EXHIBIT 10.2
SYMPHONIX DEVICES, INC.
COMMON STOCK PURCHASE AGREEMENT
December 1, 1999
TABLE OF CONTENTS
Page
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Section 1 Definitions................................................ 1
Section 2 Purchase and Sale of the Common Shares..................... 5
2.1 Purchase and Sale of the Common Shares at the Closing...... 5
2.2 Purchase and Sale of the Common Shares at Second Closing... 6
Section 3 Representations and Warranties of the Company.............. 7
3.1 Organization and Standing.................................. 7
3.2 Corporate Power; Authorization............................. 7
3.3 Issuance and Delivery...................................... 7
3.4 SEC Documents; Financial Statements; Subsequent Events..... 8
3.5 Governmental Consents...................................... 8
3.6 Exempt Transactions........................................ 8
3.7 No Material Adverse Change................................. 9
3.8 Intellectual Property...................................... 9
3.9 Authorized Capital Stock................................... 9
3.10 Litigation................................................. 10
3.11 Compliance With Other Instruments.......................... 10
3.12 Brokers or Finders......................................... 11
3.13 No Implied Representations................................. 11
3.14 Properties................................................. 11
3.15 Taxes...................................................... 11
3.16 Transfer Taxes............................................. 11
3.17 Insurance.................................................. 12
3.18 Complete Copies of Materials............................... 12
3.19 Representations Complete................................... 12
Section 4 Representations, Warranties and Covenants of the Purchaser. 12
4.1 Authorization.............................................. 12
4.2 Investment Experience...................................... 12
4.3 Investment Intent.......................................... 12
4.4 Registration or Exemption Requirements..................... 13
4.5 No Legal, Tax or Investment Advice......................... 13
Section 5 Conditions to Closing of the Purchaser..................... 13
5.1 Conditions to Purchaser's Obligations at the Closing....... 13
5.2 Conditions to the Purchaser's Obligations at the Second
Closing.................................................... 14
TABLE OF CONTENTS
(continued)
Page
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Section 6 Conditions to Company's Obligations.......................... 15
6.1 Conditions to Company's Obligations at the Closing............... 15
6.2 Conditions to Company's Obligations at the Second Closing........ 15
Section 7 The Purchaser's Covenants and the Company's Rights........... 16
7.1 The Purchaser's Standstill Obligations........................... 16
7.2 The Purchaser's Transfer Restrictions............................ 17
7.3 The Company's Right of First Refusal............................. 17
7.4 The Purchaser's Voting Obligations............................... 18
Section 8 Covenants of the Company and the Purchaser's Rights.......... 19
8.1 The Purchaser's Rights to Maintain............................... 19
8.2 The Purchaser's Board Representation Rights...................... 21
8.3 The Purchaser's Registration Rights.............................. 22
8.4 The Purchaser's Right to Increase its Ownership Interest......... 26
Section 9 Indemnification.............................................. 27
9.1 Survival of Representations and Warranties....................... 27
9.2 Obligation to Indemnify.......................................... 27
9.3 Notice and Opportunity to Defend................................. 27
Section 10 Miscellaneous............................................... 28
10.1 Waivers and Amendments........................................... 28
10.2 Governing Law.................................................... 28
10.3 Consent to Jurisdiction.......................................... 28
10.4 Release of Siemens Audiologische Technik and Siemens
Aktiengesellschaft.............................................. 29
10.5 Waiver of Jury Trial; Trial Costs................................ 29
10.6 Survival......................................................... 29
10.7 Successors and Assigns........................................... 29
10.8 Entire Agreement................................................. 29
10.9 Notices, etc..................................................... 29
10.10 Severability of this Agreement................................... 30
10.11 Counterparts..................................................... 30
10.12 Further Assurances............................................... 30
10.13 Expenses......................................................... 30
10.14 Currency......................................................... 30
SYMPHONIX DEVICES, INC.
COMMON STOCK PURCHASE AGREEMENT
This Agreement is made as of November 30, 1999 by and among Symphonix
Devices, Inc., a Delaware corporation (the "Company"), and Siemens Audiologische
Technik GmbH (the "Purchaser").
Section 1
Definitions
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"Additional Shares" shall have the meaning set forth in Section 8.4(a)
below.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the rules and
regulations promulgated under the Exchange Act; provided, however, that for
purposes of this Agreement, the Purchaser and its Affiliates, on the one hand,
and the Company and its Affiliates, on the other, shall not be deemed to be
"Affiliates" of one another.
"Average Price" shall have the meaning set forth in Section 2.2(a) below.
"Beneficially Own" or "Beneficial Ownership" shall have the meaning set
forth in Rule 13d-3 of the rules and regulations promulgated under the Exchange
Act.
"Change in Control of the Company" shall mean any of the following: (i) a
merger, consolidation or other business combination or transaction to which the
Company is a party if the stockholders of the Company immediately prior to the
effective date of such merger, consolidation or other business combination or
transaction, as a result of such ownership of stock of the Company, have
Beneficial Ownership of voting securities representing less than 50% of the
Total Current Voting Power of the surviving corporation following such merger,
consolidation or other business combination or transaction; (ii) an acquisition
by any person, entity or 13D Group of direct or indirect Beneficial Ownership of
Voting Stock of the Company representing 20% or more of the Total Current Voting
Power of the Company; (iii) a sale of all or substantially all the assets of the
Company; or (iv) a liquidation or dissolution of the Company.
"Closing" shall have the meaning set forth in Section 2.1(b) below.
"Closing Date" shall have the meaning set forth in Section 2.1(b) below.
"Common Shares" shall mean the shares of Company Common Stock to be
purchased pursuant to Section 2 below.
"Company Common Stock" shall mean shares of the Common Stock of the
Company.
"Company Controlled Corporation" shall mean a corporation of which the
Company owns not less than 80% of the outstanding voting power entitled to vote
in the election of directors of such corporation.
"Company Financing Issuance Notice" shall have the meaning set forth in
Section 8.1(b)(i)
"Disinterested Stockholders" shall mean any stockholder of the Company who
is not the Purchaser or an Affiliate of the Purchaser or a member of a 13D Group
in which Purchaser or an Affiliate of Purchaser is also a member.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, as of any date of determination, in the case of
Company Common Stock, the average of the closing sale prices of Company Common
Stock during the forty (40) trading days immediately preceding such date of
determination on Nasdaq or any comparable system then in use or, if no such
quotations are available, the fair market value of such security as of such date
of determination as determined in good faith by a majority of the Independent
Directors.
"FDA" shall mean the U.S. Food and Drug Administration.
"Financial Statements" shall have the meaning set forth in Section 3.4
below.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Indemnified Party" shall have the meaning set forth in Section 8.3(e)(3)
below.
"Independent Director" shall mean a director of the Company (i) who is not
and has never been an officer or employee of the Company, any Affiliate of the
Company or of an entity that derived 10% or more of its revenues in its most
recent fiscal year from transactions involving the Company or any Affiliate of
the Company, (ii) who is not and has never been an officer or employee and is
not currently a director of Purchaser or any Affiliate of Purchaser or of an
entity that derived more than 10% of its revenues in its most recent fiscal year
from transactions involving Purchaser or any Affiliate of Purchaser and (iii)
who has no compensation, consulting or contracting arrangement with the Company,
Purchaser or their respective Affiliates or any other entity such that a
reasonable person would regard such director as likely to be unduly influenced
by management of the Company or Purchaser, respectively, and shall, by
definition, not include any Purchaser Director.
"Marketing and Distribution Agreement" shall mean that certain Marketing
and Distribution Agreement between the Company and Purchaser dated November 2,
1999.
"Milestone Certificate" shall mean a certificate signed by the President or
a Vice President of the Company stating that the Company has achieved the
milestone identified as the receipt of an approval order from the FDA for the
premarket approval application filed for the Company's Vibrant
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P and Vibrant D soundbridges (the "Approval Order"). The Milestone Certificate
shall also include a copy of the Approval Order. The Company shall deliver such
Milestone Certificate no later than ten days after receipt of the Approval
Order.
"Nasdaq" shall mean the Nasdaq Stock Market.
"New Securities" shall mean shares of Voting Stock or other dividend-
bearing common stock to be issued by the Company, either directly or as a result
of exercise, conversion or exchange of any Non-Voting Convertible Securities by
the holder(s) thereof, excluding any such shares to be issued (i) upon exercise,
conversion or exchange of any security convertible into or exercisable or
exchangeable for Voting Stock outstanding on the date of this Agreement
(including, but not limited to Non-Voting Convertible Securities issued under
the Company's 1994 Stock Option Plan and 1997 Employee Stock Purchase Plan),
(ii) upon exercise of any option, warrant or other right to acquire any Voting
Stock or Non-Voting Convertible Securities that was previously subject to the
Purchaser's right to maintain under Section 8.1 below, or (iii) securities
issued pursuant to the exercise by the Purchaser of its rights pursuant to
Section 8.1 below.
"Non-Voting Convertible Securities" shall mean any securities of the
Company which are convertible into, exchangeable for or otherwise exercisable to
acquire Voting Stock of the Company, including convertible securities, warrants,
rights or options to purchase Voting Stock of the Company.
"Purchase Price" shall have the meaning set forth in Section 8.1(a) below.
"Purchaser Director" shall mean a member of the Board of Directors of the
Company who is designated for such position by Purchaser in accordance with
Section 8.2 below.
"Purchaser's Financing Issuance Notice" shall have the meaning set forth in
Section 8.1(b)(ii).
"Purchaser's Other Issuances Notice" shall have the meaning set forth in
Section 8.1(c)(ii) below.
"Purchaser's Pro Rata Portion" shall mean (i) in the case of the issuance
of Voting Stock, that number of shares of Voting Stock to be issued which, if
purchased by the Purchaser, would result in the Purchaser maintaining its
percentage interest in the Total Current Voting Power of the Company in effect
immediately prior to such issuance of Voting Stock or (ii) in the case of the
issuance of any other stock other than Voting Stock or Non-Voting Convertible
Securities, that number of shares of such stock to be issued which, if Purchased
by the Purchaser, would result in the Purchaser maintaining its percentage
interest in the Total Outstanding Company Equity in effect immediately prior to
such issuance.
"Purchaser Tender Offer" shall mean a bona fide public tender offer subject
to the provisions of Regulation 14D when first commenced within the meaning of
Rule 14d-2(a) of the rules and
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regulations under the Exchange Act, by the Purchaser or any Affiliate of the
Purchaser (or any 13D Group that includes Purchaser or any Affiliate of
Purchaser) to purchase or exchange for cash or other consideration any Voting
Stock and which consists of an offer to acquire 100% of the Total Current Voting
Power of the Company then in effect (other than Shares owned by the Purchaser or
any Affiliate of the Purchaser) and is conditioned (which condition may not be
waived) on a majority of the shares of Voting Stock held by Disinterested
Stockholders being tendered and not withdrawn with respect to such offer.
"Registration Expense" shall have the meaning set forth in Section 8.3(c)
below.
"Response Notice" shall have the meaning set forth in Section 7.3(a)(ii)
below.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"SEC Documents" shall have the meaning set forth in Section 3.4 below.
"Second Closing" shall have the meaning set forth in Section 2.2(b) below.
"Second Closing Date" shall have the meaning set forth in Section 2.2(b)
below.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Expenses" shall have the meaning set forth in Section 8.3(c)
below.
"Shares" shall mean any shares of Voting Stock that are Beneficially Owned
by the Purchaser, but specifically excluding any shares of Company Common Stock
subject to any Non-Voting Convertible Securities that have not yet been
exercised, converted or exchanged for Voting Stock.
"Standstill Limit" shall mean 20% of the Total Current Voting Power.
"Standstill Period" shall mean the period beginning on the Closing Date and
ending on the occurrence of a Standstill Termination Event.
"Standstill Reinstatement Event" shall mean the occurrence of either of the
following: (i) withdrawal or termination of a Third Party Tender Offer at any
time during which a Purchaser Tender Offer is not then pending or (ii)
withdrawal, termination, or material alteration of a Purchaser Tender Offer
other than an increase in price.
"Standstill Revised Limit" shall mean the percentage of the Total Current
Voting Power represented by all Shares held by the Purchaser as of the
occurrence of a Standstill Reinstatement Event.
"Standstill Termination Event" shall mean the earliest to occur of the
following: (i) a Change in Control of the Company, (ii) a Third Party Tender
Offer, (iii) a Purchaser Tender Offer, or (iv) any
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person who is not the Purchaser or an Affiliate of the Purchaser or 13D Group to
which the Purchaser or an Affiliate of the Purchaser is a member has acquired
any Voting Stock which results in such person or 13D Group owning or having the
right to acquire more than 20% of the Total Current Voting Power of the Company;
provided, however, that upon a Standstill Reinstatement Event, if the Standstill
Revised Limit is greater than the Standstill Limit, then the Standstill Revised
Limit shall thereafter be deemed the Standstill Limit for all purposes
hereunder.
"Third Party Tender Offer" shall mean a bona fide public tender offer
subject to the provisions of Regulation 14D when first commenced within the
meaning of Rule 14d-2(a) of the rules and regulations under the Exchange Act, by
a person or 13D Group (which is not made by and does not include the Purchaser
or any Affiliate of the Purchaser) to purchase or exchange for cash or other
consideration any Voting Stock and which consists of an offer to acquire 50% or
more of the then Total Current Voting Power of the Company.
"Total Current Voting Power" shall mean the total number of votes which may
be cast in the election of members of the Board of Directors of either the
Company or the surviving corporation of a merger to which the Company is a party
if all securities entitled to vote in the election of such directors are present
and voted.
"Total Outstanding Company Equity" shall mean the total number of shares of
outstanding capital stock of the Company, on a fully diluted basis assuming the
conversion, exchange or exercise of all outstanding securities, whether vested
or unvested, convertible, exchangeable or exercisable into or for Company Common
Stock.
"Transfer Notice" shall have the meaning set forth in Section 7.3(a)(i)
below.
"Voting Stock" shall mean shares of the Company Common Stock and any other
securities of the Company having the ordinary power to vote in the election of
members of the Board of Directors of the Company.
"13D Group" means any group of persons formed for the purpose of acquiring,
holding, voting or disposing of Voting Stock which would be required under
Section 13(d) of the Exchange Act, and the rules and regulations promulgated
thereunder, to file a statement on Schedule 13D pursuant to Rule 13d-1(a) or a
Schedule 13G pursuant to Rule 13d-1(c) with the SEC as a "person" within the
meaning of Section 13(d)(3) of the Exchange Act if such group beneficially owned
Voting Stock representing more than 5% of any class of Voting Stock then
outstanding.
Section 2
Purchase and Sale of the Common Shares.
---------------------------------------
2.1 Purchase and Sale of the Common Shares at the Closing.
-----------------------------------------------------
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(a) Subject to the terms and conditions hereof, the Company shall issue
and sell to the Purchaser, and the Purchaser shall purchase from the Company
1,000,000 Common Shares for a purchase price of $5.00 per share.
(b) The closing of the purchase and sale of the 1,000,000 Common Shares
(the "Closing") shall be held at 10:00 a.m. on November 30, 1999 (the "Closing
Date"), at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other time and place as the Company and
the Purchaser may agree.
(c) At the Closing, subject to the terms and conditions hereof, the
Company shall deliver to the Purchaser a certificate, representing 1,000,000
Common Shares purchased by the Purchaser from the Company, dated the date of the
Closing, against payment of the purchase price therefor by wire transfer of
immediately available funds to the Company's bank account in the amount of
$5,000,000.
2.2 Purchase and Sale of the Common Shares at Second Closing
--------------------------------------------------------
(a) Subject to Section 2.2(c) below, the Company shall issue and sell
to the Purchaser, and the Purchaser shall purchase from the Company on twenty
(20) days prior written notice to the Purchaser, which notice shall include the
Milestone Certificate, the total number of Common Shares equal to the quotient
obtained by dividing $5,000,000 by (x), where (x) is equal to the average of the
closing sales prices of the Company Common Stock as reported by Nasdaq for the
forty (40) trading days immediately preceding the date of the public
announcement of the FDA grant of premarket approval for the Company's Vibrant P
and Vibrant D soundbridges (the "Average Price"), provided, however, (i) if the
Average Price is equal to or greater than $7.00 but less than or equal to
$10.00, then (x) shall be $7.00 or (ii) if the Average Price is greater than
$10.00, then (x) shall be equal to 0.70 multiplied by the Average Price.
Notwithstanding the foregoing, in no event shall (x) be greater than $12.00 per
share. The Purchaser shall not be required to purchase any fractional Common
Share. In the event the quotient obtained by dividing $5,000,000 by (x) is not a
whole number, the Purchaser shall purchase only that number of Common Shares
equal to the whole number portion of such quotient, at a price per share equal
to (x).
(b) The purchase and sale of the Common Shares pursuant to this
paragraph 2.2 shall be consummated at a second closing (the "Second Closing"),
which Second Closing shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on the
date twenty (20) calendar days after delivery by the Company of the Milestone
Certificate, the third (3rd) business day following the satisfaction of the
conditions contemplated by paragraph (d) of this Section 2.2, or at such other
time and place as the Company and the Purchaser may agree (the "Second Closing
Date"). At the Second Closing, the Company will deliver to the Purchaser a
certificate representing the Common Shares being purchased by the Purchaser at
the Second Closing against payment of the purchase price therefor by wire
transfer of immediately available funds to the Company's bank account in the
amount of $5,000,000. In the event of any stock split or stock dividend
occurring during the period from the date hereof to the Second Closing Date, the
purchase price of the Common Shares in the Second Closing and the
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numerical parameters in paragraph 2.2(a) shall be adjusted by a factor equal to
the inverse ratio of the stock split or stock dividend.
(c) Notwithstanding the foregoing, the Purchaser shall have no
obligation to purchase any Common Shares pursuant to this Section 2.2 if either
(i) the Company does not receive premarket approval for its Vibrant P and
Vibrant D soundbridges from the FDA on or prior to April 30, 2001, or (ii) at
any time following the Closing Date a third party acquires Beneficial Ownership
of greater than 20% of the Total Current Voting Power of the Company, or (iii)
if the Company does not deliver the Milestone Certificate to the Purchaser
within ten (10) days after issuance of the Approval Order.
(d) The obligations of the parties and issuance of the Common Shares
pursuant to this Section 2.2 shall be subject to compliance with all applicable
laws, including the HSR Act, and the requirements of Nasdaq and any applicable
stock exchange.
Section 3
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to the Purchaser as follows:
3.1 Organization and Standing. The Company is a corporation duly organized
-------------------------
and validly existing under, and by virtue of, the laws of the State of Delaware
and is in good standing as a domestic corporation under the laws of said state,
and has the requisite corporate power and authority to own its properties and to
carry on its business as now being conducted. Other than as disclosed in
Schedule 3.1 hereto, the Company has no subsidiaries or direct or indirect
ownership in any firm, corporation or business which either, individually or in
the aggregate, is material to the business of the Company. The Company and each
of its subsidiaries is qualified to do business and is in good standing as a
foreign corporation in every jurisdiction in which its ownership of property or
conduct of business requires it so to be qualified and in which the failure to
so qualify would have a material adverse effect on the financial condition or
business of the Company as a whole.
3.2 Corporate Power; Authorization. The Company has all requisite legal
------------------------------
and corporate power and authority and has taken all requisite corporate action
to duly authorize, execute and deliver this Agreement, to sell and issue the
Common Shares and to carry out and perform all of its obligations under and
contemplated by this Agreement and the Marketing and Distribution Agreement.
This Agreement and the Marketing and Distribution Agreement have been duly
executed and delivered by an authorized officer of the Company and constitute
legal, valid and binding obligations of the Company, enforceable in accordance
with their terms, except as limited by applicable bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally.
3.3 Issuance and Delivery. The Common Shares and the Additional Shares
---------------------
have been duly authorized, and, when issued and delivered in compliance with
this Agreement, will be duly and
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validly issued and delivered and will be fully paid, nonassessable and free and
clear of all pledges, liens, encumbrances and restrictions. No preemptive
rights, or other rights to subscribe for or purchase, exist with respect to the
issuance and sale of the Common Shares by the Company pursuant to this
Agreement. No further approval or authority of the stockholders or the Board of
Directors of the Company will be required for the issuance and sale of the
Common Shares or the Additional Shares to be sold by the Company as contemplated
herein.
3.4 SEC Documents; Financial Statements; Subsequent Events. The Company
------------------------------------------------------
has filed in a timely manner all documents that the Company was required to file
with the SEC under Sections 13, 14(a) and 15(d) of the Exchange Act, during the
twelve (12) months preceding the date of this Agreement and all rules and
regulations thereunder. As of their respective filing dates, all documents filed
by the Company with the SEC (the "SEC Documents") complied in all material
respects with the requirements of the Exchange Act or the Securities Act, as
applicable and all rules and regulations thereunder. None of the SEC Documents
contained, as of their respective dates, any untrue statement of material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, and such SEC Documents, when read as a whole, do
not contain any untrue statements of a material fact and do not omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents (the "Financial
Statements") comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto. The Financial Statements have been prepared in accordance with
United States generally accepted accounting principles consistently applied and
fairly present the financial position of the Company and any subsidiaries at the
dates thereof and the results of the Company's operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
adjustments).
3.5 Governmental Consents. No consent, approval, order or authorization
---------------------
of, or registration, qualification, designation, declaration or filing with, any
federal, state, or local governmental authority on the part of the Company is
required in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement except for (a)
the filing of a Form D with respect to the issuance of the Common Shares with
the SEC and (b) the filing of a Nasdaq National Market Notification Form
(pursuant to Rule 10b-17 promulgated under the Exchange Act) with Nasdaq, and
(c) in the case of the Second Closing or a closing pursuant to Section 8.4
hereof, the filing under the HSR Act, each of which will be filed in a timely
manner.
3.6 Exempt Transactions. Subject to the accuracy of the Purchaser's
-------------------
representations and warranties in Section 4 of this Agreement, the offer, sale
and issuance of the Common Shares in conformity with the terms of this Agreement
constitute transactions exempt from the registration requirements of Section 5
of the Securities Act and from the registration or qualification requirements of
the laws of any applicable state or United States jurisdiction.
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3.7 No Material Adverse Change. Except as otherwise disclosed herein,
--------------------------
since September 30, 1999, there have not been any changes in the assets,
liabilities, financial condition, business or operations of the Company from
that reflected in the Financial Statements except (i) changes in the ordinary
course of business which have not been, either individually or in the aggregate,
materially adverse, and (ii) the Company's continued incurrence of operating
losses and negative cash flow.
3.8 Intellectual Property. The Company owns or possesses adequate rights
---------------------
to use all patents, patent rights, inventions, trademarks, trade names,
copyrights, licenses, governmental authorizations, trade secrets and know-how
that are used or necessary for the conduct of its business as described in the
SEC Documents; except as disclosed on Schedule 3.8 hereto, neither the Company
nor any of its subsidiaries has received any notice of, or has any knowledge of,
any infringement of or conflict with asserted rights of others with respect to
any patent, patent right, invention, trademarks, trade names, copyrights,
licenses, governmental authorizations, trade secret or know-how that,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse effect on the condition
(financial or otherwise), earnings, operations or business of the Company and
its subsidiaries considered as a whole. To the best knowledge of the Company and
its subsidiaries, no product or service that is manufactured, marketed,
performed or sold by the Company or any of its subsidiaries violates any license
or infringes any intellectual property rights of another. There is no pending or
written threat of a claim or litigation against the Company or any of its
subsidiaries (nor to the Company's knowledge does there exist any basis
therefor) contesting the validity of, or right to use, any of the foregoing
intellectual property rights.
3.9 Authorized Capital Stock. The authorized capital stock of the Company
------------------------
conforms, as of the dates for which such information is given, in all material
respects to the statements relating thereto contained in the SEC Documents. The
issued and outstanding shares of capital stock of the Company have been duly
authorized, validly issued and are fully paid and nonassessable; except as set
forth or referred to in the SEC Documents, no warrants, options or other rights
to purchase, agreements or other obligations to issue, or agreements or other
rights to convert any obligation into, any shares of capital stock of the
Company have been granted or entered into by the Company. All of the above
securities of the Company were issued in compliance with all applicable federal
and state securities laws and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities.
Except as provided in this Agreement, no holder of any security of the Company
is entitled to any preemptive or similar rights to purchase any securities of
the Company. The authorized capital stock of the Company consists of 50,000,000
shares of common stock, par value $0.001 per share, of which at September 30,
1999, 12,402,460 shares were issued and outstanding, and 5,000,000 shares of
preferred stock par value $0.001 per share, none of which are outstanding. As of
September 30, 1999, the Company has reserved a total of 275,000 shares of
Company Common Stock for issuance under its 1997 Employee Stock Purchase Plan,
of which, at September 30, 1999, 64,613 shares have been issued pursuant to
purchases under such plan. As of September 30, 1999, the Company has reserved a
total of 3,499,273 shares of Company Common Stock for issuance under its 1994
Stock Option Plan, of which, at September 30, 1999,
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1,371,571 shares of Company Common Stock are duly reserved for issuance upon
exercise of outstanding options. As of September 30, 1999, 33,611 shares of
Company Common Stock are reserved for issuance upon exercise of other options,
warrants and rights held by other parties, and a list of the holders of such
options, warrants and rights is set forth on Schedule 3.9 hereto, together with
the number of shares of either Company Common Stock or preferred stock issuable
upon exercise of each such option, warrant or right. Set forth on Schedule 3.9
hereto, to the Company's best knowledge, is a list of each record and beneficial
holder of 5% or more of the Company Common Stock as of September 30, 1999,
including the name, address and number of shares of Company Common Stock held by
each such holder. Except as provided or described in this Agreement or in the
Schedules hereto, there are no other options, warrants, conversion privileges,
convertible securities or other contractual rights presently outstanding to
purchase or otherwise acquire any authorized but unissued shares of any of the
Company's or any of its subsidiaries' capital stock or other securities. Except
as provided in this Agreement or in the Schedules hereto, there are no
preemptive or similar rights to purchase or otherwise acquire shares of capital
stock of the Company or any subsidiary, whether pursuant to law, the
certificates of incorporation or bylaws of the Company or any of its
subsidiaries, or any agreement or instrument. The Common Shares to be purchased
at the Closing shall represent approximately 7.46% of the Total Current Voting
Power, based upon a total of 13,441,949 shares of Common Stock outstanding as of
October 31, 1999 (such number includes the 1,000,000 shares to be purchased
pursuant to Section 2 above and 39,489 shares issued under the Company's 1997
Employee Stock Purchase Plan).
3.10 Litigation. There are no actions, suits, proceedings or
----------
investigations pending or, to the best of the Company's knowledge, threatened
against the Company or any of its subsidiaries or properties before or by any
court or arbitrator or any governmental body, agency or official in which there
is a reasonable likelihood (in the judgment of the Company) of an adverse
decision that (a) would have a material adverse effect on the Company's
properties or assets or the business of the Company as presently conducted or
proposed to be conducted or (b) would impair the ability of the Company to
perform in any material respect its obligations under this Agreement. The
Company is not in default with respect to any judgment, order or decree of any
court or governmental agency or instrumentality which, individually or in the
aggregate, would have a material adverse effect on the assets, properties or
business of the Company.
3.11 Compliance With Other Instruments. The business and operations of the
---------------------------------
Company and its subsidiaries have been and are being conducted in accordance
with all applicable laws, rules and regulations of all governmental authorities,
except for such violations of applicable laws, rules and regulations which would
not, individually or in the aggregate, have a material adverse effect on the
assets, properties, financial condition or business of the Company. Neither the
execution and delivery of, nor the performance or compliance with, this
Agreement and the transactions contemplated hereby, will, with or without the
giving of notice or the passage of time, (i) result in any breach of, or
constitute a default under, or result in the imposition of any lien or
encumbrance upon any asset or property of the Company pursuant to, any agreement
or other instrument to which the Company is a party or by which it or any of its
properties, assets or rights is bound or affected, except for such breach or
default or the imposition of any such lien or encumbrance which, either
-10-
individually or in the aggregate, would not have a material adverse effect on
the assets, properties, financial condition or business of the Company or (ii)
violate the Certificate of Incorporation or Bylaws of the Company, or any
applicable law, rule regulation, judgment, order or decree. The Company is not
in violation of its Certificate of Incorporation or Bylaws nor in violation of,
or in default under, any lien, indenture, mortgage, lease, agreement,
instrument, commitment or arrangement, except for such defaults which would not,
individually or in the aggregate, have a material adverse effect on the assets,
properties, financial condition or business of the Company, or subject to any
restriction which would prohibit the Company from entering into or performing
its obligations under this Agreement. Except as set forth on Schedule 3.11
hereto, neither the Company nor any subsidiary of the Company has granted any
right or authorization to any third party to develop, manufacture, use, market
or service the Company's products that would conflict with the Company's
obligations under the Marketing and Distribution Agreement.
3.12 Brokers or Finders. No person, firm or corporation has or will have,
------------------
as a result of any act or omission of the Company, any right, interest or valid
claim against the Purchaser for any commission, fee or other compensation as a
finder or broker in connection with the transactions contemplated by this
Agreement.
3.13 No Implied Representations. All of the Company's representations and
--------------------------
warranties are contained in this Agreement and no other representations or
warranties by the Company shall be implied.
3.14 Properties. The Company has good and marketable title to all the
----------
properties and assets reflected as owned in the financial statements included in
the SEC Documents, subject to no lien, mortgage, pledge, charge or encumbrance
of any kind except (i) those, if any, reflected in such financial statements, or
(ii) those which are not material in amount and do not adversely affect the use
made and promised to be made of such property by the Company and its
subsidiaries. The Company and any applicable subsidiary holds its leased
properties under valid and binding leases, with such exceptions as are not
materially significant in relation to the business of the Company and the
subsidiaries.
3.15 Taxes. The Company and its subsidiaries have filed all necessary
-----
federal, state and foreign income and franchise tax returns and have paid or
accrued all taxes shown as due thereon, all of such tax returns are true and
complete in all material respects, and the Company has no knowledge of any tax
deficiency which has been or might be asserted or threatened against the Company
or its subsidiaries which could materially and adversely affect the business,
operations or properties of the Company and its subsidiaries.
3.16 Transfer Taxes. On the Closing Date and the Second Closing Date, and
--------------
any closing under Section 8 hereof, all stock transfer or other taxes (other
than income taxes) which are required to be paid in connection with the sale and
transfer of the Common Shares to be sold to the Purchaser hereunder will be, or
will have been, fully paid or provided for by the Company and all laws imposing
such taxes will be or will have been complied with fully.
-11-
3.17 Insurance. Each of the Company and its subsidiaries maintains
---------
insurance of the types and in the amounts generally deemed adequate for its
business, including, but not limited to, insurance covering all real and
personal property owned or leased by the Company and its subsidiaries against
theft, damage, destruction, acts of vandalism and all other risks customarily
insured against, all of which insurance is in full force and effect.
3.18 Complete Copies of Materials. The Company has delivered or made
----------------------------
available true and complete copies of each document (or summaries of same) or
has indicated that no such document exists with respect to all documents
relating to the Company which Purchaser or its counsel have requested in writing
to review in connection with this Agreement, and the transactions contemplated
hereby including, without limitation, true and complete copies of certain of the
documents provided to the Food and Drug Administration in connection with the
filing of the Company's PMA application.
3.19 Representations Complete. None of the representations or warranties
------------------------
made by the Company (as modified by the Disclosure Schedules) in this Section 3,
nor any statement made in any schedule or certificate furnished by the Company
pursuant to this Agreement contains or will contain at the Closing, any untrue
statement of a material fact, or omits or will omit at the Closing to state any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.
Section 4
Representations, Warranties and Covenants of the Purchaser
----------------------------------------------------------
The Purchaser hereby represents and warrants to the Company as follows:
4.1 Authorization. (i) The Purchaser has all requisite legal and
-------------
corporate or other power and capacity and has taken all requisite corporate or
other action to execute and deliver this Agreement, to purchase the Common
Shares to be purchased by it and to carry out and perform all of its obligations
under this Agreement; and (ii) this Agreement constitutes the legal, valid and
binding obligation of the Purchaser, enforceable in accordance with its terms,
except (a) as limited by applicable bankruptcy, insolvency, reorganization, or
similar laws relating to or affecting the enforcement of creditors' rights
generally and (b) as limited by equitable principles generally.
4.2 Investment Experience. The Purchaser is an "accredited Purchaser" as
---------------------
defined in Rule 501(a) under the Securities Act. The Purchaser is aware of the
Company's business affairs and financial condition and has had access to and has
acquired sufficient information about the Company to reach an informed and
knowledgeable decision to acquire the Securities. The Purchaser has such
business and financial experience as is required to give it the capacity to
protect its own interests in connection with the purchase of the Common Shares.
-12-
4.3 Investment Intent. The Purchaser is purchasing the Common Shares for
-----------------
its own account as principal, for investment purposes only, and not with a
present view to, or for, resale, distribution or fractionalization thereof, in
whole or in part, within the meaning of the Securities Act. The Purchaser
understands that its acquisition of the Common Shares has not been registered
under the Securities Act or registered or qualified under any state securities
law in reliance on specific exemptions therefrom, which exemptions may depend
upon, among other things, the bona fide nature of the Purchaser's investment
intent as expressed herein. The Purchaser will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Common
Shares, except in compliance with the terms of this Agreement and the Securities
Act, and the rules and regulations promulgated thereunder.
4.4 Registration or Exemption Requirements. The Purchaser further
--------------------------------------
acknowledges and understands that the Common Shares may not be resold or
otherwise transferred except in a transaction registered under the Securities
Act or unless an exemption from such registration is available. The Purchaser
understands that the certificate(s) evidencing the Common Shares will be
imprinted with a legend that prohibits the transfer of such securities unless
(i) they are registered or such registration is not required, and (ii) if the
transfer is pursuant to an exemption from registration under the Securities Act
and, if the Company shall so request in writing, an opinion of counsel
reasonably satisfactory to the Company is obtained to the effect that the
transaction is so exempt.
4.5 No Legal, Tax or Investment Advice. The Purchaser understands that
----------------------------------
nothing in this Agreement or any other materials presented to the Purchaser in
connection with the purchase of the Common Shares constitutes legal, tax or
investment advice. The Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Common Shares.
Section 5
Conditions to Closing of the Purchaser
--------------------------------------
5.1 Conditions to Purchaser's Obligations at the Closing. The Purchaser's
----------------------------------------------------
obligation to purchase the Common Shares at the Closing under this Agreement is
subject to the fulfillment on or prior to the Closing Date of the following
conditions, any of which may be waived in whole or in part by the Purchaser:
(a) Representations and Warranties True. The representations and
-----------------------------------
warranties made by the Company in Section 3 hereof shall be true and correct on
the Closing Date with the same force and effect as if they had been made on and
as of said date.
(b) Covenants. All covenants, agreements and conditions contained in
---------
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with.
-13-
(c) Consents. The Company shall have obtained all consents, permits
--------
and waivers necessary to consummate the transactions contemplated by this
Agreement which need to be obtained prior to the Closing.
(d) Opinion of the Company's Counsel. The Purchaser shall have
--------------------------------
received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ("WSG&R"), counsel to the
Company, an opinion letter addressed to the Purchaser substantially in the form
attached as Exhibit A dated as of the Closing Date.
(e) Compliance Certificate. The Company shall have delivered to the
----------------------
Purchaser a certificate of the Company, executed by the President or Chief
Financial Officer of the Company and dated as of the Closing Date, certifying to
the fulfillment of the conditions specified in Sections 5.1(a), (b) and (c).
(f) Marketing and Distribution Agreement. The Marketing and
------------------------------------
Distribution Agreement shall have been executed by the Company.
(g) Compliance with Laws. The purchase of the Common Shares by the
--------------------
Purchaser hereunder shall be legally permitted by all laws and regulations to
which the Purchaser or the Company are subject.
(h) Corporate Authorizations. Purchaser shall have received (i)
------------------------
certified copies of the resolutions adopted by the Company's Board of Directors
authorizing the execution, delivery and performance of this Agreement and the
Marketing and Distribution Agreement, and (ii) copies of the Company's
Certificate of Incorporation and Bylaws, as in effect on the Closing Date.
(i) Due Diligence. Purchaser shall have completed its due diligence
-------------
review of the Company.
5.2 Conditions to the Purchaser's Obligations at the Second Closing. The
---------------------------------------------------------------
Purchaser's obligation to purchase the Common Shares at the Second Closing under
this Agreement is subject to the fulfillment on or prior to the Second Closing
Date of the following conditions, any of which may be waived in whole or in part
by the Purchaser:
(a) Representations and Warranties True. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
(other than the representations in Section 3.7 which shall be true and correct
in all material respects only as of the Closing Date) on the Second Closing Date
with the same force and effect as if they had been made on and as of said date.
(b) Covenants. All covenants, agreements and conditions contained in
---------
this Agreement to be performed by the Company on or prior to the Second Closing
Date shall have been performed or complied with including, without limitation,
delivery of the Milestone Certificate.
-14-
(c) Consents. The Company shall have obtained all consents, permits and
--------
waivers necessary or appropriate for consummation of the transactions
contemplated by this Agreement which need to be obtained prior to the Second
Closing.
(d) Compliance Certificate. The Company shall have delivered to the
----------------------
Purchaser a certificate of the Company, executed by the President or Chief
Financial Officer of the Company and dated as of the Second Closing Date,
certifying to the fulfillment of the conditions specified in Sections 5.2(a) and
(b).
(e) Compliance with Laws. The purchase of the Common Shares by the
--------------------
Purchaser hereunder shall be legally permitted by all laws and regulations to
which the Purchaser or the Company are subject.
(f) Opinion of WSG&R. The Purchaser shall have received from WSG&R an
----------------
opinion letter addressed to the Purchaser substantially in the form attached as
Exhibit A dated as of the Second Closing Date.
Section 6
Conditions to Company's Obligations.
-----------------------------------
6.1 Conditions to Company's Obligations at the Closing. The Company's
--------------------------------------------------
obligation to sell and issue the Common Shares at the Closing is subject to the
fulfillment on or prior to the Closing Date of the following conditions, any of
which may be waived in whole or in part by the Company:
(a) Representations and Warranties True. The representations and
-----------------------------------
warranties made by the Purchaser herein shall be true and correct on the Closing
Date with the same force and effect as if they had been made on and as of the
same date.
(b) Consents. The Company shall have obtained all consents, permits
--------
and waivers necessary or appropriate for consummation of the transactions
contemplated by this Agreement which need to be obtained prior to the Closing.
(c) Marketing and Distribution Agreement. The Marketing and
------------------------------------
Distribution Agreement shall have been executed by the Purchaser.
(d) Compliance with all Laws. At the Closing, the purchase of the
------------------------
Common Shares by the Purchaser hereunder shall be legally permitted by all laws
and regulations to which the Purchaser or the Company are subject.
6.2 Conditions to Company's Obligations at the Second Closing. The
---------------------------------------------------------
Company's obligation to sell and issue the Common Shares at the Second Closing
is subject to the fulfillment on
-15-
or prior to the Second Closing Date of the following conditions, any of which
may be waived in whole or in part by the Company:
(a) Representations and Warranties True. The representations and
-----------------------------------
warranties made by the Purchaser herein shall be true and correct on the Second
Closing Date with the same force and effect as if they had been made on and as
of the same date.
(b) Consents. The Company shall have obtained all consents, permits
--------
and waivers necessary or appropriate for consummation of the transactions
contemplated by this Agreement which need to be obtained prior to the Second
Closing.
(c) Compliance with all Laws. At the Second Closing, the purchase of
------------------------
the Common Shares by the Purchaser hereunder shall be legally permitted by all
laws and regulations to which the Purchaser or the Company are subject.
Section 7
The Purchaser's Covenants and the Company's Rights
--------------------------------------------------
7.1 The Purchaser's Standstill Obligations
--------------------------------------
(a) Notwithstanding anything to the contrary contained herein and
only during the Standstill Period, none of the Purchaser, any Affiliate of the
Purchaser or any 13D Group of which Purchaser or any of its Affiliates is a
member shall, directly or indirectly, acquire or Beneficially Own Voting Stock
or authorize or make a tender offer, exchange offer or other offer therefor, if
the effect of such acquisition would be to increase the percentage of Total
Current Voting Power represented by all Shares Beneficially Owned by the
Purchaser to more than the Standstill Limit, provided that, the foregoing shall
not prohibit the Purchaser and/or any of its Affiliates from making a Purchaser
Tender Offer during the Standstill Period that has been approved by the Board of
Directors of the Company.
(b) The Purchaser shall not be deemed to have violated its covenants
under this Section 7.1 by virtue of any increase in the aggregate percentage of
the Total Current Voting Power of the Company represented by Shares Beneficially
Owned by the Purchaser or its Affiliates if such increase is the result of a
recapitalization of the Company, a repurchase of securities by the Company or
other actions taken by the Company or any of the Company's Affiliates that have
the effect of reducing the Total Current Voting Power.
(c) All of the Purchaser's acquisitions of Shares during the
Standstill Period shall comply with applicable federal and state securities laws
and be subject to the provisions of this Agreement.
(d) During the Standstill Period, the Purchaser shall not solicit
proxies with respect to any Voting Stock, nor shall it become a "participant" in
any "election contest" (as such
-16-
terms are used in Rule 14(a)-11 of Regulation 14A promulgated under the Exchange
Act) relating to the election of directors of the Company. Purchaser shall not
be deemed to be such "participant" merely by reason of the membership of the
Purchaser Director on the Company's Board of Directors pursuant to the terms of
this Agreement.
(e) During the Standstill Period, the Purchaser shall not deposit any
shares of Voting Stock in a voting trust or, except as otherwise provided or
contemplated herein (including Section 7.4 hereof), or subject any Voting Stock
to any arrangement or agreement with any third party with respect to the voting
of such Voting Stock.
(f) During the Standstill Period, the Purchaser shall not join a 13D
Group, partnership, limited partnership, syndicate or other group, or otherwise
act in concert with any third person for the purpose of acquiring, holding,
voting or disposing of Voting Stock or Non-Voting Convertible Securities, unless
the joining of such group is in connection with a Purchaser Tender Offer
approved by the Board of Directors of the Company.
7.2 The Purchaser's Transfer Restrictions.
-------------------------------------
(a) Unless the Purchaser Beneficially Owns less than 5% of the Total
Current Voting Power or until the Purchaser owns at least 90% of the Total
Current Voting Power, the Purchaser shall not, directly or indirectly, sell,
transfer, pledge, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise dispose of, any Shares or Non-Voting Convertible
Securities except: (i) to the Company, (ii) to a Company Controlled Corporation,
(iii) in response to a Third Party Tender Offer which is not opposed by the
Board of Directors of the Company within the time such Board is required,
pursuant to the rules and regulations promulgated under the Exchange Act, to
advise Company stockholders of such Board's position on such offer, (iv)
following the earlier of (A) November 1, 2004 and (B) any termination by the
Purchaser (not the Company) of the Marketing and Distribution Agreement pursuant
to Section 10 thereof, (v) following the acquisition by a person or 13D Group
(which is not and does not include the Purchaser or any affiliate of the
Purchaser) of more than 20% of the Total Current Voting Power of the Company,
(vi) pursuant to an offering of Shares registered under the provisions of
Section 8.3 hereof; or (vii) pursuant to Rule 144 under the Securities Act but
only if such transaction (A) is in compliance with the volume limitations under
Rule 144(e) and (B) does not occur prior to the later of two years from the
Closing.
(b) Any attempted sale, transfer or other disposition by Purchaser
which is not in compliance with this Section 7.2 shall be null and void.
7.3 The Company's Right of First Refusal.
------------------------------------
(a) Prior to the Purchaser effecting any sale, transfer or other
disposition of Shares or Non-Voting Convertible Securities in a private
placement transaction exempt from the registration requirements of the
Securities Act other than the transactions specified in Sections 7.2(a)(i),
(ii), (iii),
-17-
(v), (vi) and (vii) above, the Company shall have a first refusal right to
purchase such Shares or Non-Voting Convertible Securities on the following terms
and conditions:
(i) The Purchaser shall give prior notice (the "Transfer
Notice") to the Company in writing of such intention, specifying the name of the
proposed purchaser or transferee, the number of Shares or Non-Voting Convertible
Securities proposed to be sold or transferred, the proposed price therefor and
the other material terms upon which such disposition is proposed to be made.
(ii) The Company shall have the right, exercisable by written
notice given by the Company to the Purchaser within ten (10) business days after
receipt of such Transfer Notice (the "Response Notice"), to purchase all, but
not less than all the Shares or Non-Voting Convertible Securities specified in
such Transfer Notice for cash at the price per share specified in the Transfer
Notice.
(iii) If the Company exercises its right of first refusal
hereunder, the closing of the purchase of the Shares or Non-Voting Convertible
Securities with respect to which such right has been exercised shall take place
within sixty (60) calendar days after the Company gives the Response Notice to
the Purchaser which period shall be extended, if necessary, to comply with
applicable laws and regulations. Upon exercise of its right of first refusal,
the Company and the Purchaser shall be legally obligated to consummate the
purchase and sale contemplated thereby and shall use their best efforts to
secure any approvals required in connection therewith.
(iv) If the Company does not exercise its right of first refusal
hereunder within the time specified for such exercise, the Purchaser shall be
free, during the period of ninety (90) calendar days following the expiration of
such time for exercise, to sell the Shares or Non-Voting Convertible Securities
specified in such Transfer Notice to the proposed purchaser or transferee
specified in such Transfer Notice and on terms not materially less favorable to
the Purchaser than the terms specified in such Transfer Notice, which period
shall be extended, if necessary, to comply with applicable laws and regulations.
(b) The Company may assign its right of first refusal hereunder to
any other person or persons.
7.4 The Purchaser's Voting Obligations.
----------------------------------
(a) The Purchaser shall take such action as may be required so that
all shares of Voting Stock Beneficially Owned by the Purchaser are voted for or
cast in favor of: (i) during the Standstill Period, nominees to the Board of
Directors of the Company in accordance with the joint recommendations of
management of the Company and a majority of the Board of Directors of the
Company, (ii) increases in the authorized capital stock of the Company and
amendments to stock option plans and employee stock purchase plans, in each case
approved by the Company's Board of Directors, and (iii) all matters approved by
the Purchaser Director whether such matters are
-18-
submitted to a vote, action by written consent or other approval of the holders
of Voting Stock of the Company.
(b) Except as set forth in paragraph (a) above, nothing in this
Agreement shall preclude the Purchaser from voting shares of Voting Stock which
it Beneficially Owns in such manner as the Purchaser determines, in its sole
discretion, on any matter presented to the holders of Voting Stock for a vote,
consent or other approval; provided, however, that, in connection with any
merger, consolidation or other reorganization (i) which is approved by the
Company's Board of Directors, (ii) which is intended to qualify for pooling-of-
interests accounting treatment, and (iii) in connection with which the Purchaser
has not exercised its appraisal rights, Purchaser hereby covenants to enter into
a standard affiliate lock-up agreement if requested by the Company, regardless
of the manner in which the Purchaser may have voted or cast Shares of Voting
Stock Beneficially Owned by the Purchaser with respect to such transaction.
(c) So long as the Purchaser Beneficially Owns at least 5% of the
Total Current Voting Power, the Purchaser, as the holder of Shares, shall be
present, in person or by proxy, at all meetings of stockholders of the Company
so that all shares of Voting Stock held by the Purchaser may be counted for
purposes of determining the presence of a quorum at such meetings.
Section 8
Covenants of the Company and the Purchaser's Rights
---------------------------------------------------
8.1 The Purchaser's Rights to Maintain.
----------------------------------
(a) In General. During the Standstill Period, provided that the
----------
Purchaser Beneficially Owns at least 5% of the Total Current Voting Power, if
the percentage interest of the Purchaser in the Total Outstanding Company Equity
is or would be reduced at any time as a result of an issuance of New Securities,
the Purchaser shall have the right to purchase for cash the Purchaser's Pro Rata
Portion, in whole or in part, at an aggregate purchase price equal to the
product of the price per share at which such New Securities were or will be sold
in such issuance (a price per share as determined in accordance with subsection
(b) below), multiplied by the Purchaser's Pro Rata Portion or any part thereof
(the "Purchase Price").
(b) Financing Issuances.
-------------------
(i) No less than ten (10), and no more than thirty (30),
calendar days prior to the issuance and sale of any New Securities for cash
consideration in a financing transaction (which shall not include any
transaction specifically described in subsection (c) below), the Company shall
notify the Purchaser of the Company's intention to make such issuance by written
dated notice (the "Company's Financing Issuance Notice") setting forth the
number and type of New Securities and the calculation of the Purchaser's Pro
Rata Portion.
-19-
(ii) Within fourteen (14) calendar days after receipt by the
Purchaser of the Company's Financing Issuance Notice, the Purchaser shall notify
the Company by written notice (the "Purchaser's Financing Issuance Notice")
stating whether the Purchaser desires to buy the Purchaser's Pro Rata Portion,
or any part thereof, for the Purchase Price.
(iii) If the Company issues and sells the New Securities in the
financing transaction, then the Purchaser shall be obligated to purchase (if it
has elected to exercise its right to maintain in the Purchaser's Financing
Issuance Notice) the Purchaser's Pro Rata Portion (or part thereof) for the
Purchase Price with such Purchase Price based on the price per share paid by the
ultimate investors in the financing. The closing of any purchases pursuant to
this Section 8.1(b) shall take place contemporaneously with such financing,
subject to the provisions of paragraph (d) below. If the Purchaser either (A)
does not deliver a Purchaser's Financing Issuance Notice within the time periods
specified above or (B) elects in the Purchaser's Financing Issuance Notice not
to purchase the Purchaser's Pro Rata Portion or any part thereof the Company
shall not be obligated to sell to the Purchaser the Purchaser's Pro Rata
Portion.
(iv) The purchase price per share at which the Purchaser shall
be entitled to purchase the Purchaser's Pro Rata Portion shall be determined as
follows:
(1) If the event giving rise to the Purchaser's rights is
a sale or issuance of New Securities for cash or property, including, without
limitation, for securities or assets or by way of merger in connection with the
acquisition of another company, the price shall be the price per share specified
in the agreement relating to such issuance, or if no such price is specified,
the Fair Market Value of the New Securities determined as of the date of
issuance and sale of such New Securities.
(2) If the event giving rise to the Purchaser's rights is
an issuance of New Securities upon conversion of any security convertible into
or exchangeable for Common Stock or upon exercise of any option, warrant or
right to acquire any New Securities, the price shall be the exercise price per
share of such New Securities determined as of the date of such conversion or
exercise plus a pro-rata portion of the premium paid for the underlying option,
warrant or right.
(3) If the event giving rise to the Purchaser's rights is
an underwritten public offering or an institutional private placement, the price
shall be the price per share at which the New Securities were sold by the
Company.
(4) In all other cases, the price shall be the Fair Market
Value of the New Securities determined as of the date of the issuance and sale
of such New Securities.
(c) Other Issuances.
---------------
(i) No more than ten (10) calendar days after each one-year
anniversary of the date of this Agreement (until the termination of the
Standstill Period), the Company shall notify the Purchaser of the number of New
Securities issued pursuant to the Company's employee
-20-
stock plans, purchase plans or other stock plans for the benefit of employees,
directors, officers, consultants or others during such one year period by
written dated notice (the "Company's Other Issuances Notice") setting forth the
number and type of New Securities (such number to be net of any New Securities
returned to an option plan). In the case of New Securities that are stock
options issued pursuant to a Company employee stock option plan, the Purchaser's
right to maintain under this subsection (c) shall relate to the Voting Stock
underlying such stock options and the Purchase Price of such Voting Stock shall
be the weighted average exercise price of such stock options regardless of the
net effect of any New Securities returned to an option plan.
(ii) Within fourteen (14) calendar days after receipt by the
Purchaser of the Company's Other Issuance Notice, the Purchaser shall notify the
Company by written notice (the "Purchaser's Other Issuances Notice") stating
whether the Purchaser desires to buy Purchaser's Pro Rata Portion of such New
Securities. If Purchaser elects to purchase such Pro Rata Portion, then the
closing of such transaction shall take place within three (3) business days
after the Company's receipt of such notice in accordance with subsection (d)
below.
(d) Closing; Other Matters.
----------------------
(i) The purchase and sale of any New Securities pursuant to
this Section 8.1 shall take place at the offices of the Company set forth in
this Agreement at 10:00 a.m. on the earlier of the: (A) closing date specified
in the applicable subsection of this Section 8.1 or (B) the third (3rd) business
day following the expiration or early termination of all waiting periods imposed
on such purchase and sale by the HSR Act, or at such other time and place as the
Company and the Purchaser may agree.
(ii) The Company and the Purchaser shall use their best efforts
to comply with all federal and state laws and regulations and Nasdaq and stock
exchange listing requirements applicable to any purchase and sale of shares of
New Securities under this Section 8.1. The issuance of such shares shall be
subject to compliance with applicable laws and regulations and requirements of
Nasdaq and any applicable stock exchange.
(iii) Except as otherwise specifically provided herein, upon
receipt of the applicable Purchaser's Notice by the Company, the Purchaser and
the Company each shall be obligated, subject to the other terms and conditions
of this Agreement, to consummate the purchase and sale contemplated by this
Section 8.1 and shall use their best efforts to secure any approvals required in
connection therewith.
(iv) Any Shares acquired by the Purchaser hereunder and all
of Purchaser's rights to maintain, shall be subject to all restrictions and
obligations of the Purchaser set forth elsewhere in this Agreement including,
but not limited to, Section 7.1 of this Agreement.
8.2 The Purchaser's Board Representation Rights.
-------------------------------------------
-21-
(a) At the Company's first Board of Directors meeting following the
Closing, the Board of Directors of the Company shall elect to the Company's
Board of Directors a person designated by the Purchaser who is either a senior
business executive of the Purchaser or has business experience comparable to a
senior business executive (the "Purchaser Director"); provided however that the
election of the Purchaser Director to the Company's Board of Directors must
occur no later than January 31, 2000.
(b) So long as the Purchaser beneficially owns all Common Shares
purchased by the Purchaser at the Closing and, if it should occur, at the Second
Closing, the Company shall include in the slate of nominees recommended by the
Company's Board of Directors or management to stockholders for election as
directors at the annual meeting of stockholders of the Company, anticipated to
be held in May 2000. The Company's Board of Directors and management shall vote
all shares for which the Company's management or Board of Directors hold proxies
or is otherwise entitled to vote in favor of the Purchaser Director. In the
event that the Purchaser Director shall cease to serve as a director for any
reason, the vacancy resulting thereby shall be filled by a designee of the
Purchaser reasonably acceptable to the Company.
8.3 The Purchaser's Registration Rights. Effective upon the earlier to
-----------------------------------
occur of (i) November 30, 2004, (ii) any termination by the Purchaser (not the
Company) of the Marketing and Distribution Agreement pursuant to Section 10
thereof, or (iii) following the acquisition by a person or 13D Group (which is
not and does not include the Purchaser or any affiliate of the Purchaser) of
more than 20% of the Total Current Voting Power of the Company, the Purchaser
shall have the following registration rights:
(a) Company Registration.
--------------------
(i) Notice of the Purchaser. If at any time or from time to
-----------------------
time, the Company shall determine to register any Company Common Stock, for its
own account or for the account of others (other than the Purchaser), other than
a registration relating solely to employee benefit plans or a registration
relating solely to a Commission Rule 145 transaction or a registration on any
registration form which does not include substantially the same information as
would be required to be included in a registration statement covering the sale
of the Shares, the Company will:
1) Promptly give to the Purchaser written notice thereof
(which shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and
2) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Shares specified in a written request or requests,
made within ten (10) days after receipt of such written notice from the Company,
by the Purchaser.
(ii) Underwriting. If the registration of which the Company
------------
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Purchaser
-22-
as a part of the written notice given pursuant to Section 8.3(a)(i). In such
event the right of the Purchaser to registration pursuant to Section 8.3(a)
shall be conditioned upon the Purchaser's participation in such underwriting and
the inclusion of the Purchaser's Shares in the underwriting to the extent
provided herein. If the Purchaser proposes to distribute its Shares through such
underwriting, it shall (together with the Company) enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by the Company. Notwithstanding any other provision of this
Section 8.3, if the Company and the underwriter determine that marketing factors
require a limitation of the number of shares to be underwritten, the Company and
the underwriter may limit the number of Shares to be included in the
registration and underwriting to any amount that the Company and the underwriter
may determine. The Company shall so advise the Purchaser, and the number of
Shares that may be included in the registration and underwriting shall be
allocated to the Purchaser as the Company and underwriter may determine at the
time of filing the registration statement.
No Shares excluded from the underwriting by reason of the
marketing limitation shall be included in such registration. If the Purchaser
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Company and the underwriter.
(b) Form S-3. In addition to the rights contained in the foregoing
--------
provision of this Section 8.3(a), the Purchaser shall have the right to request
up to two (2) registrations on Form S-3 under this Section 8.3(b) (such requests
shall be in a writing signed by the Purchaser and shall state the number of
Shares to be disposed of and the intended method of disposition of such Shares
by the Purchaser), provided that the Company shall not be required to effect a
registration pursuant to this Section 8.3(b) unless the Purchaser proposes to
dispose of Shares which the Purchaser reasonably anticipates will have an
aggregate disposition price (before deduction of underwriting discounts and
expenses of sale) of at least five hundred thousand dollars ($500,000), provided
further that the Company shall not be required to effect a registration pursuant
to this Section 8.3(b) if at the time of the request for a registration on Form
S-3 the Company in good faith gives notice within thirty (30) days of such
request that it is engaged or has fixed plans to engage within sixty (60) days
of the time of the request in a firmly underwritten registered public offering
(but such notice may not be given more than once in any six (6) month period),
and provided further that the Company shall not be required to effect more than
one registration pursuant to this Section 8.3(b) in any twelve (12) month
period.
(c) Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with any registration pursuant to Section 8.3(a) or Section 8.3(b)
shall be borne by the Company. "Registration Expenses" shall mean all expenses
incurred by the Company in complying with Sections 8.3(a) and 8.3(b) hereof
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company, blue sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company and Selling Expenses (as
defined hereinafter). All Selling Expenses incurred in
-23-
connection with any registrations hereunder, shall be borne by the Purchaser.
"Selling Expenses" shall mean all underwriting discounts and selling commissions
applicable to the sale of the Shares.
(d) Registration Procedures. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to this Section
8.3, the Company will keep the Purchaser advised in writing as to the initiation
of each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(i) Keep such registration, qualification or compliance
effective for a period of one hundred twenty (120) days or until the Purchaser
has completed the distribution described in the registration statement relating
thereto, whichever first occurs; and
(ii) Furnish such number of prospectuses and other documents
incident thereto as the Purchaser from time to time may reasonably request.
(e) Indemnification.
---------------
(i) The Company will indemnify the Purchaser, each of its
officers, directors, partners and legal counsel, and each person controlling the
Purchaser within the meaning of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Section 8.3, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on (i) any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other similar document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made, or (ii) any violation by the Company of any federal, state
or common law rule or regulation applicable to the Company in connection with
any such registration, qualification or compliance, and will reimburse the
Purchaser, each of its officers and directors, and each person controlling the
Purchaser, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, as incurred, provided that the Company will not be liable
in any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission based upon
written information furnished to the Company by an instrument duly executed by
the Purchaser and stated to be specifically for use therein or furnished by the
Purchaser to the Company in response to a request by the Company stating
specifically that such information will be used by the Company therein.
(ii) The Purchaser will indemnify the Company, each of its
directors and officers, each legal counsel and independent accountant of the
Company, each person who controls the Company within the meaning of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other similar document, or any
omission (or alleged omission) to state therein a material
-24-
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made, and
will reimburse the Company, such directors, officers, persons, or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, as incurred, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by the Purchaser and
stated to be specifically for use therein or furnished by the Purchaser to the
Company in response to a request by the Company stating specifically that such
information will be used by the Company therein.
(iii) Each party entitled to indemnification under this Section
8.3(e) (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has received written notice of any claim as to which indemnity
may be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld). The Indemnified Party may participate in such defense
at such party's expense; provided, however, that the Indemnifying Party shall
bear the expense of such defense of the Indemnified Party if representation of
both parties by the same counsel would be inappropriate due to actual or
potential conflicts of interest. The failure of any Indemnified Party to give
notice within a reasonable period of time as provided herein shall relieve the
Indemnifying Party of its obligations under this Section 8.3(e) only to the
extent that such failure to give notice shall materially adversely prejudice the
Indemnifying Party in the defense of any such claim or any such litigation. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
(iv) Notwithstanding the foregoing, to the extent that the
provisions on indemnification contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
(v) The obligations of the Company and Purchaser under this
Section 8.3 shall survive the completion of any offering of the Shares in a
registration statement under this Section 8.3, and otherwise.
(f) Information by the Purchaser. The Purchaser shall furnish to the
----------------------------
Company such information regarding the Purchaser and the distribution proposed
by the Purchaser as the Company may request in writing and as shall be required
in connection with any registration, qualification or compliance referred to in
this Section 8.
-25-
(g) Delay of Registration. The Purchaser shall not have any right
---------------------
to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 8.3.
(h) Termination of Registration Rights. All rights and duties
----------------------------------
provided for in this Section 8.3 shall terminate on the earlier of (i) the date
five (5) years from the effective date of the registration rights provided in
this Section 8.3, or (ii) the date that the Purchaser is able to dispose of all
of the Shares in one three-month period pursuant to Rule 144.
8.4 The Purchaser's Right to Increase its Ownership Interest.
--------------------------------------------------------
(a) Number of Shares. At any time during the period commencing on
----------------
the date the Company receives premarket approval from the FDA for the Company's
Vibrant P and Vibrant D soundbridges and ending on the earlier of (i) November
30, 2004 or (ii) any termination by the Purchaser of the Marketing and
Distribution Agreement pursuant to Section 10 thereof, the Purchaser shall have
the right to purchase from the Company, and the Company shall issue and sell to
the Purchaser up to that number of shares of Company Common Stock ("Additional
Shares") which would, taking into account all Shares Beneficially Owned by the
Purchaser immediately after the acquisition of the Additional Shares, give the
Purchaser 20% of the Total Current Voting Power of the Company immediately
following the acquisition of the Additional Shares.
(b) Purchase Price. The purchase price for the Additional Shares
--------------
shall be equal to the average of the closing sales price of the Company Common
Stock as reported by Nasdaq for the forty (40) trading days immediately
preceding the receipt by the Company of written notice from the Purchaser of its
intent to exercise its rights pursuant to this Section 8.4 (an "Exercise
Notice"). In the event of any stock split or stock dividend occurring during the
period from the fortieth (40th) trading day prior to the receipt by the Company
of the Exercise Notice to the date of the closing of the purchase of the
Additional Shares, the purchase price shall be adjusted by a factor equal to the
inverse of the ratio of the stock split or stock dividend.
(c) Compliance. The issuance of the Additional Shares pursuant to
----------
this Section 8.4 shall be subject to compliance with all applicable laws,
including the HSR Act, and the requirements of Nasdaq and any applicable stock
exchange.
(d) Closing. The closing of the purchase of Additional Shares shall
-------
take place at the location and on the date stated in the Exercise Notice, which
in any case shall not be less than five business days after the date of the
Exercise Notice (the "Additional Closing Date"). At the closing, the Purchaser
shall pay the purchase price by wire transfer or certified check, and the
Company shall deliver a certificate representing the Additional Shares and an
opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company,
substantially in the form attached as Exhibit A, dated as of the Additional
Closing Date.
26
Section 9
Indemnification
---------------
9.1 Survival of Representations and Warranties. Notwithstanding any
------------------------------------------
right of Purchaser fully to investigate the affairs of the Company and
notwithstanding any knowledge of facts determined or determinable by Purchaser
pursuant to such investigation or right of investigation, the Purchaser has the
right to rely fully upon the representations, warranties, covenants and
agreements of the Company contained in this Agreement. All representations and
warranties here shall survive the execution and delivery of this Agreement after
the Closing and all covenants and agreements shall survive until performed or
waived.
9.2 Obligation to Indemnify.
-----------------------
(a) The Company agrees to indemnify, defend and hold harmless
the Purchaser and its Affiliates (and the directors, officers, employees,
successors and assigns of each of them) from and against all claims, actions,
suits, losses, liabilities, damages, deficiencies, judgments, settlements, costs
of investigation or other expenses (including but not limited to interest,
penalties and reasonable attorneys' fees and disbursements incurred in
connection with enforcing this indemnification or otherwise in connection with
any of the foregoing) (collectively, the "Losses") based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of any representation or
warranty or covenant of the Company contained in this Agreement.
(b) The Purchaser agrees to indemnify, defend and hold harmless
the Company and its Affiliates (and the directors, officers, employees,
successors and assigns of each of them) from and against all Losses based upon,
arising out of or otherwise in respect of any inaccuracy in or any breach of any
representation or warranty or covenant of the Purchaser contained in this
Agreement.
9.3 Notice and Opportunity to Defend.
--------------------------------
(a) In the event that any person entitled to indemnification
hereunder shall sustain or incur any Losses in respect of which indemnification
may be sought by such person pursuant to Section 9.2, the person seeking such
indemnification (the "Indemnitee") shall assert a claim for indemnification by
giving prompt written notice thereof (a "Claims Notice") which shall describe in
reasonable detail the facts and circumstances upon which the asserted claim for
indemnification is based, to the party providing indemnification (the
"Indemnitor") and shall thereafter keep the Indemnitor reasonably informed with
respect thereto; provided that failure of the Indemnitee to give the Indemnitor
prompt notice as provided herein shall not relieve the Indemnitor of any of its
obligations hereunder, except to the extent that the Indemnitor is materially
prejudiced by such failure. In case any claim, action, suit, hearing or other
proceeding (a "Claim") is brought against any Indemnitee, the Indemnitor shall
have the right to assume, conduct and control the defense, compromise or
settlement thereof, by written notice to the Indemnitee of its intention to do
so within
27
ten (10) days after receipt of the Claims Notice, with counsel reasonably
satisfactory to the Indemnitee, at the Indemnitor's own expense, and thereupon
to prosecute in the name and on behalf of the Indemnitee any available cross-
claims, counterclaims or third-party claims arising with respect to the Claim.
If the Indemnitor shall assume the defense of such Claim, it shall not settle
such Claim unless such settlement includes as an unconditional term thereof the
giving by the claimant or the plaintiff of a release of the Indemnitee,
satisfactory to the Indemnitee, from all liability with respect to such Claim,
nor shall the Indemnitor settle such Claim without the written consent of the
Indemnitee. As long as the Indemnitor is contesting any such Claim in good faith
and on a timely basis, the Indemnitee shall not pay or settle any such Claim.
Notwithstanding the assumption by the Indemnitor of the defense of any Claim as
provided in this Section 9.3(a) and without limiting the Indemnitor's right to
assume, conduct and control the defense, compromise or settlement thereof, the
Indemnitee shall be permitted to join in the defense of such Claim and to employ
counsel at its own expense, so long as such joining does not interfere with the
Indemnitor's right to conduct and control such matter.
(b) If the Indemnitor shall fail to notify the Indemnitee of its
desire to assume the defense of any such Claim within the prescribed ten (10)
day period set forth in Section 9.3(a), or shall notify the Indemnitee that it
will not assume the defense of any such Claim, or if the Indemnitee shall have
defenses available to it which conflict with or are different than the defenses
of the Indemnitor, then the Indemnitee may assume the defense of any such Claim
at the Indemnitor's expense, in which event it may do so in such manner as it
may deem appropriate, and the Indemnitor shall be bound by any determinations
made in any litigation or other proceeding with respect to such Claim or any
settlement thereof effected by the Indemnitee.
Section 10
Miscellaneous
-------------
10.1 Waivers and Amendments. Neither this Agreement nor any provisions
----------------------
hereof shall be waived, modified, changed or discharged or terminated except by
an instrument in writing signed by the party against whom any waiver,
modification, change, discharge or termination is sought.
10.2 Governing Law. This Agreement shall be governed in all respects by
-------------
and construed in accordance with the laws of the State of New York without any
regard to conflicts of laws principles.
10.3 Consent to Jurisdiction. Subject to the provisions of Section 10.4,
-----------------------
each of the Company and Purchaser hereby agrees to submit to the exclusive
jurisdiction of the U.S. Federal courts in the Southern District of the State of
New York, and consents that service of process with respect to all such courts
may be made by registered mail to such Person at the address of such Person set
forth in Section 10.9 below with respect to any disputes arising out of this
Agreement.
28
10.4 Release of Siemens Audiologische Technik and Siemens
----------------------------------------------------
Aktiengesellschaft. If the Purchaser assigns its rights and obligations under
------------------
this Agreement pursuant to Section 10.7, Siemens Corporation shall be subject to
Section 10.3 and so long as Siemens Corporation is subject to the jurisdiction
of the Federal, state or local courts of the United States with respect to
claims or disputes relating to this Agreement and the transactions contemplated
hereby, the Company for itself and its Affiliates hereby irrevocably and
unconditionally waive and release all rights and claims that it or any of them
may thereafter have that Purchaser, its parent company Siemens
Aktiengesellschaft, Berlin and Munich, a German corporation, is or has been at
any time subject to the jurisdiction of the Federal, state or local courts of
the United States arising out of claims or disputes relating to this Agreement,
and the transactions contemplated hereby.
10.5 Waiver of Jury Trial; Trial Costs. Each of the Company, for itself
---------------------------------
and its Affiliates, and Purchaser hereby irrevocably waives all right to trial
by jury in any action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to the actions of the Company and
Purchaser or its Affiliates pursuant to this Agreement in the negotiation,
administration, performance or enforcement thereof. The party in whose favor a
final judgment is rendered shall be entitled to reasonable costs and reasonable
attorneys' fees.
10.6 Survival. The representations, warranties, covenants and
--------
agreements made in this Agreement shall survive any investigation made by the
Company or the Purchaser, the Closing and the Second Closing.
10.7 Successors and Assigns. The provisions hereof shall inure to the
----------------------
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties to this Agreement. Purchaser may assign this
Agreement to any of its wholly-owned subsidiaries or Affiliates who have the
economic resources to fulfill Purchaser's obligations under this Agreement and
agree in writing to be bound by the terms hereof. Purchaser agrees to notify the
Company immediately upon the execution of any such assignment. Purchaser further
agrees to fulfill any obligations under this Agreement that any such assignee
fails to fulfill.
10.8 Entire Agreement. This Agreement, including all exhibits, hereto
----------------
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.
10.9 Notices, etc. All notices and other communications required or
------------
permitted under this Agreement shall be effective upon receipt and shall be in
writing and may be delivered in person, by telecopy, overnight delivery service
or registered or certified United States mail, addressed:
If to the Company: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Vice President Finance and Chief Financial Officer
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
29
With a courtesy copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser to: ▇▇. ▇▇▇▇ ▇▇▇▇
Siemens Audiologische Technik GmbH
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: 011-49-9131-308-204
with a courtesy copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Siemens Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and other communications shall be effective upon the earlier of
actual receipt thereof by the person to whom notice is directed or (i) in the
case of notices and communications sent by personal delivery or telecopy, one
business day after such notice or communication arrives at the applicable
address or was successfully sent to the applicable telecopy number, (ii) in the
case of notices and communications sent by overnight delivery service, at noon
(local time) on the second business day following the day such notice or
communication was sent, and (iii) in the case of notices and communications sent
by United States mail, seven days after such notice or communication shall have
been deposited in the United States mail.
10.10 Severability of this Agreement. If any provision of this Agreement
------------------------------
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
10.11 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
10.12 Further Assurances. Each party to this Agreement shall do and
------------------
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as the other party hereto may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
10.13 Expenses. Each of the Company and the Purchaser shall bear its own
--------
expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby.
10.14 Currency. All references to "dollars" or "$" in this Agreement
--------
shall be deemed to refer to United States dollars.
30
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
SYMPHONIX DEVICES, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------
Title: President & CEO
-------------------------
"PURCHASER"
SIEMENS AUDIOLOGISCHE TECHNIK GmbH
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Title: Managing Director
-------------------------
By: /s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------
Title: Managing Director
-------------------------
EXHIBITS:
1. Exhibit A: Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
2. Disclosure Schedule
EXHIBIT A
FORM OF OPINION OF ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
SYMPHONIX DEVICES, INC.
DISCLOSURE SCHEDULE