STOCK AND WARRANT PUT AGREEMENT
THIS STOCK AND WARRANT PUT AGREEMENT (this "Agreement") dated as of May 20,
1996 between Cardiopulmonary Corp. (the "Company"), a corporation organized
under the laws of the State of Delaware, and Connecticut Innovations,
Incorporated (the "Holder").
WHEREAS, the Holder is today purchasing from the Company (A) One Hundred
Thousand (100,000) shares of the Company's common stock (the "Common Stock"),
$0.01 par value per share (together with any securities issued or issuable
directly or indirectly in respect of such shares of Common Stock in payment of a
dividend or in connection with a stock split, recapitalization or similar event,
the "Shares") and (B) a Warrant pursuant to which the Holder is given the right
to purchase certain shares of the Common Stock (together with any warrant or
warrants issued upon any replacement, exchange or transfer of such Warrant, the
"Warrant"), in each case pursuant to a Stock Purchase Agreement of even date
herewith between the Company and the Holder (the "Purchase Agreement"); and
WHEREAS, the Holder has required, as a condition to its purchase of the
Shares and the Warrant pursuant to the Purchase Agreement, that the Company make
certain covenants relating to maintaining its operations in the State of
Connecticut and that the Holder shall have the right to sell the Shares, the
Warrant Shares and the Warrant to the Company if the Company fails to comply
with such covenants;
NOW THEREFORE, each of the parties hereto, in consideration of the mutual
covenants set forth herein, agrees as follows:
SECTION 1. DEFINITIONS For all purposes of this Agreement, the following
terms shall have the meanings set forth below or in the Section of this
Agreement following such term.
CLOSING DATE - shall mean any Put Date.
COMMON STOCK FAIR MARKET VALUE - at any date of one share of Common Stock
shall be deemed the average of the daily closing prices of the Common Stock for
the 30 consecutive business days ending no more than 15 business days before the
day in question (as adjusted for any stock dividend, split, combination or
reclassification that took effect during such 30 business day period). The
closing price for each day shall be the last reported sales price regular way
or, in case no such reported sales took place on such day, the average of the
last reported bid and asked prices regular way, in either way, in either case on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading (or if the Common Stock is not at the time listed or
admitted for trading on any such exchange, then such price as shall be equal to
the average of the last reported bid and asked prices, as reported by the
National Association of Securities Dealers Automated Quotations System
("Nasdaq") on
such day, or if, on any day in question, the security shall not be quoted on the
Nasdaq, then such price shall be equal to the average of the last reported bid
and asked prices on such day as reported by The National Quotation Bureau
Incorporated or any similar reputable quotation and reporting service, if such
quotation is not reported by The National Quotation Bureau Incorporated);
provided, however, that if the Common Stock is not traded in such manner that
the quotations referred to herein are available for the period required
hereunder, the Common Stock Fair Market Value shall be determined in good faith
by the Board of Directors of the Company or, if such determination cannot be
made or is reasonably objected to by the Holder within twenty (20) days of its
notification thereof, by a nationally recognized independent investment banking
firm selected by the Board of Directors of the Company (or if such selection
cannot be made or is reasonably objected to by the Holder within (20) days of
its notification thereof, by a nationally recognized independent investment
banking firm selected by the American Arbitration Association in accordance with
its rules).
IPO - shall mean the first underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
covering the offering and sale of Common Stock for the account of the Company on
a firm commitment basis.
NOTICE OF PUT - Section 3.2.
ORIGINAL ISSUE PRICE - shall mean $5.00 per share of Common Stock, as
adjusted to reflect stock dividends, stock splits and stock capitalizations or
recapitalizations.
PUT - Section 3. The term "Put", when used as a verb, shall also mean the
Holder's exercise of the Put.
PUT DATE - Section 4.
PUT PRICE - shall equal the greater of (i) the Common Stock Fair Market
Value of the Shares and Warrant Shares made subject to a Put, plus the Warrant
Fair Market Value, and (ii) an amount which yields a return equal to the
aggregate amount of the Original Issue Price, plus an amount calculated to yield
to the Holder the Required Rate of Return on such Original Issue Price.
REQUIRED RATE OF RETURN - shall equal twenty-five percent (25%) compounded
annually.
TERMINATION DATE - shall mean the earlier of (i) the date on which the
Holder no longer holds any Common Stock, Warrants or Warrant Shares, and (ii)
the first date after an IPO and the expiration or termination of the term of any
related "lock-up" agreement applicable to the Shares or the Warrant Shares, on
which all Shares and Warrant Shares then held by the Holder may be offered and
sold by the Holder to any number of offerees and purchasers pursuant to (A) Rule
144(k) under the
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Securities Act of 1933 (or any similar rule hereafter adopted by the Securities
and Exchange Commission), or (B) an effective registration statement filed under
the Securities Act of 1933.
WARRANT FAIR MARKET VALUE - at any date shall be an amount equal to the
difference the Common Stock Fair Market Value and the Warrant Price (as defined
in the Warrant and from time to time adjusted in accordance with the terms of
the Warrant), in each case with respect to all shares of Common Stock then
issuable upon exercise of the Warrant.
WARRANT SHARES - shares of Common Stock held by the Holder and issued
upon the exercise of the Warrant, together with any securities issued or
issuable directly or indirectly in respect of such shares of Common Stock in
payment of a dividend or in connection with a stock split, recapitalization or
similar event.
SECTION 2. MAINTENANCE OF CONNECTICUT PRESENCE. The Company agrees that at all
times prior to the Termination Date it will maintain a "Connecticut Presence". A
Connecticut Presence shall mean (a) maintaining the Company's principal place of
business (including its executive offices and officers) in the State of
Connecticut, (b) basing a majority of its employees and those of its
subsidiaries in the State of Connecticut, and (c) conducting a majority of its
operations and those of its subsidiaries, in the State of Connecticut. It shall
not constitute a violation of this covenant for the Company to purchase goods
and services, participate in clinical trails of its products, sell its products
and services or engage distributors outside the State of Connecticut.
SECTION 3. RIGHT TO PUT COMMON STOCK
3.1 RIGHT TO PUT. If the Company shall fail to maintain a Connecticut
Presence at any time prior to the Termination Date, The Holder shall have the
right to sell to the Company, and the Company agrees to purchase from the
Holder, all, but not less than all, of the Shares, the Warrant Shares and the
Warrant for the Put Price and on the other terms and conditions herein set forth
(the "Put").
3.2 METHOD OF EXERCISE. On the terms and conditions herein set forth, the
Holder may exercise its rights hereunder to sell to the Company its Shares,
Warrant Shares and Warrant by delivering to the Company, at the address referred
to in Section 17 of the Purchase Agreement, a notice of Put (a "Notice of Put")
in the form attached hereto as Annex A.
SECTION 4. PUT CLOSING
(a) The closing (the "Put Closing") of any purchase and sale of Shares,
Warrant Shares and Warrant pursuant to Section 3 hereof shall be held
on the date (the "Put Date") which is the thirtieth (30th) business
day after delivery of the Notice of Put.
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(b) At the Put Closing, the Holder will deliver to the Company
certificates evidencing the Shares and the Warrant Shares made the
subject of the Notice to Put, together with the Warrant and the
Company will deliver to the Holder the Put Price for the Shares, the
Warrant Shares and the Warrant made the subject of the Notice of Put
(in cash, certified or bank check, or by wire transfer).
SECTION 5. NOTICES. All communications under this Agreement shall be delivered
in the manner set forth in the Purchase Agreement.
SECTION 6. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Connecticut.
SECTION 7. HEADINGS. The section headings appear as a matter of convenience only
and do not constitute a part of this Agreement and shall not affect the
construction hereof.
SECTION 8. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of,
and be binding upon, the successors and assigns of each of the parties hereto;
provided that the Company may not assign its rights or delegate its obligations
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf this 20th day of May, 1996.
CARDIOPULMONARY CORP.
By: /s/ JAMES W. BIONDI
---------------------------------------
Title: President
CONNECTICUT INNOVATIONS,
INCORPORATED
By: /s/ VICTOR R. BUDNICK
---------------------------------------
Title: President and Executive Director
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ANNEX A
NOTICE OF PUT
1. In accordance with a Stock and Warrant Put Agreement (the "Put Agreement")
dated as of May ___, 1996, between the undersigned (the "Holder") and
Cardiopulmonary Corp. (the "Company"), the undersigned hereby exercises its
right to sell, and does hereby sell upon receipt of the Put Price as
defined in the Put Agreement, _______________________________
(___________________) shares of Common Stock and a Warrant, dated May __,
1996 to purchase shares of Common Stock, in each case issued by the Company
in the name of the undersigned.
2. Attached hereto is a certificate or certificates evidence said shares of
Common Stock and the Warrant.
3. The Put Price is to be paid in the manner set forth in the Put Agreement.
4. All capitalized terms used herein and not otherwise defined herein shall
have the respective meanings assigned to them in the Put Agreement.
5. Other Instructions:
CONNECTICUT INNOVATIONS,
INCORPORATED
By:______________________________
Title:___________________________
Dated:___________________________
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