EXHIBIT 10(A)
EXECUTION COPY
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OXIS INTERNATIONAL, INC.
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SERIES B PREFERRED
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STOCK PURCHASE AGREEMENT
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THIS SERIES B PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is made
as of the 18th day of July, 1995 by and between OXIS INTERNATIONAL, INC., a
Delaware corporation (the "Company"), and the purchasers listed on the signature
pages hereto under the heading "Investors", each of whom is herein referred to
as an "Investor".
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereby agree as follows:
1. Purchase and Sale of Series B Preferred Stock.
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1.1 Sale and Issuance of Series B Preferred Stock.
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(a) The Board of Directors of the Company shall adopt and file
with the Secretary of State of the State of Delaware on or before the Closing
(as defined below) the Certificate of Designation (the "Certificate of
Designation") in substantially the form attached hereto as Exhibit A designating
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642,583 shares of Preferred Stock as Series B Preferred Stock.
(b) Subject to the terms and conditions of this Agreement, the
Company shall sell, and the Investors shall purchase, an aggregate of 642,583
shares of Series B Preferred Stock (the "Preferred Shares"). Each Investor
agrees severally to purchase, and the Company agrees to sell to each Investor,
the number of Preferred Shares as set forth opposite such Investor's name on the
Schedule of Investors attached as Exhibit B to this Agreement (the "Schedule of
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Investors"). The purchase price to be paid by each Investor for such Preferred
Shares is $2.33433 per share, as set forth on Exhibit B to this Agreement, and
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the aggregate purchase price to be paid by all of the Investors shall equal
$1,500,000.
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1.2 Closing. The purchase and sale of the Preferred Shares shall
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take place at the offices of the Company on July 18, 1995, or at such other time
and place as the Company and Investors mutually agree upon (which time and place
are designated as the "Closing"). At the Closing, the Company will deliver to
the Investors stock certificates representing Preferred Shares to be sold to
each Investor against payment of the purchase price therefor by checks payable
to the order of the Company or wire transfers of funds. The Investors
acknowledge that the Company intends to sell and issue additional Preferred
Shares in order to raise additional capital of up to $5,000,000, but no
assurance can be given by the Company as to when, or if, such sale and issuance
will occur, or at what price per share the additional Preferred Shares may be
sold.
2. Representations and Warranties of the Company. The Company hereby
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represents and warrants to each Investor, except as set forth on the Schedule of
Exceptions attached hereto as Exhibit C, which exceptions shall be deemed to be
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representations and warranties as if made hereunder as follows:
2.1 Organization and Authority. The Company: (i) is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware; (ii) has all necessary corporate power to own and lease its
properties, to carry on its business as now being conducted and to enter into
and perform this Agreement and all agreements to which the Company is or will be
a party that are exhibits to this Agreement, and (iii) is qualified to do
business in all jurisdictions in which the failure to so qualify would have a
material adverse effect on its business or financial condition. The Company has
made available to the Investors for inspection complete and correct copies of
its certificate of incorporation, as amended, and bylaws as in effect on the
date hereof.
2.2 Capitalization.
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(a) Immediately prior to the Closing, the authorized capital of
the Company consists, or will consist of:
(i) Preferred Stock. 5,000,000 shares of Preferred Stock,
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100,000 of which have been designated Series A Preferred Stock, $0.01 par value
per share and 642,583 of which have been designated Series B Preferred Stock,
$0.01 par value per share. No shares of Series A Preferred Stock or Series
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B Preferred Stock were issued and outstanding immediately prior to the Closing.
The rights, preferences and privileges of the Series B Preferred Stock will be
as stated in the Company's Certificate of Designation attached hereto as Exhibit
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A.
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(ii) Common Stock. 25,000,000 shares of Common Stock, $0.50
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par value per share, 10,683,687 shares of which were issued and outstanding.
(b) All such issued and outstanding shares have been duly
authorized and validly issued, are fully paid and nonassessable and have been
issued in compliance with all applicable state and federal laws concerning the
issuance of securities.
(c) Agreements for Purchase of Shares. Except for:
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(i) the conversion privileges of the Series B Preferred
Stock; and
(ii) options issued pursuant to the Company's stock option
plan and other agreements (as of the Closing, options for 575,500 shares of
Common Stock are presently outstanding and an additional 39,200 shares of Common
Stock are available for grant under the Company's stock option plan); and
(iii) warrants to purchase an aggregate of 1,135,263 shares
of Common Stock held by various parties;
prior to the Closing there will not be any outstanding options, warrants, rights
(including conversion, preemptive rights or rights of first offer) or agreements
for the purchase or acquisition from the Company of any shares of its capital
stock.
2.3 Investment in Others. Section 2.3 of the Schedule of Exceptions
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attached hereto as Exhibit C contains a list of each corporation, association,
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partnership, joint venture or other entity in which the Company, directly or
indirectly, owns an equity interest and sets forth the Company's percentage
interest by voting rights and by profits, in each such entity. Except for the
entities identified in such list, the Company does not conduct any part of its
business operations through any subsidiaries or through any other entity in
which the Company has an equity investment.
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2.4 Authority Relating to this Agreement; No Violation of Other
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Instruments.
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(a) The execution and delivery of this Agreement and all
agreements to which the Company is or will be a party that are exhibits to this
Agreement and the performance hereunder and thereunder by the Company have been
duly authorized by all necessary corporate action on the part of the Company,
and, assuming execution of this Agreement and such other agreements by each of
the other parties thereto, this Agreement and such other agreements will
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject as to enforcement:
(i) to bankruptcy, insolvency, reorganization, arrangement, moratorium and other
laws of general applicability relating to or affecting creditors' rights; and
(ii) to general principles of equity, whether such enforcement is considered in
a proceeding in equity or at law.
(b) Neither the execution of this Agreement or any other
agreement to which the Company is or will be a party that is an exhibit to this
Agreement (or otherwise executed in connection with this Agreement) nor the
performance of any of them by the Company will: (i) conflict with or result in
any breach or violation of the terms of any decree, judgment, order, law or
regulation of any court or other governmental body now in effect applicable to
the Company; (ii) conflict with, or result in, with or without the passage of
time or the giving of notice, any breach of any of the terms, conditions and
provisions of, or constitute a default under or otherwise give another party the
right to terminate, or result in the creation of any lien, charge, or
encumbrance upon any of the assets or properties of the Company pursuant to any
indenture, mortgage or lease, by which it or any of its assets or properties are
bound; (iii) permit the acceleration of the maturity of any material
indebtedness of the Company or of any other person secured by the assets or
property of the Company; or (iv) violate or conflict with any provision of the
Company's certificate of incorporation or bylaws, each as in effect on the date
hereof.
(c) Except as contemplated in Sections 1.1(a), 4.5, 4.7, and 5.4 of
this Agreement, no consent from any third party and no consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority is required to be made or obtained by the Company in
order to permit the execution, delivery or performance
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of this Agreement or any other agreement to which the Company is or will be a
party that is an exhibit to this Agreement by the Company, or the consummation
of the transactions contemplated by this Agreement and such other agreements
(assuming the exemption provided by Section 3(a)(9) of the Securities Act of
1933, as amended (the "Securities Act"), in its current form is available with
respect to the conversion of the Preferred Shares into Common Stock and no
commission is paid in connection therewith); except for such filings as have
been made prior to the Closing, and except for any notices of sale required to
be filed with the Securities and Exchange Commission ("SEC") under Regulation D
of the Securities Act, or such post-closing filings as may be required under
applicable state securities laws, which will be timely filed within the
applicable periods therefor.
2.5 Valid Issuance of Preferred Stock. The Preferred Shares, when
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issued, sold and delivered in accordance with the terms hereof for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable and, based in part upon the representations of the Investors set
forth in Section 3 of this Agreement, will be issued in compliance with all
applicable federal and state securities laws free and clear of all restrictions
on transfer (other than those arising from application of the securities laws).
The Common Stock issuable upon conversion of the Preferred Shares purchased
under this Agreement has been duly and validly reserved for issuance.
2.6 Litigation. Neither the Company nor any officer or director of the
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Company is a party to any pending or, to the best knowledge of the Company,
threatened action, suit, proceeding or investigation, at law or in equity or
otherwise in, for or by any court or any governmental body which could have a
material adverse effect on: (i) the condition, financial or otherwise, assets or
properties of the Company; or (ii) the transactions contemplated by this
Agreement; nor, to the best knowledge of the Company, does any basis exist for
any such action, suit, proceeding or investigation. The Company is not, and has
not been, subject to any pending or, to the Company's knowledge, threatened
product liability claim; nor, to the Company's knowledge, does any basis exist
for any such claim. The Company is not subject to any decree, judgment, order,
law or regulation of any court or other governmental body which could have a
material adverse effect on the condition, financial or otherwise, assets,
liabilities, business or results of operations
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of the Company or which could prevent the transactions contemplated by this
Agreement.
2.7 Protection of Intangible Property. To the knowledge of the
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Company, each employee and consultant who has worked on or contributed to the
development of the Company's technology, trade secrets and other proprietary
rights, has executed a proprietary rights and information agreement. The Company
has taken reasonable precautions to protect its trade secrets. To the Company's
knowledge, the Company's trade secrets have not been used, distributed or
otherwise exploited under circumstances which have caused, or with the passage
of time could cause, the loss of trade secret status.
2.8 Compliance with Law. The Company holds all material licenses,
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permits and authorizations necessary for the lawful conduct of the Company's
business wherever conducted pursuant to all applicable statutes, laws,
ordinances, rules and regulations of all governmental bodies, agencies and
subdivisions having, asserting or claiming jurisdiction over the Company or over
any part of the Company's operations, and the Company knows of no violation
thereof. The Company is not in violation of any decree, judgment, order, law or
regulation of any court or other governmental body (including without
limitation, applicable environmental protection legislation and regulations,
equal employment and civil rights regulations, wages and hours regulations, the
payment of social security and other employment related taxes and occupational
health and safety legislation), which violation could have a material adverse
effect on the condition, financial or otherwise, assets, liabilities, business
or results of operations of the Company.
2.9 Contracts. Section 2.9 of the Schedule of Exceptions attached as
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Exhibit C lists all oral or written agreements, notes, instruments, or contracts
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to which the Company is a party or by which its assets or properties may be
bound which involve the payment or receipt of more than Fifty Thousand Dollars
($50,000.00) (on an annual basis), or which have a term of more than one year,
or which involve intellectual property or research and development or clinical
testing, or which are employment or consulting agreements (the "Contracts").
The Company is not in default in performance of its obligations under any
material provision of such Contracts. The Company has no knowledge of any
violation of any Contract by any other party thereto and the Company has no
knowledge of any intent by any
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other party to a Contract not to perform its obligations under such Contract.
2.10 Registration Rights. Except as provided in the Registration
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Rights Agreement in the form appended hereto as Exhibit D, the Company has not
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granted or agreed to grant any registration rights, including piggy-back rights,
to any person or entity.
2.11 Personal Property. The Company has good title, free and clear of
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all title defects, objections and liens, including without limitation, leases,
chattel mortgages, conditional sales contracts, collateral security arrangements
and other title or interest-retaining arrangements, to all of its machinery,
equipment, furniture, inventory and other personal property which it owns. All
such personal property as used in the business of the Company is in good
operating condition. All of the leases to personal property utilized in the
business of the Company are valid and enforceable and are not in default by the
Company, or, to the knowledge of the Company, are any of the other parties
thereto in default thereof.
2.12 Real Property. The Company does not own any real property.
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Section 2.12 of the Schedule of Exceptions attached as Exhibit C contains a
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list of all leases for real property to which the Company is a party, the square
footage leased with respect to each lease and the expiration date of each lease.
All such leases are valid and enforceable and are not in default. To the best
knowledge of the Company, the improvements located thereon, and the furniture,
fixtures and equipment relating thereto (including plumbing, heating, air
conditioning and electrical systems), conform to any and all applicable health,
fire, safety, zoning, land use and building laws, ordinances and regulations.
There are no outstanding contracts made by the Company for any improvements made
to the real property owned, leased or occupied by the Company that have not been
paid for.
2.13 Patents, Trademarks, Trade Names and Copyrights. All patents,
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patent applications, trademarks, trade names, copyrights, processes, designs,
formulas, inventions, trade secrets, know-how, technology or other proprietary
rights which are necessary to the conduct of the Company's business are owned or
are useable by the Company. To the best knowledge of the Company, the conduct
of any business conducted by the Company does not infringe any patent,
trademark, trade name, copyright,
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trade secret, or other proprietary right of any other person. No litigation is
pending or, to the knowledge of the Company has been threatened against the
Company or any officer, director, stockholder, employee or agent of the Company,
for the infringement of any patents, trademarks or trade names of any other
party or for the misuse or misappropriation of any trade secret, know-how or
other proprietary right owned by any other party nor, to the best knowledge of
the Company, does any basis exist for such litigation. To the best knowledge of
the Company, there has been no infringement or unauthorized use by any other
party of any patent, trademark, trade name, copyright, process, design, formula,
invention, trade secret, know-how, technology or other proprietary right
belonging to the Company.
2.14 Financial Statements. The Company has delivered to each Investor:
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(i) its consolidated audited financial statements (consisting of its
consolidated balance sheet, consolidated statement of operations, consolidated
statement of shareholders' equity and consolidated statements of cash flows) at
and for the periods ending December 31, 1993 and December 31, 1994 and (ii) its
consolidated unaudited financial statements (consisting of its consolidated
balance sheet, consolidated statement of operations, consolidated statement of
shareholders' equity and consolidated statements of cash flows) at and for the
period ending March 31, 1995 (collectively, the "Financial Statements"). The
Financial Statements are complete and correct in all material respects and have
been prepared on a consistent basis throughout the periods indicated in
accordance with generally accepted accounting principals. The Financial
Statements fairly present the financial condition and operating results of the
Company as of the dates, and for the periods, indicated therein, subject to,
with respect to the unaudited financial statements, normal year-end audit
adjustments.
2.15 Absence of Certain Changes or Events. Since March 31, 1995, the
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date (the "Balance Sheet Date") of the most recent balance sheet delivered by
the Company pursuant to Section 2.14 (the "Balance Sheet"), except as
contemplated by this Agreement, there have been no material changes in the
condition, financial or otherwise, assets, liabilities, business or the results
of operations of the Company, other than changes in the ordinary course of
business which in the aggregate have not been materially adverse. Without
limiting the foregoing, including the materiality standard, since the Balance
Sheet Date, except as contemplated by this Agreement:
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(i) the Company has not entered into any transaction other
than in the ordinary course of business;
(ii) there have been no material losses or damage to any of
the assets or properties of the Company due to fire or other casualty, whether
or not insured;
(iii) there has been no increase or decrease in the rates of
direct compensation payable or to become payable by the Company to any employee,
agent or consultant (other than routine increases made in the ordinary course of
business), or any bonus, percentage compensation, service award or other like
benefit, granted, made or accrued to or to the credit of any such employee,
agent or consultant, or any material welfare, pension, retirement or similar
payment or arrangement made or agreed to be made by the Company (other than such
events occurring pursuant to any previously existing benefit plan);
(iv) the Company has not executed, created, amended or
terminated any contract except in the ordinary course of business consistent
with past practice;
(v) the Company has not declared or paid any dividend or
made any distribution on its capital stock, nor redeemed, purchased or otherwise
acquired any of its capital stock or issued any capital stock, other than under
its stock incentive plans, if any, identified herein;
(vi) the Company has not received notice that there has been
a cancellation of an order for its products or a loss of a customer of the
Company, the cancellation or loss of which would materially adversely affect the
condition, financial or otherwise, assets, liabilities, business or results of
operations of the Company;
(vii) there has been no resignation or termination of
employment of any officer or key employee of the Company and the Company does
not know of the impending resignation or termination of employment of any
officer or key employee of the Company;
(viii) there has been no material change in the contingent
obligations of the Company by way of guaranty, endorsement, indemnity, warranty
or otherwise;
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(ix) there have been no loans made by the Company to its
employees, officers or directors, other than travel advances and other advances
made in the ordinary course of business consistent with past practice;
(x) to the best of the Company's knowledge there has been no
waiver or compromise by the Company of a material right or of a material debt
owed to it;
(xi) the Company has not made or agreed to make any
disbursements or payments of any kind to any member or members of its Board of
Directors, other than travel advances or reimbursements made in the ordinary
course of business or fees or expenses for services rendered;
(xii) there have been no capital expenditures by the Company
exceeding Fifty Thousand Dollars ($50,000.00) individually;
(xiii) there has been no change in accounting methods or
practices (including without limitation, any change in depreciation or
amortization policies or rates) by the Company;
(xiv) there has been no revaluation by the Company of any of
the assets or properties of the Company;
(xv) there has been no sale or transfer of any of the assets
or properties of the Company, except in the ordinary course of business
consistent with past practice;
(xvi) there has been no loan by the Company to any person or
entity;
(xvii) there has been no commencement or notice or threat of
commencement of any governmental proceeding against or investigation of the
Company or its affairs;
(xviii) there has been no revocation of license or right to
do business granted to the Company;
(xix) the Company has not paid any obligation or liability
(fixed, contingent or otherwise) or discharged or satisfied any lien, or settled
any liability,
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claim, dispute, proceeding, suit or appeal pending or threatened against it,
except for current liabilities incurred in the ordinary course of business; and
(xx) there has been no agreement or commitment by the
Company to do or perform any of the acts described in this Section 2.15.
2.16 Tax Returns and Payments. All tax returns and reports with
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respect to the Company required by law to be filed under the laws of any
jurisdiction, domestic or foreign, have been duly and timely filed and all
taxes, fees or other governmental charges of any nature which were required to
have been paid have been paid or provided for, and the Company has no knowledge
of any actual or threatened assessment of deficiency or additional tax or other
governmental charge or a basis for such a claim against the Company. The Company
has no knowledge of any tax audit of the Company by any taxing or other
authority in connection with any of its fiscal years. The Company has no
knowledge of any such audit currently pending or threatened. There are no tax
liens on any of the properties of the Company.
2.17 Personnel. Section 2.17 of the Schedule of Exceptions attached
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hereto as Exhibit C contains a list of: (i) all employment, bonus, profit
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sharing, percentage compensation, employee benefit plans, incentive plans,
pension or retirement plans, stock purchase and stock option plans, oral or
written contracts or agreements with directors, officers, employees or unions,
or consulting agreements, to which the Company is a party or is subject as of
the date of this Agreement; and (ii) all group insurance programs in effect for
employees of the Company. The Company is not in default with respect to any of
the obligations so listed. The Company has made available complete and correct
copies of all such obligations (to the extent they are in writing or written
descriptions to the extent they are oral) to the Investors. The Company does not
have and never has had any union contracts or collective bargaining agreements
with, or any other obligations to, employee organizations or groups relating to
the Company's business. All plans described in Section 2.17 of the Schedule of
Exceptions attached hereto as Exhibit C are in full compliance with all
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applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code") and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and regulations issued under ERISA, and to the knowledge of the
Company there are no pending, threatened or
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anticipated claims (other than routine claims) for benefits by, on behalf of, or
against any of such plans. Neither the Company nor any of the plans subject to
ERISA, nor any fiduciary thereof has engaged in a transaction subject to either
a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax
imposed pursuant to Section 4975 or 4976 of the Code in connection with which
the Company has directly or indirectly incurred or may incur material liability.
The Company has never sponsored or contributed to a defined benefit pension plan
as defined in Section 414(j) of the Code.
2.18 Certain Payments. To the knowledge of the Company, neither the
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Company, nor any stockholder, director, officer, employee or agent of the
Company, has made or caused to be made, directly or indirectly, the payment of
any consideration whatsoever to any public official, candidate for public
office, political party, or other third person in connection with the business
or operations of the Company, or pertaining to the Company's relations with any
customer, supplier, or creditor, in contravention of the law of the applicable
jurisdiction.
2.19 Brokers and Finders. Neither the Company nor any stockholder,
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director, officer, employee or agent of the Company has retained any broker,
finder or investment banker in connection with the transactions contemplated by
this Agreement, except as set forth in the Schedule of Exceptions attached
hereto as Exhibit C.
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2.20 Stockholders and Employees. None of the stockholders, directors
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or management personnel of the Company is presently a party to any transaction
with the Company, including without limitation, any contract, agreement or other
arrangement: (i) providing for the furnishing of services to or by (other than
as employee); (ii) providing for rental of real or personal property to or from;
or (iii) otherwise requiring payments to or from, any stockholder, director or
management personnel, or any member of the family of any stockholder, director
or management personnel or any corporation, trust or other entity in which any
stockholder, director or management personnel has a substantial interest or is
an officer, director, investor or partner.
2.21 Absence of Environmental Liabilities. To the knowledge of the
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Company, neither the Company nor the real property owned, leased or occupied by
the Company is in violation of any applicable federal, state or local law,
ordinance,
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regulation or order relating to industrial hygiene, worker safety, public health
and safety, environmental protection, or Hazardous Material (as defined below)
on, under or about such real property, including the soil and ground water
underlying such real property. To the knowledge of the Company, no current use
of or condition at the real property owned, leased or occupied by the Company
constitutes a public or private nuisance. To the knowledge of the Company, any
handling, transportation, storage, treatment or use of Hazardous Material (as
defined below) by the Company that has occurred on the real property owned,
leased or occupied by the Company during the Company's ownership, tenancy or
occupancy and prior to the Closing Date has been and will be as of the Closing
Date in compliance with all applicable laws, ordinances, regulations and orders
relating to Hazardous Material. As used herein, the term "Hazardous Material"
means any substance, material or waste which is or becomes regulated as
"hazardous" or "toxic" by any local governmental authority or the State of
Oregon, the State of California or France, including without limitation, any
material or substance which is: (1) petroleum; (2) asbestos; or (3) defined as a
"hazardous substance" under Section 101 or Section 102 of the Comprehensive
Environmental Response Compensation and Liability Act, 42 U.S.C. Section 9601 et
seq., as amended ("CERCLA"), and any regulations applicable thereunder. To the
knowledge of the Company, the real property owned, leased or occupied by the
Company, including without limitation, the soil and groundwater on or under such
real property, is free of any significant release of any Hazardous Material. No
notification of release of Hazardous Material pursuant to CERCLA or the federal
Clean Water Act or any state or local environmental law or regulatory
requirement has been received by the Company as to any of such real property. To
the knowledge of the Company, no hazardous wastes generated by the Company or
any of its affiliates in operating the Company's business have ever been sent
directly or indirectly to any site listed or formally proposed for listing on
the National Priority List promulgated pursuant to CERCLA or to any site listed
on any state list of hazardous substances sites requiring investigation or
clean-up, nor has the Company arranged for the transportation, treatment or
disposal at any site of any Hazardous Material, except in accordance with all
applicable laws and regulations. The Company has not received from any
governmental authority or third party any requests for information, notices of
claim, demand letters, or other notification that, in connection with the
conduct of its
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business, it is or may be potentially responsible with respect to any
investigation or clean-up of Hazardous Material at any time.
2.22 Accuracy of Documents and Information. The copies of all
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instruments, agreements, other documents and written information set forth as,
or referenced in, Schedules or Exhibits to this Agreement or specifically
required to be furnished pursuant to this Agreement by the Company to the
Investors, including, without limitation, the Exhibits hereto, are and will be
complete and correct in all material respects. All information in the Schedule
of Exceptions attached hereto as Exhibit C is accurate as of the date hereof or
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such earlier date as is specified therein, which in no case is before March 31,
1995, and there have been no material changes in the information set forth
therein between the date so specified and the date of this Agreement. No
representations or warranties made by the Company in this Agreement, nor any
document, written information, statement, financial statement, certificate,
Schedule or Exhibit furnished directly to the Investors pursuant to this
Agreement or in the Schedule of Exceptions attached hereto as Exhibit C contains
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any untrue statement of a material fact, or omits to state a material fact
necessary to make the statements or facts contained herein and therein taken as
a whole not misleading. There is no undisclosed fact which materially and
adversely affects the Company.
3. Representations and Warranties of Each Investor. Each Investor
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hereby severally and not jointly represents and warrants to the Company as
follows:
3.1 Authorization. This Agreement constitutes such Investor's
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valid and legally binding obligation, enforceable in accordance with its terms
except as affected by (i) bankruptcy or insolvency laws, and (ii) equitable
principles. Each Investor who is not a natural person, hereby represents that
the person executing this Agreement on its behalf is duly authorized to do so.
3.2 Purchase Entirely for Own Account. This Agreement is made with
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each Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Preferred Shares to be received by such Investor hereunder
will be acquired for investment for such Investor's own account, not as a
nominee or agent, and not with a view to the resale or distribu-
41
tion of any part thereof, and that such Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same. By
executing this Agreement, each Investor purchasing Preferred Shares hereunder
further represents that such Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Preferred Shares, or any portion thereof (provided however, the parties
acknowledge that ▇▇▇▇▇▇▇▇ Ventures II, L.P. is a venture capital limited
partnership which pursuant to the terms of its partnership agreement from time
to time transfers securities to its limited partners). Each Investor that is an
entity represents that it has full power and authority to enter into this
Agreement.
3.3 Disclosure of Information. Each Investor believes it has received
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all the information it considers necessary or appropriate for deciding whether
to purchase the Preferred Shares. Each such Investor further represents that it
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Preferred Shares. The
foregoing does not modify the Company's representations and warranties set forth
herein or the Investor's right to rely thereon.
3.4 Investment Experience. Each Investor is an investor in securities
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of companies in the development stage and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment and has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment in the Preferred Shares. If
other than an individual, Investor also represents it has not been organized
solely for the purpose of acquiring the Preferred Shares.
3.5 Restricted Securities. Each Investor purchasing Preferred Shares
---------------------
hereunder understands that the Preferred Shares are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such Preferred Shares may be
resold without registration under the Securities Act only in certain limited
circumstances. In this connection, each Investor represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the resale
limitations
42
imposed thereby and by the Securities Act. Each Investor who is a resident of
Pennsylvania agrees not to sell the Preferred Shares within twelve (12) months
of the Closing, unless permitted under Section 204.011 of Pennsylvania's Blue
Sky Regulations.
3.6 Further Limitations on Disposition. Without in any way limiting
----------------------------------
the representations set forth above, each Investor purchasing Preferred Shares
hereunder further agrees not to make any disposition of all or any portion of
the Preferred Shares (or the Common Stock issuable upon the conversion of the
Preferred Shares) unless and until:
(a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement, or that any such disposition may
be made pursuant to the exemption under SEC Rule 144 and the Investor furnishes
to the Company an opinion of counsel (reasonably satisfactory to the Company) to
the effect that such exemption is available; or
(b) (i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such Preferred Shares under
the Securities Act and (iii) if reasonably requested by the Company, the
transferee shall have furnished to the Company its agreement to abide by the
restrictions on transfer set forth herein as if it were a purchaser hereunder.
3.7 Accredited Investor. The term "Accredited Investor" as used in
-------------------
Sections 3.7 and 3.8 refers to a person or entity who:
(a) is a director or executive officer of the Company; or
(b) is a natural person whose individual net worth, or joint net
worth with his or her spouse, at the time of purchase exceeds $1,000,000, and
the total purchase price does not exceed ten percent (10%) of his or her
individual net worth, or joint net worth with his or her spouse, at the time of
sale; or
43
(c) is a natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and reasonably expects to
reach the same income level in the current year, and the total purchase price
does not exceed ten percent (10%) of his or her individual net worth, or joint
net worth with his or her spouse, at the time of sale; or
(d) is a private business development company as defined in
section 202(a)(22) of the Investment Advisors Act of 1940; or
(e) is either (i) a bank as defined in section 3(a)(2) of the
Securities Act, or a savings and loan association or other institution as
defined in section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; (ii) a broker or dealer registered pursuant to
section 15 of the Securities Exchange Act of 1934; (iii) an insurance company as
defined in section 2(13) of the Securities Act; (iv) an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that Act; (v) a Small Business
Investment Company licensed by the U.S. Small Business Administration under
section 301(c) or (d) of the Small Business Investment Act of 1958; or (vi) an
employee benefit plan within the meaning of Title I of the Employee Retirement
Income Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in section 3(21) of such Act, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or if an employee benefit plan has total assets in excess of $5,000,000
or, if a self-directed plan, with investment decisions made solely by persons
that are Accredited Investors; or
(f) is any organization described in section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the Preferred
Shares offered, with total assets in excess of $5,000,000; or
(g) is any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Preferred Shares offered, whose
purchase is directed by a
44
sophisticated person as described in Regulation 230.506(b) (2) (ii) promulgated
under the Securities Act; or
(h) is an entity in which all of its equity owners meet one or
more of the standards set forth in (a) through (g) above.
As used in this Section 3.7, the term "net worth" means the excess of total
assets over total liabilities, and "income" means actual economic income, which
may differ from adjusted gross income for federal income tax purposes.
3.8 Representations and Warranties as to Accredited Investor Status.
---------------------------------------------------------------
Each Investor as to itself, severally and not jointly, further represents to the
Company that such Investor is an Accredited Investor.
3.9 Legends. To the extent applicable, each certificate or other
-------
document evidencing any of the Preferred Shares issued hereunder or any Common
Stock issued upon conversion of the Preferred Shares shall be endorsed with the
legends set forth below, and such Investor covenants that, except to the extent
such restrictions are waived by the Company, such Investor shall not transfer
the securities without complying with the restrictions on transfer described in
the legends endorsed thereon;
(a) The following legend under the Securities Act:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED
UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED."
(b) If required by the authorities of any state in connection
with the issuance or sale of the Preferred Shares, the legend required by such
state authority.
The Company shall not be required (i) to transfer on its books any
Preferred Shares which shall have been transferred in
45
violation of any of the provisions set forth in this Agreement, or (ii) to treat
as owner of such Preferred Shares or to accord the right to vote as such owner
or to pay dividends to any transferee to whom such Preferred Shares shall have
been so transferred.
3.10 Removal of Legends.
-------------------
(a) Any legend endorsed on a certificate pursuant to Section
3.09(a) or (b) hereof shall be removed (i) if Preferred Shares represented by
such certificate shall have been effectively registered under the Securities Act
or otherwise lawfully sold in a public transaction, (ii) if such Preferred
Shares may be transferred in compliance with Rule 144(k) promulgated under the
Securities Act, or (iii) if the holder of such Preferred Shares shall have
provided the Company with an opinion from counsel, in form and substance
acceptable to the Company and from attorneys reasonably acceptable to the
Company, stating that a public sale, transfer or assignment of such Preferred
Shares may be made without registration.
(b) Any legend endorsed on a certificate pursuant to Section
3.9(b) hereof shall be removed if the Company receives an order of the
appropriate state authority authorizing such removal or if the holder of the
Preferred Shares provides the Company with an opinion of counsel, in form and
substance acceptable to the Company and from attorneys reasonably acceptable to
the Company, stating that such state legend may be removed.
4. Conditions of Investor's Obligations at Closing. The obligations of
-----------------------------------------------
each Investor under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against any Investor who does not consent
in writing thereto:
4.1 Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and complied with
-----------
all agreements, obligations and conditions
46
contained in this Agreement that are required to be performed or complied with
by it on or before the Closing. The entering into, delivery and performance of
this Agreement by the Company shall have been duly authorized by all necessary
corporate action.
4.3 Compliance Certificate. At the Closing, the Chief Executive
----------------------
Officer of the Company shall deliver to the Investors a certificate certifying
that the conditions set forth in Sections 4.1 and 4.2 have been fulfilled.
4.4 Qualifications. Any applicable United States state securities
--------------
regulatory authority shall have issued permits qualifying the offer and sale of
the Preferred Shares to the Investors pursuant to this Agreement, or such offer
and sale shall be exempt from such qualification under applicable state blue-sky
law.
4.5 Certificate of Designation. The Company shall have adopted and
--------------------------
filed with the Secretary of State of the State of Delaware on or before the date
of the Closing, the Certificate of Designation.
4.6 Legal Investment. At the time of such Closing, the purchase of
----------------
the Preferred Shares by the Investors shall be legally permitted by all laws and
regulations to which such Investors and the Company are subject.
4.7 Acquisition of Therox Pharmaceuticals. The consummation of the
-------------------------------------
merger of Therox Pharmaceuticals, Inc., a Delaware corporation with and into a
wholly-owned subsidiary of the Company ("Acquisition") shall occur at or
immediately prior to the Closing.
4.8 Opinion of Counsel. At the Closing, the Investors shall have
------------------
received an opinion of Jackson, Tufts, ▇▇▇▇ & Black, counsel for the Company,
regarding the matters set forth on Exhibit E hereto.
---------
5. Conditions of the Company's Obligations at Closing. The obligations
--------------------------------------------------
of the Company to each Investor purchasing Preferred Shares hereunder are
subject to the fulfillment on or before the Closing of each of the following
conditions by such Investor:
47
5.1 Representations and Warranties. The representations and
------------------------------
warranties of the Investor contained in Section 3 hereof shall be true on and as
of the date of the Closing with the same effect as though such representations
and warranties had been made on and as of the Closing.
5.2 Payment of Purchase Price. Each Investor shall have delivered the
-------------------------
purchase price specified in Section 1.1(b) and Exhibit B.
---------
5.3 Blue Sky Qualification. Any applicable United States state
----------------------
regulatory authority shall have issued permits qualifying the offer and sale to
the Investors of the Preferred Shares or such offer and sale shall be exempt
from such qualification under applicable state blue-sky law.
5.4 Certificate of Designation. The Company shall have adopted and
--------------------------
filed with the Secretary of State of the State of Delaware on or before the
Closing, the Certificate of Designation.
5.5 Legal Investment. At the time of such Closing, the purchase of
----------------
the Preferred Shares by the Investors shall be legally permitted by all laws and
regulations to which the Investors and the Company are subject.
6. Miscellaneous.
--------------
6.1 Survival of Warranties. The warranties, representations and
----------------------
covenants of the Company and the Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.
6.2 Successors and Assigns. The terms and conditions of this
----------------------
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
48
6.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of Delaware.
6.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 Notices. Except as otherwise expressly provided herein, any
-------
notice required or permitted hereunder shall be given in writing and it or any
certificates or other documents delivered hereunder shall be deemed effectively
given or delivered (as the case may be) upon personal delivery (professional
courier permissible) or when mailed by receipted United States certified mail
delivery, five (5) business days after deposit in the United States mail. Such
certificates, documents or notice may be personally delivered or sent to the
following address: (a) if to a Investor, to the address set forth with respect
to such investor on Exhibit B attached hereto, or to such other address of which
---------
such investor shall have given notice pursuant hereto the Company, or (b) if to
the Company, to OXIS International, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or to such other address of which the Company shall
have given notice pursuant hereto.
6.7 Finder's Fee. Each Investor severally agrees to indemnify and
------------
hold harmless the Company from any liability for any commission or compensation
in the nature of a broker's, investment banker's or finder's fee (and the costs
and expenses of defending against such liability or asserted liability) for
which such investor or any of its officers, partners, employees or
representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor from any
liability for any commission or compensation in the nature of a finder's,
broker's or investment banker's fee (including any fees owed by the Company to
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc.) (and the costs and expenses of defending
against such liability or asserted liability) for which the Company or any of
its officers, employees or representatives is responsible.
49
6.8 Expenses. Each party to this Agreement shall bear its own
--------
expenses incurred in connection with the negotiation, preparation, execution and
consummation of this Agreement, including the fees, expenses and disbursements
of its respective legal counsel incurred in connection herewith.
6.9 Amendments and Waivers. Any term of this Agreement may be amended
----------------------
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of at least 50.1% of
shares of the Common Stock issued or issuable upon conversion of the Preferred
Shares; provided, however, the conditions to Closing set forth in Section 4
hereof may only be amended by unanimous agreement of the Investors.
6.10 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
6.11 Aggregation of Stock. All Preferred Shares (or Common Stock
--------------------
issued on conversion thereof) held or acquired by affiliated entities or persons
shall be aggregated together for the purpose of determining the availability of
any rights under this Agreement.
6.12 Confidentiality Agreement. Each Investor and any successor or
-------------------------
assigns of such Investor who receives from the Company or its agents, directly
or indirectly, any information which the Company has not made generally
available to the public, pursuant to the preparation and execution of this
Agreement or disclosure in connection therewith, acknowledges and agrees that
such information is confidential and for its use only in connection with
evaluating its investment in the Company, and further agrees that it will not
disseminate such information to any person other than its accountant, investment
advisor or attorney and that such dissemination shall be only for purposes of
evaluating its investment.
6.13 Entire Agreement. This Agreement and the other documents and
----------------
agreements delivered pursuant hereto constitute the full and entire
understanding and agreement among the parties
50
with regard to the subjects hereof and thereof and supersedes any prior
agreements, memorandum of understanding or letters of intent between the parties
regarding the subject matter hereof (including without limitation the letter of
intent between the parties dated May 17, 1995, as amended).
6.14 Series B Board Nominee. The parties acknowledge that ▇▇▇▇▇▇▇ ▇.
----------------------
Biro ("Biro") will be appointed to the Company's Board of Directors upon the
consummation of the sale of the Preferred Shares, as the designee of the
Preferred Shares. If at any time Biro (or any successor to Biro as the designee
of the Preferred Shares) ceases to serve on the Company's Board, the holders of
three-fourths (3/4) of the Preferred Shares then outstanding may request that
the Board of Directors of the Company shall appoint the designee of the holders
of the Preferred Shares to serve as a member of the Board of Directors of
Company, and the Board of Directors shall not unreasonably refuse such request.
51
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"Investors" "Company"
S.R. ONE, Limited OXIS INTERNATIONAL, INC.
a Delaware corporation
By:
--------------------------
Name: By:
----------------------- --------------------------
Title: Name:
----------------------- ------------------------
Title:
-----------------------
▇▇▇▇▇▇▇▇ VENTURE PARTNERS II, L.P.
By:
--------------------------
Name:
-----------------------
Title:
-----------------------
52
EXHIBIT A
---------
CERTIFICATE OF DESIGNATIONS, PREFERENCES, AND
---------------------------------------------
RIGHTS OF SERIES B PREFERRED STOCK
----------------------------------
OXIS International, Inc., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article FOURTH of its
Restated Certificate of Incorporation, and in accordance with the provisions of
Section 151 of the General Corporation Law of the State of Delaware, its Board
of Directors has adopted the following resolution creating a series of Preferred
Stock designated as Series B Preferred Stock.
"RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation by the Restated Certificate of Incorporation (the
"Certificate of Incorporation"), the Board of Directors does hereby provide for
the issue of, and does hereby issue, a series of Preferred Stock, par value
$0.01 per share, of the Corporation, to be designated "Series B Preferred
Stock," initially consisting of Six Hundred Forty-Two Thousand Five Hundred
Eighty-Three (642,583) shares and to the extent that the designations, powers,
preferences and relative and other special rights and the qualifications,
limitations and restrictions of the Series B Preferred Stock are not stated and
expressed in the Certificate of Incorporation, does hereby fix and herein state
and express such designations, powers, preferences and relative and other
special rights and the qualifications, limitations and restrictions thereof, as
follows (all terms used herein which are defined in the Certificate of
Incorporation shall be deemed to have the meanings provided therein):
A. Designation and Amount. The shares of such series shall be designated
----------------------
as "Series B Preferred Stock," par value $0.01 per share, and the number of
shares constituting such series shall be 642,583.
B. Rights, Preferences and Privileges. The rights, preferences,
----------------------------------
privileges and restrictions granted to or imposed upon the Series B Preferred
Stock are as follows:
1. Series B Dividends.
------------------
(a) The holders of outstanding Series B Preferred Stock shall be
entitled to receive in any fiscal year, when, as and if declared by the Board of
Directors, out of any assets at the time legally available therefor, dividends
at the rate of $0.115 per share of Series B Preferred Stock per annum before any
dividend or distribution (other than pursuant to Section 4) is paid on Common
Stock. Such dividend or distribution may be payable annually or otherwise as the
Board of Directors may from time to time determine. Dividends or distributions
(other than dividends payable solely in shares of Common Stock or distributions
pursuant to Section 4) of up to $0.115 per share may be declared and paid upon
shares of Common Stock in any fiscal year of the Corporation only if dividends
shall have been paid on and declared and set apart upon all
53
shares of Series B Preferred Stock at such annual rate in such year. After
dividends or distributions of $0.115 per share have been declared and paid on
the Common Stock in any fiscal year, all further dividends and distributions
during such fiscal year shall be distributed among the holders of the Common
Stock and the Series B Preferred Stock in proportion to the shares of Common
Stock then held by them and the shares of Common Stock which they then have the
right to acquire upon conversion of the shares of Series B Preferred Stock then
held by them. The right to such dividends on shares of Series B Preferred Stock
shall not be cumulative and no right shall accrue to holders of shares of Series
B Preferred Stock by reason of the fact that dividends on said shares are not
declared in any prior year, nor shall any undeclared or unpaid dividend bear or
accrue interest.
2. Series B Voting Rights.
----------------------
(a) Each holder of shares of Series B Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Common Stock
into which such holder's shares of Series B Preferred Stock could be converted
on the record date for the vote or consent of stockholders and, except as
otherwise provided herein, shall have voting rights and powers equal to the
voting rights and powers of the Common Stock. The holder of each share of Series
B Preferred Stock shall be entitled to notice of any stockholders' meeting in
accordance with the Bylaws of the Corporation and shall vote with holders of the
Common Stock upon the election of directors and upon any other matter submitted
to a vote of stockholders, except those matters required by law to be submitted
to a class or series vote and except as otherwise provided in Sections 2(b) and
2(c) hereof. Fractional votes by the holders of Series B Preferred Stock shall
not, however, be permitted and any fractional voting rights resulting from the
above formula (after aggregating all shares into which shares of Series B
Preferred Stock held by each holder could be converted) shall be rounded to the
nearest whole number.
(b) The number of directors shall be set as provided in the Bylaws of
the Corporation. So long as any shares of Series B Preferred Stock remain
outstanding, the holders of the Series B Preferred Stock outstanding, voting
together as a class, shall be entitled to elect one (1) director. The holders of
Common Stock voting together as a class, shall be entitled to elect the
remaining directors to be elected.
(c) In the case of any vacancy in the office of a director occurring
among the directors elected by the holders of the Series B Preferred Stock or
Common Stock pursuant to Section 2(b) hereof, the remaining director or
directors so elected by the holders of the Series B Preferred Stock or Common
Stock as the case may be, may, by affirmative vote thereof (or the remaining
director so elected if there is but one, or if there is no such director
remaining, by the vote of the shares of the applicable class) elect a successor
or successors to hold the office for the unexpired term of the director or
directors whose place or places shall be vacant. Any director who shall have
been elected by the holders of the Series B Preferred Stock or Common Stock or
any director so elected as provided in the preceding sentence hereof, may be
removed during the aforesaid term of office only by the vote of the Series B
Preferred Stock or Common Stock as the case may be, provided that the shares
voted against removal would not be sufficient to elect the director with
cumulative voting.
54
3. Series B Conversion. The holders of Series B Preferred Stock shall
-------------------
have conversion rights as follows (the "Conversion Rights");
(a) Right to Convert. Each share of Series B Preferred Stock shall be
----------------
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share at the office of the Corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing $2.33433 by the Series B Conversion
Price, determined as hereinafter provided, in effect on the date the certificate
is surrendered for conversion. The price at which shares of Common Stock shall
be deliverable upon conversion of shares of the Series B Preferred Stock (the
"Series B Conversion Price") shall initially be $2.33433 per share of Common
Stock. Such initial Series B Conversion Price shall be adjusted as hereinafter
provided.
(b) Automatic Conversion. Each share of Series B Preferred Stock shall
--------------------
automatically be converted into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing $2.33433 by the Series B
Conversion Price, in effect on the date of the receipt by the Corporation of the
written consent to, or request for, such conversion from holders of at least
three-fourths (3/4) of the Series B Preferred Stock then outstanding.
(c) Mechanics of Conversion.
-----------------------
(i) Before any holder of Series B Preferred Stock shall be
entitled to convert the same into shares of Common Stock, he shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for such stock, and shall give written
notice to the Corporation at such office that he elects to convert the same and
shall state therein the name or names in which he wishes the certificate or
certificates for shares of Common Stock to be issued. The Corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such holder
of Series B Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which he shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of surrender of the shares of Series B Preferred Stock to
be converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date.
(ii) If a voluntary conversion is made in connection with an
underwritten offering of securities pursuant to a registration statement filed
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), the
conversion may, at the option of any holder tendering shares of Series B
Preferred Stock for conversion, be conditioned upon the closing with the
underwriters of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock upon conversion of the Series
B Preferred Stock shall not be deemed to have converted such Series B Preferred
Stock until immediately prior to the closing of such sale of securities.
55
(d) Adjustments for Stock Dividends, Subdivisions, or Split-ups of
--------------------------------------------------------------
Common Stock. If the number of shares of Common Stock outstanding at any time
------------
after the filing of this Certificate of Designation is increased by a stock
dividend payable in shares of Common Stock or by a subdivision or split-up of
shares of Common Stock, then, effective at the close of business upon the record
date fixed for the determination of holders of Common Stock entitled to receive
such stock dividend, subdivision or split-up, the Conversion Price for the
Series B Preferred Stock shall be appropriately decreased so that the number of
shares of Common Stock issuable on conversion of each share of Series B
Preferred Stock shall be increased in proportion to such increase of outstanding
shares of Common Stock.
(e) Adjustments for Combinations of Common Stock. If the number of
--------------------------------------------
shares of Common Stock outstanding at any time after the filing of this
Certificate of Designation is decreased by a combination of the outstanding
shares of Common Stock, then, effective at the close of business upon the record
date of such combination, the Conversion Price for the Series B Preferred Stock
shall be appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of Series B Preferred Stock shall be
decreased in proportion to such decrease in outstanding shares of Common Stock.
(f) Adjustments for Other Distributions. In the event the Corporation
-----------------------------------
at any time or from time to time makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive any distribution
payable in securities of the Corporation other than shares of Common Stock, then
and in each such event provision shall be made so that the holders of Series B
Preferred Stock shall receive upon conversion thereof, in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation which they would have received had their Series B Preferred Stock
been converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and including the
date of conversion, retained such securities receivable by them as aforesaid
during such period, subject to all other adjustments called for during such
period under this Section 3(f) with respect to the rights of the holders of the
Series B Preferred Stock.
(g) Adjustments for Reorganizations, Reclassifications, etc. If the
-------------------------------------------------------
Common Stock issuable upon conversion of the Series B Preferred Stock shall be
changed into the same or a different number of shares of any other class or
classes of stock or other securities or property, whether by reclassification, a
merger or consolidation of this Corporation with or into any other corporation
or corporations, or a sale of all or substantially all of the assets of this
Corporation, or otherwise, the Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or reclassification,
be proportionately adjusted such that the Series B Preferred Stock shall be
convertible into, in lieu of the number of shares of Common Stock which the
holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock or securities or other property equivalent
to the number of shares of Common Stock that would have been subject to receipt
by the holders upon conversion of the Series B Preferred Stock immediately
before such event; and, in any such case, appropriate adjustment (as determined
by the Board) shall be made in the application of the provisions herein set
forth with respect to the rights and interests thereafter of the holders of the
Series B Preferred
56
Stock, to the end that the provisions set forth herein (including provisions
with respect to changes in and other adjustments of the Conversion Price) shall
thereafter be applicable, as nearly as may be reasonable, in relation to any
shares of stock or other property thereafter deliverable upon the conversion of
the Series B Preferred Stock.
(h) Certificates as to Adjustments. Upon the occurrence of each
------------------------------
adjustment or readjustment of the Series B Conversion Price pursuant to this
Section 3, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Series B Preferred Stock a certificate executed by the
Corporation's President or Chief Financial Officer setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series B Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (A) such adjustments and
readjustments, (B) the Conversion Price for such Series B Preferred Stock at the
time in effect, and (C) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the conversion
of the Series B Preferred Stock.
(i) Notices of Record Date. In the event that the Corporation shall
----------------------
propose at any time: (a) to declare any special dividend or distribution upon
its Common Stock, whether in cash, property, stock or other securities, whether
or not out of earnings or earned surplus; (b) to offer for subscription pro rata
to the holders of any class or series of its stock any additional shares of
stock of any class or series or other rights; (c) to effect any reclassification
or recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or (d) to merge or consolidate with or into any other corporation
(other than a mere reincorporation transaction), or sell, lease or convey all or
substantially all of its assets, or to liquidate, dissolve or wind up; then, in
connection with each such event, the Corporation shall send to the holders of
Series B Preferred Stock:
(i) at least twenty (20) days' prior written notice of the date
on which a record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common Stock shall be
entitled thereto) or for determining rights to vote, if any, in respect of the
matters referred to in (c) and (d) above; and
(ii) in the case of the matters referred to in (c) and (d) above,
at least twenty (20) days' prior written notice of the date when the same shall
take place (and specifying the date on which the holders of Common Stock shall
be entitled to exchange their Common Stock for securities or other property
deliverable upon the occurrence of such event).
(j) Reservation of Stock Issuable Upon Conversion. The Corporation
---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series B Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series B Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the
57
conversion of all then outstanding shares of the Series B Preferred Stock, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose,
including, without limitation, engaging in its best efforts to obtain the
requisite stockholder approval of any necessary amendment to the Certificate of
Incorporation.
(k) Fractional Shares. No fractional share shall be issued upon the
-----------------
conversion of any share or shares of Series B Preferred Stock. All shares of
Common Stock (including fractions thereof) issuable upon conversion of more than
one share of Series B Preferred Stock by a holder thereof shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of Common
Stock, the Corporation shall, in lieu of issuing any fractional share, pay the
holder otherwise entitled to such fraction a sum in cash equal to the fair
market value of such fraction on the date of conversion (as determined in good
faith by the board of directors of the Corporation).
(l) Notices. Any notice required by the provisions of this Section 3
-------
to be given to the holders of shares of Series B Preferred Stock shall be deemed
given on the date of delivery if delivered by hand delivery or by facsimile, or,
if deposited in the United States mail (registered or certified), postage
prepaid, and addressed to each holder of record at his or its address appearing
on the books of the Corporation.
4. Series B Liquidation Preferences.
--------------------------------
(a) In the event of any liquidation, dissolution or winding up of the
Corporation whether voluntary or involuntary, the holders of the Series B
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of Common Stock or any other shares of this corporation other than
Series B Preferred Stock by reason of their ownership thereof, the amount of
$2.33433 per share (as adjusted for any stock dividends, combinations or splits
with respect to such shares), plus all declared or accrued but unpaid, dividends
on such share, for each share of Series B Preferred Stock then held by them. If
upon the occurrence of such event, the assets and funds thus distributed among
the holders of the Series B Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amount, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Series B Preferred Stock
in proportion to the preferential amount each such holder is otherwise entitled
to receive.
(b) After the payment to the holders of the Series B Preferred Stock
of the amounts set forth in Section 4(a) above, the holders of the Common Stock
shall be entitled to receive, prior and in preference to any distribution of any
of the assets or surplus funds of the Corporation to the holders of the other
capital stock of the Company by reason of their ownership
58
thereof, an aggregate distribution equal to the total consideration received by
the Corporation for the sale and issuance of all issued and outstanding Series B
Preferred Stock, with each holder of Common Stock participating on a pro rata
basis based on the number of shares of Common Stock they own. If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Common Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amount, then all assets and funds of
the Corporation legally available for distribution after the payment to the
holders of the Series B Preferred Stock of the amounts set forth in Section 4(a)
shall be distributed ratably among the holders of the Common Stock in proportion
to the preferential amount each such holder is otherwise entitled to receive.
(c) After payments to (i) the holders of the Series B Preferred Stock
of the amounts set forth in Section 4(a) above, and (ii) the holders of the
Common Stock of the amounts set forth in Section 4(b) above, the entire
remaining assets and funds of the Corporation legally available for
distribution, if any, shall be distributed among the holders of the Common Stock
and the Series B Preferred Stock in proportion to the shares of Common Stock
then held by them and the shares of Common Stock which they then have the right
to acquire upon conversion of the shares of Series B Preferred Stock then held
by them.
5. Series B Protective Provisions. In addition to any other rights
------------------------------
provided by law, so long as any share of Series B Preferred Stock shall be
outstanding, the Corporation shall not, without first obtaining the affirmative
vote or written consent of the holders of the majority of the outstanding shares
of Series B Preferred Stock voting separately as a separate class, take any
action which alters or changes any of the rights, privileges or preferences of
the Series B Preferred Stock, including without limitation increasing or
decreasing the aggregate number of authorized shares of such series other than
an increase incident to a stock split.
RESOLVED FURTHER, that the President or any Vice President and the
Secretary or any Assistant Secretary of this Corporation be, and they hereby
are, authorized and directed to prepare and file a Certificate of Designation in
accordance with the foregoing resolution and the provisions of Delaware law and
to take such actions as they may deem necessary or appropriate to carry out the
intent of the foregoing resolutions."
59
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be duly executed by its Chairman of the Board and attested to by
its Secretary this ____ day of July, 1995.
OXIS INTERNATIONAL, INC.
By:
-----------------------
▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board
ATTEST:
-------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Secretary
60
EXHIBIT B
---------
SCHEDULE OF INVESTORS
---------------------
Aggregate
No. of Purchase
"INVESTORS" Shares Price
------ ---------
Name: S.R. One, Limited
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Address: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ 428,389 $1,000,000
Name: ▇▇▇▇▇▇▇▇ Venture Partners II, L.P.
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ 214,194 $500,000
61
OXIS International, Inc.
SCHEDULE OF EXCEPTIONS
July 18, 1995
EXHIBIT C
---------
SCHEDULE OF EXCEPTIONS
OF
OXIS INTERNATIONAL, INC.
------------------------
This Schedule of Exceptions is delivered by Oxis International, Inc., a Delaware
corporation (the "Company") to ▇▇▇▇▇▇▇▇ Venture Partners II, L.P. and S.R. One,
Limited (collectively, the "Investors"), pursuant to Article 2 of that certain
Series B Preferred Stock Purchase Agreement between the Company and the
Investors, dated July 18, 1995 (the "Agreement"). The representations and
warranties of the Company (including its subsidiary, Bioxytech SA (now known as
OXIS International S.A.), a French company ("Bioxytech")) set forth in the
Agreement are hereby amended and excepted to the extent set forth hereafter.
GENERAL EXCEPTION
On May 10, 1993, the current Board of Directors of the Company was appointed
following a control contest and the Company appointed new management.
Accordingly, management is unable to give representations and warranties
relating to the period prior to May 10, 1993.
SECTION 2.1 ORGANIZATION AND AUTHORITY
--------------------------------------
1. The Company is in good standing in the State of Delaware, its state of
incorporation. The Company is qualified to transact business and is in good
standing in the State of Oregon and the State of California. The Company
does not believe it is required to qualify to conduct business other than in
the State of Oregon and the State of California.
2. The Company has made accessible or delivered copies of its certificate of
incorporation and bylaws currently in effect and records of all meetings of
and actions taken by its Board of Directors and stockholders except for
certain meetings of the Board of Directors taking place prior to May 10,
1993.
3. Bioxytech does not have "articles of organization" or "bylaws;" the French
equivalent of such instruments are grouped together in Bioxytech's
"statuts."
4. The Company has made accessible or delivered copies of Bioxytech's statuts
as currently in effect. Minutes of all meetings of Bioxytech's Directoire
and Conseil de Surveillance have been prepared and are accessible.
SECTION 2.2 CAPITALIZATION
--------------------------
1. At the meeting of the Company's Board of Directors on July 6, 1995, the
Board approved the grant of options covering an aggregate of 575,500 shares
of Common Stock.
62
2. Paragraphs 2, 3 and 7 of Section 2.15 are hereby incorporated herein by
reference.
SECTION 2.2(b)
--------------
1. Certain agreements of the Company which have been disclosed to the Investors
in the course of the companies' respective due diligence review of material
contracts include covenants of the Company not to disclose such documents to
third parties. The Company believes that it has adequately protected the
interests of other parties to such confidential agreements by the agreements
of confidentiality of disclosed information with the Investors.
SECTION 2.2(c)
--------------
Please see Section 2.2(b) above.
SECTION 2.3 INVESTMENT IN OTHERS
--------------------------------
The Company does not own directly or indirectly an equity interest in any
corporation, association, partnership, joint venture or other entity other than
Bioxytech.
SECTION 2.4 CONSENTS
--------------------
None.
SECTION 2.6 LITIGATION
----------------------
1. The Company is subject to two Securities & Exchange Commission consent
decrees entered into in the early 1980s requiring the Company, among other
things, to comply with the requirements of the Securities Exchange Act of
1934 and rules and regulations promulgated thereunder.
2. Bioxytech is in litigation with a former director and present OXIS
shareholder, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, who is claiming damages for unfair dismissal.
He is claiming a total of FF 4.8 million, which claim if granted would
require payments by the Company of approximately FF 6.5 million, including
social charges. ▇▇. ▇▇▇▇▇▇'▇ action was dismissed by the labor court on May
16, 1994, and he has appealed the decision. The former shareholders of
Bioxytech have agreed to indemnify OXIS from payments resulting from this
claim to the extent that such payment can be made from the proceeds from
sale of their OXIS stock.
SECTION 2.7 PROTECTION OF INTANGIBLE PROPERTY
---------------------------------------------
1. Section 2.13 is hereby incorporated herein by reference thereto.
63
2. The Company has used a variety of forms of confidentiality agreements; a
copy of each such form is attached hereto as Schedule 2.7. All United States
employees have signed such agreements with the exception of two temporary
employees whose jobs are limited to packaging Palosein.
3. Each Bioxytech employee has signed an employment contract which contains a
secrecy clause with the exception of two maintenance and cleaning employees
who do not have access to secrets in the course of their work.
4. The Bioxytech employment contracts stipulate that the terms of the
Convention Collective Nationale des Industries Chimiques (Chemical Industry
Convention) apply. These terms provide that any invention made during the
course of the employee's work is the property of the employer.
SECTION 2.9 LIST OF MATERIAL AGREEMENTS
---------------------------------------
1. The following Schedule 2.9 is a list of all material agreements to which the
Company is a party.
SCHEDULE 2.9
LIST OF MATERIAL AGREEMENTS /1/
---------------------------
A. AGREEMENTS REGARDING ORGOTEIN
-----------------------------
1. License Agreement, between the Company and Grunenthal GmbH
("Grunenthal"), dated February 17, 1982, as amended.
2. Basic Supply Agreement, between the Company and Grunenthal, dated
February 12, 1985, as amended.
3. Agreement, between the Company and Grunenthal, dated January 1, 1987,
as amended.
4. Letter Agreement, between the Company and Grunenthal, dated January 30,
1990.
5. License Agreement, between the Company and Zambeletti S.p.a. (now known
as SmithKline ▇▇▇▇▇▇▇), executed May 20, 1983 and June 1, 1983, as
amended.
-----------------
/1/ Many of the agreements of the Company with respect to licensing and
distribution of Orgotein have been amended or modified from time to time
both by formal amendments to the agreements as well as by letter agreements
and written and verbal understandings.
64
6. License Agreement, between the Company and Zambeletti Espana (now known as
Tedec Meiji Farma), executed August 15, 1983 and September 1, 1983, as
amended.
7. Agreement, between the Company and Grunenthal, dated January 1, 1987, as
amended.
8. Manufacturing and Supply Agreement, between the Company and Diosynth B.V.
("Diosynth"), dated as of July 12, 1985, as amended.
9. Letter Agreement, between the Company and Diosynth, dated as of December 9,
1988, as amended.
10. Letter Agreement, between the Company and Diosynth, dated January 1, 1989,
as amended.
11. Letter Agreement, between the Company and Diosynth, dated December 23,
1991.
12. Agreement, between the Company and Diosynth, dated January 1, 1993.
13. Letter Agreement, between the Company and Diosynth, dated February 22,
1993.
14. Agreement between the Company and TSI Redfield Laboratories, Inc., dated
March 2, 1994.
15. Notice from Diosynth to the Company, dated March 4, 1993, and accepted (by
counter-signature) by the Company.
16. Amended and Restated Research and Development Agreement, between the
Company and Allelix, Inc., dated February 9, 1988, as amended by Addendum
No. 1 dated March 10, 1989.
17. Agreement, between the Company and Sterling Drug, Inc. (now Sterling
Winthrop, Inc.), dated January 1, 1990.
18. Agreement, between the Company and Sterling Drug, Inc. (now Sterling
Winthrop, Inc.), dated September 16, 1992.
19. Letter Agreement, between the Company and Sterling Winthrop Inc., dated
March 21, 1994.
20. Research Collaboration Agreement, between the Company and Amgen Inc., dated
December 31, 1991.
65
B. AGREEMENTS REGARDING DEVELOPMENT AND DISTRIBUTION OF DIAGNOSTIC ASSAY
---------------------------------------------------------------------
PRODUCTS
--------
21. Diagnostic Assay For Topiramate Development and Distribution Agreement,
between International BioClinical, Inc. (now the Company) and Ortho
Pharmaceutical Corporation, dated as of April 1, 1994, as amended by
Amendment No. 1, dated October 10, 1994.
22. Research and Development Agreement, between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Dow Inc., dated as of January 1, 1993.
23. Technology Development Agreement, between the Company and the University of
Iowa, dated as of April 1, 1994.
24. Federal Supply Schedule Contract, between the Company and the Department of
Veterans Affairs, effective March 10, 1992.
25. Distribution Agreement, between the Company and ▇▇▇▇▇▇ Diagnostics Inc.,
dated July 22, 1993.
26. Agreement, between the Company and J&S Medical Associates, dated as of
December 1, 1991.
27. Agreement, between the Company and Protea Medical & Laboratory Limited,
dated August 1, 1994.
28. Agreement, between the Company and Intermountain Veterinary Supply, dated
December 15, 1994.
29. Agreement, between the Company and Infolab, dated as of September 1, 1994.
30. Agreement, between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, dated as of January 1,
1994.
31. Agreement, between the Company and Labsco, dated as of January 1, 1992.
32. Agreement, between the Company and Biomedical Diagnostics France, dated as
of September 1, 1991.
33. Agreement, between the Company and ▇▇▇▇ ▇▇▇▇▇▇▇ BioChemica GmbH, dated as
of July 1, 1994.
34. Agreement, between the Company and Biomedical Diagnostics Belgium, dated as
of September 1, 1991.
35. Agreement, between the Company and Bio-Stat Limited, dated as of February
21, 1995.
66
36. Agreement, between the Company and Dispolab AG, dated as of November 1,
1992.
37. Agreement, between the Company and Immucor Canada Inc., dated as of January
1, 1992.
38. Agreement, between the Company and Immuno Diagnostics, dated as of November
1, 1991.
39. Agreement, between the Company and Ingelheim Diagnostica Y Technologia,
S.A., dated as of February 21, 1995.
40. Agreement, between the Company and Novatek Healthcare AB, dated as of May
1, 1994.
41. Agreement, between the Company and Quatro Biosystems Ltd., dated as of
August 19, 1991.
42. Agreement, between the Company and Smets Technology Alliance Group N.V.,
dated as of June 1, 1994.
43. Agreement, between the Company and Tema Ricera S.R.L., dated as of November
1, 1992.
44. Distribution Agreement, between Bioxytech S.A. (now the Company) and Cayman
Chemical Company, dated May 10, 1993.
45. Distribution Agreement, between the Company and British Bio-Technology
Products Ltd. (now R&D Systems), dated May 11, 1993.
46. Distributor Agreement, between the Company and Funakoshi Co. Ltd., dated
October 8, 1992.
47. Agreement, between the Company and Calbiochem-Novabiochem International,
dated February 15, 1995.
48. Agreement, between the Company and BDS Diagnostics, dated April 27, 1995.
49. Agreement, between the Company and Univet Pharmaceuticals, Ltd., dated
December 27, 1994
50. Agreement, between the Company and Western Medical Supply, Inc., dated
December 27, 1994.
67
51. Distribution Agreement, between Bioxytech and BioWhittaker France, dated
June 1, 1995.
C. DOCUMENTS REGARDING FINANCING OF COMPANY
----------------------------------------
52. Loan Agreement, with Oregon Resource and Technology Development
Corporation, dated October 27, 1987.
53. Letter Agreement, between the Company and Oregon Research and Technology
Development Fund, dated September 14, 1995.
54. Promissory Note of Company, payable to U.S.N.B. Oregon in principal amount
of approximately $67,000, dated January 27, 1995.
55. Promissory Note of Company, payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇ in principal amount of
$5,000, dated March 1, 1993.
56. Agreement, between the Company and ▇▇▇▇▇▇ & Company, Inc., dated April 28,
1995.
57. Term Loan Agreement among the Company, Bioxytech and Sanofi S.A., dated May
2, 1995 with accompanying Promissory Note and Security Agreement.
58. Secured Promissory Notes aggregating $766,127.00 dated February 7, 1995
between the Company and the following: Alta Berkeley ▇.▇. ▇▇, Innolion
S.A., Sofinnova Capital F.C.P.R., Sofinnova S.A., and Finovalec S.A.,
together with a related Security Agreement of the same date.
59. Letter Agreement between the Company and ▇▇▇▇▇▇▇▇▇▇▇ Peralla & Co., Inc.,
dated September 14, 1994.
D. OTHER AGREEMENTS
----------------
60. Lease Agreement, with ▇▇▇▇▇/▇▇▇▇▇ Associates Limited partnership, a
California limited partnership (formerly known as REALPROP Mountain View
Associates) dated July 1, 1990, renewed and extended through June 30, 1994
by a Lease Extension dated June 3, 1993, and further extended through June
30, 1995 by Lease Extension, dated March 22, 1994, and further extended
through July 31, 1995 by Lease Extension dated June 27, 1995
61. Lease Agreement, between the Company and Expressway Development dated
November 5, 1990, with Lease Amendment, dated November 5, 1990.
68
62. NASDAQ National Market Listing Agreement ("Listing Agreement"), between the
Company and the National Association of Securities Dealers, dated October
28, 1994.
63. Various consultants also provide services to the Company, including ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Public Relations, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. Various
members of the Company's Board of Directors also provide consulting and/or
legal services to the Company from time to time.
64. Supply Agreement between the Company and Diagnostic Reagents, Inc., dated
June 6, 1995.
65. Agreement between the Company and ▇▇▇▇ ▇▇▇▇▇▇▇ Co., Inc., dated March 6,
1995.
66. Agreement between the Company and SmithKline ▇▇▇▇▇▇▇ Pharmaceutici dated
May 25, 1995.
67. Agreement for Stock Transfer Services between the Company and The First
National Bank of Boston, dated August 30, 1993.
68. Agreement and Plan of Reorganization and Merger between the Company and
International BioClinical, Inc., an Oregon corporation ("IBC") and certain
shareholders of IBC, dated as of June 21, 1994, together with related
agreements.
69. Stock Purchase Agreement between the Company and Bioxytech S.A., a French
company ("Bioxytech") and certain shareholders of Bioxytech, dated as of
June 21, 1994, together with all related agreements.
SECTION 2.11 PERSONAL PROPERTY
------------------------------
1. The leases on certain of the scientific equipment of Bioxytech provide that
the equipment remains the property of the lessor until the lease is fully
paid off, including a residual value. Bioxytech rescheduled lease payments
to two equipment lessors, Sofinabail and Slibail such that the remaining
payments to be made are a payment of approximately FF 625,000 to Slibail
due September 25, 1995 and payments of approximately FF 1,970,000 to
Sofinabail due over the period September 1995 to March 1997.
2. Bioxytech's personal property, considered as part of its "fonds du
commerce", has been pledged to Bioxytech's landlord as security against
deferred rent (See Section 3.8 below).
69
3. Notes payable by the Company to United States National Bank of Oregon with
a principal balance of approximately $67,000 are secured by certain of the
personal property of the Company.
4. The Company's personal property is subject to a lien pursuant to the terms
of the promissory note executed by the Company for the benefit of Sanofi
S.A. (See Section 2.15(6).)
5. Personal property of the Company relating to diagnostic products is
subject to a lien pursuant to the terms of the promissory notes executed
by the Company in favor of certain shareholders in February 1995 and
related agreements. (See Section 2.15.)
SECTION 2.12 REAL PROPERTY
--------------------------
1. The Company leases approximately 6,900 square feet of office space at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ pursuant to a Lease Agreement with
▇▇▇▇▇/▇▇▇▇▇ Associates Limited Partnership, a California limited
partnership (formerly known as REALPROP Mountain View Associates) dated
July 1, 1990 (the "Lease"). The Lease, as amended, has been extended
through July 31, 1995 by a Lease Extension dated June 27, 1995.
2. The Company leases 13,129 square feet of space at ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ for its principal executive offices pursuant to a lease
agreement with Expressway Development which expires April 15, 1996.
3. Bioxytech leases 1,995 square meters of space pursuant to a lease with
Sofibus dated June 23, 1989 (the "Bioxytech Lease"). Total payments of FF
642,978 owing to Sofibus have been deferred to be due in full on August
31, 1995. As security for the deferred amount, Bioxytech has pledged its
"fonds de commerce," which generally include all the assets and goodwill
of the business but in this case specifically exclude Bioxytech's patents
and trademarks. Sofibus has agreed to release the pledge upon final
settlement of the deferred amount.
SECTION 2.13 PATENTS, TRADEMARKS, TRADE NAMES AND COPYRIGHTS
------------------------------------------------------------
1. Although the Company continues to have unpatented trade secrets and know-
how, substantially all of the Company's important U.S. and foreign patents
regarding SOD inventions (other than its recently developed, long-acting
SOD derivatives), have expired.
2. The Company does not market dosage forms of bovine SOD for human use and
does not depend substantially on trademarks. The Company's foreign
licensees market dosage forms of bovine SOD abroad for human use under
trademarks owned by them. In the
70
event of the termination of a license, there can be no assurance that the
Company or any successor licensee would be able to use such trademarks.
SECTION 2.15 ABSENCE OF CHANGES OR EVENTS
-----------------------------------------
In February 1995 the Company was advanced an aggregate of $766,127 by certain
shareholders in return for one year secured promissory notes, an aggregate of
93,300 shares of Common Stock and the further agreement that, upon the closing
of the private placement contemplated by the Stock Purchase Agreement dated June
21, 1994 among the Company, Bioxytech and certain stockholders of Bioxytech, the
Company would issue to the shareholders/lenders warrants to purchase additional
shares of the equity securities sold in such private placement, for the amounts
and for the exercise price determined by the formula set forth in such secured
promissory notes.
Since March 31, 1995, the date of the most recent balance sheet of the Company
delivered to the Investors, the following changes have occurred:
1. As expected, the Company has continued to incur losses as its expenses
exceed revenue. These losses include the costs and expenses associated
with the acquisition of Therox Pharmaceuticals, Inc., a Delaware
corporation ("Therox") pursuant to an Agreement and Plan of Reorganization
and Merger dated July 18, 1995.
2. [Intentionally left blank.].
3. In May 1995 the Company consummated the sale of 1,227,625 shares of Common
Stock at a price of $1.66 per share in an offshore private placement.
4. Routine salary adjustments for all Oregon employees of the Company were
made as of June 1, 1995.
5. The Company has not executed, created, amended or terminated any contract
other than in the ordinary course of business and as disclosed in this
Section 2.15.
6. In May 1995 the Company was advanced $600,000 by Sanofi S.A., a customer
of the Company, in return for a one year secured promissory note.
7. Following the issuance of 93,300 shares in connection with loans advanced
to the Company in February 1995, and the sale of 1,227,625 shares of
Common Stock in an overseas private placement in May 1995, the 40,000
shares of Series A Preferred Stock of the Company issued to Innolion,
under the terms of the Company's Certificate of Incorporation, converted
into 40,000 shares of Company Common Stock.
71
8. The Board of Directors of the Company has contemplated the payment of
bonuses to employees at the Company's Mountain View facility. Such bonuses
would be for an aggregate of approximately $30,000.
9. ▇▇▇▇ ▇▇▇▇▇▇, a Vice President of the Company, has tendered his resignation
as a corporate officer of the Company effective June 30, 1995, but
continues as an employee of the Company.
10. ▇▇▇▇ Chaudiere, a Vice President of Bioxytech, has tendered his
resignation as a corporate officer of the Company and of Bioxytech but
continues as an employee of Bioxytech.
11. The Company is preparing to file a registration statement on Form S-3
registering approximately 5.3 million shares of Common Stock (including
Common Stock subject to warrants and options) and a registration statement
on Form S-8 registering the Company's 1994 Stock Incentive Plan (covering
400,000 shares of Common Stock), plus additional shares covered by
separate stock option agreements.
SECTION 2.17 PERSONNEL
----------------------
1. The Company adopted an Employee Stock Option Plan in 1994 pursuant to
which stock options were granted to certain employees of the Company.
2. The Company has written employment/severance agreements with two former
employees (▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇) and one current employee
(▇▇▇▇ ▇▇▇▇▇▇, Vice President). ▇▇. ▇▇▇▇▇▇ has triggered the one year
notice of termination provision in his contract.
3. Bonuses for employees are based on both Company and individual performance
and are at the discretion of the Chairman and President.
4. Effective July 6, 1995, the Company adopted the OXIS International, Inc.
401(k) Cash or Deferred Savings Plan which provides for a matching
contribution by the Company of up to $2,000 per employee per year and
allows for a profit sharing contribution at the discretion of the Company.
5. The Company's two sales representatives are on a performance-based
commission program.
6. Two Bioxytech employees benefit from special severance clauses in their
employment contracts. ▇▇▇▇ Chaudiere's employment contract contains a non-
competition clause which forbids him from taking up other employment in a
related technical area. The clause, which provides for a maximum period of
four years, would be effective for either two years (if Bioxytech
exercises its rights to cancel the third and fourth years at the time of
termination) or otherwise for four years after leaving Bioxytech and
provides for
72
financial compensation in the form of monthly payments for the duration of
the application of the clause. The clause can be cancelled by mutual
agreement or unilaterally by the employer with one year's notice. ▇▇▇▇
Chaudiere's employment contract provides that he is entitled to 2 years'
salary on severance if he is dismissed (i) for a reason other than serious
misconduct (faute grave) or (ii) unless Bioxytech has dismissed employees
because of its financial difficulties in the preceding 12 months. ▇▇▇▇
Chaudiere has resigned as a corporate officer of the Company and
Bioxytech, but continues as an employee of Bioxytech. The Company and Mr.
Chaudiere are in discussions concerning his future role within the
Company.
▇▇▇▇-▇▇▇▇▇▇ Yadan's employment contract provides that he is entitled to
one year's salary on severance if he is dismissed for a reason other than
serious misconduct (faute grave).
7. Bioxytech and its employees subscribe to two pension plans, CGRCR for the
"cadres" (senior staff) and IGIRS for the other employees. Both
organizations are collective industry-wide pension providers. The
subscription made now to these two organizations are used to pay the
pensions of ex-subscribers who are now in retirement on the "pay as you
go" system. The subscription rates are fixed in a range provided for by
government legislation.
8. Bioxytech and its employees pay mandatory social charges in the amounts
required by the law to provide social cover (URSSAF for health insurance
and family allowances, ASSEDIC for unemployment pay). In addition
Bioxytech and its employees subscribe to two group insurance programmes:
UAP Prevoyance and UAP Mutuelle. The first covers death or injury in
service and the second allows employees to obtain reimbursement of all or
part of the cost of medical treatment not covered by the State health
insurance. Bioxytech also pays a mandatory charge for the industrial
medical service (Medecine du Travail, GIMAC) .
9. Bioxytech is subject to the Convention Collective Nationale des Industries
Chimiques (Chemical Industry Convention) which regulations the terms of
employment contracts and employment conditions and determines certain
mandatory obligations of the Company regarding wages and benefits of
employees.
10. Item 63 of Schedule 2.9 is hereby incorporated herein by reference.
11. The Company provides medical and dental insurance coverage for Oregon
employees through the ▇▇▇▇▇▇ Foundation Health Plan of the Northwest. The
Company is covered for workers compensation for its Oregon employees
through SAIF Corporation.
12. The following Schedule 2.17(ii) is a schedule of insurance coverage
provided by the Company to its California employees.
73
SCHEDULE 2.17(II)
-----------------
1. The Company provides insurance coverage for its California employees
through an insurance broker, ▇▇▇▇▇▇-▇▇▇▇▇▇▇, Inc., as follows:
Medical Blue Cross
Dental Designated Benefits -- Delta Dental
Vision Blue Shield
Life Reliance Standard
Accident, Death & Dismemberment Reliance Standard
Long-Term Disability Standard Insurance Co.
Workmen's Compensation Republic Indemnity
SECTION 2.20 STOCKHOLDERS AND EMPLOYEES
---------------------------------------
1. Section 2.17 is hereby incorporated herein by reference.
2. From time to time, the Company pays certain of its directors for
consulting and/or legal services rendered.
3. Item 63 of Schedule 2.9 is hereby incorporated herein by reference.
4. ▇▇▇▇ ▇▇▇▇▇▇, a shareholder of OXIS and member of Bioxytech's Directoire,
is employed by Innovaction (a consulting firm) which has a contract with
Bioxytech to provide his services at a rate of FF 3,000/day. The contract
can be terminated with 30 days notice. The existing contract expired on
May 30, 1994, but the business arrangement has been continued upon the
same terms.
SECTION 2.21 ABSENCE OF ENVIRONMENTAL LIABILITIES
-------------------------------------------------
1. Bioxytech has a "Certificat de Non-Classement" (a non-classification
certificate) provided by the Prefecture of the Marne Valley on the June 7,
1989. This Certificat means that Bioxytech is not subject to Prefectoral
declaration or authorization procedures concerning safety, hygiene,
environment or industrial risk prevention but that Bioxytech must respect
the directives of the "Code de Travail" (labour law) and the "Code de
Sante Publique" (public health law). Bioxytech has received no
unsatisfactory reports or warnings from the "Inspection du Travail"
(labour and factories inspectorate). Bioxytech has ensured that all the
regular controls required by French law have been carried out. To
Bioxytech's knowledge it has not infringed any French law concerning
directly or indirectly the protection of the environment, in particular,
laws concerning the conformity of the electrical installations, fire risk
prevention, air treatment, water treatment, liquid
74
and solid waste and the preparation and transport of hazardous industrial
chemicals. To the best of Bioxytech's knowledge, no hazardous wastes
generated by Bioxytech have ever been sent directly or indirectly to any
site on the "points noirs" list (the nearest French equivalent of the
National Priority List) .
75
EXECUTION COPY
EXHIBIT D
---------
OXIS INTERNATIONAL, INC.
------------------------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of the 18th
day of July 1995 by and among OXIS International, Inc., a Delaware corporation
(the "Company"), and each of the parties who are the owners of Registrable
Securities (as defined hereafter), each of whom is herein referred to as a
"Shareholder." Attached hereto as Schedule A is a complete list of the
----------
Shareholders and the Registrable Securities held by each such Shareholder.
RECITALS:
--------
WHEREAS, in connection with (i) the merger of its wholly-owned subsidiary
with Therox Pharmaceuticals, Inc., a Delaware corporation ("Therox") and (ii)
the simultaneous offering of the Company's Series B Preferred Stock to certain
investors, the Company has issued shares of its Common Stock and Series B
Preferred Stock to such former Therox shareholders and such investors and
pursuant to the terms of this Agreement is agreeing to register the resale of
such shares of Company Common Stock and Common Stock issuable upon conversion of
such Series B Preferred Stock with the Securities and Exchange Commission (the
"SEC");
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Registration Rights. The Company covenants and agrees as follows:
-------------------
1.1 Definitions. For purposes of this Section 1:
-----------
(a) 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 of 1933, as amended (the
"Securities Act"), and the declaration or ordering of effectiveness of such
registration statement or document.
(b) The term "Registrable Securities" means (i) any Common Stock
of the Company ("Common Stock") currently outstanding issued to former
shareholders of Therox pursuant to the Agreement and Plan of Reorganization and
Merger (the "Merger
76
Agreement"), dated as of July 18, 1995 between the Company, the Company's
subsidiary, and Therox, (ii) any Common Stock issuable upon conversion of the
Series B Preferred Stock of the Company issued to certain investors pursuant to
a Series B Preferred Stock Purchase Agreement dated July 18, 1995 between the
Company and such investors (the "Stock Purchase Agreement") (the Merger
Agreement and the Stock Purchase Agreement are hereafter sometimes collectively
referred to as the "Acquisition Agreements"), and (iii) any Common Stock issued
or issuable as a dividend or other distribution with respect to, or in exchange
for or in replacement of, such Registrable Securities, excluding in all cases,
however, any Registrable Securities sold by a person in a transaction in which
his or her registration rights are not assigned.
(c) The term "Holder" means any person owning or having the right
to acquire Registrable Securities or any assignee thereof in accordance with
Section 1.8 hereof.
1.2 Registration.
------------
(a) The Company shall file, and use its best efforts to cause the
SEC to declare effective, on or before July 18, 1996, a registration statement
under the Securities Act covering the resale of the Registrable Securities by
the Holders. In the event that the Company grants new registration rights in
connection with an issuance and sale of capital stock taking place after the
date of this Agreement which results in the Company filing prior to July 18,
1996 a registration statement covering the resale of such capital stock, the
Holders of Registrable Securities hereunder shall be entitled to have their
Registrable Securities registered on such registration statement upon the terms
and conditions set forth herein. In such event, the Company shall have no
obligation to file the registration statement contemplated by the first sentence
of this Section 1.2(a).
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action to effect any such registration pursuant to this
Section 1.2 in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act.
77
1.3 Obligations of the Company. The Company shall:
--------------------------
(a) Keep the registration statement with respect to the
Registrable Securities filed pursuant to Section 1.2 of this Agreement
("Registration Statement") effective for the period from the date of declaration
of effectiveness of such Registration Statement through July 18, 1997.
(b) Prepare and file with the SEC such amendments and supplements
to such Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement during the period of its effectiveness.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) Notify each Holder of Registrable Securities covered by such
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
1.4 Limitations on Resales.
----------------------
(a) Each Holder shall not sell during (i) any three month
period while the Registration Statement is in effect, a number of shares of
Registrable Securities that is greater than one percent (1%) of the number of
issued and outstanding Common
78
Stock at such time and (ii) any single month while the Registration Statement is
in effect, a number of shares of Registrable Securities that is more than one-
third (1/3) of one percent (1%) of the number of issued and outstanding Common
Stock at such time. The parties acknowledge that the one percent (1%) limitation
set forth in the immediately preceding sentence is consistent with the
limitation set forth in SEC Rule 144(e)(1)(i). If at any time the Company's
securities trading volume as calculated pursuant to SEC Rule 144 (e)(1)(ii) (the
"Company's Trading Volume Calculation") exceeds the one percent (1%)
calculation, then the Holders shall be limited to an amount equal to the
Company's Trading Volume Calculation instead of the one percent (1%)
calculation. Within ten (10) days following the last day of any month in which a
Holder sells Registrable Securities, the Holder shall notify the Company of the
number of shares of Registrable Securities sold by such Holder.
(b) If the Company proposes to register any of its stock or other
securities under the Securities Act in connection with an underwritten public
offering of such securities solely for cash, the Company shall, at such time,
promptly give each Holder written notice of such registration, and in connection
with such public offering, the Holders shall agree not to sell any of the
Registrable Securities during such customary lock-up period requested by the
Company's underwriters who are underwriting such public offering. The Holders
shall have no right to participate in any such public offering. The Company's
obligation to keep a registration statement effective for the time period set
forth in Section 1.3(a) hereof shall be extended by an amount of time equal to
any lock-up period applicable to the Holders.
Notwithstanding the immediately preceding paragraph, S.R. One, Limited
("S.R. One") shall agree to a lock-up period in excess of ninety (90) days only
if ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇-Berkeley ▇.▇. ▇▇ ("Other
Stockholders") have agreed not to sell during such lock-up period in excess of
ninety (90) days; provided, however, S.R. One may request that the Company
consent to relieving S.R. One of its obligation to abide by a lock-up period
longer than ninety (90) days if S.R. One would suffer a hardship that is
materially adversely different from that suffered by the Other Stockholders and
relief from such obligation shall not materially impair the Company's ability to
complete its underwritten offering. The Company shall not
79
unreasonably withhold the consent referred to in the immediately preceding
sentence.
1.5 Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to this Section 1 that
the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of the Registrable Securities.
1.6 Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the officers, directors, partners and legal
counsel of each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, rule or
regulation insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively, a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and the Company will
reimburse each such Holder, officer, director, partner, legal counsel,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection 1.6(a) shall not apply to amounts paid in
settlement of
80
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company, nor shall the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, officer, partner, director,
underwriter, legal counsel or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, officers, its
legal counsel, each person, if any, who controls the Company within the meaning
of the Securities Act, any underwriter and any other Holder selling securities
in such Registration Statement or any of such other Holder's directors, legal
counsel or officers or any person who controls such Holder, against any losses,
claims, damages or liabilities (joint or several) to which the Company or any
such director, officer, legal counsel, controlling person, or underwriter or
controlling person, or other such Holder or director, officer, legal counsel or
controlling person of such other Holder may become subject, under the Securities
Act, the Exchange Act or other federal or state law, to the extent that such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer, legal
counsel, controlling person, underwriter or controlling person, other Holder, or
officer, director, legal counsel, or controlling person of such other Holder in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.6(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the indemnifying Holder; provided, that, in no event
shall any indemnity under this subjection 1.6(b) exceed the gross proceeds
received by such Holder from the sale of Registrable Securities sold pursuant to
a Registration Statement.
81
(c) Promptly after receipt by an indemnified party under this
Section 1.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.6, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential materially conflicting interests between such indemnifying party
and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.6, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnifying party other than under this Section 1.6.
(d) If the indemnification provided for in this Section 1.6 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party, then each indemnifying party, in lieu of indemnifying such indemnified
party thereunder, hereby agrees to contribute to the amount paid or payable by
such indemnifying party in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other. Notwithstanding the foregoing, the amount any Holder of
Registrable Securities shall be obligated to contribute pursuant to this Section
1.6(d) shall be limited to an amount equal to the offering price of the shares
sold by such Holder pursuant to a Registration provided hereunder.
(e) The obligations of the Company and Holders under this
Section 1.6 shall survive the completion of any offering or sale of Registrable
Securities in a Registration Statement under this Section 1, and otherwise.
82
1.7 Reports Under Securities Exchange Act of 1934. With a view to
---------------------------------------------
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration following the expiration of the effectiveness of the Registration
Statement provided for hereunder, the Company agrees to use its best efforts for
as long as Holders own Registrable Securities.
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144,
the Securities Act and the Exchange Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company and (iii) such other information as may be reasonably requested
in availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
The above commitments of the Company in this Section 1.7 will continue
notwithstanding a de-listing of the Company's securities from the Nasdaq
National Market System.
1.8 Assignment of Registration Rights. The registration rights
---------------------------------
pursuant to this Section 1 may be assigned by a Holder to a transferee or
assignee who is not a competitor of the Company and acquires at least one
hundred thousand (100,000) shares (as adjusted for stock splits, combinations,
etc.) of Registrable Securities; provided, in each case, the Company is, within
a reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the 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
the further disposition of such
83
securities by the transferee or assignee is restricted under the Securities Act.
If the Holder is a partnership and transfers or assigns its rights hereunder to
any of its partners, such partners may aggregate the number of Registrable
Securities held by them for purposes of meeting the 100,000 share threshold set
forth in this Section 1.8.
1.9 Amendment of Registration Rights. Any provision of this
--------------------------------
Section 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 holders of
at least a majority of the Registrable Securities. Any amendment or waiver
effected in accordance with this Section shall be binding upon each Holder of
Registrable Securities, each transferee or future holder of all such securities,
and the Company.
2. Miscellaneous.
-------------
2.1 Successors and Assigns. The terms and conditions of this
----------------------
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
2.2 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of Delaware.
2.3 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.4 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
2.5 Notices. Except as otherwise expressly provided herein, any
-------
notice required or permitted hereunder shall be given in writing and it or any
certificates or other documents delivered hereunder shall be deemed effectively
given or delivered (as the case may be) upon personal delivery (professional
courier permissible) or when mailed by receipted United
84
States certified mail delivery, five (5) business days after deposit in the
United States mail. Such certificates, documents or notices may be personally
delivered or sent to the following address: (a) if to a Shareholder, to the
address set forth with respect to such Shareholder on such Shareholder's
counterpart signature page attached hereto, or to such other address of which
such Shareholder shall have given notice pursuant hereto to the Company or, (b)
if to the Company, OXIS International, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: President, or to such other address of
which the Company shall have given notice pursuant hereto.
2.6 Severability. If one or more provisions of this Agreement are held
------------
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
2.7 Number and Gender. Whenever used herein, the singular number shall
-----------------
include the plural and the plural the singular, and the use of any gender shall
be applicable to all genders.
2.8 Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement among the parties with regard to the subject matter
hereof and supersedes any prior agreements (including any memorandum of
understanding or letters of intent) between the parties regarding the subject
matter hereof.
[Signature Page Follows]
85
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
OXIS INTERNATIONAL, INC.
By:
------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board
86
OXIS INTERNATIONAL, INC.
REGISTRATION RIGHTS AGREEMENT
Counterpart Signature Page
Shareholder:
---------------------------------------
(Print Name)
---------------------------------------
(Signature and Title, if applicable)
---------------------------------------
---------------------------------------
(Address)
---------------------------------------
---------------------------------------
87
SCHEDULE A
LIST OF SHAREHOLDERS AND REGISTRABLE SECURITIES
-----------------------------------------------
Therox Shareholder OXIS Common
---------------------- -----------
▇▇▇▇▇▇▇▇ Venture Partners II, L.P. 550,699
S.R. One, Limited 549,497
Ohio State University 87,131
Research Foundation
▇. ▇▇▇▇▇▇▇▇ 72,610
D. Witiek 53,005
▇. ▇▇▇▇▇▇▇ 21,783
▇. ▇▇▇▇▇▇▇ 4,357
▇. ▇▇▇▇▇▇ 2,904
▇. ▇▇▇▇▇▇ 2,179
▇. ▇▇▇▇▇▇▇▇ 72,610
▇. ▇▇▇▇▇▇▇ 14,522
▇. ▇▇▇▇▇▇▇▇▇ 5,809
▇. ▇▇▇▇▇▇ 3,630
---------
TOTAL: 1,440,736
S.R. One, Limited OXIS Common Stock to be
issued upon conversion
of 428,389 shares of
the Series B Preferred
Stock of OXIS
International, Inc.
▇▇▇▇▇▇▇▇ Venture Partners II, L.P. OXIS Common Stock to be
issued upon conversion
of 214,194 shares of
Series B Preferred
Stock of OXIS
International, Inc.
88
EXHIBIT E
---------
FORM OF LEGAL OPINION TO BE DELIVERED
BY COUNSEL TO OXIS INTERNATIONAL, INC.
The opinion to be delivered to the Investors by Jackson, Tufts, ▇▇▇▇ &
Black, counsel to OXIS International, Inc., shall address the matters set forth
below in the form substantially as follows, subject to appropriate assumptions
and qualifications to be set forth in such opinion. Any term used herein as a
defined term and not otherwise defined shall have the meaning set forth in the
Series B Preferred Stock Purchase Agreement between OXIS International, Inc. and
the Investors dated as of July 18, 1995 (the "Agreement").
1. OXIS International, Inc., a Delaware corporation (the "Company"), has
been duly incorporated and is validly existing under the laws of the State of
Delaware.
2. The Company has all requisite corporate power and corporate authority
to enter into and perform the Agreement.
3. The Agreement has been duly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered on
behalf of the Company.
4. The Agreement is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
5. No federal or California governmental consents, approvals,
authorizations, registrations, declarations or filings on behalf of the Company
are required for the execution and delivery of the Agreement and consummation of
the transactions contemplated therein (other than the filing of the Certificate
of Designation with the Delaware Secretary of State, the filing of a Form 8-K
and Form 10-C following the consummation of the transactions contemplated by the
Agreement, or as otherwise required pursuant to any requirements of federal or
state securities laws).
6. Neither the execution and delivery of the Agreement on behalf of the
Company nor the consummation by the Company of the transactions contemplated by
the Agreement (i) conflicts with any provision of the Certificate of
Incorporation or By-Laws of the Company or (ii) violates any federal or
California law applicable to the Company.
7. The authorized capital stock of the Company consists of 25,000,000
shares of Common Stock and 5,000,000 shares of Preferred Stock. The Preferred
Shares being issued to the Investors under the Agreement, when issued, sold and
delivered in accordance with the terms thereof, for the consideration expressed
therein, will be duly authorized, validly issued, fully paid and nonassessable.
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