NOVARTIS PHARMA AG
OSIRIS THERAPEUTICS, INC.
STOCK PURCHASE AGREEMENT
June 16, 1997
TABLE OF CONTENTS
Page
1. Purchase and Sale of Common Stock 1
1.1 Authorization 1
1.2 Sale of Common Stock 1
1.3 Closing 1
2. Closing Date, Delivery. 2
2.1 Closing Date 2
2.2 Delivery 2
2.3 Further Assurances 2
3. Representations, Warranties and Covenants of the Company. 2
3.1 Organization, Good Standing and Qualification 2
3.2 Capitalization and Voting Rights 2
3.3 Subsidiaries 3
3.4 Authorization 4
3.5 Valid Issuance of Shares 4
3.6 Liabilities 5
3.7 Governmental Consents 5
3.8 Litigation 5
3.9 Employees and Consultants 5
3.10 Patents and Trademarks 6
3.11 Compliance with Other Instruments 6
3.12 Agreements; Action 6
3.13 Registration Rights 7
3.14 Title to Property and Assets 7
3.15 Financial Statements 8
3.16 Employee Benefit Plans 8
3.17 Tax Returns, Payments and Elections 10
3.18 Insurance 10
3.19 Labor Agreements and Actions 10
3.20 Real Property Holding Corporation 10
3.21 Offering 10
3.22 Environmental and Safety Laws 10
3.23 Licenses and Other Rights; Compliance with Laws 11
3.24 Board of Directors 12
3.25 Reliance 13
4. Representations, Warranties and Covenants of the Investor 13
4.1 Authorization, Governmental Consents and Compliance with Other
Instruments 13
4.2 Purchase Entirely for Own Account 13
4.3 Disclosure of Information 14
4.4 Investment Experience and Accredited Investor Status 14
4.5 Restricted Securities 14
4.6 Further Limitations on Disposition 14
4.7 Legends 15
5. Conditions to Closing of Investor. 15
5.1 Representations and Warranties Correct 15
5.2 Covenants 16
5.3 Compliance Certificate 16
5.4 Legal Opinion 16
5.5 Certification of Resolutions and Officers 16
5.6 Certification of No Material Adverse Change 16
5.7 Research Collaboration and License Agreement 17
6. Conditions to Closing of the Company. 17
6.1 Representations and Warranties Correct 17
6.2 Covenants 17
6.3 Compliance Certificate 17
6.4 Receipt of Purchase Price 17
6.5 Legal Opinion 17
6.6 Research Collaboration and License Agreement 18
7. Mutual Conditions to Closing. 18
7.1 Qualifications 18
7.2 Absence of Litigation 18
7.3 Waiver by Series C Stockholders 18
8. Standstill Agreement. 18
9. Additional Covenants and Agreements. 19
9.1 Delivery of Financial Statements 19
9.2 Assignment of Rights to Financial Information 20
9.3 Termination of Covenants 20
9.4 Right of Osiris to Purchase Shares 20
9.5 Further Restriction on Sale of Shares 21
9.6 Inspection of Properties 22
9.7 Equity Purchases from the Company 22
9.8 Exchange of the Shares for Series F Convertible Preferred
Stock 24
10. Registration Rights; Compliance with the Act. 25
10.1 Definitions 25
10.2 Form S-3 Registration 25
10.3 Company Registration 27
10.4 Underwriting Requirements 28
10.5 Obligations of the Company 28
10.6 Furnish Information 29
10.7 Delay of Registration 29
10.8 Indemnification 29
10.9 Reports Under Securities Exchange Act of 1934 31
10.10 Amendment of Registration Rights 32
11. Miscellaneous. 33
11.1 Survival of Warranties 33
11.2 Remedies 33
11.3 Successors and Assigns 34
11.4 Entire Agreement 34
11.5 Governing Law 34
11.6 Counterparts 34
11.7 Titles and Subtitles 34
11.8 Nouns and Pronouns 34
11.9 Notices 34
11.10 Finder's Fee 36
11.11 Expenses 36
11.12 Amendments and Waivers 36
11.13 Severability 36
11.14 Confidentiality and Publicity 36
11.15 Termination 37
EXHIBIT A 38
SCHEDULE OF EXCEPTIONS 38
EXHIBIT B 44
Compliance Certificate of Osiris 44
EXHIBIT C 45
Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. 45
EXHIBIT D 46
Research Collaboration and License Agreement 46
EXHIBIT E 47
Compliance Certificate of Novartis 47
EXHIBIT F 48
Opinion of Counsel to Novartis 48
EXHIBIT G 49
Certificate of Designation 49
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 16th day of
June, 1997, by and between Novartis Pharma AG ("Novartis" or the "Investor"),
a corporation organized under the laws of Switzerland with its principal place
of business at ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇-▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ and Osiris
Therapeutics, Inc. ("Osiris" or the "Company"), a Delaware corporation with
its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇.▇.▇.
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Common Stock.
1.1 Authorization. The Company will authorize the sale and issuance of
1,176,500 shares of its $0.001 par value Common Stock (the "Common Stock")
having the rights and privileges set forth in the Company's Restated
Certificate of Incorporation (the "Restated Certificate").
1.2 Sale of Common Stock.
(a) Subject to the terms and conditions hereof, the Company will issue
and sell to the Investor, and the Investor will buy from the Company, at the
Closing (as defined below), 1,176,500 shares of Common Stock (the "Shares")
for a purchase price of $8.50 per share in cash in U.S. dollars, or
$10,000,250 in the aggregate in cash in U.S. dollars (the "Aggregate Purchase
Price"). The parties agree that Novartis may assign the right and obligation
to purchase the Shares for the Aggregate Purchase Price, and all of its other
rights and obligations under this Agreement, to an "Affiliate" as defined in
the Research Collaboration and License Agreement of even date, in which case
the term "Investor" shall refer herein to such Affiliate (provided that such
assignment shall be ineffective to the extent that such Affiliate fails to
perform any such obligation, in which event Novartis shall continue to be
deemed the Investor hereunder).
(b) In the event of any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the
Company prior to the Closing which affects or relates to the Common Stock, the
number of Shares and the purchase price per Share (but not the Aggregate
Purchase Price) shall be adjusted proportionately.
1.3 Closing. The closing of purchase and sale of the Shares (the
"Closing") shall occur at 11:00 a.m. on the Closing Date (as defined in
Section 2.1 herein) at the Company's offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
2. Closing Date, Delivery.
2.1 Closing Date. The Closing shall be held on June 16, 1997 or such
other date as the Company and the Investor may agree upon (the "Closing Date").
2.2 Delivery. At the Closing, the Company will deliver to the Investor a
stock certificate, registered in the Investor's name, representing the Shares,
against payment of the Aggregate Purchase Price by certified or cashier's
check payable to the Company, or by wire transfer of same day funds per the
Company's wiring instructions.
2.3 Further Assurances. The Company and the Investor hereby covenant and
agree, without the necessity of any further consideration, to execute,
acknowledge and deliver any and all such other documents and take any such
other action as may be reasonably necessary to carry out the intent and
purposes of this Agreement.
3. Representations, Warranties and Covenants of the Company. The Company
hereby represents and warrants to the Investor as follows:
3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite corporate power
and corporate authority to own and operate its properties and assets, to
carry on its business as now conducted and as proposed to be conducted, to
enter into this Agreement, to sell the Shares and to carry out the other
transactions contemplated hereunder. The Company and each of its subsidiaries
is qualified to transact business and is in good standing in each jurisdiction
in which the failure to qualify would have a material adverse effect on its
business, properties or financial condition (a "Material Adverse Effect").
The Company has delivered to the Investor true, correct and complete copies
of the Restated Certificate, and Bylaws in effect on the date hereof.
3.2 Capitalization and Voting Rights. The authorized capital of the
Company as of the date hereof consists of:
(a) 20,000,000 shares of $.001 par value Preferred Stock ("Preferred
Stock"), of which 2,122,000 shares have been designated Series A Convertible
Preferred Stock, 750,000 shares have been designated Series B Convertible
Preferred Stock, 740,000 shares have been designated Series C Convertible
Preferred Stock and Series C-1 Convertible Preferred Stock, 3,600,000 shares
have been designated Series D Convertible Preferred Stock, 2,788,000 shares
have been designated Series E Convertible Preferred Stock and 1,176,500 shares
have been designated Series F Convertible Preferred Stock, of which 2,068,625
shares of Series A Convertible Preferred Stock, 619,750 shares of Series B
Convertible Preferred Stock, 735,294 shares of Series C Convertible Preferred
Stock, 3,599,070 shares of Series D Convertible Preferred Stock, 2,246,224
shares of Series E Convertible Preferred Stock and no shares of Series F
Convertible Preferred Stock are issued and outstanding. Except as set forth
in Schedule 3.2 of Exhibit A to this Agreement, the rights, privileges and
preferences of the Series A, Series B, Series C, Series C-1, Series D, Series
E and Series F Convertible Preferred Stock are as stated in the Restated
Certificate.
(b) 30,000,000 shares of Common Stock, of which 4,332,241 shares are
issued and outstanding.
(c) Except as set forth in Schedules 3.2 and 3.13 of Exhibit A to this
Agreement, there are: (i) no outstanding options, warrants, rights (including
conversion or preemptive rights) or agreements pursuant to which the Company
is or may become obligated to issue, sell, repurchase or redeem any shares
of its capital stock or any other securities of the Company; (ii) no
restrictions on the transfer of capital stock of the Company imposed by the
Restated Certificate or Bylaws of the Company, any agreement to which the
Company is a party, any order of any court or any governmental agency to which
the Company is subject, or any statute other than those imposed by relevant
state and federal securities laws; (iii) no cumulative voting rights for any
of the Company's capital stock; and (iv) no registration rights under the
Securities Act of 1933, as amended (the "Securities Act") with respect to
shares of the Company's capital stock. The Company has reserved up to
1,050,000 shares of its Common Stock for issuance pursuant to the exercise of
existing options or options to be granted in the future under its Amended and
Restated 1994 Stock Incentive Plan.
(d) Except as set forth in Schedule 3.2 of Exhibit A to this Agreement,
the Company is not a party to or is not subject to any agreement or
understanding relating to, and to the Company's knowledge there is no agreement
or understanding between any persons and/or entities which affects or relates
to, the voting of shares of capital stock of the Company or the giving of
written consents by a shareholder or director of the Company.
3.3 Subsidiaries. Except as set forth in Schedule 3.3 of Exhibit A to
this Agreement, the Company does not presently own or control, directly or
indirectly, any other corporation, association, or other business entity and
does not currently own or control, directly or indirectly, any capital stock
or other ownership interest, directly or indirectly, in any corporation,
association, partnership, trust, joint venture or other entity. Each of the
Company's subsidiaries is duly organized and existing under the laws of its
jurisdiction of organization and is in good standing under such laws. None of
the Company's subsidiaries owns or leases property or engages in any activity
in any jurisdiction that might require its
qualification to do business as a foreign corporation and in which failure to
do so would have a Material Adverse Effect.
3.4 Authorization. All corporate action on the part of the Company and
its 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 the Shares to be sold
hereunder has been taken or will be taken prior to the Closing. This
Agreement has been duly executed and delivered by the Company and constitutes
a valid and legally binding obligation of the Company, enforceable in
accordance with its terms, except as such enforcement is limited by
bankruptcy, insolvency and similar laws affecting creditor rights. The
execution, delivery and performance of this Agreement and compliance with the
provisions hereof by the Company, will not:
(a) violate any provision of law, statute, ordinance, rule or regulation
or any ruling, writ, injunction, order, judgment or decree of any court,
administrative agency or other governmental body, and will not require any
filing or registration by the Company with any federal or state administrative
agency or other governmental body other than filing pursuant to the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Pre-Merger Notification Act ("HSR Act") if applicable and
other than filings pursuant to federal and state securities laws to the extent
applicable;
(b) conflict with or result in any breach of any of the terms, conditions
or provisions of, or constitute (with due notice or lapse of time, or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under (i) any agreement, document, instrument, contract, note,
indenture, mortgage or lease to which the Company is a party or under which
the Company or any of its assets is bound or affected, other than any such
breaches or defaults as would not have a Material Adverse Effect, (ii) the
Company's Restated Certificate or (iii) the Bylaws of the Company; or
(c) result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company which would
have a Material Adverse Effect.
3.5 Valid Issuance of Shares.
(a) The issuance, sale and delivery of the Shares being purchased by the
Investor hereunder have been duly authorized by all requisite corporate action
of the Company, and the Shares, when issued, sold and delivered in accordance
with the terms hereof for the consideration expressed herein, will be validly
issued and outstanding, fully paid and nonassessable and not subject to any
preemptive rights, rights of first refusal or other similar rights imposed by
the Company.
(b) Except as set forth in Schedule 3.2 of Exhibit A to this Agreement,
the outstanding shares of Common Stock and Series A, Series B, Series C, Series
C-1, Series D and Series E Preferred Stock are all duly authorized and
validly issued, fully paid and nonassessable, and were issued in compliance in
all material respects with all applicable federal and state securities laws.
3.6 Liabilities. Except as set forth in Schedule 3.6 of Exhibit A to
this Agreement and the Exhibits hereto, the Company has not incurred any unpaid
indebtedness for money borrowed or any other contractual liabilities in excess
of $500,000 individually or $1,000,000 in the aggregate.
3.7 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 consummation of the transactions contemplated
by this Agreement, (i) except as may be required pursuant to the HSR Act and
(ii) except for registration or qualification, or taking such action to secure
exemption from such registration or qualification, of the Shares under
applicable state or federal securities laws, which actions shall be taken, by
and at the expense of the Company, on a timely basis as may be required.
3.8 Litigation. Except as set forth in Schedule 3.8 of Exhibit A to this
Agreement, there is no action, suit, proceeding or investigation pending or,
to the Company's knowledge, currently threatened against the Company which
questions the validity of this Agreement or the right of the Company to enter
into it, or to consummate the transactions contemplated hereby, or which
reasonably would be expected to have, either individually or in the aggregate,
a Material Adverse Effect, or result in any change in the current equity
ownership of the Company, nor is the Company aware that there is any basis for
the foregoing. To the Company's knowledge, there are no legal actions or
investigations pending or threatened involving the employment by or with the
Company of any of the Company's current employees, their use in connection
with the Company's business of any information or techniques allegedly
proprietary to any of their former employers, or their obligations under any
agreements with prior employers or alleging a violation of any federal, state
or local statute or common law relationship with the Company. The Company
is not a party to any order, writ, injunction, judgment or decree of any court.
3.9 Employees and Consultants. Except as set forth in Schedule 3.9 of
Exhibit A to this Agreement:
(a) To the Company's knowledge, none of its employees is obligated under
any contract (including licenses, covenants or contracts of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his best efforts to
promote the interests of the Company or that would conflict with the
Company's business as proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business by
the employees of the Company, nor the conduct of the Company's business as
proposed, will, to the Company's knowledge, conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default
under, any material contract, covenant or instrument under which any of such
employees is now obligated.
(b) Each employee of, or consultant to, the Company, who has or is
proposed to have access to confidential or proprietary information of the
Company, is a signatory to, and is bound by, an agreement with the Company
relating to noncompetition, nondisclosure, proprietary information and
assignment of patent, copyright and other intellectual property rights.
(c) To the Company's knowledge, no employee of, or consultant to, the
Company is in violation of any term of any employment contract, patent
disclosure agreement or any other contract or agreement with the Company
including, but not limited to, those matters relating to (i) the relationship
of any such employee with the Company or to any other party as a result of the
nature of the Company's business as currently conducted, or (ii) unfair
competition, trade secrets or proprietary information.
3.10 Patents and Trademarks. Except as set forth in a letter from the
Company to Novartis dated the date hereof and delivered to Novartis
simultaneously with the execution of this Agreement, there are no outstanding
options, licenses, or agreements of any kind relating to the Company's
patents, service marks, trademarks, copyrights, trade secrets, proprietary
rights or other intellectual property (hereinafter collectively the
"Intellectual Property"); nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to, the Intellectual
Property of any other person or entity. The Company has not received any
written communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the Intellectual
Property of any other person or entity. To the Company's knowledge, all
patents owned by or licensed to the Company were validly obtained and are
valid and enforceable by the Company.
3.11 Compliance with Other Instruments. The Company is not in violation
or default of any provisions of the Restated Certificate or the Company's
Bylaws or of any judgment, order, writ or decree to which the Company is a party
or by which it is bound.
3.12 Agreements; Action.
(a) Except for agreements explicitly contemplated hereby and as set
forth in Schedule 3.12 of Exhibit A to this Agreement, there are no
agreements, understandings, transactions or proposed transactions between the
Company and any of its officers, directors, or affiliates, or any affiliate
thereof, and none of any such individuals or entities has any interest in any
party to any such agreement, understanding, transaction or proposed
transaction.
(b) Except as set forth in Schedule 3.12 of Exhibit A to this Agreement,
there are no agreements, understandings, instruments, contracts, transactions
or proposed transactions to which the Company is a party or by which it is
bound which involve (i) obligations of, or payments to the Company in excess
of $50,000, or (ii) the license of any patent, copyright, trade secret or
other proprietary right to or from the Company.
(c) Except as set forth in Schedule 3.12 of Exhibit A to this Agreement,
the Company has not (i) declared or paid any dividends, or authorized or made
any distribution upon or with respect to any class or series of its capital
stock, (ii) made any loans or advances to any person, other than ordinary
advances to employees for travel expenses, or (iii) sold, exchanged or
otherwise disposed of any of its assets or rights, other than in the ordinary
course of business.
(d) The Company has not admitted in writing its inability to pay its
debts generally as they become due, filed or consented to the filing against it
of a petition in bankruptcy or a petition to take advantage of any insolvency
act, made an assignment for the benefit of creditors, consented to the
appointment of a receiver for itself or for the whole or any substantial part
of its property, or had a petition in bankruptcy filed against it, been
adjudicated a bankrupt, or filed a petition or answer seeking reorganization or
arrangement under the federal bankruptcy laws or any other laws or of the
United States or any other jurisdiction.
(e) To the Company's knowledge, the Company is in compliance with all
obligations, agreements and conditions contained in any evidence of
indebtedness or any loan agreement or other contract or agreement (whether or
not relating to indebtedness) to which the Company is a party or is subject
(collectively, the "Obligations"). To the Company's knowledge, all other
parties to such Obligations are in compliance with the terms and conditions
of such Obligations.
3.13 Registration Rights. Except as provided in Schedule 3.13 of
Exhibit A to this Agreement, the Company has not granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
3.14 Title to Property and Assets. Except as set forth in the Company's
Balance Sheet as of December 31, 1996 and the related notes thereto, the
Company has good, legal and merchantable title to all of its assets, including
all properties and assets reflected on such Balance Sheet, free and clear of
all liens,
claims, restrictions or encumbrances (other than those described
therein), except those assets disposed of since the date of such Balance
Sheet in the ordinary course of business, none of which assets either alone or
in the aggregate are material, either in nature or amount, to the business of
the Company. All machinery and equipment included in such properties which
are material to the business of the Company are in good condition and repair,
and each lease of real or personal property to which the Company is a party
is fully effective, affords the Company peaceful and undisturbed possession of
the subject matter of the lease, and such lease is free of any liens, claims,
restrictions or encumbrances. Each such lease constitutes a valid and
binding obligation of, and is enforceable in accordance with its terms
against, the Company and, to the Company's knowledge, the other parties
thereto. Except as set forth in Schedule 3.8 of Exhibit A to this Agreement,
with respect to the property and assets it leases, the Company is in all
material respects in compliance with such leases, has not received notice of
any allegations that it is in default thereunder in any respect and holds a
valid leasehold interest free of any liens, claims or encumbrances.
3.15 Financial Statements. The Company has delivered to the Investor (i)
its audited financial statements (Balance Sheets, Statements of Operations,
Statements of Shareholder's Equity and Statements of Cash Flow) at December
31, 1996, 1995 and 1994 and for the fiscal years then ended, respectively
(the "Audited Financial Statements") and (ii) its unaudited financial
statements as of and for the three months ended March 31, 1997 (the "Unaudited
Financial Statements") (collectively, the "Financial Statements"). The
Financial Statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods indicated and fairly present the financial condition and operating
results of the Company as of the dates, and for the periods, indicated
therein, except in the case of the Unaudited Financial Statements which are
subject to normal year-end adjustments, none of which shall be material, and
the absence of footnotes. Except as set forth in the Financial Statements and
in the material agreements listed in Schedule 3.15 of Exhibit A to this
Agreement, the Company has no material liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to March 31, 1997 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in the
financial statements, which, in both cases, individually or in the aggregate,
are not material to the financial condition or operating results of the
Company. Except as disclosed in the Financial Statements, the Company is not
a guarantor or indemnitor of any indebtedness of any other person, firm or
corporation. The Company maintains and will continue to maintain a standard
system of accounting established and administered in accordance with GAAP.
3.16 Employee Benefit Plans. Except as set forth in Schedule 3.16 of
Exhibit A to this Agreement, there are no "employee benefit plans" as such term
is defined in Section 3(3) of the Employee Retirement Income Security Act of
1974 ("ERISA") maintained by the Company or any stock purchase plan, stock
option plan, fringe benefit plan, bonus plan or any other deferred
compensation agreement, plan, practice or pending arrangement sponsored,
maintained or to which contributions are made by the Company by or on
behalf of current or former employees of the Company, their dependents or
any other party. The Osiris Retirement Savings Plan (the "Savings Plan") is
the only Plan sponsored, maintained or contributed to by the Company which
is an "employee pension benefit plan" as such term is defined in Section 3(2)
of ERISA. The Company has delivered to the Investor a current, accurate and
complete copy of the Savings Plan (including all other instruments relating
thereto). The Savings Plan is the subject of a request for a determination
letter as to its qualification under Section 401 of the Internal Revenue Code
of 1986, as amended (the "Code"). The trust created under the Savings Plan is
exempt from taxation pursuant to Section 501(a) of the Code. The Savings Plan
and the trust forming a part thereof, as well as any other employee benefit
plan sponsored by the Company, have been administered and enforced in
accordance with their terms, and no actions, suits, investigations or other
disputes are pending (other than routine claims for benefits in the ordinary
course) or, to the Company's knowledge, threatened with respect to any
employee benefit plan or employee pension benefit plan and the Company has
no knowledge of any facts which could give rise to any such actions, suits,
investigations or other disputes. Other than set forth in Schedule 3.16 of
Exhibit A to this Agreement, the Company has no current plans to substantially
alter the benefits or coverage available under any of the employee benefit,
employee pension benefit or other plans, arrangements or practices referred to
above, and has retained the right to amend, modify or terminate any such plan,
arrangement or practice.
3.17 Tax Returns, Payments and Elections. The Company has filed all tax
returns and reports as required by law, including without limitation, all
federal, state and local income, excise or franchise tax returns, real estate
and personal property tax returns, sales and use tax returns, payroll tax
returns and other tax returns or reports required to be filed by it. These
returns and reports are true and correct in all material respects. The
Company has paid or made provision for the payment of all accrued and unpaid
taxes and other charges to which the Company is subject and which are not
currently due and payable. The federal income tax returns of the Company
have never been audited by the Internal Revenue Service, and the Company has
not agreed to an extension of the statute of limitations with respect to any
of its tax years. Neither the Internal Revenue Service nor any other taxing
authority is now asserting, nor, to the Company's knowledge, is threatening to
assert, against the Company any deficiency or claim for additional taxes or
interest thereon or penalties in connection therewith; nor does such
deficiency or claim or basis for such a deficiency or claim exist. The
Company has not elected, pursuant to the Code, to be treated as a Subchapter
S corporation or a collapsible corporation pursuant to Section 341(f) or
Section 1362(a) of the Code, nor has it made any other elections pursuant to
the Code (other than
elections which relate solely to methods of accounting, depreciation or
amortization) which would have a material adverse effect on the Company, its
financial condition, its business as presently conducted or proposed to be
conducted or any of its properties or material assets.
3.18 Insurance. The Company has in full force and effect fire, casualty
and liability insurance policies, with coverage, in the case of property
insurance, sufficient in amount (subject to reasonable deductibles) to allow
it to replace any of its properties that might be damaged or destroyed, and in
the case of casualty and liability insurance, in amounts customary and
adequate for business similar to the business of the Company.
3.19 Labor Agreements and Actions. The Company does not have any
collective bargaining agreements covering any of its employees, nor is the
Company bound by or subject to (and none of its assets or properties is bound
by or subject to) any written or oral, express or implied, contract, commitment
or arrangement with any labor union, and no labor union has requested or, to
the knowledge of the Company, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the knowledge of the Company
threatened, which could have a material adverse effect on the business,
properties or financial condition of the Company (as such business is
presently conducted and as it is proposed to be conducted), nor is the
Company aware of any labor organization activity involving its employees. The
Company is not aware that any officer or key employee, or that any group of
key employees, intends to terminate their employment with the Company, nor
does the Company have a present intention to terminate the employment of any
of the foregoing. Except as set forth in this Agreement and Schedule 3.19 of
Exhibit A to this Agreement, the employment of each officer and employee of
the Company is terminable at the will of the Company.
3.20 Real Property Holding Corporation. The Company is not, and has not
been at any time a "United States real property holding corporation "as defined
in Section 897 of the Code.
3.21 Offering. Subject to the accuracy of the Investor's
representations set forth in Section 4 of this Agreement, the offer, sale and
issuance of the Shares in conformity with the terms of this Agreement constitute
transactions exempt from the registration requirements of the Securities Act
and from all applicable state registration or qualification requirements, other
than those with which the Company has complied or will comply.
3.22 Environmental and Safety Laws.
(a) To the Company's knowledge, the Company is not in violation of any
Environmental Law (as hereinafter defined) and to its knowledge, no material
expenditures are or will be required in order to comply with any
Environmental Law. As used in this Agreement, "Environmental Law" shall mean
any applicable federal, state and local law, ordinance, rule or regulation
that regulates, fixes liability for, or otherwise relates to, the handling,
use (including use in industrial processes, in construction, as building
materials, or otherwise), treatment, storage and disposal of hazardous and
toxic wastes and substances, and to the discharge, leakage, presence,
migration, actual Release (as hereinafter defined) or threatened Release
(whether by disposal, a discharge into any water source or system or into the
air, or otherwise) of any pollutant or effluent.
(b) The Company has not used, generated, manufactured, refined, treated,
transported, stored, handled, disposed, transferred, produced, processed or
released (hereinafter together defined as "Release") any Hazardous Materials
(as hereinafter defined) on, from or affecting any Property (as hereinafter
defined) in any manner or by any means in violation of any Environmental Laws
and to the Company's knowledge, there is no threat of such Release. As used
herein, the term "Property" shall include, without limitation, land, buildings
and laboratory facilities owned or leased by the Company or as to which the
Company now has any duties, responsibilities (for cleanup, remedy or
otherwise) or liabilities under any Environmental Laws, or as to which the
Company or any subsidiary of the Company may have such duties,
responsibilities or liabilities because of past acts or omissions of the
Company or any such subsidiary or their predecessors, or because the Company
or any such subsidiary or their predecessors in the past was such an owner or
operator of, or bore some other relationship with, such land, buildings or
laboratory facilities. The term "Hazardous Materials" shall include, without
limitation, any flammable explosives, petroleum products, petroleum by-
products, radioactive materials, hazardous wastes, hazardous substances, toxic
substances or related materials as defined by Environmental Laws.
(c) The Company has not received written notice that the Company is a
party potentially responsible for costs incurred at a cleanup site or
corrective action under any Environmental Laws. The Company has not received
any written requests for information in connection with any inquiry by any
Governmental Authority (as hereinafter defined) concerning disposal sites or
other environmental matters. As used herein, "Governmental Authority" shall
mean any nation or government, any federal, state, municipal, local,
provincial, regional or other political subdivision thereof, and any entity or
person exercising executive, legislative, judicial regulatory or
administrative functions of or pertaining to government.
(d) The stockholders of the Company have had no control over, or
authority with respect to, the waste disposal operations of the Company.
3.23 Licenses and Other Rights; Compliance with Laws. The Company has
all franchises, permits, licenses and other rights and privileges necessary to
permit it to own its properties and to conduct its business as presently
conducted, other than such franchises, permits, licenses and other rights and
privileges which the failure to have would not have a Material Adverse
Effect. The Company is in compliance in all material respects under each,
and the transactions contemplated by this Agreement will not cause a violation
under any, of such franchises, permits, licenses and other rights and
privileges. The Company is in compliance in all material respects with all
laws and governmental rules and regulations applicable to its businesses,
properties and assets, and to the products and services sold by it, including,
without limitation, all such rules, laws and regulations relating to fair
employment practices, occupational safety and health and public safety.
The Company is in compliance in all material respects with the applicable
provisions of the Clinical Laboratories Improvement Act of 1967, as amended.
3.24 Board of Directors.
(a) The Company currently has six members on its Board of Directors
(the "Board of Directors") and one vacancy. Except as set forth in Section
3.24(b), the Company has not extended any offer or promise or entered into
any agreement, arrangement, understanding or otherwise, whether written or
oral, with any person or entity by which the Company has agreed to allow such
person or entity to serve on, or to nominate, recommend or elect another
person to serve on, the Board of Directors.
(b) At the request of the Investor, a representative designated by the
Investor, reasonably acceptable to the Company, shall be elected to fill the
currently existing vacancy on the Board of Directors and shall be nominated
and recommended for election to the Board of Directors at successive annual
meetings of the shareholders of the Company. The Company's obligation to
nominate a Novartis representative at each annual meeting of the shareholders
shall cease upon the earlier of (i) the Investor's termination of research
funding under the Research Collaboration and License Agreement, unless
such termination is permitted under such agreement based on a breach by the
Company of any of its obligations under such agreement or (ii) the first date
following the third anniversary of the Closing Date on which the Investor owns
less than four percent (4%) of the issued and outstanding Common Stock
(including any shares of Common Stock into which other securities owned by
the Investor can be converted) unless such reduction below 4% results from
action by the Company. The Investor may, in lieu of designating a
representative to serve on the Board of Directors as permitted herein,
designate a representative, reasonably acceptable to the Company, who shall
be permitted to attend all meetings of the Board of Directors as an observer,
and who shall receive notice of such meetings in the same manner and at the
same times as the members of the Board of Directors. The rights granted to
Novartis pursuant to this Section 3.24(b) may not be assigned or otherwise
conveyed by Novartis or by a subsequent permitted transferee of any such
rights without the prior written consent of the Company; provided, however,
that the consent of the
Company shall not be required for an assignment of such rights to an Affiliate
of Novartis.
3.25 Reliance. The Company understands that the foregoing
representations and warranties shall be deemed material and to have been relied
upon by the Investor. No representation or warranty by the Company in this
Agreement, and no written statement contained in any document, certificate or
other writing delivered by the Company to the Investor contains any untrue
statement of material fact or omits to state any material fact necessary to
make the statements herein or therein, in light of the circumstances under
which they were made, not misleading.
4. Representations, Warranties and Covenants of the Investor.
The Investor hereby represents and warrants the following:
4.1 Authorization, Governmental Consents and Compliance with Other
Instruments. All corporate action on the part of the Investor necessary for
the authorization, execution and delivery of this Agreement and the
performance of all obligations of the Investor hereunder has been taken or
will be taken prior to the Closing. This Agreement constitutes a valid and
legally binding obligation of the Investor, enforceable in accordance with
its terms, except as such enforcement is limited by bankruptcy, insolvency
and similar laws affecting creditor rights. 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 Investor is required in connection with the consummation of the
transactions contemplated by this Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in any such violation or be in conflict
with or constitute, with or without the passage of time and giving of notice,
either a default under any provision of the Investor's corporate charter or
other equivalent documents or any instrument, judgment, order, writ, decree
or contract to which the Investor is a party or by which it is bound.
4.2 Purchase Entirely for Own Account. The Investor is aware that the
Company is entering into this Agreement in reliance upon the Investor's
representation to the Company, which by the Investor's execution of this
Agreement the Investor hereby confirms, that the Shares will be acquired for
investment for the 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 the
Investor has no present intention of selling, granting any participation in,
or otherwise distributing the Shares. By executing this Agreement, the
Investor further represents that the Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
grant participation to such person or to any third person, with respect to any
of the Shares. The Investor represents that it has full
power and authority to enter into this Agreement. In addition, the Investor
agrees not to sell, assign, transfer, pledge, encumber, hypothecate, permit to
become subject to a security interest, grant an option in or otherwise dispose
of the Common Stock acquired hereunder by the Investor, without regard to the
registration of such shares, to any United States Person (as that term is
defined in Regulation S under the Securities Act) for a period of one year
after the closing of the purchase of the Common Stock, if, in the reasonable
judgment of the Company, such action might make Regulation S unavailable to
the Company as a basis for not registering under the Securities Act the
initial issuance of the Shares to the Investor.
4.3 Disclosure of Information. The Investor has received all the
information from the Company and its management that the Investor considers
necessary or appropriate for deciding whether to purchase the Common Stock
hereunder. The Investor further represents that it has had an opportunity to
ask questions and receive answers from the Company regarding the terms and
conditions of the offering of the Common Stock.
4.4 Investment Experience and Accredited Investor Status. The Investor
(i) is an "accredited investor" (as defined in Regulation D promulgated under
the Securities Act) and (ii) is not a United States Person as that term is
defined in Regulation S under the Securities Act, and is not acquiring the
Shares for the account or benefit of any United States Person. The Investor is
an investor in securities of companies in the development stage and acknowledges
that it is able to fend for itself, and bear the economic risk of its
investment and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the
investment in the Shares hereunder.
4.5 Restricted Securities. The Investor understands that the Shares,
when issued, will be "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
Securities Act only in certain limited circumstances. In this connection, the
Investor represents that it is familiar with Rule 144, as presently in effect,
and understands the resale limitations imposed thereby and by the Securities
Act.
4.6 Further Limitations on Disposition. Without in any way limiting the
representations set forth above or the obligations of the Investor under
Section 9.5, the Investor further represents, warrants and agrees that it will
not make any disposition of all or any portion of the Shares (except to an
Affiliate in accordance with Section 1.2), unless and until:
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(b) the disposition is made pursuant to Rule 144 or similar provisions
of the federal securities laws as in effect from time to time (in which case, if
required by the Company's transfer agent, the Investor will provide an opinion
of counsel reasonably satisfactory to the Company that such disposition is not
required to be registered under the Securities Act); or
(c) (i) The Investor shall have notified the Company of the proposed
disposition and the identity of the proposed transferee, and (ii) if
requested by the Company, the Investor shall have furnished the Company
with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such Shares under the
Securities Act.
4.7 Legends. It is understood that the certificates evidencing the
Shares will bear the following legends:
(a) These securities have not been registered under the Securities Act
of 1933. They may not be sold, offered for sale, pledged or hypothecated in the
absence of an effective registration statement with respect to the securities
under such Act or the availability of an exemption from the registration
requirements of such Act."
(b) Any legend required by applicable state securities laws.
5. Conditions to Closing of Investor. The Investor's obligation to
purchase the Shares at the Closing is subject to the fulfillment as of the
Closing Date of the following conditions:
5.1 Representations and Warranties Correct. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on the Closing Date, except that:
(a) there shall be delivered at the Closing a certificate, signed by an
officer of the Company, which contains the representation and warranty set
forth in Section 3.2, but substituting the then-current numbers of shares for
the numbers of shares set forth in Section 3.2; and
(b) if there shall be available more recent financial statements than
those referred to in Section 3.15, there shall be delivered at the Closing a
certificate, signed by an officer of the Company, which contains
the representation and warranty set forth in Section 3.15, but substituting
the most recent financial statements then available (which shall have been
delivered to the Investor at least three business days prior to such Closing)
for the financial statements referred to in Section 3.15.
5.2 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 in all material respects. All
proceedings to have been taken and all waivers and consents to be obtained in
connection with the transactions contemplated by this Agreement shall have been
taken or obtained, and all documents incidental thereto shall be satisfactory
to the Investor and its counsel, and the Investor and its counsel shall have
received copies (executed or certified, as may be appropriate) of all documents
which the Investor or its counsel may reasonably have requested in connection
with such transactions.
5.3 Compliance Certificate. The Company shall have delivered to the
Investor a certificate of the Company in the form of Exhibit B hereto,
executed by the President and Chief Executive Officer of the Company,
certifying to the fulfillment of the conditions specified in Sections 5.1
and 5.2 of this Agreement.
5.4 Legal Opinion. All legal matters incident to the purchase of the
Shares shall be satisfactory to the Investor's counsel, and the Investor shall
have received from ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., counsel for the Company, such firm's
opinion addressed to the Investor and dated the date of the Closing, in the
form of Exhibit C hereto.
5.5 Certification of Resolutions and Officers. The Company shall have
delivered to the Investor a certificate or certificates, dated the date of the
Closing, of the Secretary of the Company certifying as to (i) the resolutions
of the Board of Directors (and the vote of the stockholders, if necessary)
authorizing the execution and delivery of this Agreement, the issuance to
the Investor of the Shares, the execution and delivery of such other documents
and instruments as may be required by this Agreement, and the consummation
of the transactions contemplated hereby, and certifying that such resolutions
were duly adopted and have not been rescinded or amended as of said date,
and (ii) the name and the signature of the officers of the Company authorized
to sign, as appropriate, this Agreement and the other documents and
certificates to be delivered pursuant to this Agreement by either the
Company or any of its officers.
5.6 Certification of No Material Adverse Change. The Company shall have
delivered to the Investor certificates, dated the date of the Closing, of the
Chief Financial Officer of the Company certifying that since December 31,
1996, there has not been any material adverse change in the financial
condition or operations of the Company, and that, except to the extent
reflected in the financial statements referred to in Section 3.15 (or in such
later financial statements, as the case may be), and except for liabilities
arising in the ordinary course of business (none of which liabilities either
alone or in the aggregate are material either in nature or amount to the
business of the Company), the Company has no material accrued or contingent
liabilities which are not specifically described in such financial statements.
5.7 Research Collaboration and License Agreement. The Company and the
Investor shall have entered into the Research Collaboration and License
Agreement in the form of Exhibit D hereto.
6. Conditions to Closing of the Company.
The Company's obligation to sell the Shares at the Closing is subject to the
fulfillment as of the Closing Date of the following conditions:
6.1 Representations and Warranties Correct. The representations and
warranties made by the Investor in Section 4 hereof shall be true and correct
in all material respects as of the Closing Date with the same force and effect
as though such representations and warranties had been made on the Closing
Date.
6.2 Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Investor on or prior to the Closing Date
shall have been performed or complied with in all material respects. All
proceedings to have been taken and all waivers and consents to be obtained in
connection with the transactions contemplated by this Agreement shall have
been taken or obtained, and all documents incidental thereto shall be
satisfactory to the Investor and its counsel, and the Company and its counsel
shall have received copies (executed or certified, as may be appropriate) of
all documents which the Company or its counsel may reasonably have requested
in connection with such transactions.
6.3 Compliance Certificate. The Investor shall have delivered to the
Company a certificate of the Investor in the form of Exhibit E hereto, executed
by the Head of Financial Evaluation and Mergers and Acquisitions of the
Investor, certifying to the fulfillment of the conditions specified in Sections
6.1 and 6.2 of this Agreement.
6.4 Receipt of Purchase Price. The Company shall have received from the
Investor the Aggregate Purchase Price by certified or cashier's check payable
to the Company, or by wire transfer of same day funds per the Company's wiring
instructions, for the Shares to be purchased by the Investor.
6.5 Legal Opinion. All legal matters incident to the purchase of the
Shares by the Investor shall be satisfactory to the Company's counsel and the
Company shall have received from counsel to the Investor reasonably
satisfactory to
the Company his opinion addressed to the Company and dated the date of the
Closing, in the form of Exhibit F hereto.
6.6 Research Collaboration and License Agreement. The Company and the
Investor shall have entered into the Research Collaboration and License
Agreement in the form of Exhibit D hereto.
7. Mutual Conditions to Closing. The obligations of each of the Investor
and the Company to consummate the Closing are subject to the fulfillment as of
the Closing Date of the following conditions:
7.1 Qualifications. All consents, permits, approvals, qualifications
and registrations required to be obtained or effected with any governmental
authority, including, without limitation, necessary Blue Sky law permits and
qualifications required by any state for the offer and sale to the Investor of
the Shares, shall have been obtained or effected, and any filings required
under the HSR Act shall have been made and the required waiting period shall
have elapsed.
7.2 Absence of Litigation. There shall be no injunction, actions,
suits, proceeding or investigations pending or currently threatened against the
Company or the Investor which questions the validity of this Agreement or the
right of the Company or the Investor to enter into it, or to consummate the
transactions contemplated hereby.
7.3 Waiver by Series C Stockholders. The holders of the outstanding
shares of the Company's Series C Convertible Preferred Stock (collectively, the
"Series C Investors") shall have waived the provisions of Section 2.3 of the
Investors' Rights Agreement dated May 25, 1994 by and between the Series C
Investors and the Company with respect to the Shares and any Series F
Convertible Preferred Stock exchangeable therefor (and any Common Stock
issued upon conversion thereof) in accordance with Section 9.8 of this
Agreement.
8. Standstill Agreement.
Prior to the earlier of (i) three years from the Closing Date or (ii) two
years from the date of consummation of an underwritten initial public offering
of the Common Stock, neither the Investor nor any subsidiary, parent
corporation or other affiliate of the Investor shall (A) propose, nominate or
support for election to the Board of Directors (other than as contemplated by
Section 3.24) any person whose nomination has not been approved by a majority
of the full Board of Directors, or vote or cause to be voted in favor of any
such person any securities of the Company entitled to vote in the election of
directors ("Voting Stock"), (B) without the express written consent of the
Company, acquire beneficial ownership of any Voting Stock, any securities
convertible into or exchangeable for Voting Stock,
or any other right to acquire Voting Stock (except, in any case, by way of
stock dividends or other distributions or offerings made available to holders
of any Voting Stock generally), or make a tender, exchange or other offer to
acquire Voting Stock, if, after giving effect to such acquisition, the
Investor would beneficially own (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Securities Exchange Act")) more than
fifteen percent (15%) of the voting power represented by all Voting Stock of
the Company or (C) encourage or support a tender, exchange or other offer or
proposal by any other person, entity or group (an "Offeror") the consummation
of which would result in a "change of control" of the Company (an "Acquisition
Proposal"). For purposes of this Section 8, a "change of control" shall mean
(i) a merger or consolidation to which the Company is a party and as a result
of which the persons who were stockholders of the Company immediately prior to
the effective date of such merger or consolidation beneficially own (as
defined in Rule 13d-3 under the Securities Exchange Act) less than twenty
percent (20%) of the Voting Stock outstanding immediately following the
effectiveness of such merger or consolidation; (ii) the acquisition by the
Offeror of beneficial ownership of Voting Stock which, when combined with
all other Voting Stock beneficially owned by the Offeror, represents fifteen
percent (15%) or more of the voting power represented by the issued and
outstanding Voting Stock; (iii) a sale of all or substantially all of the
Company's assets (other than to a wholly owned subsidiary of the Company);
or (iv) a liquidation or dissolution of the Company. The restrictions imposed
on the Investor by the foregoing provisions of this Section 8 shall terminate
upon the public announcement by an Offeror of an Acquisition Proposal or the
acquisition by an Offeror of beneficial ownership of more than fifteen percent
(15%) of the voting power represented by all Voting Stock of the Company.
Following such termination, however, and until the earlier of (i) three years
from the Closing Date or (ii) two years from the date of consummation of an
underwritten initial public offering of the Common Stock, the Investor shall
not support, encourage, assist or act in concert with the Offeror to effect a
change of control of the Company. It shall be a condition to a Transfer (as
defined in Section 9.4) of Shares by the Investor, in whole or in part, to any
person or entity (other than in unsolicited broker's transactions following
completion by the Company of an underwritten initial public offering), that
such person or entity agrees to be bound by the provisions of this Section 8
For purposes of this Section 8, such transferee shall be deemed to have
acquired the transferred shares on the Closing Date.
9. Additional Covenants and Agreements.
9.1 Delivery of Financial Statements. The Company shall deliver to the
Investor:
(a) as soon as practicable, but in any event within one hundred and
twenty (120) days after the end of each fiscal year of the Company, statements
of operations, shareholders' equity and cash flow for such fiscal year, a
balance sheet of the Company as of the end of such year, all in reasonable
detail,
prepared in accordance with GAAP, and audited and certified by independent
public accountants of nationally recognized standing selected by the Company;
(b) such other information relating to the business of the Company as
the Investor may from time to time reasonably request, provided, however, that
the Company shall not be obligated to provide information which it deems in
good faith to be proprietary unless such Investor or assignee of such Investor
agrees in writing to hold in confidence and trust and to act in a fiduciary
manner with respect to all information so provided.
9.2 Assignment of Rights to Financial Information. The rights granted
pursuant to Section 9.1 may not be assigned or otherwise conveyed by the
Investor or by a subsequent permitted transferee of any such rights without
the prior written consent of the Company; provided, however, that the consent
of the Company shall not be required for an assignment of the rights granted
pursuant to Section 9.1(b) to an Affiliate of Novartis.
9.3 Termination of Covenants. The covenants set forth in Section 9.1
shall terminate when the sale of securities pursuant to a registration
statement filed by the Company under the Securities Act in connection with the
firm commitment underwritten offering of its securities to the general public is
consummated or when the Company first becomes subject to the periodic
reporting requirements of Sections 12(g) or 15(d) of the Securities Exchange
Act, whichever event shall first occur.
9.4 Right of Osiris to Purchase Shares
(a) The right of the Investor to sell or offer to sell, or otherwise
transfer or distribute any of the Shares in any manner which would constitute a
sale within the meaning of the Securities Act (any such sale, disposition or
transfer hereinafter referred to as a "Transfer"), except to an Affiliate of
Novartis in accordance with Section 1.2 hereof, shall be subject to a right
of first refusal of the Company as set forth in this Section 9.4(a). Any
attempted or purported Transfer of the Shares by operation of law, by death
or otherwise, in violation of this Section 9.4, shall be null and void and of
no legal force or effect. If the Investor desires to dispose of any or all of
the Shares (the "Offered Shares"), the Investor shall first submit to the
Company a written offer (the "Offer") to sell the Offered Shares to the
Company at a price and on such other terms and conditions as shall be
specified in the Offer. The Offer by its terms shall remain open and
irrevocable for a period of 45 days from the date of delivery of the Offer
to the Company (the "45-Day Period"). The Company shall notify the Investor
prior to the end of the 45-Day Period of its intention to purchase, or to
place with other purchasers, all (but not less than all) of the Offered Shares
by delivering a written notice to the Investor (the "Notice of Acceptance")
which shall fix a closing date that is not more than 20 days after the date of
delivery of such notice.
If the Company fails to deliver to the Investor a Notice of Acceptance as to
the Offered Shares, the Company shall provide written notice to the Investor
(the "Counter-offer") within the 45-Day Period of the price at which, and the
other terms and conditions upon which, the Company or its designees would be
willing to purchase the Offered Shares. Upon receipt of the Counter-offer,
the Investor shall have 45 days within which to elect to sell the Offered
Shares to the Company or its designees pursuant to the Counter-offer. Such
election shall be made by a written notice of election provided to the
Company, which notice shall fix a closing date not more than 20 days after
the date of delivery of such notice. Any time during the 45 days following
its receipt of the Counter-offer, the Investor may sell to any person or
entity (other than a "competitor" of the Company, as defined below) all (but
not less than all) of the Offered Shares, provided that such sale is at a
price and upon terms and conditions that are more favorable to the Investor
than those specified in the Counter-offer. If the Offered Shares are not sold
to the Company or another party within such 45-day period, such Shares shall
continue to be subject to the requirements of this Section 9.4. It shall be a
condition to a Transfer of Shares by the Investor, in whole or in part, to any
person or entity, that such person or entity agrees to be bound by the
provisions of this Section 9.4 and Section 8. For purposes of this Section
9.4(a), a "competitor" shall mean any person or entity engaged in or promoting
the research, development, testing, study or commercialization of methods of
repairing or regenerating bone, cartilage or bone marrow stroma of a
mesenchymal origin.
(b) The provisions of this Section 9.4 shall not apply to any sale of
Shares that occurs upon or following the consummation by the Company of an
underwritten initial public offering of the Common Stock.
9.5 Further Restriction on Sale of Shares. The Investor shall not offer,
sell, pledge, grant an option to purchase, or otherwise dispose of any of the
Shares, other than (i) as permitted by Section 1.2 of this Agreement or (ii)
to an Affiliate of the Investor, prior to the first anniversary of the Closing
Date. The Investor agrees that it shall, if so requested by the Company,
enter into an agreement providing that it shall not offer, sell, pledge, grant
an option to purchase, or otherwise dispose of any of the Shares: (i) during
the period of one hundred and eighty (180) days after the closing of the
initial underwritten public offering of the Common Stock or (ii) during a
period of up to one hundred and eighty (180) days after the closing of an
underwritten follow-on or secondary offering of the Company's Common Stock,
without the prior written consent of the Company and/or the Company's
underwriters; provided, however, that (A) this Section 9.5 shall not apply or
be effective unless a majority of the officers and directors of the Company
and a majority of all holders of five (5%) percent or more of the Common Stock
of the Company on a fully diluted basis enter into similar agreements, and (B)
the Investor shall not be required to agree, in connection with any offering,
to a lock-up period that is longer than the shortest lock-up period agreed to
by any person or entity having a contractual obligation to the Company to
agree to a lock-up in connection with such offering.
9.6 Inspection of Properties. The Company shall permit the Investor
from time to time, at the Investor's expense, to visit and inspect the Company's
properties and to discuss the Company's affairs, finances and accounts with
its officers, all at such reasonable times as may be requested by the
Investor; provided, however, that the Company shall not be obligated pursuant
to this Section 9.6 to provide access to any information which it reasonably
considers to be a trade secret or similar confidential information; and
provided further, that such right shall terminate upon the transfer by the
Investor (other than to an Affiliate of Novartis) of 50% or more of the Shares
or the power to vote such Shares. The rights granted to Novartis pursuant to
this Section 9.6 may not be assigned or otherwise conveyed by Novartis or by
a subsequent permitted transferee of any such rights without the prior written
consent of the Company; provided, however, that the consent of the Company
shall not be required for an assignment of such rights to an Affiliate of
Novartis.
9.7 Equity Purchases from the Company.
(a) Definitions. For purposes of this Section 9.7:
(i) "New Securities" means any Equity Securities (defined herein)
issued by the Company; provided that "New Securities" shall not include (A) any
securities issuable upon conversion of any convertible Equity Security, (B)
any securities issuable upon exercise of any option, warrant or other similar
Equity Security, (C) any securities issuable in connection with any stock
split, stock dividend or recapitalization of the Company where such securities
are issued to all holders of a class of the Company's capital stock on a
proportionate basis or (D) any Common Stock issuable in connection with or
after an underwritten initial public offering of the Common Stock.
(ii) "Equity Securities" means any Common Stock or other voting
stock, any securities of the Company convertible into or exchangeable for
Common Stock or other voting stock, or any options, rights or warrants (or any
similar securities) issued by the Company to acquire Common Stock or other
voting stock.
(iii) "Person" means an individual, a partnership, a joint
venture, a corporation, a trust, an incorporated or unincorporated
organization, a government or any department or agency thereof.
(iv) "Pro Rata Share" means the fraction of an entire issuance of
New Securities, the numerator of which shall be the number of shares of Common
Stock owned by the Investor (including for this purpose any shares of Common
Stock issuable upon conversion of any shares of Series F Convertible Preferred
Stock owned by the Investor) immediately prior to such issuance of such New
Securities and the denominator of which shall be the aggregate number of
shares of Common Stock outstanding immediately prior to such issuance of
such New Securities
(including for this purpose any shares of Common Stock issuable upon exercise
or conversion of any outstanding Equity Securities).
(v) "Fair Market Value" with respect to any security, means, as
of any date of determination, the fair market value of such security as of
such date of determination, as determined in good faith by a majority of the
full Board of Directors.
(b) Subscription Rights. So long as the Investor has the right to
designate a representative to serve on the Board of Directors pursuant to
Section 3.24(b), if the Board of Directors shall authorize the issuance of New
Securities to any Person after the Closing and prior to the consummation of
an underwritten initial public offering of the Common Stock (other than any
New Securities issued to (i) officers, employees or directors of the Company
pursuant to any employee stock offering, plan or arrangement approved by the
Company's Board of Directors, (ii) any person or entity in connection with a
corporate partnering or license agreement, joint venture arrangement, or other
transaction in which the issuance of New Securities is incidental to or
coincident with the Company's establishment of a business relationship with
such person or entity (a "Partnering Transaction"), or (iii) Novartis or its
affiliates), then prior to each such issuance of New Securities, the Company
shall offer to the Investor a Pro Rata Share of such New Securities. Any
offer of New Securities made to the Investor under this Section 9.7 shall be
made by notice in writing (the "Subscription Notice") at least 10 calendar
days prior to the date on which the meeting of the Board of Directors is held
to authorize the issuance of such New Securities. The Subscription Notice
shall set forth (i) the number of New Securities proposed to be issued to
Persons other than the Investor and the terms of such New Securities, (ii) the
consideration, if any, for which such New Securities are proposed to be issued
and the terms of payment, (iii) the number of New Securities offered to the
Investor in compliance with the provisions of this Section 9.7 and (iv) the
proposed date of issuance of such New Securities. Not later than 20 days
after such Board of Directors meeting authorizing such issuance is held, the
Investor shall notify the Company in writing whether it elects to purchase all
or any portion of the New Securities offered to the Investor pursuant to the
Subscription Notice. If the Investor shall elect to purchase any such New
Securities, the New Securities which it shall have elected to purchase shall
be issued and sold to the Investor by the Company at the same time and on the
same terms and conditions as the New Securities are issued and sold to third
parties (except that, if such New Securities are issued for consideration
other than cash, the Investor shall pay the Fair Market Value thereof). If,
for any reason, the issuance of New Securities to third parties is not
consummated, the Investor's right to its Pro Rata Share of such issuance shall
lapse, subject to the Investor's ongoing subscription right with respect to
issuances of New Securities at later dates or times. Notwithstanding any
other provision of this Agreement, if the Board of Directors shall authorize
the issuance of New Securities to any Person prior to the Closing and prior to
the consummation of an underwritten initial public offering of
the Common Stock (other than any New Securities issued to (i) officers,
employees or directors of the Company pursuant to any employee stock
offering, plan or arrangement approved by the Company's Board of Directors,
(ii) any person or entity in connection with a Partnering Transaction, or
(iii) Novartis or its affiliates), the Company shall be obligated to offer to
the Investor, in accordance with the terms, conditions and procedures set
forth in the foregoing provisions of this Section 9(b), a Pro Rata Share of
such New Securities as though the Investor were then the owner of all of
the Shares. Notwithstanding the foregoing, in the event that the Company
issues New Securities in connection with a Partnering Transaction, the
Company shall, simultaneously with or promptly after such Partnering
Transaction, offer to the Investor, for the same purchase price, a number of
securities of the same class (and, where applicable, the same series) as such
New Securities equal to the product of (A) the Investor's Pro Rata Share
(expressed as a percentage) and (B) the sum of (i) the number of such New
Securities and (ii) the number represented by the Investor's Pro Rata Share of
such New Securities. The Investor shall have 20 days following its receipt of
such offer within which to deliver a notice of acceptance to the Company. If
the Investor elects to accept the offer, the closing of the transaction shall
take place on the tenth business day following such acceptance, or on such
other date as may be mutually agreed upon by the Company and the Investor.
9.8 Exchange of the Shares for Series F Convertible Preferred Stock.
In the event the Company shall not have consummated an underwritten initial
public offering of its Common Stock on or prior to the date that is one year
from the Closing Date, the Company agrees, upon the written request of holders
of all the then outstanding Shares, to exchange one share of Series F
Convertible Preferred Stock, par value $.001 per share, for each such
outstanding Share (as adjusted to reflect any stock split, stock dividend,
combination of shares or similar change affecting the Common Stock). Such
written notice shall be furnished to the Company within 30 days following the
first anniversary of the Closing Date (if the Company shall not have consummated
an underwritten initial public offering within one year after the Closing Date
as aforesaid). Such notice shall be accompanied by the certificates evidencing
the Shares for surrender and cancellation whereupon the Company shall issue and
deliver to each holder of Shares a certificate for the number of shares of
Series F Convertible Preferred Stock to which such holder is entitled. Upon
issuance and delivery thereof, Series F Convertible Preferred Stock shall be
duly authorized, validly issued and fully paid and non-assessable. The rights,
powers and privileges of the Series F Convertible Preferred Stock shall be
as set forth in the Certificate of Designation of Series F Convertible
Preferred Stock of Osiris Therapeutics, Inc. attached hereto as Exhibit G.
10. Registration Rights; Compliance with the Act.
The Company covenants and agrees as follows:
10.1 Definitions. For purposes of this Section 10:
(a) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration
or ordering of effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (1) the Common Stock sold to
the Investor pursuant to this Agreement (or issued upon conversion of the
Series F Convertible Preferred Stock exchanged for the Shares pursuant to
Section 9.8) and (2) any Common Stock of the Company issued as a dividend or
other distribution with respect to, or in exchange for or in replacement of,
such Common Stock, excluding in all cases, however, (i) any Registrable
Securities sold by a person in a transaction in which his rights under this
Section 10 are not assigned, or (ii) any Registrable Securities sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction.
(c) The term "Holder" means any person owning or having the right to
registration of Registrable Securities hereunder; and
(d) The term "Form S-3" means such form under the Securities Act as in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the Securities and Exchange Commission ("SEC")
which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
10.2 Form S-3 Registration. If the registration of Registrable
Securities under the Securities Act can be effected on Form S-3 (or any
successor short-form registration promulgated by the Securities and Exchange
Commission), subject to the provisions of this Section 10, the Company will use
reasonable best efforts to effect registration under the Securities Act on Form
S-3, including a Form S-3 shelf registration, of all or such portion of the
Registrable Securities as the Investor (or other Holder(s)) shall specify
by written notice given to the Company; provided, however, that the market
value of the Registrable Securities to be included in any such registration
shall be estimated to be at least $3,000,000 at the time of filing of such
registration statement (unless such Registrable Securities constitute all of
the Registrable Securities owned by the Investor or other Holder(s) at such
time), and provided further that the Company shall not be required to effect
more than three such registrations pursuant to this Section 10.2. The Company
shall maintain the effectiveness of any Form S-3 registration until all of the
Registrable Securities included in such registration statement have been
sold. The obligations of the Company to prepare and file a Form S-3
registration statement pursuant to this Section 10.2 and to maintain such
registration pursuant to 10.3 shall be suspended during any period of time
that the Registrable Securities held by the Investor (or such Holder(s)) are,
in the opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. or other counsel to the Company
reasonably satisfactory to the Investor, eligible for resale without volume
limitation pursuant to Rule 144(k) under the ▇▇▇.▇▇ case the Company shall
receive from the Investor (or other Holder(s)) a written request or requests
that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all of the Investor's or such
other Holder's Registrable Securities, or Registrable Securities the
reasonably anticipated aggregate price to the public of which, net of
underwriting discounts and commissions, would exceed $3,000,000, the
Company will:
(a) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Holders (if any); and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within 15 days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any
such registration, qualification or compliance, pursuant to this Section 10.2:
(1) if Form S-3 is not available for such offering by the Holders; (2) if the
Holders, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less than
$3,000,000 (unless such Registrable Securities constitute all of the
Registrable Securities owned by the Investor or other Holder(s) at such
time); (3) if the Company shall furnish to the Holders a certificate signed
by the President and Chief Executive Officer of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such Form S-3
Registration to be effected at such time, in which event the Company shall
have the right to defer the filing of the Form S-3 registration statement for
a period of not more than 120 days after receipt of the request of the Holder
or Holders under this Section 10.2; or (4) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute
a general consent to service of process in effecting such registration,
qualification or compliance.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so
requested to be registered as soon as practicable after receipt of the request
or requests of the Holders. All expenses incurred in connection with the
registrations, qualifications and compliance requested pursuant to Section
10.2 (exclusive of underwriting discounts and commissions and any fees and
expenses of a special counsel to a selling shareholder) shall be paid by the
Company.
10.3 Company Registration. If after one year from the Closing Date (but
without any obligation hereunder to do so) the Company proposes to register
(including for this purpose a registration effected by the Company for
stockholders other than the Holder(s)) any of its stock or other securities
under the Securities Act in connection with the public offering of such
securities (other than (i) a registration effected pursuant to Section 2.1 of
the Registration Rights Agreement dated December 31, 1996 by and between the
Company and the State of Maryland Department of Business and Economic
Development, as modified by a letter agreement of even date therewith (unless
consented to in writing by the State of Maryland Department of Business and
Economic Development), (ii) a registration effected pursuant to Section 2.1 of
any of the Registration Rights Agreements by and between the Company and the
purchasers of the Series E Convertible Preferred Stock (unless consented to in
writing by such purchasers), (iii) a registration effected pursuant to Section
7.3 of the Warrant Agreement dated September 24, 1993 by and between the
Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Securities Incorporated (unless consented to in
writing by the Holders of a Majority of the Warrant Shares (as such terms are
defined therein), (iv) a registration relating solely to the sale of
securities to current or former employees, officers, advisors, consultants or
directors of the Company or any subsidiary of the Company pursuant to a
stock purchase plan or stock option or stock awards approved by the Board of
Directors of the Company, (v) a registration on Form S-4 or any similar
successor form, (vi) a registration on any 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 Registrable Securities or
(vii) a registration in which the only Common Stock being registered is
Common Stock issuable upon conversion of debt securities which are also
being registered), the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each Holder
given within twenty (20) days after giving of such notice by the Company in
accordance with Section 11.9, the Company shall, subject to the provisions of
Section 10.4, cause to be registered under the Securities Act all of the
Registrable Securities that each such Holder has requested to be registered.
The Company shall not be obligated to effect, or to take any action to effect,
any registration pursuant to this Section 10.3 if, at the time such
registration would otherwise be required, the Company delivers to the
Holder(s) seeking to have their Registrable Securities included in such
Registration an opinion of counsel, in form and substance reasonable
acceptable to such Holder(s), to the effect that the Registrable Securities
requested to be registered may then be sold or transferred pursuant to Rule
144(k) of the Securities Act.
10.4 Underwriting Requirements. In connection with any offering
involving any underwriting of shares of the Company's capital stock, the
Company shall not be required under Section 10.3 to include any of a Holder's
Registrable Securities in such underwriting unless such Holder accepts the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (or by other persons entitled to select the
underwriters), and then only in such quantity as the managing underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities of such stockholders that the
managing underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities owned by such stockholders,
including Registrable Securities, which the managing underwriters determine
in their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the Holder(s) and the
holders of other securities entitled to be included in such underwriting under
the terms of any registration rights agreement with the Company, according to
the total amount of Registrable Securities or other such securities entitled to
be included therein owned by each Holder and other holders or in such other
proportions as shall be agreed to by a majority in interest of the Holders and
such other holders, except as otherwise provided (i) in Sections 1.2(b) and 1.8
of the Investors' Rights Agreement dated May 25, 1994 by and between the
Company, and the Series C Investors and (ii) in Section 4(d) of the Placement
Agency Agreement dated June 25, 1993 by and between the Company and ▇▇▇▇▇▇▇
▇▇▇▇▇ Securities Incorporated.
10.5 Obligations of the Company. Whenever required under this Section
10 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities sought to be included therein and use its best
efforts to cause such registration statement to become effective as promptly
as practicable.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Promptly notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing.
10.6 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 10 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition
of such securities as shall be required to effect the registration of such
Holder's Registrable Securities.
10.7 Delay of Registration. No Holder shall 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 10.
10.8 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 10:
(a) The Company will indemnify and hold harmless each Holder registering
Registrable Securities for resale, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the
Securities Exchange Act , against any and all losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Securities Exchange Act, or any other statute or common
law of the United States of America
or any other country or political subdivision thereof, including any amount
paid in settlement of any litigation commenced or threatened (including any
amounts paid pursuant to or in settlement of claims made under the
indemnification or contribution provisions of any underwriting or similar
agreement entered into by the Investor in connection with any offering or
sale of securities covered by this Agreement), and shall promptly reimburse
them, as and when incurred, for any legal or other expenses incurred by them
in connection with investigating any claims and defending any actions, insofar
as any such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Securities Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act or the Securities Exchange Act;
provided, however, that the indemnity agreement contained in this subsection
10.8(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by the Investor or other Holder seeking indemnification.
(b) Each selling Holder will indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within the meaning of
the Securities Act, any underwriter, any other Holder selling securities in
such registration statement and any controlling person of any such underwriter
or other Holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Securities Act, the Securities Exchange Act, or any other statute or common
law of the United States of America or any other country or political
subdivision thereof, including any amounts paid in settlement of any
litigation commenced or threatened (including any amounts paid pursuant to or
in settlement of claims made under the indemnification or contribution
provisions of any underwriting or similar agreement entered into by the
Company in connection with any offering or sale of securities covered by this
Agreement), and shall promptly reimburse them, as and when incurred, for any
legal or other expenses incurred by them in connection with investigating any
claims and defending any actions, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation
occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this subsection 10.8(b), in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 10.6(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld; provided, that, in no event
shall any indemnity under this subsection 10.8(b) exceed the gross proceeds
from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
10.6 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 10.6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
shall have the right to retain its own counsel, with the fees and expenses to
be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate due
to actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time
of the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 10.6 to the extent of such
prejudice, but the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 10.6.
(d) The obligations of the Company and Holders under this Section 10.8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 10 and otherwise.
10.9 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any
time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to
use its best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of its Common
Stock under Section 12 of the Securities Exchange Act, as is necessary to
enable the Holders to utilize Form S-3 for the sale of their Registrable
Securities, such action to be taken as soon as practicable after the end of
the fiscal year in which the first registration statement filed by the
Company for an underwritten offering of its securities to the general public
is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act; and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company
that it has complied with the reporting requirements of SEC Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by the Company), the Securities Act and the Securities
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any rule
or regulation of the SEC (exclusive of Rule 144A) which permits the selling of
any such securities without registration or pursuant to such form.
10.10 Amendment of Registration Rights. Any provision of Section 10
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of at least fifty-one percent
(51%) of the Registrable Securities then outstanding; and with the same
consent the Company may enter into a supplemental agreement for the purpose
of adding any provisions to or changing in any manner or eliminating any of
the provisions of Section 10. Any amendment, waiver or supplemental
agreement effected in accordance with this Section 10.8 shall be binding
upon each Holder of any securities which are or at one time were Registrable
Securities (or which are or were convertible into Registrable Securities),
each future holder of all such securities, and the Company.
11. Miscellaneous.
11.1 Survival of Warranties; Indemnification. (a) The warranties and
representations of the Company and the Investor contained in this Agreement
(other than those contained in Section 3.22) or in any certificate or other
instrument delivered at the Closing shall survive for a period of one year
following the Closing. The representations and warranties of the Company set
forth in Section 3.22 shall survive indefinitely until, by their respective
terms, they are no longer operative. The Company shall indemnify, defend and
hold the Investor and the Investor's directors, officers, employees, agents
and affiliates harmless against any and all liabilities, loss, cost or damage,
together with all reasonable costs and expenses related thereto (including
legal and accounting fees and expenses), arising from, relating to, or
connected with (i) the untruth, inaccuracy or breach of any statements,
representations, warranties or covenants of the Company contained in Section
3.22 or (ii)(A) any Release on, from or affecting any property of the Company
or any Subsidiary, whether on the premises of the Company or any Subsidiary
or through other Persons, and whether by the Company or any Subsidiary or any
predecessor to any of the businesses or assets of the Company or any
Subsidiary, of any hazardous materials, whether or not disclosed pursuant
to this Agreement, (B) any noncompliance by the Company or any Subsidiary
(or by any other Person with respect to any of the Company's or any
Subsidiary's property) with any Environmental Law, whether or not disclosed
pursuant to this Agreement, or (C) any environmental remediation expenses
associated with any property owned or leased at any time by the Company or
any Subsidiary, or the storage, transportation or disposal practices of the
Company or any Subsidiaries for pollutants, toxic or hazardous material,
hazardous substances, hazardous constituents or waste or any kind, whether
or not disclosed pursuant to this Agreement; provided, however, that the
Company's obligation of indemnity under this Section 11.1 shall not apply to
any liability, loss, cost or damage caused by or resulting from the negligence
or willful misconduct of the Investor. The foregoing indemnification shall
survive the termination of this Agreement for any reason.
11.2 Remedies. In case any one or more of the covenants or agreements
set forth in this Agreement shall have been breached by any party hereto, the
party or parties entitled to the benefit of such covenants or agreements may
proceed to protect and enforce their rights either by suit in equity or action
at law, including, but not limited to, an action for damages as a result of
any such breach or an action for specific performance of any such covenant or
agreement contained in this Agreement. The rights, powers and remedies of the
parties under this Agreement are cumulative and not exclusive of any other
right, power or remedy which such parties may have under any other agreement
or law. No single or partial assertion or exercise of any right, power or
remedy of a party hereunder shall preclude any other or further assertion
or exercise thereof.
11.3 Successors and Assigns. Except as otherwise expressly provided
in this Agreement, the terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and permitted
assigns of the parties. Subject to Section 1.2 of this Agreement, this
Agreement and the rights and duties of the Investor set forth herein may be
freely assigned, in whole or in part, by the Investor to an Affiliate of the
Investor. In addition, the Investor may assign its rights under Section 10
hereof in connection with any permitted transfer by the Investor of all of the
Shares. Neither this Agreement, nor any of the rights or duties of the Company
set forth herein, shall be assigned by the Company, in whole or in part,
without having first received the written consent of the Investor.
Notwithstanding the foregoing sentence, the Company may assign this Agreement,
and the rights and the duties of the Company set forth herein, to an entity or
person which purchases all or substantially all of its assets or voting
securities, so long as the successor agrees in writing to be bound by all of
the terms of this Agreement. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
11.4 Entire Agreement. This Agreement and the other writings referred
to herein or delivered pursuant hereto which form a part hereof contain the
entire agreement among the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous arrangements or understandings,
whether written or oral, with respect thereto; provided, however, that this
Agreement is not intended to supersede the Research Collaboration and License
Agreement of even date herewith between the Company and the Investor.
11.5 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware (without regard to the conflict of law
principles thereof).
11.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11.8 Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
11.9 Notices. Unless otherwise provided, all notices. requests,
consents and other communications hereunder to any party shall be given in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified or duly sent by first class registered or certified mail,
or other courier service, postage prepaid, or telecopied with a confirmation
copy by regular mail, and addressed or telecopied to the party to be notified
at the address or telecopier number indicated for such party at the address or
telecopier number, as the case may be, set forth below or such other address
or telecopier number, as the case may be, as may hereafter be designated in
writing by the addressees to the addressor listing all parties:
To the Company: Osiris Therapeutics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Columbia Square
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▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇, Esq.
Carella, Byrne, Bain, Gilfillan,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
To the Investor: Novartis Pharma AG
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▇▇-▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., Esq.
Executive Vice President and
General Counsel
Novartis Corporation
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▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
All such notices, requests, consents and other communications shall be deemed
to have been received: (a) in the case of personal delivery, on the date of
such delivery; (b) in the case of mailing, on the seventh business day
following the date of such mailing; and (c) in the case of facsimile
transmission, when confirmed by facsimile machine report.
11.10 Finder's Fee. The Investor agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of a finders' fee (and the reasonable costs and expenses of
defending against such liability or asserted liability) for which the Investor
or any of its officers, partners, employees, or representatives is responsible.
The Company agrees to indemnify and hold harmless the Investor from any
liability for any commission or compensation in the nature of a finders' fee
(and the reasonable costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.
11.11 Expenses. Each party shall pay its own fees and expenses with
respect to this Agreement. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement or the Restated Articles, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party
may be entitled.
11.12 Amendments and Waivers. Except as provided in Section 8.8 of
this Agreement, any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the Investor.
11.13 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be
ineffective, and the balance of the Agreement shall be interpreted as if such
provision were so excluded, without invalidating the remaining provisions of
this Agreement.
11.14 Confidentiality and Publicity. Neither the Company nor the
Investor will disclose to any person (other than its attorneys, accountants,
employees, officers and directors) the existence or terms of this Agreement or
any of the transactions contemplated hereby without the prior written consent
of the other party, except as may, in the reasonable opinion of such party's
counsel, be required by law (in which event the disclosing party will first
consult with the other party with respect to such disclosure). If the Company
is required to provide a copy of this Agreement or any related document to any
third party, the Company shall redact from such document, to the extent
permitted by law, all confidential information, and shall consult with the
Investor regarding such redaction prior to submission of this Agreement or
any related document to such third party. The Company and the Investor will
consult and reach agreement with one another as to the form and substance of
any press release or any other public disclosure of the existence or terms of
this Agreement or the transactions contemplated hereby.
11.15 Termination. If each of the conditions set forth in Articles 5,6
and 7 have not been satisfied or waived (by the party entitled thereunder to
make such waiver) by 5:00 p.m., Maryland time, on December 31, 1997, this
Agreement shall terminate and be null, void and of no force or effect.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
NOVARTIS PHARMA AG
By: _________________________________
Name: ______________________________
Title: ______________________________
By: _________________________________
Name: ______________________________
Title: ______________________________
OSIRIS THERAPEUTICS, INC.
By: _/s/ ▇▇▇▇▇ ▇. Burns______________
▇▇▇▇▇ ▇. ▇▇▇▇▇,
President and Chief Executive Officer