EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
BETWEEN
ALTEON INC.
AND
GENENTECH, INC.
DATED AS OF
DECEMBER 1, 1997
TABLE OF CONTENTS
Page
1. DEFINITIONS; SALE AND PURCHASE OF SHARES. . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . 1
1.2 Sale and Purchase. . . . . . . . . . . . . . . . . . 1
1.3 Purchase Price . . . . . . . . . . . . . . . . . . . 2
2. CLOSING DATE; DELIVERY. . . . . . . . . . . . . . . . . . . 2
2.1 Closing Dates and Location . . . . . . . . . . . . . 2
(a) First Closing. . . . . . . . . . . . . . . . . . 2
(b) Subsequent Closings. . . . . . . . . . . . . . . 2
(c) Amounts Purchased at Subsequent Closings . . . . 3
(d) Certain Adjustments. . . . . . . . . . . . . . . 3
2.2 Delivery . . . . . . . . . . . . . . . . . . . . . . 4
3. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 4
4. REPRESENTATIONS AND WARRANTIES BY THE COMPANY . . . . . . . 7
4.1 Organization and Standing. . . . . . . . . . . . . . 7
4.2 Changes. . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Litigation . . . . . . . . . . . . . . . . . . . . . 8
4.4 Compliance With Applicable Laws and Other Instruments;
Non-Contravention. . . . . . . . . . . . . . . . . . 9
4.5 Reports and Financial Statements . . . . . . . . . . 9
4.6 Shares . . . . . . . . . . . . . . . . . . . . . . .10
4.7 Securities Laws; Governmental Approvals. . . . . . .10
4.8 Capital Stock. . . . . . . . . . . . . . . . . . . .10
4.9 Corporate Acts and Proceedings . . . . . . . . . . .11
4.10 No Brokers or Finders. . . . . . . . . . . . . . . .11
4.11 Compliance with Environmental Law. . . . . . . . . .11
4.12 Company Disclosure Documents . . . . . . . . . . . .11
4.13 No Implied Representations . . . . . . . . . . . . .11
4.14 Filing of Reports. . . . . . . . . . . . . . . . . .11
4.15 Insurance. . . . . . . . . . . . . . . . . . . . . .12
4.16 Tax Returns, Payments, and Elections . . . . . . . .12
4.17 Subsidiaries . . . . . . . . . . . . . . . . . . . .12
4.18 Complaints . . . . . . . . . . . . . . . . . . . . .13
4.19 Patents and Trademarks . . . . . . . . . . . . . . .13
4.20 Manufacturing and Marketing Rights . . . . . . . . .14
5. REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE
PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . .14
5.1 Authorization. . . . . . . . . . . . . . . . . . . .14
5.2 Investment Experience. . . . . . . . . . . . . . . .14
5.3 Investment Intent. . . . . . . . . . . . . . . . . .14
5.4 Registration or Exemption Requirements . . . . . . .14
5.5 Restriction on Sales, Short Sales and Hedging
Transactions . . . . . . . . . . . . . . . . . . . .15
(i)
TABLE OF CONTENTS (continued)
Page
5.6 No Legal, Tax or Investment Advice . . . . . . . . .15
5.7 Acquisition of Common Stock. . . . . . . . . . . . .15
5.8 Sales of Common Stock. . . . . . . . . . . . . . . .15
6. CONDITIONS TO FIRST CLOSING.. . . . . . . . . . . . . . . .16
6.1 Opinion of Counsel . . . . . . . . . . . . . . . . .16
6.2 Secretary's Certificate. . . . . . . . . . . . . . .16
6.3 Officers' Certificates . . . . . . . . . . . . . . .16
6.4 Obligations; Consents. . . . . . . . . . . . . . . .16
6.5 Transaction Documents. . . . . . . . . . . . . . . .17
6.6 Transactions Not Prohibited. . . . . . . . . . . . .17
6.7 Initial Registration Statement . . . . . . . . . . .17
7. CONDITIONS TO SUBSEQUENT CLOSINGS . . . . . . . . . . . . .17
7.1 Officers' Certificates . . . . . . . . . . . . . . .17
7.2 Obligations; Consents. . . . . . . . . . . . . . . .18
7.3 Transactions Not Prohibited. . . . . . . . . . . . .18
8. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . .18
8.1 Registration Requirements. . . . . . . . . . . . . .18
(a) Registration of Initial Registered
Securities. . . . . . . . . . . . . . . . . . .18
(b) Request for Registration. . . . . . . . . . . .19
(c) Piggyback Registration. . . . . . . . . . . . .20
(d) Shelf Registration. . . . . . . . . . . . . . .21
(e) Registration Expenses . . . . . . . . . . . . .22
(f) Registration Procedures . . . . . . . . . . . .22
(g) Standstill. . . . . . . . . . . . . . . . . . .24
(h) Rule 144. . . . . . . . . . . . . . . . . . . .24
(i) Furnishing Information. . . . . . . . . . . . .25
(j) Assignment of Registration Rights . . . . . . .25
(k) Limitations on Subsequent Registration
Rights. . . . . . . . . . . . . . . . . . . . .25
(l) Amendment of Registration Rights. . . . . . . .26
(m) ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇. . . . . . .▇▇
(▇) Non-Resale Periods. . . . . . . . . . . . . . .26
8.2 Indemnification and Contribution . . . . . . . . . .26
(a) Indemnification by the Company. . . . . . . . .26
(b) Indemnification by the Holder . . . . . . . . .27
(c) Indemnification Procedure . . . . . . . . . . .28
(d) Contribution. . . . . . . . . . . . . . . . . .28
(e) Other Liability . . . . . . . . . . . . . . . .29
8.3 Repurchases. . . . . . . . . . . . . . . . . . . . . .29
9. RESTRICTIONS ON TRANSFERABILITY OF SHARES; COMPLIANCE WITH
SECURITIES ACT. . . . . . . . . . . . . . . . . . . . . . .29
9.1 Restrictions on Transferability. . . . . . . . . . .29
(ii)
TABLE OF CONTENTS (continued)
Page
9.2 Restrictive Legend . . . . . . . . . . . . . . . . .30
9.3 Transfer of Shares . . . . . . . . . . . . . . . . .30
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .30
10.1 Survival of Representations and Warranties . . . . .30
10.2 Parties in Interest. . . . . . . . . . . . . . . . .31
10.3 Headings . . . . . . . . . . . . . . . . . . . . . .31
10.4 Severability; Choice of Law. . . . . . . . . . . . .31
10.5 Entire Agreement; Amendments and Waivers . . . . . .31
10.6 Counterparts . . . . . . . . . . . . . . . . . . . .31
10.7 Notices. . . . . . . . . . . . . . . . . . . . . . .31
LIST OF EXHIBITS
EXHIBIT A DISCLOSURE SCHEDULE
EXHIBIT B CERTIFICATE OF DESIGNATIONS FOR SERIES G
PREFERRED STOCK
EXHIBIT C CERTIFICATE OF DESIGNATIONS FOR SERIES H
PREFERRED STOCK
EXHIBIT D EXHIBITS TO COMPANY SEC REPORTS REQUESTED
BY AND DELIVERED TO THE PURCHASER
EXHIBIT E OPINION OF COUNSEL
(iii)
ALTEON INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
December 1, 1997, between Alteon Inc., a Delaware corporation,
having offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Company"), and Genentech, Inc., a Delaware corporation having
offices at ▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Purchaser").
PRELIMINARY STATEMENT
A. The Company and the Purchaser are entering into that
certain Development Collaboration and License Agreement of even date
herewith (the "License Agreement"), pursuant to which, inter alia,
the Company has granted to the Purchaser certain license rights with
respect to the compounds identified therein; and
B. In order to provide the Company with funds for further
collaborative development of such compounds in the United States by
the Company and the Purchaser, the Company wishes to sell, and the
Purchaser desires to purchase, shares of the Company's Common Stock
and Preferred Stock on the terms and conditions set forth in this
Agreement. Unless defined herein, capitalized terms used herein
shall have the meanings set forth in the License Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties contained in this Agreement, the parties
hereto agree as follows:
1. DEFINITIONS; SALE AND PURCHASE OF SHARES.
1.1 Definitions. All capitalized terms used herein without
further definition shall have the meanings ascribed thereto in the
License Agreement.
1.2 Sale and Purchase. Subject to the terms and conditions
hereof, the Company will issue and sell to the Purchaser, and the
Purchaser will purchase from the Company, the following number of
shares of Common Stock and Preferred Stock:
Common Stock (as defined below) 837,314 shares
Series G Preferred Stock 939 shares
(as defined below)
Series H Preferred Stock subject to Section 2.1(b) and (c)
(as defined below) below and the License Agreement,
up to 4,800 shares
At the first Closing (as hereinafter defined), the Company is to
issue to the Purchaser and the Purchaser is to purchase the Common
Stock and the Series G Preferred Stock identified above. If
necessary, immediately prior to such first Closing, the exact
numbers of shares of Common Stock and Series G Preferred Stock to be
purchased by the Purchaser hereunder shall be adjusted, if and as
needed, based on the total consideration of $15,000,000 and the
purchase price of the Common Stock set forth in Section 1.3(a), so
that in no event shall the Purchaser be obligated to purchase or
hold five percent (5%) or more of the outstanding Common Stock of
the Company immediately after such first Closing. The total amount
of Common Stock and Preferred Stock sold to the Purchaser pursuant
to this Agreement is hereinafter referred to as the "Shares."
1.3 Purchase Price.
(a) The per share purchase price of the Common Stock
to be purchased at the first Closing shall be $6.70 per share.
(b) The per share purchase price of the Series G
Preferred Stock shall be $10,000.
(c) The per share purchase price of the Series H
Preferred Stock shall be $10,000.
2. CLOSING DATE; DELIVERY.
2.1 Closing Dates and Location. The closings of the
purchase and sale of the Shares hereunder (each, a "Closing") will
be held at the offices of Smith, Stratton, Wise, ▇▇▇▇▇ & ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, on or before the
following dates (each, a "Closing Date"):
(a) First Closing. With respect to the first Closing
of the purchase of the Common Stock and Series G Preferred Stock as
set forth above, the later of December 15, 1997, or the Business Day
immediately following the date on which Purchaser receives a copy of
the Company's Certificates of Designations (attached as Exhibits B
and C hereto) filed as required under Section 6.4 below and file
stamped by the Delaware Secretary of State, or such other date as
may be agreed upon by the parties.
(b) Subsequent Closings. With respect to subsequent
Closings, the agreed-upon Development Costs for the collaborative
development of Pimagedine Products in the United States shall be
funded in advance by purchases of Series H Preferred Stock. Subject
to the other terms of the License Agreement, such funding and
Closings shall begin on January 31, 1998 and continue on a quarterly
basis thereafter on July 1, 1998, October 1, 1998, January 2, 1999,
April 1, 1999, July 1, 1999 and October 1, 1999, with the final
Closing on January 2, 2000, or such other date on which the
aggregate purchase price of the Series H Preferred Stock purchased
hereunder equals the lesser of (i) $48,000,000, or (ii) the amount
of total Development Costs agreed-upon under Section 3 of the
License Agreement.
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(c) Amounts Purchased at Subsequent Closings. The
aggregate purchase price of the Series H Preferred Stock to be
purchased on January 31, 1998 shall be $16,000,000. At the Closings
on July 1, 1998 and October 1, 1998, the Purchaser shall purchase a
number of shares of Series H Preferred Stock having an aggregate
purchase price equal to one-half of the excess, if any, of the
aggregate annual Development Costs as set forth in the agreed-upon
Collaborative Budget established by the Joint Steering Committee for
1998 for Pimagedine Products in the United States over $16,000,000.
In the event that the agreed-upon Collaborative Budget established
by the Joint Steering Committee for 1998 for Pimagedine Products in
the United States is less than $16,000,000 or is decreased by the
Joint Steering Committee in the second half of 1998 to less than
$16,000,000, the Company shall purchase from the Purchaser for an
amount per share equal to the purchase price paid by the Purchaser
that number of shares of Series H Preferred Stock that equals the
difference between such Collaborative Budget for 1998 and
$16,000,000. The aggregate purchase price of the Series H Preferred
Stock to be purchased at each quarterly Closing in 1999 shall be
equal to one-fourth (1/4th) of the aggregate annual Development
Costs as set forth in the agreed-upon Collaborative Budget
established by the Joint Steering Committee for 1999 for Pimagedine
Products in the United States, until the Purchaser has purchased
shares of Series H Preferred Stock having an aggregate purchase
price of up to the lesser of (i) $48,000,000, or (ii) the total
amount of the Development Costs agreed-upon under Section 3 of the
License Agreement.
(d) Certain Adjustments.
(i) If the annual Collaborative Budget for
Pimagedine Products in the United States is increased by the Joint
Steering Committee during the second half of 1998, the calculation
of the excess of the amounts contained in such Collaborative Budget
over $16,000,000 pursuant to Section 2.1(c) above shall be adjusted
at the time of the July 1, 1998 and October 1, 1998 Closings to
reflect such increase.
(ii) If the annual Collaborative Budget for
Pimagedine Products in the United States is adjusted or modified by
the Joint Steering Committee during 1999, the purchase price of the
Series H Preferred Stock to be purchased at each Closing during 1999
after the date of such adjustment shall be adjusted by adding to or
subtracting from, as the case may be, such purchase price an amount
equal to the quotient obtained by dividing the amount of the
increase or decrease, as the case may be, in such annual
Collaborative Budget by the number of Closings remaining in 1999.
(iii) Commencing in January 1999, the aggregate
purchase price for additional shares of Series H Preferred Stock to
be purchased at any Closing in any April shall be reduced by the
amount, if any, by which the aggregate purchase price of the Series
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H Preferred Stock purchased through December 31 of the prior year
exceeded the actual Development Costs incurred through December 31
of the prior year for the development of the Pimagedine Products in
the United States. Subject to a maximum aggregate purchase price of
$48,000,000, commencing in January 1999, the aggregate purchase
price for additional shares of Series H Preferred Stock to be
purchased at any Closing in any April shall be increased by the
amount, if any, by which the aggregate purchase price of the Series
H Preferred Stock purchased through December 31 of the prior year
was less than the agreed-upon Development Costs of the Company
through December 31 of the prior calendar year; provided that, the
Joint Steering Committee must have approved an appropriate budget
modification or authorized spending in excess of the budgeted amount
for the prior calendar year.
(iv) If the Purchaser elects to terminate the
License Agreement in its entirety in accordance with Section 10.4(a)
or 10.5 of the License Agreement, the Purchaser shall remain
obligated to purchase shares of Series H Preferred Stock hereunder
only as and to the extent provided in Section 3.11(c) of the License
Agreement. Except as provided in Section 3.11(c) of the License
Agreement, the Purchaser shall have no further obligation to
purchase shares of Series H Preferred Stock in connection with the
termination of the License Agreement.
2.2 Delivery. At each Closing, the Company will deliver to
the Purchaser certificates registered in the Purchaser's name,
representing the shares of Common Stock and Preferred Stock, as the
case may be, purchased by the Purchaser, and the Purchaser will pay
to the Company by certified check or wire transfer (to such account
as the Company may designate in writing to the Purchaser at least
one (1) Business Day prior to such Closing) the amount of the
Purchase Price for the Shares purchased at such Closing.
3. DEFINITIONS.
Unless the context otherwise requires, the terms defined in
this Section 3 shall have the meanings herein specified for all
purposes of this Agreement.
"Affiliate" shall have the meaning set forth in Rule 405
under the Securities Act; provided, however, that an Affiliate which
is not controlled (within the meaning of Rule 405 under the
Securities Act) by the Purchaser shall not be deemed to be an
Affiliate unless such Affiliate files statements regarding the
securities of the Company pursuant to Regulations 13D-G under the
Exchange Act.
"Agreement" means this stock purchase agreement,
including the exhibits hereto, as may be validly amended hereunder.
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"Business Day" means a day on which the Nasdaq National
Market or, if the Common Stock is not then listed on the Nasdaq
National Market, any other established exchange or national system
on which the Common Stock is listed, is open for trading.
"Certificate" means the Certificate of Incorporation of
the Company as filed with the Delaware Secretary of State, as
amended to the date hereof, including the Company's Certificates of
Designations (attached as Exhibits B and C hereto) filed as required
under Section 6.4 below and file stamped by the Delaware Secretary
of State.
"Closing" is defined in Section 2.1 hereof.
"Closing Date" is defined in Section 2.1 hereof.
"Commission" means the Securities and Exchange
Commission.
"Common Stock" means the shares of Common Stock, $.01
par value, authorized by the Certificate, any additional shares of
Common Stock which may be authorized in the future by the Company,
and any stock into which such Common Stock may hereafter be changed,
and shall also include capital stock of any other class of the
Company which is not preferred as to dividends or assets over any
other class of stock of the Company and which is not subject to
redemption.
"Company Disclosure Documents" means the Company SEC
Reports, the Company's Press Releases provided to the Purchaser
prior to the execution of this Agreement and the Disclosure Schedule
attached as Exhibit A hereto.
"Company's Press Releases" means all press releases
issued by the Company since January 1, 1997.
"Company SEC Reports" means the Company's (i) Annual
Report on Form 10-K for the fiscal year ended December 31, 1996, as
filed with the Commission, (ii) Quarterly Report on Form 10-Q for
the fiscal quarters ended March 31, 1997, June 30, 1997, and
September 30, 1997, as filed with the Commission, (iii) Forms 8-K
filed with the Commission since January 1, 1997 and (iv) the
Company's Proxy Statement for its Annual Meeting of Stockholders
held June 10, 1997.
"Conversion Date" shall have the meaning given it in the
Certificates of Designations for the Series G Preferred Stock and
the Series H Preferred Stock.
"Conversion Shares" means the shares of Common Stock
issued upon conversion of the Preferred Stock.
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"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and the regulations promulgated
thereunder.
"Fair Market Value" means, for any Business Day, the
average of the closing sales prices of the Common Stock (or the
closing bid, if no sales were reported) as quoted on the Nasdaq
National Market, or if the Common Stock is not then quoted on
Nasdaq, on such other established exchange or national system on
which the Common Stock is listed, over the prior twenty (20)
Business Days.
"Group" shall have the meaning given it in Rule 13d-5
under the Exchange Act, provided, however, that the Purchaser or its
Affiliate(s) shall not be deemed to be a member of a Group unless a
member of such Group has filed statements regarding the securities
of the Company pursuant to Regulation 13D-G under the Exchange Act
stating that the Purchaser or its Affiliate(s) is a member of such
Group.
"Holder" means any person, including the Purchaser,
owning or having the right to acquire Registrable Securities, or any
assignee thereof in accordance with Section 7.1(j) hereof.
"Initial Registered Securities" is defined in Section
7.1(a) hereof.
"Initial Registration Statement" is defined in Section
7.1(a) hereof.
"License Agreement" means that certain Development
Collaboration and License Agreement of even date herewith between
the Company and the Purchaser, including the exhibits thereto.
"Preferred Stock" shall mean the Series G Preferred
Stock and the Series H Preferred Stock.
"Purchase Price" means, as to any of the Shares, the
purchase price set forth in Section 1.3 hereof.
"Registrable Securities" means (i) the Common Stock
constituting a portion of the Shares, (ii) the Conversion Shares,
and (iii) any Common Stock or other security of the Company issued
as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a stock split, dividend,
recapitalization, other distribution or similar event with respect
to or in exchange for or in replacement of such Common Stock;
provided, however, that such shares of Common Stock shall only be
treated as Registrable Securities if and so long as they (A) have
not been sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, (B) have not
been sold in a transaction exempt from the registration and
-6-
prospectus delivery requirements of the Securities Act under Section
4(1) thereof so that all transfer restrictions and restrictive
legends with respect to such Common Stock are removed upon the
consummation of such sale and the seller and purchaser of such
Common Stock receive an opinion of counsel for the Company, which
shall be in form and content reasonably satisfactory to the seller
and buyer and their respective counsel, to the effect that such
Common Stock in the hands of the purchaser is freely transferable
without restriction or registration under the Securities Act in any
public or private transaction, or (C) cannot be sold in any three
(3) month period pursuant to Rule 144 promulgated by the Commission
under the Securities Act.
The terms "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.
"Registration Expenses" is defined in Section 7.1(e)
hereof.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, and the regulations promulgated
thereunder.
"Selling Expenses" is defined in Section 7.1(e) hereof.
"Series G Preferred Stock" means the Company's Series
G Preferred Stock as more fully described in the form of Certificate
of Designations attached as Exhibit B hereto.
"Series H Preferred Stock" means the Company's Series
H Preferred Stock as more fully described in the form of Certificate
of Designations attached as Exhibit C hereto.
"Shares" is defined in Section 1.2 hereof.
"Transaction Documents" means this Agreement and the
License Agreement, including the exhibits hereto and thereto, each
as may be amended from time to time.
4. REPRESENTATIONS AND WARRANTIES BY THE COMPANY.
The Company represents and warrants to the Purchaser as of the
date hereof as follows:
4.1 Organization and Standing. The Company is a corporation
duly organized and validly existing under, and by virtue of, and is
in good standing under the laws of, the State of Delaware, and has
the requisite corporate power and authority to own its properties,
to carry on its business as now being conducted, and to carry out
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the transactions contemplated under the Transaction Documents. Other
than as disclosed in the Company Disclosure Documents, the Company
has no subsidiaries or direct or indirect ownership interest in any
firm, corporation, association or business which, either
individually or in the aggregate, are material to the business of
the Company. The Company is qualified to do business and is in good
standing as a foreign corporation in every jurisdiction in which its
ownership of property or conduct of business requires it so to be
qualified and in which the failure to so qualify would have a
material adverse effect on the financial condition or business of
the Company.
4.2 Changes. Except as set forth in the Company Disclosure
Documents, since September 30, 1997, the Company has not, to the
extent material to the Company (i) incurred any debts, obligations
or liabilities, absolute, accrued or contingent, whether due or to
become due, other than in the ordinary course of business, (ii)
mortgaged, pledged or subjected to lien, charge, security interest
or other encumbrance any of its assets, tangible or intangible,
(iii) waived any debt owed to the Company, (iv) satisfied or
discharged any lien, claim or encumbrance or paid any obligation
other than in the ordinary course of business, (v) declared, set
aside or paid any dividends or other distribution with respect to
the capital stock of the Company, (vi) changed any material contract
or arrangement by which the Company or any of its assets is bound,
(vii) sold, assigned or transferred any of its patents, trademarks,
copyrights, trade secrets or other intangible assets or (vii)
entered into any transaction other than in the usual and ordinary
course of business. Other than as may be set forth in the Company
Disclosure Documents, there has been no material adverse change in
the financial condition or business, assets or properties,
liabilities or operating results of the Company since the date of
the financial statements contained in the Company Disclosure
Documents other than normal recurring operating losses, and there
has not occurred any loss, destruction or damage affecting the
business, properties, prospects or financial condition of the
Company, whether or not insured, which has or may have a material
adverse effect on the Company.
4.3 Litigation. Other than as described in the Company
Disclosure Documents, there are no legal actions, suits,
arbitrations or other legal, administrative or governmental
proceedings pending or, to the best of the Company's knowledge,
threatened against the Company or its properties, assets or
business, and neither the Company nor any of its officers is aware
of any facts which might result in or form the basis for any such
action, suit or other proceeding, in each case which, if adversely
determined, would, individually or in the aggregate, affect the
execution and delivery of the Transaction Documents or the
performance by the Company of its obligations hereunder and
thereunder, or have a material adverse effect on the financial
condition or business of the Company. The Company is not in default
-8-
with respect to any judgment, order or decree of any court or any
governmental agency or instrumentality, which default would have a
material adverse effect on the financial condition or business of
the Company.
4.4 Compliance With Applicable Laws and Other Instruments;
Non-Contravention. The business and operations of the Company have
been and are being conducted in accordance with all applicable laws,
rules and regulations of all governmental authorities, except for
such violations of applicable laws, rules and regulations which
would not, individually or in the aggregate, have a material adverse
effect on the financial condition or business of the Company.
Neither the execution and delivery of, nor the performance of or
compliance with, the Transaction Documents and the transactions
contemplated hereby and thereby will, with or without the giving of
notice or passage of time, (i) result in any breach of, or
constitute a default under, or result in the imposition of any lien
or encumbrance upon any asset or property of the Company pursuant
to, any agreement or other instrument to which the Company is a
party or by which it or any of its properties, assets or rights is
bound or affected, except for such breach or default or the
imposition of any such lien or encumbrance which, either
individually or in the aggregate, would not have a material adverse
effect on the financial condition or business of the Company or (ii)
violate the Certificate or Bylaws of the Company, or any law, rule,
regulation, judgment, order or decree. The Company is not in
violation of its Certificate or Bylaws nor in violation of, or in
default under, any lien, indenture, mortgage, lease, agreement,
instrument, commitment or arrangement, except for such defaults
which would not, individually or in the aggregate, have a material
adverse effect on the financial condition or business of the
Company, or subject to any restriction which would prohibit the
Company from entering into or performing its obligations under the
Transaction Documents.
4.5 Reports and Financial Statements. The Company has
furnished the Purchaser with true and complete copies of its Company
SEC Reports (without exhibits thereto except for such exhibits as
the Purchaser has requested, a list of which is attached as Exhibit
D hereto). As of their respective filing dates the Company SEC
Reports were prepared in all material respects in accordance with
the applicable requirements of the Securities Act or the Exchange
Act, as the case may be. The audited consolidated financial
statements and unaudited interim financial statements of the Company
included in the Company SEC Reports comply as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect
thereto, and the financial statements included in the Company SEC
Reports have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent
basis (except as may be indicated therein or in the notes thereto)
and fairly present the financial position of the Company as at the
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dates thereof and the results of its operations and cash flows for
the periods then ended, subject, in the case of the unaudited
interim financial statements, to normally recurring year-end
adjustments and any other adjustments described in such financial
statements.
4.6 Shares. The Shares, when issued, paid for and delivered
pursuant to the terms of the Agreement, will be duly and validly
authorized, issued and outstanding, fully paid, nonassessable and
free and clear of all pledges, liens, encumbrances and restrictions
other than the restrictions on transfer set forth in Section 8.
4.7 Securities Laws; Governmental Approvals. Based in part
upon the representations and warranties of the Purchaser contained
in Section 5 of this Agreement, the offer, sale, issuance and
delivery to Purchaser of the Shares as contemplated by this
Agreement are exempt from the registration requirements of the
Securities Act, and from the registration or qualification
requirements of the laws of any applicable state or other U.S.
jurisdiction. Based in part on the representations and warranties
of the Purchaser contained in Section 5 of this Agreement, no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental instrumentality,
domestic or foreign, under any applicable laws, rule or regulations,
is or will be necessary for or in connection with the offer, sale,
issuance and delivery to Purchaser of the Shares as contemplated by
this Agreement or for the performance by the Company of its
obligations under the Transaction Documents, except for (i) filing
of the Certificates of Designations attached as Exhibits B and C
hereto with the Secretary of State of the State of Delaware and (ii)
such other filings under applicable securities laws which will be
made by the Company (or in the case of Section 13 of the Exchange
Act, by the Purchaser) within the prescribed periods.
4.8 Capital Stock. At September 30, 1997, 16,515,970
shares of the Common Stock were issued and outstanding, 2,060 shares
of the Company's 6% Cumulative Convertible Preferred Stock were
issued and outstanding and options and warrants to purchase
3,516,614 shares of the Company's Common Stock were issued and
outstanding. All of the outstanding shares of the Company's capital
stock are validly issued, fully paid and nonassessable and were
issued in compliance with all applicable federal and state
securities laws. Except as set forth in the Company Disclosure
Documents, the Company has not agreed to register the sale of any of
its securities under the Securities Act, and there are no
outstanding subscriptions, options, warrants, calls, contracts,
demands, commitments, conversion rights or other agreements or
arrangements of any character or nature whatever under which the
Company is or may be obligated to issue its Common Stock, preferred
stock or warrants or options to purchase Common Stock or preferred
stock. No holder of any security of the Company is entitled to any
rights of first refusal, preemptive or similar rights to purchase
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any securities of the Company (including, without limitation, the
Shares).
4.9 Corporate Acts and Proceedings. This Agreement and the
other Transaction Documents have been duly authorized by the
requisite corporate action, and each has been duly executed and
delivered by an authorized officer of the Company and is a valid and
binding obligation of the Company, enforceable in accordance with
its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and as
to limitations on the enforcement of the remedy of specific
performance and other equitable remedies. The Company has taken all
requisite corporate action necessary for the authorization,
creation, issuance and delivery to Purchaser of the Shares and to
carry out and perform all of the Company's other obligations under
the Transaction Documents.
4.10 No Brokers or Finders. To the knowledge of the Company,
no person, firm or corporation has or will have, as a result of any
act or omission of the Company, any right, interest or valid claim
against the Purchaser for any commission, fee or other compensation
as a finder or broker in connection with the transactions
contemplated by this Agreement.
4.11 Compliance with Environmental Law. Except as disclosed
in the Company Disclosure Documents, the Company is not in violation
in any material respect of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and,
to the best of the Company's knowledge, no material expenditures are
or will be required in order to comply with any such existing
statute, law or regulation. To the best of the Company's knowledge,
the Company does not have any material liability to any governmental
authority or other third party arising under or as a result of any
such past or existing statute, law or regulation.
4.12 Company Disclosure Documents. The Company Disclosure
Documents, when read as a whole, as updated by the Company Press
Releases and as of the date hereof, do not contain any untrue
statements of a material fact and do not omit to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.13 No Implied Representations. All of the Company's
representations and warranties are contained in this Agreement, and
no other representations or warranties by the Company shall be
implied.
4.14 Filing of Reports. Since the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996, the
Company has filed with the Commission all reports and other material
required to be filed by it therewith pursuant to Section 13, 14 or
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15(d) of the Exchange Act, and the Company is eligible to register
the offer and resale of the Shares by the Purchaser on a
Registration Statement on Form S-3 or a successor form.
4.15 Insurance. The Company has in full force and effect
fire and casualty insurance policies, with extended coverage,
sufficient in amount (subject to reasonable deductibles) to allow it
to replace any of its properties that might be damaged or destroyed.
The Company has in full force and effect products liability
insurance policies in amounts customary for companies similarly
situated.
4.16 Tax Returns, Payments, and Elections. Except as
disclosed in the Company Disclosure Documents, the Company has filed
all tax returns and reports as required by law. These returns and
reports are true and correct in all material respects. The Company
has paid all taxes and other assessments due, except those contested
by it in good faith. The provision for taxes of the Company as
shown in the financial statements is adequate for taxes due or
accrued as of the date thereof. The Company has not elected
pursuant to the Internal Revenue Code of 1986, as amended ("Code"),
to be treated as an S corporation or a collapsible corporation
pursuant to Section 1362(a) or Section 341(f) of the Code, nor has
it made any other elections pursuant to the Code (other than
elections that relate solely to methods of accounting, depreciation,
or amortization) that would have a material effect on the business,
properties, prospects, or financial condition of the Company. The
Company has never had any tax deficiency proposed or assessed
against it and has not executed any waiver of any statute of
limitations on the assessment or collection of any tax or
governmental charge. Except as disclosed in the Company Disclosure
Documents, none of the Company's federal income tax returns and none
of its state income or franchise tax or sales or use tax returns has
ever been audited by governmental authorities. Since the date of
the financial statements, the Company has made adequate provisions
on its books of account for all taxes, assessments, and governmental
charges with respect to its business, properties, and operations for
such period. The Company has withheld or collected from each
payment made to each of its employees, the amount of all taxes,
including, but not limited to, federal income taxes, Federal
Insurance Contribution Act taxes and Federal Unemployment Tax Act
taxes required to be withheld or collected therefrom, and has paid
the same to the proper tax receiving officers or authorized
depositaries.
4.17 Subsidiaries. The Company does not own or control,
directly or indirectly, any interest in any other corporation,
association, or other business entity. The Company is not a
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participant in any joint venture, partnership, or similar
arrangement.
4.18 Complaints. Except as disclosed in the Company
Disclosure Documents, the Company has received no complaints which
it believes to be material from clinical subjects concerning alleged
defects in its products (or the design thereof) that, if true, would
materially adversely affect the operations or financial condition of
the Company.
4.19 Patents and Trademarks. To the best of its knowledge,
the Company owns or possesses sufficient legal rights to all
patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information, and proprietary rights and processes
necessary for its business as now conducted and as proposed to be
conducted without any conflict with, or infringement of the rights
of, others. Except as disclosed in the Company Disclosure Documents
and except for agreements with its own employees or consultants, and
standard end-user license agreements, there are no outstanding
options, licenses, or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options,
licenses, or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets,
licenses, information, and proprietary rights and processes of any
other person or entity. The Company has not received any
communications alleging that the Company has violated or, by
conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights, trade
secrets, or other proprietary rights or processes or any other
person or entity. The Company is not aware that any of its
employees is obligated under any contract (including licenses,
covenants, or commitments of any nature) or other agreement, or
subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use of such
employee's 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 best of the Company's knowledge, conflict with or
result in a breach of the terms, conditions, or provisions of, or
constitute a default under, any contract, covenant, or instrument
under which any of such employees is now obligated. The Company
does not believe it is or will be necessary to use any inventions of
any of its employees (or persons it currently intends to hire) made
prior to their employment by the Company except for such inventions
as to which the Company has obtained all necessary rights to do so.
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4.20 Manufacturing and Marketing Rights. Except as disclosed
in the Company Disclosure Documents, the Company has not granted
rights to manufacture, produce, assemble, license, market, or sell
its products to any other person and is not bound by any agreement
that affects the Company's exclusive right to develop, manufacture,
assemble, distribute, market, or sell its products.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE PURCHASER.
The Purchaser hereby represents and warrants to, and covenants
and agrees with, the Company, as of the date hereof as follows:
5.1 Authorization. The Purchaser has all requisite legal
and corporate or other power and capacity and has taken all
requisite corporate or other action to execute and deliver the
Transaction Documents, to purchase the Shares and to carry out and
perform all of its obligations under the Agreement and other
Transaction Documents. Each of the Transaction Documents constitutes
the legal, valid and binding obligation of the Purchaser,
enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and as to limitations on the enforcement
of the remedy of specific performance and other equitable remedies.
5.2 Investment Experience. The Purchaser is an "accredited
investor" as defined in Rule 501 under the Securities Act. The
Purchaser is aware of the Company's business affairs and financial
condition and has had access to and has acquired sufficient
information about the Company to reach an informed and knowledgeable
decision to acquire the Shares. The Purchaser has such business and
financial experience as is required to give it the capacity to
evaluate the risks of an investment in the Shares and to protect its
own interests in connection with the purchase of the Shares. The
Purchaser is not a "broker" or a "dealer" as defined in the Exchange
Act.
5.3 Investment Intent. The Purchaser is purchasing the
Shares and the Conversion Shares for its own account for investment
only and not with a view to any resale or distribution thereof,
except pursuant to (i) an effective registration statement under the
Securities Act and in compliance with the requirements of state
securities laws, (ii) an opinion of counsel to the Company that such
registration or compliance is not required or (iii) Rule 144 under
the Securities Act.
5.4 Registration or Exemption Requirements. The Purchaser
further acknowledges and understands that the Shares and the
Conversion Shares may not be resold or otherwise transferred except
in a transaction registered under the Securities Act and applicable
state laws or unless an exemption from such registration is
-14-
available or unless pursuant to Rule 144 under the Securities Act.
The Purchaser understands that the certificates evidencing the
Shares and the Conversion Shares will be imprinted with a legend
that prohibits the transfer of the Shares unless (i) such
transaction is registered, (ii) the Company receives an opinion
reasonably satisfactory to the Company of counsel reasonably
satisfactory to the Company to the effect that registration is not
required or (iii) pursuant to Rule 144 under the Securities Act.
5.5 Restriction on Sales, Short Sales and Hedging
Transactions. During the period of twenty five (25) Business Days
immediately prior to the execution of this Agreement by the
Purchaser and the period of twenty five (25) Business Days prior to
each Conversion Date, the Purchaser did not and the Purchaser will
not, directly or indirectly, execute or effect or cause to be
executed or effected any short sale, option or equity swap
transactions in or with respect to the Common Stock or any other
derivative security transaction the purpose or effect of which is to
hedge or transfer to a third party all or any part of the risk of
loss associated with the ownership of the Shares or the Conversion
Shares to be purchased on such Conversion Date by the Purchaser.
5.6 No Legal, Tax or Investment Advice. The Purchaser
understands that nothing in the Company Disclosure Documents, this
Agreement or any other materials presented to the Purchaser in
connection with the purchase and sale of the Shares constitutes
legal, tax or investment advice. The Purchaser has consulted such
legal, tax and investment advisors as it, in its sole discretion,
has deemed necessary or appropriate in connection with its purchase
of the Shares.
5.7 Acquisition of Common Stock. From the date of this
Agreement and until the tenth (10th) anniversary of the date of this
Agreement, the Purchaser, its Affiliates and any Group of which the
Purchaser or any of its Affiliates is a member shall not at any time
be the beneficial owner (as defined in Rule 13d-3 promulgated
pursuant to the Exchange Act) of, in aggregate, more than forty
percent (40%) of the shares of Common Stock outstanding from time to
time, exclusive of any shares of Common Stock issuable but not
issued upon conversion of Series G Common Stock or Series H Common
Stock by the Company.
5.8 Sales of Common Stock. From and after the date of this
Agreement until the fifth (5th) anniversary of the date of this
Agreement, during each calendar week no holder of the Shares or the
Conversion Shares shall sell, transfer, assign, pledge, hypothecate
or otherwise dispose of, directly or indirectly, more than that
number of shares of Common Stock which is equal to twenty-five
percent (25%) of the average weekly trading volume of the Common
Stock for the four (4) preceding calendar weeks; provided, however,
that shares of Common Stock received by the Purchaser upon the
Company's conversion of the Series G Preferred Stock or Series H
-15-
Preferred Stock shall not be included for purposes of determining
the number of shares which may be sold by the Purchaser pursuant to
this Section and such shares shall not be subject to the foregoing
volume restrictions. Such holder shall give the Company notice of
any directions given to a broker or other third party instructing
such party to sell or otherwise transfer Common Stock and shall
notify the Company of any such sales or transfers not later than
three (3) Business Days after such holder learns that any such sale
or transfer has been effected.
6. CONDITIONS TO FIRST CLOSING.
The obligation of the Company to sell, and the Purchaser to
buy, the Shares shall be conditioned on the satisfaction of the
following conditions on the date of the first Closing hereunder.
6.1 Opinion of Counsel. The Purchaser shall have received
an opinion of Smith, Stratton, Wise, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, dated the
Closing Date, substantially in the form attached hereto as Exhibit
E.
6.2 Secretary's Certificate. The Purchaser shall have
received a Secretary's Certificate, dated the Closing Date,
certifying the Certificate and Bylaws of the Company, the
resolutions of the Board of Directors of the Company and the
signatures of the officers of the Company to execute this Agreement
and the other Transaction Documents and certificates to be delivered
by the Company in connection with the transactions contemplated
hereby and thereby. All corporate and other proceedings in
connection with the transactions contemplated under the Transaction
Documents shall be reasonably satisfactory to the Purchaser and its
counsel, and they shall have received all such counterpart original
and certified or other copies of such documents as they may
reasonably request.
6.3 Officers' Certificates. The Company shall have received
from the Purchaser a certificate of an officer of the Purchaser,
dated the Closing Date, to the effect that the Purchaser's
representations and warranties contained in this Agreement and the
other Transaction Documents are true and correct as of the Closing
Date as though made on and as of that date. The Purchaser shall
have received from the Company a certificate of an officer of the
Company, dated the Closing Date, to the effect that the Company's
representations and warranties contained in this Agreement and the
other Transaction Documents are true and correct as of the Closing
Date as though made on and as of that date and that the Company has
performed all of the conditions to the Closing set forth in Section
6.4.
6.4 Obligations; Consents. The Company shall have performed
and complied with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or
-16-
complied with by it on or before the Closing Date, including,
without limitation filing with the Secretary of State of the State
of Delaware the Certificates of Designations attached hereto as
Exhibits B and C and providing Purchaser with a file stamped copy of
each. The Purchaser shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or
before the Closing Date. The Company shall have obtained all
consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated under the Transaction
Documents, including, without limitation, all governmental and
regulatory consents, approvals or authorizations required in
connection therewith.
6.5 Transaction Documents. The Transaction Documents shall
have been executed and delivered on behalf of each of the Company
and the Purchaser.
6.6 Transactions Not Prohibited. There shall be no action
or proceeding commenced or, to the knowledge of the parties,
threatened before any legal or administrative tribunal or by any
administrative organization, and no judgment, order or injunction
shall have been rendered by any such tribunal or organization for
the purpose of restraining or prohibiting the transactions
contemplated by the Transaction Documents.
6.7 Initial Registration Statement. The Company shall have
delivered to the Purchaser a draft of a Registration Statement on
Form S-3 covering the Initial Registered Securities (as hereinafter
defined) (the "Initial Registration Statement").
7. CONDITIONS TO SUBSEQUENT CLOSINGS.
The obligation of the Company to sell, and the Purchaser
to buy, the Shares shall be conditioned on the satisfaction of the
following conditions on each subsequent Closing Date hereunder.
7.1 Officers' Certificates. The Purchaser shall have
received from the Company a certificate of an officer of the
Company, dated the Closing Date, to the effect that the Company's
representations and warranties contained in this Agreement and the
other Transaction Documents are true and correct as of the Closing
Date as though made on and as of that date and that the Company has
performed all of the conditions to the Closing set forth in Section
7.2. Notwithstanding the foregoing, such representations and
warranties shall reflect any updated Company Disclosure Documents
delivered to the Purchaser prior to any subsequent Closing Date;
provided that such representations and warranties, as updated by the
Company Disclosure Documents, are true and correct, the obligation
of the Purchaser to purchase shares of Series H Preferred Stock at
any Closing shall not be affected by the content of such
representations or warranties as so updated.
-17-
7.2 Obligations; Consents. The Company shall have performed
and complied with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or
complied with by it on or before the Closing Date. The Purchaser
shall have performed and complied with all agreements, obligations
and conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing Date. The
Company shall have obtained all consents, permits and waivers
necessary or appropriate for consummation of the transactions
contemplated under the Transaction Documents, including, without
limitation, all governmental and regulatory consents, approvals or
authorizations required in connection therewith.
7.3 Transactions Not Prohibited. There shall be no action
or proceeding commenced or, to the knowledge of the parties,
threatened before any legal or administrative tribunal or by any
administrative organization, and no judgment, order or injunction
shall have been rendered by any such tribunal or organization for
the purpose of restraining or prohibiting the transactions
contemplated by the Transaction Documents.
8. COVENANTS.
8.1 Registration Requirements.
(a) Registration of Initial Registered Securities.
(i) In addition to the registration rights set
forth in Sections 8.1(b), (c) and (d) hereof, the Purchaser has
requested and the Company has agreed to effectuate registration
under the Securities Act of Registrable Securities consisting of (A)
the Common Stock purchased in the first Closing, (B) Common Stock
issuable or issued on conversion of the Series G Preferred purchased
in the first Closing, and (C) Common Stock or any other security (if
any) included in clause (iii) of the definition of "Registrable
Securities" in Section 3 hereof to the extent that such Common Stock
or other security relates to the Common Stock described in Section
8.1(a)(A) or (B) (collectively, the "Initial Registered
Securities").
(ii) Subject to the other terms of this Section 8,
using its diligent best efforts, and as soon as reasonably
practicable after the first Closing Date (but in no event later than
thirty (30) days after such first Closing Date), the Company shall
prepare and file with the Commission the Initial Registration
Statement, and shall secure the effectiveness of such Initial
Registration Statement as soon as reasonably practicable thereafter.
(iii) The Company shall be obligated to maintain
the effectiveness of the Initial Registration Statement until the
sale of all of the Initial Registered Securities has been completed
or the Initial Registered Securities have ceased to be Registrable
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Securities.
(iv) If the Company is unable to cause the Initial
Registration Statement to become effective within ninety (90) days
after the date of the first Closing as contemplated, the Company, to
the extent that it may lawfully do so, shall, if the Purchaser so
requests in writing not later than ninety (90) days after the
expiration of such ninety (90) day period, purchase from the
Purchaser the Initial Registered Securities included in such
registration statement for a purchase price equal to the Purchase
Price for such Initial Registered Securities, or in the case of
Initial Registered Securities consisting of Common Stock issued upon
conversion of the Series G Preferred Stock, for a purchase price
equal to the Conversion Value (as defined in the Certificate of
Designation for such Series G Preferred Stock attached hereto as
Exhibit B). Such purchase shall be effected not later than fifteen
(15) days after the Company's receipt of the Purchaser's request
therefor.
(b) Request for Registration.
(i) At any time and from time to time after the
purchase of Shares hereunder, the Holder(s) of Registrable
Securities (the "Initiating Holder(s)") may request registration
under the Securities Act of all or a portion of its or their
Registrable Securities, provided that the anticipated aggregate
offering price of the Registrable Securities to be sold, including
underwriting discounts and commissions, is at least $1,500,000.
Such request must specify the number of Registrable Securities
requested to be registered by the Initiating Holder(s).
(ii) Subject to the other terms of this Section 8
(including, without limitation, Section 8.1(g)), using its diligent
best efforts, and as soon as reasonably practicable after receipt of
the request for registration under Section 8.1(b)(i) (but in no
event later than sixty (60) days after receipt of such request), the
Company shall prepare and file a registration statement with the
Commission under the Securities Act to register the offer and resale
of the number of Registrable Securities specified in such request
and shall secure the effectiveness of such registration statement as
soon as reasonably practicable thereafter.
(iii) If the Initiating Holder(s) intend to
distribute the Registrable Securities covered by their request under
Section 8.1(b)(i) by means of an underwriting, they shall so advise
the Company as part of their request under such Section. The right
of any Initiating Holder(s) to include securities in such
registration shall be conditioned upon the inclusion of such
securities in the underwriting. The Initiating Holder(s) shall
enter into an underwriting agreement in customary form with the
representative of the underwriter(s) selected by a majority in
interest of the Initiating Holder(s) and reasonably acceptable to
the Company. If the underwriter determines and advises the
-19-
Initiating Holder(s) that marketing factors require a limitation of
the number of shares of Registrable Securities to be underwritten,
then the numbers of shares of Registrable Securities to be included
in the registration statement by the Initiating Holder(s) shall be
reduced pro rata among such Initiating Holder(s) (based on the
respective amounts of Registrable Securities then held by such
Initiating Holder(s)). If any Initiating Holder disapproves of the
terms of the underwriting, such Initiating Holder may elect to
withdraw therefrom by written notice to the underwriter and the
Company.
(iv) The Company is obligated to effect no more
than one (1) registration for the Purchaser or its transferees or
assignees during any six (6) month period. Notwithstanding the
foregoing, if the Company furnishes to the Initiating Holder(s) a
certificate signed by the 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 registration statement to be filed and it
is therefore essential to defer such filing, the Company shall have
the right to defer such filing for a period of not more than sixty
(60) days after receipt of such certificate by the Initiating
Holder(s); provided, however, that the Company may not utilize this
deferral right more than once in any twelve (12) month period.
(c) Piggyback Registration.
(i) If (but without any obligation to do so) the
Company proposes to register any of its capital stock or other
securities under the Securities Act in connection with the public
offering of such securities (other than a registration relating
solely to an employee benefit plan of the Company or a registration
relating solely to a Rule 145 transaction), the Company shall
promptly give each Holder of Eligible Registrable Securities written
notice of such registration, together with a list of jurisdictions
in which the Company intends to attempt to qualify such securities
under applicable state securities laws. For purposes of this Section
8.1(c), "Eligible Registrable Securities" shall mean all Registrable
Securities other than Registrable Securities which are then covered
by an effective registration statement.
(ii) Subject to the other terms of this Section 8,
upon the written request of each Holder of Eligible Registrable
Securities given within thirty (30) days after receipt of the notice
from the Company under Section 8.1(c)(i), the Company shall include
in such registration (and any related qualification under applicable
state securities laws), and in any underwriting involved therein,
all of the Eligible Registrable Securities each such Holder has
requested to be registered.
(iii) In the event the proposed registration is an
underwritten public offering, the Company shall so advise the
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Holders as part of the notice under Section 8.1(c). If the managing
underwriter determines and advises the Company in writing that the
inclusion of shares of requesting Holders, together with shares to
be offered by the Company, would materially adversely affect the
successful marketing of such securities, then the Company
immediately shall provide the Holders requesting inclusion with a
copy of such written advice, and the numbers of shares of Eligible
Registrable Securities to be included in the registration statement
by Holders shall be reduced pro rata among such Holders requesting
inclusion (based on the respective amounts of Eligible Registrable
Securities then held by such Holders requesting inclusion). If any
Holder disapproves of the terms of the underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
managing underwriter.
(iv) The Company shall have the right to terminate
or withdraw any registration statement initiated by it under this
Section 8.1(c) prior to the effectiveness of such registration,
whether or not any Holder has elected to include Eligible
Registrable Securities in such registration. The Registration
Expenses (as hereinafter defined) of such withdrawn registration
shall be borne by the Company in accordance with Section 8.1(e)
hereof.
(d) Shelf Registration.
(i) At any time and from time to time after the
purchase of Shares hereunder, the Holder(s) of Registrable
Securities may request registration on Form S-3 (or any successor
short-form registration statement adopted by the Commission) under
the Securities Act of all or a portion of its or their Registrable
Securities. Such request must specify the number of Registrable
Securities requested to be so registered.
(ii) Upon receipt of any such request under Section
8.1(d)(i), the Company promptly shall notify all other Holders (if
any) of such proposed registration. Such other Holders shall have
thirty (30) days in which to request in writing to the Company that
all or any portion of their Registrable Securities be included in
such registration.
(iii) Subject to the other terms of this Section
8 (including, without limitation, Section 8.1(g)), using its
diligent best efforts, and as soon as reasonably practicable after
its receipt of the request for registration under Section 8.1(d)(i)
(but in no event later than sixty (60) days after receipt of such
request), the Company shall prepare and file a registration
statement on Form S-3 (or any successor short-form registration
statement adopted by the Commission) with the Commission under the
Securities Act to register the offer and resale of the Registrable
Securities specified in the request(s) under Section 8.1(d)(i) and
(ii) hereof. The Company shall cause such registration statement to
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become effective as soon as reasonably practicable thereafter and to
remain effective until the earlier of (A) three (3) years
thereafter, (B) the completion of the distribution described therein
or (C) the date on which all of the Registrable Securities covered
by the registration statement cease to be Registrable Securities.
(iv) The Company shall not be obligated to effect
any such registration under this Section 8.1(d): (A) if the Company
is not qualified as a registrant entitled to use Form S-3 (or any
successor short-form registration statement adopted by the
Commission); (B) if the Holder(s) requesting registration under
Sections 8.1(d)(i) and (ii) propose to sell Registrable Securities
in an aggregate amount less than $500,000, unless all registration
expenses are borne by the requesting Holders; or (C) if the Company
furnishes to the Holder(s) requesting registration under this
Section 8.1(d) a certificate signed by the 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 registration statement on
Form S-3 (or any similar successor form) to be filed and it is
therefore essential to defer such filing, in which case the Company
shall have the right to defer such filing for a period of not more
than sixty (60) days after receipt of such certificate by such
Holder(s); provided, however, that the Company may not utilize this
deferral right more than once in any twelve (12) month period.
(v) No registration pursuant to this Section
8.1(d) shall be counted as a request for registration pursuant to
Sections 8.1(a), (b) or (c) hereof.
(e) Registration Expenses. The Company shall pay all
Registration Expenses (as defined below) in connection with any
registration, qualification or compliance hereunder, and each Holder
of Registrable Securities so registered under Section 8.1 shall pay
all Selling Expenses(as defined below) and other expenses that are
not Registration Expenses that relate to the Registrable Securities
of such Holder to be registered. "Registration Expenses" shall mean
all expenses, except for Selling Expenses and compensation of
employees of the Company, incurred by the Company in complying with
the registration provisions herein described, including, without
limitation, all registration, qualification, compliance and filing
fees, printing expenses, escrow fees, fees and disbursements of
counsel for the Company, fees and disbursements of one (1) counsel
for the participating Holder(s) designated by a majority in interest
thereof up to a maximum of $25,000, blue sky fees and expenses, and
accounting fees (including the expense of any special audits
incident to or required by any such registration). "Selling
Expenses" shall mean all selling commissions, underwriting fees and
stock transfer taxes applicable to the Registrable Securities.
(f) Registration Procedures. In the case of any
registration effected by the Company pursuant to this Section 8.1,
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the Company will use its best efforts:
(i) except as otherwise expressly provided in this
Section 8.1, to keep such registration effective until the earlier
of (A) the date on which all of the Registrable Securities included
in the registration statement have been resold, or (B) the date on
which all Registrable Securities included in the registration
statement cease to be Registrable Securities;
(ii) to respond promptly to any comments of the
Commission relating to the registration statement, and to prepare
and file with the Commission such amendments (including
post-effective amendments) and supplements to the registration
statement and the prospectus used in connection with the
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 the registration statement;
(iii) to furnish such number of registration
statements and other documents incident thereto, including any
amendment of or supplement to the registration statement or
prospectus, as any Holder of Registrable Securities covered by such
registration statement may reasonably request to facilitate the
public sale or other disposition of all or any of the Registrable
Securities;
(iv) to cause the Shares to be listed on the Nasdaq
National Market, or if the Common Stock is not then listed on
Nasdaq, any securities exchange or quoted on each quotation service
on which the Common Stock of the Company is then listed or quoted;
(v) to provide a transfer agent and registrar for
all securities registered pursuant to the registration statement and
a CUSIP number for all such securities;
(vi) to file the documents required of the Company
and otherwise use its best efforts to maintain requisite blue sky
clearance in (A) all U.S. jurisdictions in which any of the Shares
are originally sold and (B) all other states specified in writing by
the Purchaser; provided, however, that, as to clause (B), the
Company shall not be required to qualify to do business in any state
in which it is not now so qualified or has not so consented except
as may be required by the Securities Act;
(vii) to keep each Holder of Registrable
Securities covered by the registration statement generally advised
in writing as to the filing and completion of each registration,
qualification and compliance;
(viii) in the event of an underwritten public
offering, to enter into and perform its obligations under the
underwriting agreement for the offering;
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(ix) on the closing date of any public offering (in
the case of an underwritten public offering), or on the date the
registration statement becomes effective (in the case of any other
public offering), to furnish (A) an opinion of counsel for the
purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public
offering, addressed to the underwriters (if any) and to the Holders
of Registrable Securities covered by such registration statement, to
the effect that (I) the registration statement has become effective
under the Securities Act and, to the knowledge of such counsel
(after due inquiry), no stop order or proceedings with respect
thereto are threatened or pending, and (II) the registration
statement and each prospectus forming a part thereof and each
supplement or amendment thereto (except for the financial statements
and schedules) complies in all material respects with the Securities
Act, and (B) a letter from the independent certified public
accountants, in form and substance as is customarily given by
independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters (if any)
and to the Holders of Registrable Securities covered by such
registration statement; and
(x) to advise the Holders of Registrable Securities
covered by a registration statement promptly at any time when the
prospectus (including any supplements thereto) contained in a
registration statement then in effect under this Section 8 includes
an untrue statement of material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing.
(g) Standstill. Commencing after the first (1st)
anniversary of the date of this Agreement, no Holder shall effect
any public sale or distribution (including sales pursuant to Rule
144) of the Registrable Securities or the Preferred Shares during
the seven (7) days prior to and the ninety (90) day period beginning
on the effective date of any underwritten public offering of the
Common Stock unless the underwriters managing such offering
otherwise agree, provided that the anticipated aggregate offering
price of the securities to be sold, including underwriting discounts
and commissions, is at least $1,500,000 and the Company is actively
employing its good faith efforts to cause such registration
statement to become effective. In addition, commencing on the date
of this Agreement, no Holder shall effect any public sale or
distribution (including sales pursuant to Rule 144) at any time
after notice from the Company that a prospectus relating thereto
which is required to be delivered under the Securities Act contains
an untrue statement of a material fact or omits any fact necessary
to make the statements therein not misleading.
(h) Rule 144. With a view to making available to the
Purchaser the benefits of Rule 144 under the Securities Act and any
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other rule or regulation of the Commission that may at any time
permit the Purchaser to sell Registrable Securities to the public
without registration or pursuant to a registration statement on Form
S-3, the Company covenants and agrees to use its best efforts to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144, until the earlier of (A) the
date on which the Shares may be sold pursuant to Rule 144(k) (or any
successor rule) or (B) such date as all of the Registrable
Securities shall have ceased to be Registrable Securities; and (ii)
file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and
Exchange Act.
(i) Furnishing Information. Each Holder selling
Registrable Securities in any registration under this Section 8.1
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 its Registrable Securities and to execute such
documents in connection therewith as the Company may reasonably
request (and in any case only as shall be necessary to allow the
Company to comply with the provisions hereof).
(j) Assignment of Registration Rights. The rights to
cause the Company to register Registrable Securities pursuant to
this Agreement may be assigned by any Holder of Registrable
Securities to a transferee or assignee of such Registrable
Securities, provided that after such transfer or assignment, such
transferee or assignee is the Holder of Registrable Securities with
a Fair Market Value of at least $500,000 and provided, further, that
the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of the name and address of
such transferee or assignee and the Registrable Securities with
respect to which such registration rights are being assigned, and
provided, further, that such assignment shall be effective only if
immediately following such transfer or assignment the securities
covered by such transfer or assignment are still Registrable
Securities.
(k) Limitations on Subsequent Registration Rights.
From and after the date of this Agreement, the Company shall not,
without the prior written consent of the Holder(s) of a majority in
interest of the Registrable Securities, enter into any agreement
with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder to
include such securities in any registration filed under this Section
8, unless under the terms of such agreement, such holder or
prospective holder may include such securities only to the extent
that such inclusion will not reduce the amount of Registrable
Securities of the Holder(s) of Registrable Securities included in
that registration.
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(l) Amendment of Registration Rights. Any provision
of this Section 8.1 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 Holder(s) of a majority in interest of the
Registrable Securities. Any amendment or waiver effected in
accordance with this Section 8.1(l) shall be binding upon each
Holder of Registrable Securities then outstanding, each future
Holder of Registrable Securities, and the Company.
(m) Termination of Registration Rights. The
registration rights granted pursuant to this Section 8.1 shall
terminate at the time at which all of the Registrable Securities
then outstanding can be sold within a given three (3) month period
without compliance with the registration requirements under the
Securities Act, pursuant to Rule 144 or other applicable exemption,
as supported by a written opinion of legal counsel to the Company,
which opinion shall be reasonably satisfactory in form and substance
to legal counsel for the Holder(s); provided, however, that in no
event shall the registration rights granted hereunder terminate
while any shares of the Series H Preferred Stock may be issued
pursuant to the terms of this Agreement.
(n) Non-Resale Periods. At any time and from time to
time after effectiveness of a registration statement filed by the
Company pursuant to this Section 8, the Company may refuse to permit
the Holder of the securities covered by such registration statement
to resell any securities pursuant to such registration statement,
and such Holder will not effectuate any such resale of the
registered securities during the time period requested by the
Company (the time period with respect to each such request, a
"Non-Resale Period"). The total number of days in all of the
Non-Resale Period(s) requested by the Company hereunder (if any) may
not exceed thirty (30) days in the aggregate. In order to exercise
this right hereunder, the Company must furnish to the Holders a
certificate signed by the 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 sale of the registered securities to continue.
8.2 Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees
to indemnify and hold harmless each Holder of Registrable Securities
(and its officers, directors, employees, affiliates and agents), and
each underwriter (if any), and each person who controls any
underwriter, from and against any and all losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect
thereof) to which any of them may become subject (under the
Securities Act or otherwise) with respect to any registration,
qualification or compliance under this Section 8.1 insofar as such
losses, claims, damages, liabilities or expenses (or actions or
-26-
proceedings in respect thereof) arise out of, or are based upon (i)
any untrue statement or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading,
in any registration statement (on the effective date thereof),
prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident
to any such registration, qualification or compliance, or (ii) any
violation by the Company of any applicable rule or regulation under
the Securities Act relating to any action or inaction required of
the Company in connection with such registration, qualification or
compliance, or (iii) any failure by the Company to fulfill any
undertaking included in the registration statement or related
documents or to fulfill any of its obligations under Sections 8.1 or
8.2 hereof. The Company will, as incurred, reimburse the
indemnified parties herein for any legal or other expenses
reasonably incurred in investigating, defending or preparing to
defend any such claims, actions or proceedings in respect thereof;
provided, however, that the Company shall not be liable in any such
case to the extent that such loss, claim, damage, liability or
expense arises out of, or is based upon (A) any untrue statement or
omission of a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in any
registration statement (on the effective date thereof), prospectus,
offering circular or other document (including any related
registration statement, notification or the like) incident to any
such registration, qualification or compliance, made in reliance
upon and in conformity with written information furnished to the
Company by or on behalf of the Holder specifically for use in
preparation of such document, (B) an untrue statement or omission in
any prospectus that is corrected in any subsequent prospectus, or
supplement or amendment thereto, that was delivered to the Holder
prior to the sale or sales from which a loss or liability arose, or
(C) the sale of Registrable Securities during a blockage period
described in Section 8.1(g).
(b) Indemnification by the Holder. Each Holder agrees
to indemnify and hold harmless the Company (and its officers,
directors, employees, affiliates and agents), and each underwriter
(if any), and each person who controls any underwriter, from and
against any losses, claims, damages, liabilities or expenses (or
actions or proceedings in respect thereof) to which any of them may
become subject (under the Securities Act or otherwise) insofar as
such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise out of, or are based upon (i)
any untrue statement or omission of a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading, in any
registration statement (on the effective date thereof), prospectus,
offering circular or other document (including any related
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registration statement, notification or the like) incident to any
such registration, qualification or compliance, made in reliance
upon and in conformity with written information furnished to the
Company by or on behalf of the Holder specifically for use in
preparation of such document; provided, however, that the Holder
shall not be liable in any such case for any untrue statement or
omission in any registration statement, prospectus or other such
document which statement has been corrected, in writing, by the
Holder and delivered to the Company ten (10) days before the sale
from which such loss occurred, (ii) an untrue statement or omission
in any prospectus delivered by the Holder that is corrected in any
subsequent prospectus, or supplement or amendment thereto, and
delivered to the Holder prior to the sale or sales from which a loss
or liability arose, or (iii) any failure by the Holder to fulfill
any of its obligations under Sections 8.1 or 8.2 hereof. The Holder
will, as incurred, reimburse the indemnified parties herein for any
legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such claims, actions or
proceedings in respect thereof.
(c) Indemnification Procedure. Promptly after receipt
by any indemnified party of a notice of a claim or the beginning of
any action in respect of which indemnity is to be sought against an
indemnifying party pursuant to this Section 8.2, such indemnified
party shall notify the indemnifying party in writing of such claim
or of the commencement of such action, and, subject to the
provisions hereinafter stated, in case any such action shall have
been brought against an indemnified party and the indemnifying party
shall have been notified thereof, the indemnifying party shall be
entitled to participate therein, and, to the extent that it shall
wish, to assume the defense of such action, with counsel reasonably
satisfactory to the indemnified party. After notice from the
indemnifying party to such indemnified party of the indemnifying
party's election to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal
expenses subsequently incurred by such indemnified party in
connection with the defense thereof; provided, however, that if
there exists or shall exist a conflict of interest that would make
it inappropriate in the reasonable judgment of the indemnified party
for the same counsel to represent both the indemnified party and
such indemnifying party or any affiliate or associate thereof, the
indemnified party shall be entitled to retain its own counsel at the
expense of such indemnifying party. Failure of any indemnifying
party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under this Section 8.2. No
indemnifying party, in the defense of any such claim or action,
except with the consent of each indemnified party, shall consent to
entry of any judgment or enter into any settlement.
(d) Contribution. If the indemnification provided for
in this Section 8.2 is unavailable to or insufficient to hold
harmless an indemnified party under Section 8.2(a) or Section 8.2(b)
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in respect of any losses, claims, damages, liabilities or expenses
(or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as result of such losses, claims,
damages, liabilities or expenses (or actions or proceedings in
respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and the Holder on the
other in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities or expenses (or actions
or proceedings in respect thereof). The relative fault shall be
determined by reference to, among other things, whether the untrue
or allegedly untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Holder on the other
and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) referred to above in this Section
8.2(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 8.2(d), no Holder shall be required
to contribute any amount in excess of the amount by which the net
amount received by the Holder from the sale of the Shares to which
such loss relates exceeds the amount of any damages which the Holder
has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No party
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any party who was not guilty of such fraudulent
misrepresentation.
(e) Other Liability. The obligations of the Company
and each Holder under this Section 8.2 shall be in addition to any
liability which the Company and the Purchaser may otherwise have.
8.3 Repurchases. If the Company becomes obligated under this
Agreement or the License Agreement to repurchase any shares of
Series H Preferred Stock from the Purchaser, then not later than
thirty (30) days thereafter, the Company shall purchase from the
Purchaser for an amount per share equal to the purchase price paid
by the Purchaser that number of shares of Series H Preferred Stock
that the Company is obligated to repurchase under this Agreement or
the License Agreement.
9. RESTRICTIONS ON TRANSFERABILITY OF SHARES; COMPLIANCE WITH
SECURITIES ACT.
9.1 Restrictions on Transferability. The Shares and the
Conversion Shares shall not be transferable in the absence of
registration under the Securities Act or an exemption therefrom or
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in the absence of compliance with any term of this Agreement or in
absence of compliance with Rule 144 under the Securities Act.
9.2 Restrictive Legend. Each certificate representing the
Shares and the Conversion Shares shall bear substantially the
following legends (in addition to any legends required under
applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT") OR THE SECURITIES ACT OF ANY STATE AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE 1933
ACT OR APPLICABLE STATE SECURITIES ACTS OR, IN THE OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH OR SOLD
PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.
At such time that Shares and the Conversion Shares may be sold
pursuant to Rule 144(k) under the Securities Act (or any successor
rule), the Company agrees to provide Purchaser with replacement
non-legended certificates evidencing the Shares within ten (10)
Business Days of a written request therefor by Purchaser.
9.3 Transfer of Shares. The Purchaser hereby covenants with
the Company not to make any sale of the Shares or the Conversion
Shares except either (a) a sale of Shares or the Conversion Shares
in accordance with a registration statement, in which case the
Purchaser covenants to comply with the requirement of delivering a
current prospectus, (b) a sale of the Shares or the Conversion
Shares in accordance with Rule 144 under the Securities Act, in
which case the Purchaser covenants to comply with Rule 144 and to
deliver such additional certificates and documents as the Company
may reasonably request, or (c) subject to such conditions as the
Company in its sole discretion shall impose, in accordance with
another exemption from the registration requirements of the
Securities Act. The legend set forth in Section 9.2 will be removed
from a certificate representing the Shares or the Conversion Shares
following and in connection with any sale of the Shares or the
Conversion Shares pursuant to clause (a) or (b) hereof but not in
connection with any sale of the Shares or the Conversion Shares
pursuant to clause (c) hereof.
10. MISCELLANEOUS.
10.1 Survival of Representations and Warranties. All
representations and warranties contained herein shall survive the
execution and delivery of this Agreement, any investigation at any
time made by or on behalf of the Purchaser, and the sale and
purchase of the Shares and payment therefor.
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10.2 Parties in Interest. All the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the
parties hereto.
10.3 Headings. The headings of the sections of this
Agreement have been inserted for convenience of reference only and
do not constitute a part of this Agreement.
10.4 Severability; Choice of Law. Should any Section or
provision in this Agreement be rendered void, invalid or
unenforceable by any court of law for any reason, such invalidity or
unenforceability shall not void or render invalid or unenforceable
any other Section or provision of this Agreement. It is the
intention of the parties that the internal laws of the State of
Delaware, without regard to the body of law controlling conflicts of
law, shall govern the validity of this Agreement, the construction
of its terms and the interpretation of the rights and duties of the
parties set forth herein.
10.5 Entire Agreement; Amendments and Waivers. This
Agreement is intended by the parties as a final expression of their
agreement and is intended to be a complete and exclusive statement
of the agreement and understanding between the parties with respect
to the subject matter hereof, and supersedes all prior agreements
and understandings between the parties (oral or written) with
respect to the subject matter hereof, excepting only the other
Transaction Documents. Subject to Section 8.1(l) hereof, the
provisions of this Agreement may not be amended or waived without
the written consent of the Purchaser and the Company.
10.6 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, any one of which need
not contain the signature of more than one party but all such
counterparts taken together shall constitute one and the same
agreement.
10.7 Notices. Any notice, request, demand or other
communication required or permitted to be given under or in
connection with this Agreement shall be deemed to have been
sufficiently given if in writing and personally delivered by
messenger, facsimile transmission (receipt verified), express
courier service (signature required), certified or registered mail,
or telegram, prepaid, to the party for which such notice is
intended, at the address set forth for such party below:
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In the case of the Purchaser, to:
Genentech, Inc.
▇ ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
In the case of the Company, to:
Alteon Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Smith, Stratton, Wise, ▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address for such party as it shall have specified
by like notice to the other party, provided that notices of a change
of address shall be effective only upon receipt thereof. If sent by
messenger, facsimile transmission, express courier service,
certified or registered mail or telegram, the date of mailing or
transmission shall be deemed to be the date on which such notice or
request has been given.
************
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed and delivered by its duly authorized
officer as of the day and year first above written.
ALTEON INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and
Chief Executive Officer
GENENTECH, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
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EXHIBIT A
DISCLOSURE SCHEDULE
1. Letter from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ to ▇▇▇▇▇▇ ▇▇▇▇▇▇ dated October
21, 1997 and all documents referred to therein.
2. Letter from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ to ▇▇▇▇▇▇ ▇▇▇▇▇▇ dated
November 26, 1997 and all documents referred to therein.
The Company hereby discloses the following exceptions to its
representations and warranties contained herein:
Section 4.8. The Company has agreed to issue warrants to
purchase 10,000 shares of its Common Stock to the original
purchasers of its 6% Cumulative Convertible Preferred Stock or their
assignees.
Section 4.16. The Company's federal income tax return for the
year 1993 and its New Jersey sales and use tax returns for the
period April 1, 1988 through March 31, 1994 were audited.
EXHIBIT B
CERTIFICATE OF DESIGNATIONS FOR SERIES G PREFERRED STOCK
[Omitted]
EXHIBIT C
CERTIFICATE OF DESIGNATIONS FOR SERIES H PREFERRED STOCK
[Omitted]
EXHIBIT D
EXHIBITS TO COMPANY SEC REPORTS
REQUESTED BY AND DELIVERED TO THE PURCHASER
None
EXHIBIT E
OPINION OF COUNSEL
, 1997
Genentech, Inc.
▇ ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This opinion is rendered to you pursuant to Section 6.1 of the
Stock Purchase Agreement dated , 1997 (the "Purchase
Agreement") between Alteon Inc., a Delaware corporation, (the
"Company") and you (the "Purchaser"). Capitalized terms used but
not otherwise defined in this opinion shall have the meanings
designated in the Purchase Agreement.
In our capacity as counsel for the Company, we have examined
originals or copies certified or otherwise identified to our
satisfaction as being true copies of such corporate records of the
Company, certificates of public officials and of officers of the
Company and others, and other documents as we have deemed necessary
for the purpose of this opinion. In such examination we have
assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to
authentic original documents of all documents submitted to us as
certified, conformed copies, photocopies or facsimiles. As to
various questions of fact material to our opinion, we have relied on
the representations contained in the Purchase Agreement and on
certificates of, or communications with, officers and
representatives of the Company and certain public officials.
On the basis of such examinations and our consideration of such
questions of law as we have deemed relevant in the circumstances and
subject to the foregoing, we are of the opinion that:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own
and lease its properties and to conduct its business as now being
conducted;
(ii) The Shares to be issued and sold by the Company in
accordance with the Purchase Agreement have been duly authorized
and, when issued and delivered against payment therefor as provided
by the Purchase Agreement, will be duly and validly issued and fully
paid and nonassessable, and will not have been issued in violation
of or subject to any preemptive or similar right of shareholders;
Genentech, Inc.
____________, 1997
Page 2
(iii) The Transaction Documents have been duly authorized,
executed and delivered by the Company, and compliance by the Company
with the provisions thereof and the consummation of the transactions
contemplated thereby will not conflict with or constitute a breach
of, or a default under (a) any agreement or other instrument to
which the Company is a party or by which, to the best of our
knowledge, it or any of its properties, assets or rights is bound or
affected, except for such breach or default which, either
individually or in the aggregate, would not have a material adverse
effect on the financial condition or business of the Company or (b)
the Certificate or Bylaws of the Company;
(iv) No consent, approval, authorization or order of or
filing or registration with any court or governmental agency or body
is required for the execution, delivery and performance of the
Purchase Agreement by the Company and the consummation of the
transactions contemplated thereby;
(v) Except as disclosed in the Company Disclosure Documents
or other documents delivered to you by the Company, to the best of
our knowledge, there are no legal actions, suits, arbitrations or
other legal, administrative or governmental proceedings pending or
threatened against the Company or its properties, assets or
business, and we are aware of no facts which might result in or form
the basis for any such action, suit or other proceeding, in each
case which, if adversely determined, would, individually or in the
aggregate, have a material adverse effect on the financial condition
or business of the Company;
(vi) To the best of our knowledge, the Company is not in
default with respect to any judgment, order or decree of any court
or any governmental decree or instrumentality which would have a
material adverse effect on the financial condition or business of
the Company.
(vii) The Common Stock issuable upon conversion of the Series
G Preferred Stock and the Series H Preferred Stock purchased, or to
be purchased, pursuant to the Purchase Agreement has been duly and
validly reserved for issuance and, when and if issued upon such
conversion in accordance with the Certificates of Designations for
the Series G Preferred Stock and the Series H Preferred Stock will
be validly issued, fully paid and nonassessable.
(viii) Based in part upon the representations made by you in
the Purchase Agreement, the offer and sale of the Series G Preferred
Stock and Series H Preferred Stock to you in accordance with the
terms of the Purchase Agreement is, or will be upon issuance, exempt
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Genentech, Inc.
__________, 1997
Page 3
from the registration requirements of Section 5 of the Securities
Act of 1933, as amended, by virtue of Section 4(2) thereof and the
rules and regulations promulgated thereunder and from the California
Corporate Securities Law of 1968, and, under such securities laws as
they presently exist, the issuance of Common Stock to you upon
conversion of the Series G Preferred Stock and Series H Preferred
Stock would also be exempt from such registration and qualification
requirements.
A matter stated in this opinion to be "to the best of our
knowledge" is so stated to reflect the fact that, while during the
course of our representation of the Company nothing has come to our
attention that would lead us to believe that the statement of such
matter is inaccurate, we have made no independent factual
investigation with respect to such statement or matter.
The opinions expressed herein are subject to the effects and
limitations imposed by further legislation, administrative
regulation and judicial decisions, which effects may be prospective
or retroactive.
With respect to the opinions expressed herein, we further
advise you that we express no opinion as to any law or regulation
except for laws or regulations of the State of New Jersey or the
United States and except for the Delaware General Corporation Law.
This opinion is issued as of the date hereof and is provided by
us as counsel for the Company to you at your request and for your
exclusive use only and is not to be made available to or relied upon
by any other persons or entities without our prior written consent.
Very truly yours,
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