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EXHIBIT 2
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is made and
entered into as of the 22nd day of November 1996, by and between
CytoTherapeutics, Inc., a Delaware corporation ("CTI"), and Genentech, Inc., a
Delaware corporation ("Genentech").
Recital
The parties hereto are entering into to a Development Collaboration and
License Agreement relating to ▇▇▇▇▇▇▇▇▇'▇ Disease of even date herewith (the
"Development Agreement"), pursuant to which the parties have agreed to
collaborate on the development and commercialization of products consisting of
certain encapsulated-neurotrophic-factor-producing cells for the treatment of
▇▇▇▇▇▇▇▇▇'▇ Disease. Pursuant to the terms of the Development Agreement, and
subject to the terms and conditions of this Agreement, Genentech has agreed to
purchase, and CTI has agreed to sell to Genentech, shares of CTI's Common Stock,
$.01 par value ("Common Stock").
Agreement
In consideration of the mutual covenants and agreements hereinafter set
forth, the parties to this Agreement agree as follows:
1. Sale and Purchase of Common Stock. In reliance upon the representations and
warranties contained herein and subject to the terms and conditions hereof, CTI
agrees to sell and issue to Genentech, and Genentech agrees to purchase from
CTI, at one or more Closings as identified in the table below (each, a
"Closing"), for the aggregate Total Purchase Price (as referred to below) for
such Closing the aggregate number of shares of Common Stock (the "Shares") equal
to the Total Purchase Price for such Closing divided by the Per Share Purchase
Price (as referred to below) for such Closing rounded down to the nearest whole
number as referred to below:
Purchase/
Development Per Share
Closing Agr. Provision Event Closing Date Purchase Price Total Purchase Price
------- -------------- ------------------ ------------------ -------------- --------------------
1. Initial Equity Purchase First public 30 days after the 110% of 20 Day $8,300,000
[Section 8.01]* announcement of date hereof or on Average
the signing of the such other date as
Development the parties may
Agreement agree.
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2. Additional Initial Upon mutual As determined 20 Day Average To be determined based on
Equity Purchase, if agreement on pursuant to the agreed upon additional
agreed upon [Sections additional Development projected expenses under
4.07(a) and 8.01(a)]* projected Agreement the Development
expenses under Agreement.
the Development
Agreement
3. Phase II Equity Prior to start of As determined 20 Day Average To be determined pursuant
Purchase [Section the Clinical pursuant to the to the Development
8.01(b)]* Development Development Agreement based on agreed
Program Agreement upon Phase II Clinical
Development.
4. Additional Phase II Upon mutual As determined 20 Day Average To be determined based on
Equity Purchase, if agreement on pursuant to agreed upon additional
agreed upon [Sections additional Development projected expenses
4.07(b) and 8.01(b)]* projected Agreement exceeding original Phase II
expenses Equity Purchase amount.
exceeding Phase
II Equity
Purchase amount
*References are to sections of the Development Agreement.
Each Closing shall be held at the offices of CTI, Two Richmond Square,
Providence, Rhode Island 02906 on the date, in the case of the first purchase,
that is thirty (30) days after the date hereof, or on such other date as the
parties may agree. Subsequent Closings shall occur at the times indicated above
and in the Development Agreement. Payment for the Shares shall be by wire
transfer to an account designated by CTI against the delivery by CTI of a stock
certificate evidencing the Shares to be sold at such Closing. The date of each
such Closing is called a "Closing Date."
The "Per Share Purchase Price" of Shares at each Closing shall be equal
to the average (the "20 Day Average") of the high and the low price of a share
of Common Stock on the NASDAQ National Market System or if not there quoted on a
National Security Exchange or other market on which the Common Stock is then
traded as agreed upon by the parties) for the twenty (20) trading day period
preceding the Closing Date for each Closing, except that in the case of the
first Closing above the 20 Day Average shall be based on the ten (10) trading
days before and ten (10) trading after the date of the first public announcement
by the parties of the Development Agreement.
Other capitalized terms used herein without further definition shall
have the meanings ascribed thereto in the Development Agreement.
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2. Representations and Warranties of CTI. Except as set forth on a Disclosure
Schedule (the"Disclosure Schedule"), which shall be updated and provided to
Genentech prior to each Closing, CTI represents and warrants to Genentech as
follows:
(a) Organization and Standing. CTI is a corporation duly
organized, and validly existing under the laws of the State of Delaware
and is in good standing under such laws. CTI is duly qualified to do
business as a foreign corporation in the State of Rhode Island.
(b) Authorization. This Agreement has been duly authorized,
executed and delivered by CTI and constitutes the valid and binding
obligation of CTI, enforceable in accordance with its terms. The Shares
have been duly authorized and, when delivered against payment therefore
in accordance with the terms hereof, will be duly and validly issued
and outstanding, fully paid and nonassessable, and are free to
Genentech of any liens, encumbrances and restrictions (except as set
forth in Section 7).
(c) Authorized Capital Stock. The authorized capital stock of
CTI consists of 45,000,000 shares of Common Stock, 15,428,576 of which
were outstanding as of October 31, 1996, and 1,000,000 shares of
Preferred Stock, $.01 par value (the "Preferred Stock"), none of which
are outstanding. No person has any right of first refusal or any
preemptive rights in connection with the issuance of the Shares, or
with respect to any future, offer sale or issuance of securities by
CTI.
(d) Compliance With Other Instruments. CTI is not in violation
of any term of its Certificate of Incorporation or Bylaws, or any
material agreement, mortgage, indenture, debenture, trust, instrument,
judgment, decree, order, law, statute, rule or governmental regulation
to which it is subject (the "Other Instruments"). The execution,
delivery and performance of this Agreement and the issuance and sale of
the Shares or the taking of any other action contemplated by this
Agreement will not result in any violation of or be in conflict with or
constitute a default (with or without notice, lapse of time or both)
under any of the Other Instruments.
(e) Litigation. Except as set forth in the Disclosure Schedule
or the SEC Documents, there are no litigation, claims, actions,
proceedings or investigations pending against CTI.
(f) Governmental Consents. Except for filings required to
comply with (i) state and federal securities' laws, and (ii) the NASDAQ
National Market System, no permit, consent, approval or authorization
of, or declaration to or filing with, any governmental authority is
required in connection with the execution, delivery or performance of
this Agreement or the sale of the Shares pursuant hereto.
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(g) SEC Documents; Financial Statements. CTI has filed all the
documents (the "SEC Documents") required to be filed by it with the
Securities and Exchange Commission (the "SEC") under Sections 13,
14(a), and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), since the date on which its last Annual Report on
Form 10-K was filed. As of their respective filing dates, the SEC
Documents complied in all material respects with the requirements of
the Exchange Act or the Securities Act of 1933, as amended (the "Act"),
as applicable. The SEC Documents did not, as of their respective dates,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading. The financial statements of CTI included in
such documents (the "Financial Statements") comply as to form in all
material respects with applicable accounting requirements and with all
applicable published rules and regulations of the SEC with respect
thereto. Except as may be indicated in the notes to the Financial
Statements or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC, the Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently
applied and fairly present the consolidated financial position of CTI
at the dates thereof and the consolidated results of its operations and
consolidated cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end adjustments).
(h) No Material Change. Since the end of the most recent
fiscal quarter of CTI for which a Quarterly Report on Form 10-Q has
been filed with the SEC, there has been no material adverse change in
the business, prospects, financial condition, net worth or results of
operations of CTI, other than changes occurring in the ordinary course
of business which changes have not, individually or in the aggregate,
had a material adverse effect on the business, prospects, properties or
financial condition of CTI.
3. Representations and Warranties of Genentech. Genentech represents and
warrants to CTI that:
(a) Investment Intent. The Shares are being acquired by
Genentech solely for its own account, for investment purposes only, and
with no present intention of distributing, selling or otherwise
disposing of them.
(b) Economic Risk; Sophistication. Genentech is able to bear
the economic risk of an investment in the Shares and can afford to
sustain a total loss on such investment and has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of the proposed investment and
therefore has the capacity to protect its own interests in connection
with the purchase of the Shares.
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(c) Authority. Genentech has all requisite power and authority
to enter into this Agreement and perform its obligations hereunder, and
this Agreement constitutes a valid and binding obligation of Genentech
enforceable against Genentech in accordance with its terms.
(d) Accredited Investor. Genentech is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the
Act.
4. Conditions.
4.1. Genentech's Conditions to Closing. Genentech's obligation to
purchase the Shares at each Closing is subject to the satisfaction, prior to or
at such Closing, of the following conditions:
(a) Representations and Warranties. The representations and
warranties contained in Section 2 shall be true, correct and complete
in all material respects on and as of such Closing Date as though made
on and as of such Closing Date and CTI shall have delivered Genentech
an updated Disclosure Schedule in advance of such Closing.
(b) Compliance Certificate. Genentech shall have received a
certificate of an officer of CTI certifying that CTI has performed and
complied with all conditions and agreements required to be performed or
complied with by it prior to such Closing under this Agreement and
certifying as to the matters set forth in paragraph (a).
(c) Certificates. Genentech shall have received: (i) a copy of
CTI's Certificate of Incorporation, as amended, certified by the
Secretary of State of the State of Delaware; (ii) a certificate of the
Secretary of State of the State of Delaware as to the legal existence
and good standing of CTI and listing all amendments to CTI's
Certificate of Incorporation then on file in his office; and (iii) a
copy, certified by the Secretary of CTI, of the resolutions adopted by
the directors of CTI authorizing the execution and delivery of this
Agreement and the Development Agreement, the issuance, sale and
delivery of the Shares hereunder, and the performance of all other
obligations of CTI contemplated by this Agreement and the Development
Agreement.
4.2. CTI Conditions to Closing. CTI's obligation to issue and sell the
Shares is subject to the satisfaction, prior to or at each Closing, of the
following condition:
(a) Representations and Warranties. The representation and
warranties contained in Section 3 shall be true, correct and complete
in all material respects on and as of such Closing Date as though made
on and as of such Closing Date.
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5. Information. CTI will provide to Genentech copies of all reports
(financial or otherwise) mailed to CTI's stockholders generally. Such reports
shall be sent to Genentech simultaneous with the mailing of such reports to
CTI's other stockholders.
6. Covenants of Genentech and CTI. The parties agree as follows:
(a) Standstill. Genentech agrees that, without the prior
written consent of the Board of Directors of CTI, Genentech will not,
at any time, directly or indirectly in any manner whatsoever, acquire,
or offer to or agree to acquire any shares or any rights or options to
acquire shares of CTI Common Stock if following such action Genentech
would beneficially own (as defined under the Act) in excess of ten
percent (10%) of CTI's outstanding Common Stock; provided, however,
that the foregoing shall not in any way limit purchases of CTI Common
Stock provided for in the Development Agreement. In addition, Genentech
agrees that, without the prior written consent of the Board of
Directors of CTI, Genentech will not (a) make, or in any way become a
"participant" in any "solicitation" of "proxies" (as such terms are
defined in Regulation 14A under the Exchange Act) to vote shares of
Common Stock, or seek to advise or influence any person with respect to
the voting of any voting securities of CTI, or (b) form, join or in any
way participate in a "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) with respect to any voting securities of CTI.
(b) Actions Affecting CTI Stock Price. During each Restricted
Period (as defined below) (i) Genentech agrees that, except as
otherwise required by law and except to comply with contractual
commitments entered into prior to the start of such Restricted Period,
it will not sell or agree to sell any shares of CTI capital stock, or
purchase or sell any options, puts, calls or other securities with
respect to CTI stock during a Restricted Period, and (ii) CTI agrees
that, except as otherwise required by law and except to comply with
contractual commitments entered into prior to the start of such
Restricted Period, it will not purchase or agree to purchase any shares
of its capital stock or purchase or sell any options, puts, calls or
other securities relating to CTI stock , provided that the foregoing
restriction shall not prohibit CTI from issuing stock options, shares
of stock or other awards under its stock option, 401(k), employee stock
purchase or other similar plans.
The term "Restricted Period" shall mean, with respect to each
period used in calculating a 20 Day Average hereunder, a period
beginning (10) days prior to the first day used in calculating such 20
Day Average and ending on the day following the last day used in
calculating such 20 Day Average.
7. Restrictions on Transfer. None of the Shares purchased hereunder shall
be sold, transferred, assigned, pledged, hypothecated or otherwise disposed of
unless and until one of the following events shall have occurred:
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(a) Compliance With the Act. Such securities are disposed of
pursuant to and in conformity with an effective registration statement
filed with the SEC pursuant to the Act or pursuant to Rule 144 of the
SEC thereunder; or
(b) Opinion of Counsel. Genentech shall have delivered to CTI
a written opinion by counsel which is reasonably acceptable to CTI to
the effect that the proposed transfer is exempt from the registration
and prospectus delivery requirements of the Act.
The parties hereto further agree that any certificate evidencing the
Shares shall bear the following legend in addition to any legend required to
comply with state securities law:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, HAVE BEEN ACQUIRED FOR INVESTMENT,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM.
8. Registration Rights.
8.1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Registrable Securities" shall mean (i) the Shares and (ii) any Common
Stock of CTI issued or issuable with respect to, or in exchange for or in
replacement of (a) the Shares. or (b) other securities convertible into or
exercisable for Common Stock issued upon any stock split, stock dividend,
recapitalization, or similar event; provided, however, that such shares of
Common Stock or other securities shall only be treated as Registrable Securities
for the purposes of Section 8.2 if and for so long as they have not been (A)
sold to or through a broker or dealer or underwriter in a public distribution or
a public securities transaction or (B) otherwise transferred to a transferee in
whose hands such shares are not (1) restricted securities under the Act or (2)
subject to the volume limitations of Rule 144.
The term "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act, and the declaration or ordering of the effectiveness of
such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
stated below, incurred by CTI, in complying with Section 8.2 hereof, including,
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for CTI, blue sky fees
and expenses, the expense of any special audits incident to or required by any
such registration (but excluding the compensation of
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regular employees of CTI which shall be paid in any event by CTI) and up to
$25,000 for fees and disbursements of one counsel to the holders of CTI's Common
Stock participating in such registration.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes and fees applicable to the securities
registered by Genentech and disbursements of counsel to Genentech, if any, in
excess of the $25,000 payable to one counsel for the holders of CTI's Common
Stock participating in such registration as provided in the definition of the
Registration Expenses.
8.2. Piggyback Registration Rights.
(a) Notice of Registration. If, at any time after the date
that is one (1) year from the initial Closing Date, CTI shall determine
to register any of its securities, either for its own account or the
account of a security holder or holders, other than (i) a registration
relating solely to employee benefit plans, or (ii) a registration
relating solely to a Rule 145 transaction, CTI will:
(i) promptly give Genentech written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all the Registrable
Securities specified in a written request, made within 20 days
after receipt of such written notice from the CTI, by
Genentech.
(b) Underwriting. If the registration of which CTI gives
notice is for a registered public offering involving an underwriting,
CTI shall so advise Genentech as a part of the written notice given
pursuant to Section 8.2. In such event the right of Genentech to
registration pursuant to Section 8.2 shall be conditioned upon
Genentech's participation in such underwriting and the inclusion of
Registrable Securities in the underwriting to the extent provided
herein. In such event Genentech (together with all other holders of
Common Stock proposing to distribute their securities through such
underwriting and CTI) shall enter into an underwriting agreement in
customary form with the managing underwriter selected for such
underwriting by CTI. Notwithstanding any other provision of this
Section 8.2, if the managing underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the securities to be
distributed through such underwriting. CTI shall so advise all holders
of Common Stock distributing their securities through such underwriting
of such limitation and the number of shares of Genentech's Registrable
Securities that may be included in the registration and underwriting
shall be allocated among all such holders in proportion, as nearly as
practicable, to the respective amounts of securities eligible to be
included in such registration held by such holders at the time of
filing the
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registration statement. To facilitate the allocation of shares in
accordance with the above provisions, CTI may round the number of
shares allocated to any holder to the nearest 100 shares. If, in the
case of a registration initiated pursuant to the exercise by other
holders of CTI's Common Stock of so-called "demand" registration
rights, the managing underwriter selected for such registration
determines that marketing factors require a limitation of the number of
shares to be underwritten, Genentech shall have no right to include any
shares of its Registrable Securities in such registration unless all
shares requested by the holders exercising such "demand" registration
rights to be included in such registration are permitted to be included
in such registration. If Genentech disapproves of the terms of any such
underwriting, Genentech may elect to withdraw therefrom by written
notice to CTI and the managing underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such
registration, and shall not be transferred in a public distribution
prior to 90 days after the effective date of the registration statement
relating thereto, or such other shorter period of time as the
underwriters may require.
(c) Right to Terminate Registration. CTI shall have the right
to terminate or withdraw any registration initiated by it under this
Section 8.2 prior to the effectiveness of such registration whether or
not Genentech or any other holder of Common Stock has elected to
include securities in such registration. The Registration Expenses of
such withdrawn registration shall be borne by CTI in accordance with
Section 8.3 hereof.
8.3. Expenses of Registration. All Registration Expenses incurred in
connection with registrations pursuant to this Section 8 shall be borne by CTI.
All Selling Expenses relating to securities registered on behalf of Genentech
shall be borne by Genentech and holders of securities included in such
registration pro rata with CTI and among each other on the basis of the number
of shares so registered.
8.4. Representations of Genentech. Notwithstanding anything to the
contrary contained herein, in connection with any underwritten offering,
Genentech shall not be required to make any representations or warranties to or
agreements with CTI or the underwriters except as relate to Genentech, the
Registrable Securities held by it and its intended method of distribution.
8.5. Registration Procedures. In the case of each registration,
qualification or compliance effected by CTI pursuant to this Section 8 in which
Genentech participates, CTI will keep Genentech advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense CTI will:
(a) Prepare and file with the SEC a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become
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and remain effective for at least one hundred eighty (180) days or
until the distribution described in the Registration Statement has been
completed;
(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 Act with respect to the disposition
of all securities covered by such registration statement;
(c) Furnish to Genentech and to the underwriters, if any, such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as Genentech and
underwriters may reasonably request in order to facilitate the public
offering of such securities;
(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 Genentech, provided that CTI shall not be
required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in
any such states or jurisdictions;
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in
usual and customary form, with the managing underwriter of such
offering. Genentech shall also enter into and perform its obligations
under such an agreement;
(f) Notify Genentech at any time when a prospectus relating
thereto is required to be delivered under the Act or 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;
(g) As soon as practicable after the effective date of the
registration statement, and in any event within 16 months thereafter,
have "made generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need
not be audited) covering the period of at least twelve months beginning
after the effective date of the registration statement and otherwise
complying with Section 11(a) of the Act;
(h) Furnish, at the request of Genentech, on the date that
such Registrable Securities are delivered to the underwriters for sale
in connection with a registration pursuant to this Section 8 if being
sold through underwriters, or, if such securities are not being sold
through underwriters, on the date the registration statement becomes
effective, (i) an opinion, dated such date, of the counsel representing
CTI for the
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purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering, addressed to
the underwriters, if any, and to Genentech and (ii) a letter dated such
date, from the independent accountants of CTI, in form and substance as
is customarily given by independent accountants to underwriters in an
underwritten public offering, addressed to the underwriters, if any,
and to Genentech; and
(i) Make available for inspection by Genentech and any
underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or financial
advisor retained by Genentech or underwriter, financial and other
pertinent records, pertinent corporate documents and properties of CTI,
and cause CTI's officers, directors and employees to supply information
reasonably requested by Genentech, and any such underwriter, attorney,
accountant or financial advisor in connection with such registration
statement.
(j) Use its best efforts to list the securities covered by
such registration statement with any securities exchange on which the
Common Stock of CTI is then listed.
8.6. Indemnification.
(a) CTI will indemnify Genentech, each of its officers,
directors, partners, employees and affiliates, and legal counsel, and
each person controlling Genentech within the meaning of the Act, with
respect to which registration, qualification or compliance has been
effected pursuant to this Section 8, and each underwriter for
Genentech, if any, and each person who controls any underwriter within
the meaning of the Act, against all expenses, claims, losses, damages
or liabilities (joint or several) (or actions in respect thereof),
including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus (preliminary or
final), offering circular or other document, or any amendment or
supplement thereto, incident to any such registration, qualification or
compliance, and any documents filed under state securities laws in
connection therewith, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by CTI of the Act, the
Exchange Act, and state securities laws or any rule or regulation
promulgated thereunder applicable to CTI in connection with any such
registration, qualification or compliance, and CTI will reimburse, as
incurred, Genentech, each of its officers, directors, partners, and
legal counsel and each person controlling Genentech, each such
underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage,
liability or action, provided that CTI will not
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be liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to
CTI by an instrument duly executed by Genentech, controlling person or
underwriter and stated to be specifically for use therein.
(b) Genentech will, if Registrable Securities held by
Genentech are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify CTI, each of
its directors, officers, employees, affiliates and legal counsel, each
underwriter, if any, of CTI's securities covered by such a registration
statement, each person who controls CTI or such underwriter within the
meaning of the Act, and each other holder of CTI's securities, each of
their officers, directors, partners, employees, affiliates and legal
counsel and each person controlling such holder within the meaning of
the Act, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue
statement or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance
upon and in conformity with written information furnished to CTI by an
instrument duly executed by Genentech and stated to be specifically for
use therein, and will reimburse, as incurred, CTI, such other holders,
such directors, officers, persons, underwriters or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action to the extent entitled to indemnification hereunder.
Notwithstanding the foregoing, the liability of Genentech under this
subsection (b) shall be limited to an amount equal to the net proceeds
to Genentech of Registrable Securities sold as contemplated herein,
unless such liability resulted from willful misconduct by Genentech.
Genentech will not be required to enter into any agreement or
undertaking in connection with any registration under this Section 8
providing for any indemnification or contribution on the part of
Genentech greater than Genentech's obligations under this Section 8.6.
(c) Each party entitled to indemnification under this Section
8.6 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party, if it
so desires, to assume the defense of any such claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party
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may participate in such defense at such party's expense, and provided
further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 8.4, except and only to the extent that
the failure to give such notice is materially prejudicial to an
Indemnifying Party's ability to defend such action and provided
further, that the Indemnifying Party shall not be entitled to assume
the defense for matters as to which there is a conflict of interest or
separate and different defenses but shall bear the expense of such
defense nevertheless. No Indemnified Party shall consent to the entry
of any judgment or enter into any settlement without the prior written
consent of the Indemnifying Party, which consent shall not be
unreasonably withheld; and in no event shall it be unreasonable so to
withhold consent to entry of any judgment or any settlement which does
not include as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.
8.7. Information by Holder. In the event Genentech elects to include
Registrable Securities in any registration, Genentech shall furnish to CTI such
information regarding Genentech, the Registrable Securities held by them and the
distribution proposed by Genentech as CTI may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Section 8.
8.8. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of which may at any time permit the sale of the
restricted securities to the public without registration, CTI agrees to use its
best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Act, at all times
during which CTI is subject to the reporting requirements of the Act or
the Exchange Act;
(b) Use its best efforts to file with the SEC in a timely
manner all reports and other documents required of CTI under the Act
and the Exchange Act (at all times during which it is subject to such
reporting requirements); and
(c) So long as Genentech owns any Shares, furnish to Genentech
forthwith upon request a written statement by CTI as to its compliance
with the reporting requirements of said Rule 144 and of the Act and the
Exchange Act (at any time during which it is subject to such reporting
requirements), a copy of the most recent annual or quarterly report of
CTI, and such other reports and documents of CTI and other information
in the possession of or reasonably obtainable by CTI as Genentech may
reasonably request in availing itself of any rule or regulation of the
SEC allowing Genentech to sell any such securities without
registration.
8.9. Standoff Agreement. Genentech agrees, so long as Genentech holds
at least one percent (1%) of CTI's outstanding voting equity securities, in
connection with any public
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offering of CTI's securities, upon request of CTI or the underwriters managing
any underwritten offering of CTI's securities, not to sell, make any short sale
of, loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in the registration) without
the prior written consent of CTI or such underwriters, as the case may be, for
such period of time from the date of such request through the period of time
(not to exceed ninety (90) days) following the effective date of such
registration as may be requested by the underwriters; provided, that in either
such case the executive officers, directors and major shareholders of CTI who
own stock of CTI also agree to at least such restrictions.
9. Miscellaneous Provisions.
9.1. Notices. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered in
person, or by United States mail, certified or registered, with return receipt
requested, or otherwise actually delivered:
(i) if to Genentech, at the address set forth below:
Genentech, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to CTI, at the address set forth below:
CytoTherapeutics, Inc.
Two ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Ropes & ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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or at such other address as may have been furnished by such person in writing to
the other parties. Any such notice, demand or other communication shall be
deemed to have been given on the date actually delivered or as of the date
mailed, as the case may be.
9.2. Severability and Governing Law. Should any Section or any part of
a Section within this Agreement be rendered void, invalid or unenforceable by
any court of law for any reason, such invalidity or unenforceability shall not
void or render invalid or unenforceable any other Section or part of a Section
in this Agreement. This Agreement shall be governed by and construed in
accordance with the substantive domestic laws of the State of Delaware.
9.3. Amendments and Waivers. The provisions of this Agreement may not
be changed, waived, discharged or terminated orally or in writing, without the
written consent of CTI and Genentech.
9.4. Survival of Representations and Warranties, etc. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement, any investigation at any time made, the sale and
purchase of the Shares and payment therefor.
9.5. Expenses. CTI and Genentech shall each bear its own expenses
incurred on its behalf in connection with this Agreement and the transactions
contemplated hereby including fees of legal counsel.
9.6. Entire Agreement. This Agreement contains the entire understanding
of the parties and there are no further or other agreements or understandings,
written or oral, in effect between the parties relating to the subject matter
hereof unless expressly referred to herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
CYTOTHERAPEUTICS, INC.
By: /s/ Illegible Signature
---------------------------------
Title:
GENENTECH, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Executive Vice President
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COMPANY DISCLOSURE SCHEDULE
The Company has granted an investor rights, similar to preemptive
rights, which provide that if the Company issues additional shares of its stock
or securities convertible into or exchangeable for the Company's stock, the
investor will have the right to purchase, at the then current market price, the
number of shares of the Company's stock necessary to permit the investor to
maintain its ownership percentage of the Company's stock. These rights expire
April 30, 2000 and were granted pursuant to a Nontransferable Warrant for the
Purchase of Shares of Common Stock dated May 1, 1995.
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