EXHIBIT 2
STOCK PURCHASE AGREEMENT
AMONG
XECHEM INTERNATIONAL, INC.,
▇▇▇▇▇ ▇▇▇▇▇,
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
November 18, 1996
TABLE OF CONTENTS
Page
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I. The Exchanges 1
1.1. Terms of the Exchange 1
1.2. The Closings 3
II Representations and Warranties of the Company and Pandey 3
2.1. Organization and Qualification 3
2.2. SEC Reports 3
2.3. Capitalization 3
2.4. Litigation and Claims 4
2.5. Authority to Sell 4
2.6. No Conflicts 4
2.7. Valid Issuance, Etc. 5
2.8. Completeness of Disclosure 5
III Additional Representations and Warranties of Pandey 5
3.1. Authority to Act 5
3.2. No Conflicts 5
3.3. Non-Distributive Intent 6
3.4. Pandey Debt and Preferred Stock 6
3.5. Completeness of Disclosure 6
IV Representations and Warranties of the Purchaser 6
4.1. Authority to Buy 6
4.2. No Conflicts 6
4.3. Non-Distributive Intent 7
4.4. Completeness of Disclosure 7
V Conditions to Obligations of the Purchaser 7
5.1. Accuracy of Representations and Compliance with Conditions 7
5.2. Opinion of Counsel 8
5.3. Legal Action 8
5.4. No Governmental Action 8
5.5. Contractual Consents Needed 8
5.6. Stockholders Agreement 8
5.7. Pandey Closing 8
5.8. Consulting Agreement 8
5.9. Bankruptcy 8
5.10. Chief Executive 8
VI Conditions to the Obligations of the Company and Pandey 9
6.1. Accuracy of Representations and Compliance with Conditions 9
6.2. Opinion of Counsel 9
6.3. Legal Action 9
6.4. No Governmental Action 9
6.5. Contractual Consents Needed 9
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Page
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6.6. Stockholders Agreement 9
6.7. Purchaser Closing 9
6.8. Fairness Opinion 9
VII Covenants and Agreements 9
7.1. Advice of Changes 10
7.2. Confidentiality 10
7.3. Public Statements 10
7.4. Furnish Future Information 10
7.5. Amendment 10
7.6. Nasdaq 11
7.7. Employment Agreement 11
7.8. Expenses 11
7.9. Pandey Debt 11
VIII Indemnification 11
8.1. General 11
8.2. Indemnity Procedures 11
8.3. Exclusivity 12
8.4. Survival 12
IX Termination 12
9.1. Termination 12
9.2. Effect of Termination 13
X Miscellaneous 13
10.1. Further Actions 13
10.2. Availability of Equitable Remedies 13
10.3. Modification 13
10.4. Notices 14
10.5. Waiver 14
10.6. Binding Effect 14
10.7. No Third Party Beneficiaries 15
10.8. Separability 15
10.9. Headings 15
10.10. Counterparts; Governing Law 15
LIST OF EXHIBITS
Exhibit 1.1 - Stockholders Agreement
Exhibit 2.3A - Capitalization
Exhibit 2.3B - Commitments
Exhibit 2.3C - Warrant Adjustments
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Exhibit 2.5 - Certificate of Designation
Exhibit 2.6 - Consents
Exhibit 4.3 - Disclosure Documents
Exhibit 5.2 - Opinion of Duane, Morris & Heckscher
Exhibit 5.8 - Consulting Agreement
Exhibit 6.2 - Opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
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STOCK PURCHASE AGREEMENT
Agreement, dated November 18, 1996, among Xechem International, Inc.,
a Delaware corporation (the "Company"); ▇▇▇▇▇ ▇▇▇▇▇ (the "Purchaser"); and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Pandey").
The Purchaser and Pandey desire to acquire certain shares of the
capital stock of the Company, in exchange for cash and debt of the Company as
hereinafter provided, and the Company desires to effect such exchange.
I. The Exchanges
1.1. Terms of the Exchange. On the basis of the representations,
warranties, covenants, and agreements contained in this Agreement and subject to
the terms and conditions of this Agreement:
(a) at the Initial Closing (as defined below):
(i) the Company shall issue to the Purchaser a
certificate registered in the name of the Purchaser for 5,000
shares (the "Initial Shares") of the Class C Series 2
Convertible Voting Preferred Stock (the "Series 2 Stock") of
the Company;
(ii) in consideration for the Initial Shares, the
Purchaser shall deliver to the Company (A) the promissory
note, dated October 17, 1996, from the Company to The ▇▇▇▇▇▇
▇. ▇▇▇▇▇ Trust, in the principal amount of $100,000, and any
subsequent promissory notes issued by the Company to such
Trust or the Purchaser, each marked paid in full, and (B) the
excess, if any, of $500,000 over the aggregate principal
amount of such promissory notes and any other advances made
by such Trust or the Purchaser, by wire transfer of
immediately available funds (the Purchaser hereby agreeing to
provide evidence, reasonably acceptable to the Company, at
the Initial Closing that repayment to the Trust of such
advances has been made); and
(iii) the parties shall enter into a Stockholders
Agreement (the "Stockholders Agreement") in the form attached
as Exhibit 1.1 hereto;
(b) at each of the Second Closing and the Third Closing
(each as defined below):
(i) the Company shall issue to the Purchaser a
certificate registered in the name of the Purchaser for 5,000
shares (the "Second Shares" or "Third Shares," respectively)
of the Series 2 Stock; and
(ii) in consideration for the Second Shares or Third
Shares, as the case may be, the Purchaser shall deliver to
the Company $500,000 by wire transfer of immediately
available funds;
(c) at the Fourth Closing (as defined below),
(i) the Company shall issue to the Purchaser a
certificate registered in the name of the Purchaser for 7,500
shares (the "Fourth Shares") of the Series 2 Stock;
(ii) in consideration for the Third Shares, the
Purchaser shall deliver to the Company $750,000 by wire
transfer of immediately available funds;
(iii) the Company shall issue to Pandey a
certificate registered in his name for 13,180 shares (the
"Pandey Shares") of the Class C Series 3 Convertible Voting
Preferred Stock (the "Series 3 Stock") of the Company; and
(iv) in consideration for the Pandey Shares, Pandey
shall deliver to the Company (A) all promissory notes or
other instruments evidencing the indebtedness owed as of the
date of this Agreement by the Company or any of its
subsidiaries to Pandey (the "Pandey Debt"), marked paid in
full, and (B) the stock certificate(s) held by Pandey
representing the Class B 8% Preferred Stock of the Company
(the "Class B Preferred Stock"), together with a stock power
related thereto;
(d) at the Fifth Closing (as defined below):
(i) the Company shall issue to the Purchaser a
certificate registered in the name of the Purchaser for 17,500
shares (the "Fifth Shares") of the Series 2 Stock; and
(ii) in consideration for the Fifth Shares, the
Purchaser shall deliver to the Company $1,750,000 by wire
transfer of immediately available funds; and
(e) at the Sixth Closing (as defined below),
(i) the Company shall issue to the Purchaser a
certificate registered in the name of the Purchaser for 10,000
shares (the "Sixth Shares") of the Series 2 Stock;
(ii) in consideration for the Sixth Shares, the
Purchaser shall deliver to the Company $1,000,000 by wire
transfer of immediately available funds;
(f) at the Final Closing (as defined below):
(i) the Company shall issue to the Purchaser a
certificate registered in the name of the Purchaser for 5,000
shares (the "Final Shares" and, together with the Initial
Shares, the Second Shares, the Third Shares, the Fourth
Shares, the Fifth Shares, and the Sixth Shares, the
"Purchaser Shares") of the Series 2 Stock;
(ii) in consideration for the Final Shares, the
Purchaser shall deliver to the Company $500,000 by wire
transfer of immediately available funds.
(g) Notwithstanding the foregoing, if, prior to any Closing Date (as
hereinafter defined), the Conversion Date (as defined in the Certificate of
Designation (as hereinafter defined)) has occurred, the Purchaser and Pandey,
to the extent applicable, shall receive, at the Closing (as hereinafter
defined) held on such Closing Date, in lieu of the shares of Series 2 Stock or
Series 3 Stock, respectively, issuable as provided above, the shares of Common
Stock into which such shares of Series 2 Stock or Series 3 Stock would have
been convertible on such Closing Date. In such case, the shares of Common Stock
so delivered shall be deemed the Purchaser Shares or Pandey Shares delivered at
such Closing.
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(h) At the option of the Purchaser, the Purchaser may, at any Closing,
purchase some or all of the Purchaser Shares to be purchased at a subsequent
Closing. The Purchaser shall give the Company five business days prior notice
of intent to exercise the option set forth in this Section 1.1(h).
1.2. The Closings. The closing of the transactions contemplated by
Section 1.1(a) (the "Initial Closing") shall take place on or as soon as
practicable after the date hereof (the "Initial Closing Date"). The closings of
the transactions contemplated by Sections 1.1(b), (c), (d), (e), and (f) (the
"Second Closing," "Third Closing," "Fourth Closing," "Fifth Closing," "Sixth
Closing," and "Final Closing," consecutively, and collectively, including the
Initial Closing, the "Closings") shall take place on such dates (the "Second
Closing Date," "Third Closing Date," "Fourth Closing Date," "Fifth Closing
Date," "Sixth Closing Date," and "Final Closing Date," consecutively, and
collectively, including the Initial Closing Date, the "Closing Dates") shall
take place on or before December 2, 1996, December 16, 1996, January 15, 1997,
February 17, 1997, June 2, 1997, and July 15, 1997, consecutively, as the
Purchaser shall, on five business days notice, inform the Company that the
Purchaser is prepared to proceed with the respective Closing. Each Closing
shall take place at the offices of Duane, Morris & Heckscher, ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇.
II Representations and Warranties of the Company and Pandey
The Company and Pandey, jointly and severally, represent and warrant
to the Purchaser as follows:
2.1. Organization and Qualification. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware, with all requisite power and authority to own, lease, license, and
use its properties and assets and to carry on the business in which it is now
engaged and the business in which it contemplates engaging.
2.2. SEC Reports. The Company has delivered to the Purchaser true and
correct copies of its Annual Report on Form 10-KSB, as amended, for the year
ended December 31, 1995 (the "10-K"), Quarterly Reports on Form 10-QSB for the
periods ended March 31 and June 30, 1996, all Current Reports on Form 8-K filed
with the Securities and Exchange Commission (the "SEC") since the filing of the
10-K, and its Proxy Statement dated May 24, 1996 (collectively, the "SEC
Reports"). None of the SEC Reports when filed with the SEC contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein not misleading.
From the date of the last SEC Report to each Closing Date, no event has
occurred which caused a material adverse change in the business of the Company,
except as disclosed (a) in this Agreement or one of the Exhibits hereto, (b) in
a report or statement filed with the SEC on or before such Closing Date, a copy
of which is delivered to the Purchaser in accordance with Section 7.4, or (c)
to the Purchaser in writing prior to such Closing Date.
2.3. Capitalization. Set forth on Exhibit 2.3A is the capitalization
of the Company (a) as of August 31, 1996 and (b) pro forma, giving effect to
certain transactions described on Exhibit 2.3A which occurred subsequent to
such date and prior to the date hereof and to the transactions contemplated by
this Agreement as if all such transactions (including the issuance of all of
the Purchaser Shares and Pandey Shares) had occurred on such date. Since August
31, 1996, the Company has not issued any shares of its capital stock except (c)
as indicated on Exhibit 2.3A or Exhibit 2.3B, (d) issuances on exercises of
previously outstanding stock options, (e) pursuant to this Agreement, or (f)
issuance approved in writing
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by the Purchaser or approved by the Board of Directors of the Company at a time
when a majority of the directors of the Company were nominees of the Purchaser.
Other than this Agreement or as described on Exhibit 2.3B, there is (g) no
commitment, plan, or arrangement to issue, or outstanding option, warrant, or
other right calling for the issuance of, any share of capital stock of the
Company, or to issue or calling for the issuance of any security or other
instrument convertible into, exercisable for, or exchangeable for capital stock
of the Company, and (h) no outstanding security or other instrument convertible
into or exchangeable for capital stock of the Company. Set forth as Exhibit
2.3C is a description of the adjustments made in the exercise price of certain
outstanding warrants (the "Warrants") and estimated adjustments which will
result from the transactions contemplated hereby. It is understood that such
estimated adjustments are based on various assumptions, as indicated on Exhibit
2.3C (including, without limitation, dates for and numbers of shares to be
issued at the Closings which are not identical to the dates and numbers of
shares set forth in Section 1.1), and that no representation is made as to
whether such assumptions are reasonable, are likely to be or will be achieved,
or as to the adjustments to such exercise price which would result from facts
different than those set forth in such assumptions.
2.4. Litigation and Claims. Except as disclosed in the SEC Reports,
there is no litigation, arbitration, claim, governmental or other proceeding
(formal or informal), or investigation pending or threatened, with respect to
the Company, except as would not be reasonably likely to have a material
adverse effect on the Company and its subsidiaries (each, a "Subsidiary") taken
as a whole.
2.5. Authority to Sell. The Company has all requisite power and
authority to execute, deliver, and perform this Agreement and the Stockholders
Agreement. All necessary corporate proceedings of the Company have been duly
taken to authorize the execution, delivery, and performance of this Agreement
and the Stockholders Agreement by the Company, except for (a) the filing of the
Amended and Restated Certificate of Designation setting forth the terms of the
Series 2 Stock and the Series 3 Stock (the "Certificate of Designation"), which
will be filed, in the form attached hereto as Exhibit 2.5, on or before the
First Closing Date and (b) approval of the stockholders of the Company
("Stockholder Approval") of an amendment to the Certificate of Incorporation
(the "Amendment") to increase the number of authorized shares of the Company's
Common Stock (the "Common Stock") as contemplated by Section 7.5. Each of this
Agreement and the Stockholders Agreement has been duly authorized by the
Company, this Agreement has been, and at the Initial Closing the Stockholders
Agreement will be, duly executed and delivered by the Company, and each of this
Agreement and the Stockholders Agreement constitutes or will constitute the
legal, valid, and binding obligation of the Company and is or will be
enforceable as to the Company in accordance with its terms.
2.6. No Conflicts. Except as set forth in Sections 7.5 and 7.6, no
consent, authorization, approval, order, license, certificate, or permit of or
from, or declaration or filing with, any federal, state, local, or other
governmental authority or any court or other tribunal is required by the
Company for the execution, delivery, or performance of this Agreement and the
Stockholders Agreement by the Company. No consent of any party to any contract,
agreement, instrument, lease, or license (collectively, "Contracts") to which
the Company or any Subsidiary is a party, or to which it or any of its
businesses, properties, or assets are subject, is required for the execution,
delivery, or performance of this Agreement and the Stockholders Agreement by
the Company (except consents referred to in Exhibit 2.6); and the execution,
delivery, and performance of this Agreement and the Stockholders Agreement by
the Company will not (if the consents referred to in Exhibit 2.6 are obtained
prior to the Initial Closing) violate, result in a breach of, conflict with, or
(with or without the giving of notice or the passage of time or both) entitle
any party to terminate or call a default under, entitle any party to rights and
privileges that such
4
party was not receiving or entitled to receive immediately before this
Agreement was executed under, or create any obligation on the part of the
Company or any Subsidiary that it was not paying or obligated to pay
immediately before this Agreement was executed under, any term of any such
Contract or violate or result in a breach of any term of the certificate of
incorporation (or other charter document) or by-laws of the Company or any
Subsidiary, or violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on the Company or any Subsidiary
or to which it or any of its businesses, properties, or assets are subject.
2.7. Valid Issuance, Etc. At each Closing, the Purchaser Shares or
Pandey Shares to be issued at such Closing will be validly authorized, validly
issued, fully paid, and nonassessable and will not have been issued in
violation of any preemptive right of stockholders, and the Purchaser or Pandey,
as the case may be, will receive good title to the shares issued to it or him,
free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, and voting trusts, other than the
Stockholders Agreement. Subject to receipt of the Stockholder Approval and
filing of the Amendment, the shares of Common Stock issuable on conversion of
the Purchaser Shares and Pandey Shares (the "Conversion Shares") have been
reserved for issuance and, when issued and delivered on conversion of the
Purchaser Shares or Pandey Shares, will be validly authorized, validly issued,
fully paid, and nonassessable and will not have been issued in violation of any
preemptive right of stockholders, and the holders of such converted the
Purchaser Shares or Pandey Shares, as the case may be, will receive good title
to the shares issued to it or him, free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements, and voting
trusts, other than the Stockholders Agreement.
2.8. Completeness of Disclosure. No representation or warranty by the
Company in this Agreement contains or (except for changes beyond the control of
the Company) on any Closing Date will contain an untrue statement of a material
fact or omits or (except for changes beyond the control of the Company) on any
Closing Date will omit to state a material fact required to be stated therein
or necessary to make the statements made therein not misleading.
III Additional Representations and Warranties of Pandey
Pandey represents and warrants to the other parties hereto as follows:
3.1. Authority to Act. This Agreement has been, and at the Initial
Closing the Stockholders Agreement will be, duly executed and delivered by
Pandey, and each of this Agreement and the Stockholders Agreement constitutes
or will constitute the legal, valid, and binding obligation of Pandey and is or
will be enforceable as to Pandey in accordance with its terms.
3.2. No Conflicts. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing with, any
federal, state, local, or other governmental authority or any court or other
tribunal is required by Pandey for the execution, delivery, or performance of
this Agreement and the Stockholders Agreement by Pandey. No consent of any
party to any Contract to which Pandey is a party, or to which he or any of his
businesses, properties, or assets are subject, is required for the execution,
delivery, or performance of this Agreement and the Stockholders Agreement by
Pandey (except consents referred to in Exhibit 2.6); and the execution,
delivery, and performance of this Agreement and the Stockholders Agreement by
Pandey will not (if the consents referred to in Exhibit 2.6 are obtained prior
to the Initial Closing) violate, result in a breach of, conflict with, or (with
or without the giving of notice or the passage of time or both) entitle any
party to terminate or call a default
5
under, entitle any party to rights and privileges that such party was not
receiving or entitled to receive immediately before this Agreement was executed
under, or create any obligation on the part of Pandey that he was not paying or
obligated to pay immediately before this Agreement was executed under, any term
of any such Contract, or violate, result in a breach of, or conflict with any
law, rule, regulation, order, judgment, or decree binding on Pandey or to which
he or any of his businesses, properties, or assets are subject.
3.3. Non-Distributive Intent. Pandey is an "accredited investor," as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended (the "Securities Act"). Pandey is acquiring the Pandey Shares, and on
conversion of any Pandey Shares will acquire the underlying Conversion Shares,
for his own account (and not for the account of others) for investment and not
with a view to the distribution thereof. Pandey will not sell or otherwise
dispose of the Pandey Shares or Conversion Shares (whether pursuant to a
liquidating dividend or otherwise) without registration under the Securities
Act or an exemption therefrom, and the certificate or certificates representing
the Pandey Shares and the Conversion Shares may contain a legend to the
foregoing effect. Pandey has been given access to the kind of financial and
other information about the Company as would be contained in a registration
statement filed under the Securities Act. Pandey understands that he may not
sell or otherwise dispose of the Pandey Shares or Conversion Shares in the
absence of either a registration statement under the Securities Act or an
exemption from the registration provisions of the Securities Act.
3.4. Pandey Debt and Preferred Stock. Pandey owns all of the Pandey
Debt and all of the shares of Class B Preferred Stock, in each case free and
clear of all liens, security interests, pledges, charges, encumbrances,
stockholders' agreements, and voting trusts, other than this Agreement and the
agreement referred to on Exhibit 2.6. Pandey owns no other shares of preferred
stock of the Company, except 2,500 shares of the Class A Voting Preferred Stock
of the Company.
3.5. Completeness of Disclosure. No representation or warranty by
Pandey in this Agreement contains or (except for changes beyond the control of
Pandey) on any Closing Date will contain an untrue statement of a material fact
or omits or (except for changes beyond the control of Pandey) on any Closing
Date will omit to state a material fact required to be stated therein or
necessary to make the statements made therein not misleading.
IV Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the other parties hereto as
follows:
4.1. Authority to Buy. This Agreement has been, and at the Initial
Closing the Stockholders Agreement will be, duly executed and delivered by the
Purchaser, and each of this Agreement and the Stockholders Agreement is or will
be the legal, valid, and binding obligation of the Purchaser and is or will be
enforceable as to the Purchaser in accordance with its terms.
4.2. No Conflicts. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing with, any
federal, state, local, or other governmental authority or any court or other
tribunal is required by the Purchaser for the execution, delivery, or
performance of this Agreement and the Stockholders Agreement by the Purchaser.
No consent of any party to any Contract to which the Purchaser is a party, or
to which it or any of its businesses, properties, or assets are subject,
6
is required for the execution, delivery, or performance of this Agreement and
the Stockholders Agreement by the Purchaser; and the execution, delivery, and
performance of this Agreement and the Stockholders Agreement by the Purchaser
will not violate, result in a breach of, conflict with, or (with or without the
giving of notice or the passage of time or both) entitle any party to terminate
or call a default under, entitle any party to rights and privileges that such
party was not receiving or entitled to receive immediately before this
Agreement was executed under, or create any obligation on the part of the
Purchaser that it was not paying or obligated to pay immediately before this
Agreement was executed under, any term of any such Contract, or violate, result
in a breach of, or conflict with any law, rule, regulation, order, judgment, or
decree binding on the Purchaser or to which it or any of its businesses,
properties, or assets are subject.
4.3. Non-Distributive Intent. The Purchaser is an accredited investor.
The Purchaser is acquiring the Purchaser Shares, and on conversion of any the
Purchaser Shares will acquire the underlying Conversion Shares, for its own
account (and not for the account of others) for investment and not with a view
to the distribution thereof. The Purchaser will not sell or otherwise dispose
of the Purchaser Shares or Conversion Shares (whether pursuant to a liquidating
distribution or otherwise) without registration under the Securities Act or an
exemption therefrom, and the certificate or certificates representing the
Purchaser Shares and the Conversion Shares may contain a legend to the
foregoing effect. The Purchaser has been given access to the kind of financial
and other information about the Company as would be contained in a registration
statement filed under the Securities Act. Without limiting the foregoing, the
Purchaser acknowledges receipt of the SEC reports and the other documents
listed in or attached to Exhibit 4.3. The Purchaser understands that it may not
sell or otherwise dispose of the Purchaser Shares or Conversion Shares in the
absence of either a registration statement under the Securities Act or an
exemption from the registration provisions of the Securities Act.
4.4. Completeness of Disclosure. No representation or warranty by the
Purchaser in this Agreement contains or (except for changes beyond the control
of the Purchaser) on any Closing Date will contain an untrue statement of a
material fact or omits or (except for changes beyond the control of the
Purchaser) on any Closing Date will omit to state a material fact required to
be stated therein or necessary to make the statements made therein not
misleading.
V Conditions to Obligations of the Purchaser
The obligations of the Purchaser at any Closing under this Agreement
are subject, at the option of the Purchaser, to the following conditions:
5.1. Accuracy of Representations and Compliance with Conditions. All
representations and warranties of the Company or Pandey contained in this
Agreement shall be accurate when made and, in addition, shall be accurate as of
such Closing as though such representations and warranties were then made in
exactly the same language by the Company or Pandey (except for changes beyond
its or his control); as of the Closing the Company and Pandey shall have
performed and complied with all covenants and agreements and satisfied all
conditions required to be performed and complied with by any of them at or
before such time by this Agreement; and the Purchaser shall have received
certificates executed by the President or Vice President - Finance and
Operations of the Company and by Pandey, dated the respective Closing Date, to
that effect.
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5.2. Opinion of Counsel. The Purchaser shall have received on such
Closing Date the opinion of Duane, Morris & Heckscher, counsel to the Company,
dated as of such date, in the form attached as Exhibit 5.2.
5.3. Legal Action. There shall not have been instituted or
threatened any legal proceeding relating to, or seeking to prohibit or otherwise
challenge the consummation of, the transactions contemplated by this Agreement,
or to obtain substantial damages with respect thereto.
5.4. No Governmental Action. There shall not have been any action
taken, or any law, rule, regulation, order, or decree proposed, promulgated,
enacted, entered, enforced, or deemed applicable to the transactions
contemplated by this Agreement by any federal, state, local, or other
governmental authority or by any court or other tribunal, including the entry
of a preliminary or permanent injunction, which makes any of the transactions
contemplated by this Agreement illegal or prohibits, restricts, or delays
consummation of any of the transactions contemplated by this Agreement.
5.5. Contractual Consents Needed. The Company shall have obtained at
or prior to such Closing the consents listed in Exhibit 2.6.
5.6. Stockholders Agreement. The Stockholders Agreement shall have
been duly authorized, executed, and delivered by Pandey and the Company at or
prior to such Closing and at such Closing shall be in full force.
5.7. Pandey Closing. The exchange by Pandey of the Pandey Debt and
shares of Class B Preferred Stock for the Pandey Shares shall have been
consummated; provided, that this Section 5.7 shall be a condition only with
respect to the Fourth Closing and each subsequent Closing.
5.8. Consulting Agreement. At the Initial Closing, the Company shall
have executed and delivered a Consulting Agreement with ▇▇▇▇ ▇▇▇▇▇▇▇
substantially in the form attached hereto as Exhibit 5.8.
5.9. Bankruptcy. At such Closing Date, there shall not have been
entered any decree or order by a court having jurisdiction adjudging the
Company a bankrupt or insolvent, or approving a petition seeking
reorganization, arrangement, adjustment, or composition of or in respect of the
Company, under any federal or state bankruptcy law, and the Company shall not
have (a) commenced a voluntary case under any federal or state bankruptcy law,
(b) consented to the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under federal or state bankruptcy law or the
appointment of a receiver, liquidator, assignee, trustee, sequestrator, or
similar official of the Company or of any substantial part of its property, (c)
made an assignment for the benefit of creditors, (d) admitted in writing its
inability to pay its debts generally as they become due, or (e) taken any
action in furtherance of any such action.
5.10. Chief Executive. At such Closing Date, Pandey shall be the Chief
Executive Officer of the Company; provided, that this Section 5.10 shall not
apply if Pandey shall have been removed (other than for cause) as Chief
Executive Officer by action of the Purchaser or any of its nominees as
directors of the Company.
8
VI Conditions to the Obligations of the Company and Pandey
The obligations of the Company and Pandey under this Agreement are
subject, at the option of the Company and Pandey, to the following conditions:
6.1. Accuracy of Representations and Compliance with Conditions. All
representations and warranties of the Purchaser contained in this Agreement
shall be accurate when made and, in addition, shall be accurate as of such
Closing as though such representations and warranties were then made in exactly
the same language by the Purchaser (except for changes beyond its control); as
of the Closing the Purchaser shall have performed and complied with all
covenants and agreements and satisfied all conditions required to be performed
and complied with by it at or before such time by this Agreement; and the
Company and Pandey shall have received a certificate executed on behalf of the
Purchaser, dated the respective Closing Date, to that effect.
6.2. Opinion of Counsel. The Company shall have received on the First
Closing Date the opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Purchaser, dated as
of such date, in the form attached as Exhibit 6.2.
6.3. Legal Action. There shall not have been instituted or threatened
any legal proceeding relating to, or seeking to prohibit or otherwise challenge
the consummation of, the transactions contemplated by this Agreement, or to
obtain substantial damages with respect thereto.
6.4. No Governmental Action. There shall not have been any action
taken, or any law, rule, regulation, order, or decree proposed, promulgated,
enacted, entered, enforced, or deemed applicable to the transactions
contemplated by this Agreement by any federal, state, local, or other
governmental authority or by any court or other tribunal, including the entry
of a preliminary or permanent injunction, which makes any of the transactions
contemplated by this Agreement illegal or prohibits, restricts, or delays
consummation of any of the transactions contemplated by this Agreement.
6.5. Contractual Consents Needed. The Company shall have obtained at
or prior to such Closing the consents listed in Exhibit 2.6.
6.6. Stockholders Agreement. The Stockholders Agreement shall have
been duly authorized, executed, and delivered by the Purchaser at or prior to
such Closing and at such Closing shall be in full force.
6.7. Purchaser Closing. The purchase by the Purchaser of the Purchaser
Shares to be purchased on or prior to such Closing Date shall have been
consummated.
6.8. Fairness Opinion. The Company shall have received a written
fairness opinion, in form and substance satisfactory to the Company, from The
▇▇▇▇▇▇▇ Group, Inc. with respect to the transactions contemplated by this
Agreement.
VII Covenants and Agreements
The parties covenant and agree as follows:
9
7.1. Advice of Changes. Until the Final Closing or the termination of
this Agreement, each party will advise the others of any fact or occurrence of
which such party obtains knowledge and which (if existing and known at the date
of the execution of this Agreement) would have been required to be set forth or
disclosed in or pursuant to this Agreement or an Exhibit hereto, which (if
existing and known at any time prior to or at the Closing) would make the
performance by any party of a covenant contained in this Agreement impossible
or make such performance materially more difficult than in the absence of such
fact or occurrence, or which (if existing and known at the time of a subsequent
Closing) would cause a condition to any party's obligations under this
Agreement not to be fully satisfied.
7.2. Confidentiality. Each party shall insure that all confidential
information which such party or any of its officers, directors, employees,
counsel, agents, investment bankers, or accountants may now possess or may
hereafter create or obtain relating to the financial condition, results of
operations, business, properties, assets, liabilities, or future prospects of
any other party shall not be published, disclosed, or made accessible by any of
them to any other person or entity at any time or used by any of them except in
the business and for the benefit of the party to whom such information belongs,
in each case without the prior written consent of such party; provided,
however, that the restrictions of this sentence shall not apply (a) as may
otherwise be required by law, (b) as may be necessary or appropriate in
connection with the enforcement of this Agreement, or (c) to the extent such
information shall have otherwise become publicly available.
7.3. Public Statements. Before any party shall release any information
concerning this Agreement or the transactions contemplated by this Agreement
which is intended for or would be likely to result in public dissemination
thereof, it shall cooperate with the other parties, shall furnish drafts of
such disclosure to the other parties for comments, and shall not release any
such information without the written consent of such other parties, such
consent not to be unreasonably withheld; provided, that (a) any party may,
without complying with this Section 7.3, make such disclosure if such
disclosure is substantially similar to public disclosure previously made by any
party and (b) nothing contained herein shall prevent any party from releasing
any information to any governmental authority if required to do so by law or
the Company from describing this Agreement and the transactions contemplated
herein to the extent the Company reasonably believes it is required in its
reports and filings under the Securities Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act").
7.4. Furnish Future Information. Until the Final Closing or the
termination of this Agreement, and thereafter so long as the Purchaser and its
permitted assignees hereunder shall hold at least 10% of the Purchaser Shares
or underlying Conversion Shares, the Company will furnish to the Purchaser and
such assignees, promptly upon their becoming available, copies of all financial
statements, reports, notices, and proxy statements sent by the Company to its
stockholders, all regular and periodic reports filed by the Company with any
securities exchange or with the SEC, and all press releases.
7.5. Amendment. The Company will, and Pandey will cause the Company
to, use their best efforts to, as soon as practicable, (a) file a proxy or
information statement relating to, and call and hold a meeting of or obtain
written consent of the stockholders of the Company to approve, the Amendment,
(b) obtain the Stockholder Approval, and (c) file the Amendment. The Company
shall give the Purchaser prompt notice of the filing of the Amendment. Each of
Pandey and the Purchaser agrees to vote or execute a written consent with
respect to all shares of capital stock of the Company owned by him or it in
favor of the Amendment.
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7.6. Nasdaq. Promptly after the date hereof, the Company shall give
notice to the Nasdaq Stock Market, Inc. of the issuance or potential issuance
of the Purchaser Shares and Pandey Shares and the potential issuance of the
Conversion Shares.
7.7. Employment Agreement. For purposes of Section 5.5 of the
Employment Agreement, dated February 1994, between Pandey and the Company,
Pandey hereby agrees that he has approved the transactions contemplated by this
Agreement and that, accordingly, such transactions do not and will not result
in a "Change in Control" as defined in such Employment Agreement.
7.8. Expenses. The Company shall pay the reasonable attorneys' fees
and expenses of the Purchaser's counsel, not to exceed $15,000 in the aggregate.
The Company shall pay such expenses at the Initial Closing or thereafter upon
presentation of invoices therefor. Except for the foregoing, each party shall
be responsible for his or its own expenses in connection with this Agreement.
7.9. Pandey Debt. Effective upon delivery of the Pandey Shares, Pandey
hereby releases and discharges all claims and causes of action, whether known
or unknown, which he or his heirs, personal representatives, successors, or
assigns ever had, now have, or hereafter may have against the Company on
account of or relating to the Pandey Debt.
VIII Indemnification
8.1. General. Each party (the "indemnifying party") shall indemnify
and hold harmless the other parties and the other parties' affiliates,
officers, directors, trustees, stockholders, employees, agents, and
representatives (each, an "indemnified party") from and against any and all
liabilities, claims, demands, actions, suits, losses, damages, costs, and
expenses (including, without limitation, reasonable attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation)
(collectively, "Damages"), based upon or arising out of a breach of any
covenant, agreement, representation, or warranty made by the indemnifying party
in this Agreement or the Stockholders Agreement.
8.2. Indemnity Procedures. (a) An indemnified party seeking
indemnification under this Agreement in respect of, arising out of, or
involving a claim or demand made by any person or governmental authority
against the indemnified party (a "Third Party Claim") shall notify the
indemnifying party in writing of the Third Party Claim within 20 days after
receipt by the indemnified party of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall not affect the
indemnification provided under this Agreement, except to the extent the
indemnifying party shall have been prejudiced by such failure. Thereafter, the
indemnified party shall deliver to the indemnifying party, promptly after the
indemnified party's receipt thereof, copies of all notices and documents
(including court papers) received by the indemnified party relating to the
Third Party Claim.
(b) The indemnifying party shall have the right, within 30 days after
being so notified, to assume the defense of such Third Party Claim with counsel
reasonably satisfactory to the indemnified party. In any such proceeding the
defense of which the indemnifying party shall have so assumed, the indemnified
party shall have the right to participate therein and retain its own counsel at
its own expense unless (i) the indemnified party and the indemnifying party
shall have mutually agreed to the retention
11
of such counsel, (ii) the indemnified party shall have reasonably concluded on
the basis of an opinion of its counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party, or (iii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party, and representation of both parties by the same
counsel would be inappropriate in the opinion of the indemnified party's
counsel due to actual or potential differing interests between them; in any
such case, one such separate counsel may be retained by all indemnified parties
as a group at the indemnifying party's expense. To the extent that the
settlement of such a Third Party Claim, the defense of which has been assumed
by the indemnifying party, involves the payment of money only, the indemnifying
party shall have the right, in consultation with the indemnified party, to
settle those aspects dealing only with the payment of money, provided that the
indemnifying party pays such money and such settlement includes a general
release from the other parties to such Third Party Claim in favor of the
indemnified party. In connection with any such defense or settlement, the
indemnifying party shall not enter into a consent decree involving injunctive
or non-monetary relief or consent to an injunction without the indemnified
party's prior written consent.
(c) The indemnified party shall cooperate in all reasonable respects
with the indemnifying party in connection with any Third Party Claims and the
defense or compromise thereof. Such cooperation shall include the retention and
(upon the indemnifying party's request) the provision to the indemnifying party
of records and information reasonably relevant to the Third Party Claim, making
employees available on a mutually convenient basis to provide additional
information, and explanation of any material provided under this Agreement. If
the indemnifying party shall have assumed the defense of a Third Party Claim,
the indemnified party shall not, without first waiving the indemnity as to such
claim, admit any liability with respect to, or settle, compromise, or
discharge, the Third Party Claim, without the indemnifying party's prior
written consent, which consent shall not be unreasonably withheld; provided
that admissions of facts which a party may reasonably be required to make shall
not be deemed to be admissions of liability.
8.3. Exclusivity. The indemnification provided by this Article VIII
shall be the sole remedy (other than termination of this Agreement pursuant to
Article IX) for any matters relating to Third Party Claims; provided, that this
Section 8.3 shall not prohibit injunctive relief if available under applicable
law.
8.4. Survival. All representations, warranties, covenants, and
agreements contained in this Agreement shall survive the execution and delivery
of this Agreement and the Closings hereunder for a period of, and shall
terminate on, the first anniversary of, the Final Closing, and no claim with
respect to a breach thereof shall be made thereafter; provided, that
representations and warranties contained in Sections 2.3, 2.7, 3.3, 3.4, and
4.3 shall survive indefinitely.
IX Termination
9.1. Termination. This Agreement may be terminated at any time prior
to any Closing:
(a) by mutual written consent executed by the Company, Pandey,
and the Purchaser;
(b) by the Company and Pandey, acting jointly, or the
Purchaser, by notice given to the Company and Pandey in writing,
without liability to the terminating party or parties on
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account of such termination (providing the terminating party or
parties are not otherwise in default or in breach of this Agreement),
if (i) any of the conditions to their or its obligations under this
Agreement shall not have been satisfied or waived in writing by such
parties or party or (ii) the other party or parties shall have failed
to perform in any material respect its or their covenants or
agreements contained herein required to be performed prior to the
Closing, or shall have breached any of its or their representations or
warranties contained herein, in each instance in a material respect
(and provided that the terminating parties or party shall afford the
other party or parties at least 15 business days notice of and
opportunity to cure such breach), unless such failure is attributable
to the breach by the terminating party or parties of any of its or
their obligations to consummate the transactions contemplated hereby
or of any of its or their other obligations hereunder; or
(c) by any party, by notice given to the other parties in
writing, without liability, if the transactions contemplated hereby
shall violate any non-appealable final order, decree, or judgment of
any governmental authority having competent jurisdiction or if there
shall be a statute, rule, or regulation that makes such purchase
illegal or otherwise prohibited.
9.2. Effect of Termination. Upon any termination of this Agreement
pursuant to Section 9.1, none of the parties shall have any liability or
obligation to the others arising out of this Agreement except for any liability
arising from a party's breach of this Agreement prior to such termination;
provided that (a) if this Agreement shall be terminated after the occurrence of
a Closing and prior to the occurrence of one or more other Closing, this
Agreement shall remain in effect except with respect to the transactions
contemplated to occur after the date of such termination, (b) the termination
of this Agreement by a party or parties as a result of the failure or refusal
of another party or parties to close all or any part of the transactions
contemplated by Section 1.1 when and as required by this Agreement shall not
relieve the defaulting party or parties from any liability for such failure or
refusal to close (except that a termination resulting from the failure by the
Purchaser to consummate the purchase of the Third Shares, Fourth Shares, Fifth
Shares, Sixth Shares, or Final Shares shall relieve the Purchaser from such
liability and shall be the sole remedy for such failure), and (c) in any case,
the provisions of Sections 7.2, this Section 9.2, and Articles VIII and X shall
survive such termination.
X Miscellaneous
10.1. Further Actions. At any time and from time to time, each party
agrees, at its or his expense, to take such actions and to execute and deliver
such documents as may be reasonably necessary to effectuate the purposes of this
Agreement.
10.2. Availability of Equitable Remedies. Since a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, any party shall be entitled, either before or after the Closing, in
addition to any other right or remedy available to it, to an injunction
restraining such breach or a threatened breach and to specific performance of
any such provision of this Agreement, and in either case no bond or other
security shall be required in connection therewith, and the parties hereby
consent to the issuance of such an injunction and to the ordering of specific
performance.
10.3. Modification. This Agreement and the Exhibits hereto set forth
the entire understanding of the parties with respect to the subject matter
hereof, supersede all existing agreements among them
13
concerning such subject matter, and may be modified only by a written
instrument duly executed by each party.
10.4. Notices. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be mailed by certified
mail, return receipt requested, or by Federal Express, Express Mail, or similar
overnight delivery or courier service, or delivered (in person or by telecopy,
telex, or similar telecommunications equipment) against receipt to the party to
whom it is to be given,
(a) if to the Company or Pandey, at
Xechem International, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Purchaser,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 10.4. Any notice or other
communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
will be deemed given at the time of receipt thereof. Any notice given by other
means permitted by this Section 10.4 shall be deemed given at the time of
receipt thereof.
10.5. Waiver. Any waiver by any party of a breach of any term of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that term or of any breach of any other term of this Agreement. The
failure of a party to insist upon strict adherence to any term of this
Agreement on one or more occasions will not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term
or any other term of this Agreement. Any waiver must be in writing.
10.6. Binding Effect. No party may sell, assign, transfer, or
otherwise convey any of its or his rights or delegate any of its or his duties
under this Agreement, except as hereinafter provided, and this Agreement shall
be binding upon and inure to the benefit of the parties hereto and the
respective permitted successors, assigns, and personal representatives of the
parties. Notwithstanding the foregoing, the Purchaser may assign its rights and
delegate its obligations to purchase any of the Shares to any person or
persons, provided that (a) such person or persons agree to be bound by this
Agreement and the Stockholders Agreement as if such person or persons were the
Purchaser, including, without limitation, that each such person shall make
representations with respect to himself or itself similar to those made by the
Purchaser herein, (b) each such person shall be reasonably acceptable to the
Company (the Company hereby agreeing that The ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Trust and ▇▇▇▇
▇▇▇▇▇▇▇ are reasonably acceptable assignees), and (c) no such assignment or
delegation shall relieve the Purchaser of its obligations to
14
purchase any such shares if such assignee does not. Any attempted sale,
assignment, transfer, conveyance, or delegation in violation of this Section
10.6 shall be void. The provisions of this Agreement shall inure to the benefit
of each indemnified party and its successors and assigns (if not a natural
person) and his assigns, heirs, and personal representatives (if a natural
person).
10.7. No Third Party Beneficiaries. This Agreement does not create,
and shall not be construed as creating, any rights enforceable by any person not
a party to this Agreement (except as provided in Section 10.6).
10.8. Separability. If any provision of this Agreement is invalid,
illegal, or unenforceable, the balance of this Agreement shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
10.9. Headings. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
10.10. Counterparts; Governing Law. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. It shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to conflict of laws.
15
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first written above.
XECHEM INTERNATIONAL, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇
16