EXHIBIT 4.6
VASCULAR SOLUTIONS, INC.
PUT & OPTION AGREEMENT
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THIS PUT & OPTION AGREEMENT (this "Agreement") is made and entered into as
of December 9, 1998, by and among VASCULAR SOLUTIONS, INC., a Minnesota
corporation (the "Company"), STEPHENS VASCULAR PREFERRED, LLC, an Arkansas
limited liability company ("Preferred, LLC") and STEPHENS VASCULAR OPTIONS, LLC,
an Arkansas limited liability company ("Options, LLC") (each of Preferred, LLC
and Options, LLC are referred to individually as the "Investor" and collectively
as the "Investors").
RECITALS
A. Upon the terms and subject to the conditions set forth in that certain
Series B Preferred Stock Purchase Agreement dated as of the date hereof by and
between the Company, Preferred, LLC and certain other investors (the "Purchase
Agreement"), Preferred, LLC has purchased shares of the Series B Preferred Stock
of the Company ("Series B Stock").
B. The Company is desirous of having access to additional capital, and
Preferred, LLC and Options, LLC are willing to make such access available in
exchange for the right to acquire additional interests in the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
of the parties hereto, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Definitions. A glossary of the definitions of the capitalized terms
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used in this Agreement is set forth in Appendix A which is attached hereto and
incorporated therein.
2. Obligation of Investor to Purchase Common Stock.
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(a) At any time after PMA Submission, the Company shall have the right
to sell to Preferred, LLC, and Preferred, LLC hereby agrees to purchase, subject
to the terms and conditions herein, up to $3,000,000 of Common Stock. The
Company may exercise its rights under this Section 2(a) one or more times,
provided that Preferred, LLC's aggregate obligation under this Section 2(a)
shall not exceed $3,000,000 of Common Stock. If at the time that the Company
gives the notice specified in the following paragraph PMA Approval has occurred,
the issue price of the Common Stock that Preferred, LLC is obligated to buy
pursuant to such notice will be $6.00 per share; otherwise the issue price will
be $5.00 per share.
(b) The Company shall exercise its rights under Section 2(a) by giving
notice to Preferred, LLC setting forth (i) the dollar amount of Common Stock as
to which it is exercising its rights, (ii) the number of shares of Common Stock
that such amount represents in accordance with Section 2(a) above, and (iii) the
closing date for such purchase which shall not be less than twenty (20) days
after the effective date of such notice.
(c) The Company's right to give the notice in Section 2(b) shall
expire upon the earlier of (i) December 31, 2000 and (ii) the effective date of
a registration statement for a public offering of securities of the Company that
satisfies the requirements of Section 4(b) of the Series B Certificate.
(d) If at any time prior to December 31, 2000, the Company incurs
Indebtedness, the number of shares of Common Stock that Preferred, LLC shall be
obligated to purchase under Section 2(a) above shall be reduced by an amount
(rounded to the nearest whole number) equal to the principal amount of such
Indebtedness divided by $4.50.
3. Right of Investor to Purchase Common Stock.
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(a) At any time after PMA Submission, Options, LLC shall have the
right to buy from the Company, and the Company hereby agrees to sell, subject to
the terms and conditions herein, up to $3,000,000 of Common Stock. Options, LLC
may exercise its rights under this Section 3(a) one or more times, provided that
the Company's aggregate obligation under this Section 3(a) shall not exceed
$3,000,000 of Common Stock. If at the time that Options, LLC gives the notice
specified in the following paragraph PMA Approval has occurred, the issue price
of the Common Stock that the Company is obligated to sell pursuant to such
notice will be $6.00 per share; otherwise the issue price will be $5.00 per
share.
(b) Options, LLC shall exercise its rights under Section 3(a) by
giving notice to the Company setting forth (i) the dollar amount of Common Stock
as to which it is exercising its rights, (ii) the number of shares of Common
Stock that such amount represents in accordance with Section 3(a) above, and
(iii) the closing date for such purchase which shall not be more than twenty
(20) days after the effective date of such notice.
(c) Options, LLC's right to give the notice in Section 3(b) shall
expire upon the earlier of (i) December 31, 2000 and (ii) the effective date of
a registration statement for a public offering of securities of the Company that
satisfies the requirements of Section 4(b) of the Series B Certificate.
4. Additional Right of Investor to Purchase Common Stock.
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(a) Options, LLC shall have the right to buy from the Company, and the
Company hereby agrees to sell, subject to the terms and conditions herein, up to
$2,000,000 of Common Stock. Options, LLC may exercise its rights under this
Section 4(a) one or more times, provided that Options, LLC's aggregate rights
under this Section 4(a) shall not exceed $2,000,000 of Common Stock. If at the
time that Options, LLC gives the notice specified in the following paragraph PMA
Approval has occurred, the issue price of the Common Stock that the Company is
obligated to sell pursuant to such notice will be $8.00 per share; otherwise the
issue price will be $7.00 per share.
(b) Options, LLC shall exercise its rights under Section 4(a) by
giving notice to the Company setting forth (i) the dollar amount of Common Stock
as to which it is exercising its
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rights, (ii) the number of shares of Common Stock that such amount represents in
accordance with Section 4(a) above, and (iii) the closing date for such purchase
which shall not be more than twenty (20) days after the effective date of such
notice.
(c) Options, LLC's right to give the notice in Section 4(b) shall
expire on December 31, 2000.
(d) Options, LLC shall have the right (the "Conversion Right") to
require the Company to convert such Investor's right under Subsection 4(a)
hereof (the "Option Right") at any time prior to December 31, 2000 into shares
of Common Stock as provided for in this Subsection (d). Upon exercise of the
Conversion Right, the Company shall deliver to Options, LLC (without payment by
Options, LLC of any issue price) that number of shares of Common Stock equal to
the quotient obtained by dividing (i) the value of the Option Right at the time
the Conversion Right is exercised (determined by subtracting the aggregate issue
price for the shares subject to the Option Right in effect immediately prior to
the exercise of the Conversion Right from the aggregate Fair Market Value for
the shares subject to the Option Right immediately prior to the exercise of the
Conversion Right) by (ii) the Fair Market Value of one share of Common Stock
immediately prior to the exercise of the Conversion Right. The Conversion Right
may be exercised by the Investor, at any time or from time to time, prior to its
expiration, by giving notice to the Company specifying (x) the total number of
shares of stock the Investor will purchase pursuant to such conversion and (y) a
date not more than 20 days from the date of the conversion notice for the
closing of such purchase.
5. Mechanics of Stock Sales.
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(a) Place, Time and Date. The closing of any sale and purchase of
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shares of Common Stock pursuant to this Agreement (a "Closing") shall take place
at the offices of the Company on the date that is (a) set forth in the notice of
exercise pursuant to Section 2(b), 3(b), or 4(b), whichever is applicable, or
(b) such other place, time, and date as the parties may agree.
(b) Closing Items. At the Closing, the Company shall deliver to the
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Investor, as the case may be, certificates representing the Common Stock, and
the Investor, as the case may be, shall deliver to the Company the aggregate
purchase price of such shares being purchased by the Investor, as the case may
be, by wire transfer of same-day funds or cashier's or bank-certified check
payable to the order of the Company.
6. Independent Agreements. The right of the Company to sell under Section
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2 and the right of Options, LLC to buy under Section 3, and the right of
Options, LLC to buy under Section 4, are independent, and the exercise, in full
or in part, or the non-exercise by a Party of its rights under any of the
foregoing Sections shall not have any impact upon any Party's rights under any
other Section.
7. Covenants re PMA Submission and Approval. The Company shall give the
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Investors notice of the occurrence of PMA Submission or PMA Approval within
three (3) business days after each such occurrence. The Company will update the
directors as to the progress of the Company's
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PMA Submission to the United States Food & Drug Administration at each meeting
of the Board and will respond to inquiries from members of the Board on this
topic between meetings.
8. Adjustment for Stock Splits, Dividends, and Combinations. The number
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and type of shares issuable by the Company upon exercise of any Party's rights
hereunder shall be equitably adjusted in the event of any stock split,
combination, stock dividend or recapitalization, or conversion or exchange for
other securities or property as a result of a merger, sale, liquidation or
reorganization of the Company, or other similar change in capital structure of
the Company or as a result of any other disposition or conversion affecting the
Common Stock occurring during the period from the date of this Agreement to the
applicable Closing.
9. Representations and Warranties of Investor. The Investors each
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represent and warrant to the Company, which representations and warranties shall
be true in all material respects on and as of the date of any Closing as though
such representations and warranties had been made as of the date of such
Closing, as follows:
(a) Authorization. This Agreement, when executed and delivered by the
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Investors, will constitute the valid and legally binding obligations of the
Investors, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors' fights generally, and as limited by laws relating to the availability
of a specific performance, injunctive relief or other equitable remedies.
(b) Restricted Securities. The Investors understand that the
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Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of each Investor's representations as
expressed herein. The Investors understand that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Investors must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available.
(c) No Public Market. The Investors understand that no public market
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now exists for any of the securities issued by the Company and that the Company
has made no assurances that a public market will ever exist for the Securities.
(d) Legends. The Investors understand that the Securities may bear
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one or both of the following legends:
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE TRANSFERRED WITHOUT (I) THE OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER OF SUCH SECURITIES THAT SUCH
TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION OR
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QUALIFICATION UNDER THE FEDERAL SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS; OR (II) SUCH
REGISTRATION OR QUALIFICATION."
(ii) Any legend required by the blue sky laws of any
state to the extent such laws are applicable to the shares
represented by the certificate so legended.
(e) Purchase Entirely for Own Account.
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(i) This Agreement is made with the Investors in reliance upon
each Investors's representation to the Company, which by each Investors's
execution of this Agreement, each Investor hereby confirms, that the Securities
to be acquired by the Investors will be acquired for investment for each
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that each Investor has no
present intention of selling, granting any participation in or otherwise
distributing the same. By executing this Agreement, the Investors further
represent that each Investor does not presently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, any of the Securities.
Each Investor represents that it has full power and authority to enter into this
Agreement.
(ii) Each Investor hereby represents and warrants that (A) it is a
limited liability company formed under the laws of the State of Arkansas and
that (B) its members consist of not more than 30 individuals and trusts each of
whom is (x) a resident of or domiciled in the State of Arkansas, (y) an
accredited investor as defined in Rule 501(a) of Regulation D promulgated under
the Securities Act and (z) affiliated with Stephens, Inc.
(f) Disclosure of Information. The Investors have had an opportunity
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to discuss the Company's business, management, financial affairs and the terms
and conditions of the offering of the Securities with the Company's management
and have had an opportunity to review the Company's facilities. The Investors
understand that such discussions, as well as the Company's business plan and any
other written information issued by the Company, were intended to describe the
aspects of the Company's business which the Company believes to be material.
10. Representations and Warranties of Company. The Company represents and
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warrants to the Investors, which representations and warranties shall be true in
all material respects on and as of the date of any Closing as though such
representations and warranties had been made as of the date of such Closing, as
follows:
(a) Organization, Good Standing and Qualification. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota and has all requisite corporate power and authority to
carry on its business.
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(b) Authorization. All corporate action on the part of the Company,
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its officers, directors and stockholders necessary for the authorization,
execution, and delivery of this Agreement, the performance of all obligations of
the Company hereunder and the authorization, issuance and delivery of shares of
Common Stock pursuant to the terms hereof has been taken or will be taken prior
to Closing, and this Agreement, when executed and delivered by the Company,
shall constitute a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and other laws of general application affecting enforcement of
creditors' rights generally, and as limited by laws relating to the availability
of specific performance, injunctive relief, or other equitable remedies.
(c) Valid Issuance of Securities. The Common Stock that will be
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issued to the Investors hereunder, when issued, sold and delivered in accordance
with the terms hereof for the consideration expressed herein, will be duly and
validly issued, fully paid, and nonassessable and free of restrictions on
transfer other than restrictions on transfer under this Agreement and applicable
state and federal securities laws. Based in part upon the representations of
the Investors in this Agreement, the Stock will be issued in compliance with all
applicable federal and state securities laws.
11. Notices.
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(a) Method of Notice. Any notice required to be given pursuant to
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this Agreement shall be deemed to have been given (i) on the date of delivery or
transmission thereof if given in person or by facsimile transmission, (ii) one
day after dispatch if sent by overnight courier, receipt of which has been
verified, or (iii) three days after deposit in the official government mail by
registered or certified mail, postage prepaid, addressed to the party being
notified at the address specified below or at such other address of which the
addressee may notify the other party in writing.
(b) Addresses. Until otherwise notified, notices shall be directed as
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follows:
If to the Company:
Vascular Solutions, Inc.
2495 Xenium Lane North
Minneapolis, MN 55441
Attention: Chief Executive Officer
With a copy to:
Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, MN 55402
Attention: Timothy S. Hearn
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If to the Investor:
Stephens, Inc.
111 Center Street
Suite 2500
Little Rock, AR 72201
Attention: Jackson Farrow
12. Miscellaneous.
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(a) Survival of Warranties. The warranties, representations and
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covenants contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing.
(b) Entire Agreement. This Agreement contains the entire agreement
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and understanding between the parties with respect to the subject matter hereof
and supersedes all prior understandings and representations.
(c) Specific Performance. The Investors expressly agree that the
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Company will be irreparably damaged if this Agreement is not specifically
enforced. Upon a breach or threatened breach of the terms, covenants or
conditions of this Agreement by the Investors, the Company, in addition to all
other remedies, shall be entitled to a temporary or permanent injunction,
without showing any actual damage and without posting bond, and a decree for
specific performance, in accordance with the provisions of this Agreement.
(d) Applicable Law. This Agreement shall for all purposes be governed
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by and construed in accordance with the laws of Minnesota, without regard to the
choice of law provisions thereof.
(e) Successors and Assigns. Except as otherwise set forth herein, the
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provisions of this Agreement shall inure to the benefit of and be binding upon
the parties hereto, their successors and assigns.
(f) Amendment. Except as otherwise provided herein, no amendment,
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waiver, interpretation, alteration or modification of any provision of this
Agreement shall be binding unless in writing and signed by the Company and the
Investors.
(g) Waivers. Any failure of either party hereto to insist upon or
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enforce strict performance of any of the provisions of this Agreement or to
exercise any rights for remedies under this Agreement shall not be interpreted
or construed as a waiver or relinquishment to any extent of such party's right
to assert or rely upon any such provision, right or remedy in that or any other
instance.
(h) Headings. The headings of the sections of this Agreement are for
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convenience of reference only and shall not by themselves determine the
interpretation of this Agreement.
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(i) Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall constitute an original, but all of which
together shall constitute one and the same instrument.
(j) Severability. If any provision of this Agreement shall be held to
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be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
[Signature Pages Follow]
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IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written.
VASCULAR SOLUTIONS, INC.
By: /s/ Howard C. Root, CEO
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Howard C. Root, Chief Executive Officer
STEPHENS VASCULAR PREFERRED, LLC
By: /s/ Jackson Farrow, Jr.
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Its Vice President, Stephens Group, Inc.,
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Manager
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STEPHENS VASCULAR OPTIONS, LLC
By: /s/ Jackson Farrow, Jr.
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Its Vice President, Stephens Group, Inc.,
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Manager
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APPENDIX A
"Closing" shall have the meaning ascribed to it in (S)5(a).
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"Common Stock" shall mean the $.01 par value common stock of the Company.
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"Company" shall have the meaning ascribed to it in the preface.
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"Fair Market Value" shall mean, with respect to the Company's Common Stock,
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as of any date:
(i) if the Common Stock is listed or admitted to unlisted trading
privileges on any national securities exchange or is not so listed or admitted
but transactions in the Common Stock are reported on the Nasdaq National Market
System, the reported closing price of the Common Stock on such exchange or by
the Nasdaq National Market System as of such date (or, if no shares were traded
on such day, as of the next proceeding day on which there was such a trade); or
(ii) if the Common Stock is not so listed or admitted to unlisted
trading privileges or reported on the Nasdaq National Market System, and bid and
asked prices therefor in the over-the-counter market are reported by the Nasdaq
system or National Quotation Bureau, Inc. (or comparable report service), the
mean of the closing bid an asked prices as of such date, as so reported by the
Nasdaq System, or, if not so reported thereon, as reported by National Quotation
Bureau, Inc. (or such comparable reporting service); or
(iii) if the Common Stock is not so listed or admitted to unlisted
trading privileges, or reported on the Nasdaq National Market System, and such
bid and asked prices are not so reported by the Nasdaq system or National
Quotation Bureau, Inc. (or any comparable reporting service), such price as the
Company's Board of Directors determines in good faith in the exercise of its
reasonable discretion.
"Indebtedness" shall mean, without duplication, (i) obligations for
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borrowed money, (ii) obligations evidenced by bonds, debentures, notes, or
similar instruments, (iii) any indebtedness on which interest charges are
customarily paid or accrued, (iv) any guarantees, and (v) any obligations
secured by lien on any property or asset of the Company regardless of whether
the indebtedness secured thereby has been assumed by the Company, but shall not
include (A) any obligations under capital leases or with respect to deferred
purchase price for assets which are incurred in the ordinary course of business,
or (B) a line or lines of credit in the aggregate principal amount of up to $3.0
million.
"Investors" shall have the meaning ascribed to it in the preface.
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"Party" shall mean either the Company or the Investor.
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"PMA Approval" shall mean receipt by the Company of a written communication
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from the United States Food & Drug Administration granting approval to begin
commercial distribution of the Vascular Solutions Duett sealing device in the
United States.
"PMA Submission" shall mean written evidence of submission of all required
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modules of the Company's premarket approval application to the United States
Food & Drug Administration for the approval to begin commercial distribution of
the Vascular Solutions Duett sealing device in the United States.
"Purchase Agreement" shall have the meaning ascribed to it in the recitals.
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"Securities" shall mean any shares of Common Stock acquired by Investors
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pursuant to this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Series B Certificate" shall mean the Certificate of Designation of Series
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B Preferred Stock of the Company.
"Series B Stock" shall have the meaning ascribed to it in the recitals.
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