EXHIBIT 10.12
CONVERTIBLE NOTE PURCHASE AGREEMENT
March 16, 1998
SBC Warburg Dillon Read Inc.
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Dear Sirs:
Columbia Laboratories, Inc. (the "Company") wishes to confirm its
arrangement with you in connection with the issuance to you today, against
payment in immediately available funds of the purchase price of 00.0% of the
principal amount thereof, of a convertible subordinated note in the form
attached hereto as Annex IV (the "Convertible Note"), in the aggregate principal
amount of $10,000,000 and convertible initially into 628,931 fully paid and
non-assessable shares (the "Shares", and together with the Convertible Note,
the "Securities") of the Company's Common Stock, par value $.Ol per share (the
"Common Stock"), subject to adjustment as set forth in the Convertible Note. In
consideration of your purchase of the Convertible Note, the Company will pay to
you, in immediately available funds, a fee of 3.0% of the principal amount
thereof, which shall be netted against the purchase price of the Convertible
Note.
Simultaneously with the issuance of the Convertible Note pursuant to this
Agreement, you and the Company have entered into a Registration Rights
Agreement, dated as of the date hereof (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to register the Shares under certain
circumstances. All capitalized terms not defined herein shall have the meaning
ascribed in the Convertible Note.
1. AGREEMENT TO ISSUE AND ACCEPT. On the basis of the representations and
warranties and subject to the terms and conditions set forth herein, the
Company agrees to issue to you, and you agree to accept from the Company,
the Convertible Note against payment of the above-specified purchase price
therefor. The closing of the issuance and acceptance of the Convertible Note
against such payment shall take place on the date hereof, at which time the
Company shall deliver to you a certificate representing the Convertible Note,
against delivery by you of a wire transfer of the
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purchase price to the Company's account No. 2090001613844 at First Union
National Bank, ABA #▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, Attention: Coconut Grove
Branch, Account Name: Columbia Laboratories, Inc.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby makes
the representations and warranties to you set forth on Annex I hereto.
3. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants that:
(a) It is purchasing the Securities for its own account, for
investment purposes only and not with a view towards or in connection with
the public sale or distribution thereof in violation of the Securities Act
of 933 (the "Act").
(b) It is (i) an "accredited investor" within the meaning of Rule 501
of Regulation D under the Act, (ii) experienced in making investments of
the kind contemplated by this Agreement, (iii) capable, by, reason of its
business and financial experience, of evaluating the relative merits and
risks of an investment in the Securities, and (iv) able to afford the loss
of its investment in the Securities.
(c) It understands that the Securities are being offered and sold by
the Company in reliance on an exemption from the registration requirements
of the Act and equivalent state securities and "blue sky" laws, and that
the Company is relying upon the accuracy of, and the Purchaser's compliance
with, its representations, warranties and covenants set forth in this
Agreement to determine the availability of such exemption and the
Purchaser's eligibility to purchase the Securities;
(d) It acknowledges that it has been furnished with copies of the
Company's Exchange Act Reports (as defined below).
(e) It acknowledges that in making its decision to purchase the
Securities the Purchaser has been given an opportunity to ask questions of
and to receive answers from the Company's executive officers, directors and
management personnel concerning the terms and conditions of the private
placement of the Securities by the Company.
(f) It understands that the Securities have not been approved or
disapproved by the Securities and Exchange Commission or any state
securities commission and that the foregoing authorities have not reviewed
any documents or instruments in connection with the offer and sale to the
Purchaser
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of the Securities and have not confirmed or determined the adequacy or
accuracy of any such documents or instruments.
(g) This Agreement and the Registration Rights Agreement have been
duly and validly authorized, executed and delivered by the Purchaser and
are valid and binding agreements of it enforceable against it in accordance
with their terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally.
4. AGREEMENTS OF PURCHASER. You covenant and agree with the Company that:
(a) You will not offer, sell, assign, hypothecate or otherwise
transfer the Convertible Note except (i) pursuant to an effective
registration statement under the Act, (ii) to a person you reasonably
believe to be an "accredited investor" within the meaning of Rule 501 under
the Act, pursuant to an available exemption under the Act or (iii) in
offshore transactions within the meaning and meeting the requirements of
Rule 903 under the Act.
(b) You will not offer, sell, assign, hypothecate or otherwise
transfer any Shares issued upon conversion of the Convertible Note except
(i) pursuant to an effective registration statement under the Act; (ii) to
a person you reasonably believe to be an "accredited investor" within the
meaning of Rule 501 under the Act, pursuant to an available exemption under
the Act or (iii) irl an offshore transaction within the meaning and meeting
the requirements of Rule 903 under the Act.
5. CONDITIONS. Your obligations under this Agreement shall be subject to
the condition that all representations and warranties and other statements of
the Company herein are true and correct at and as of the closing of the purchase
and sale of the Convertible Note, the condition that the Company shall have
performed all of its, obligations hereunder theretofore to be performed, and the
following additional conditions:
(a) Counsel for the Company specified in Annex 11 hereto shall have
furnished to you their respective written opinions, dated the date of such
closing, in form and substance satisfactory to you, to the effect set forth
in Annex 11 hereto.
(b) On the date of such closing, the Company shall have furnished to
you such appropriate further information, certificates and documents as you
may reasonably request.
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6. MISCELLANEOUS.
(a) This Agreement shall be binding upon, and inure solely to the benefit
of, you and the Company and the respective executors, administrators, successors
and assigns; thereof, and no other person shall acquire or have any right under
or by virtue of this Agreement. No purchaser of the Convertible Note from you
shall be deemed a successor or assign by reason merely of such purchase.
(b) Any notice or other communication required or permitted to be given
hereunder may be given by personal delivery, transmitted by facsimile, sent by,
nationally-recognized overnight courier or mailed by, pre-paid certified mail,
return receipt requested, or may be given by telephone when confirmed in writing
by one of the preceding methods addressed as follows (as applicable):
If to the Company, to:
Columbia Laboratories, Inc.
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile Transmission Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to SBC Warburg Dillon Read Inc., to:
SBC Warburg Dillon Read Inc.
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Attention: General Counsel Capital Markets
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or number arid to the attention of such other person as
either party may designate by written notice to the other party. Any notice or
other communication required or permitted hereunder shall be effective only upon
actual receipt, in the case of personal delivery facsimile transmission,
overnight courier or
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certified mail, or upon actual receipt of written confirmation, in the case of
notice by telephone.
(c) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(d) Time shall be of the essence in the performance of this Agreement.
(e) This Agreement may be executed by the parties hereto in any number of
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
Very truly yours,
COLUMBIA LABORATORIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Accepted as of the date hereof:
SBC Warburg Dillon Read Inc.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
Convertibles
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ANNEX I
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
(a) Each of the Comapny's Annual Report on Form 1O-K for the year ended
December 31, 1997, and each report filed by the Company pursuant to the Exchange
Act after the filing of such Annual Report on Form 1O-K (collectively, the
"Exchange Act Reports") conformed in all material respects when it was filed
with the requirements of the Exchange Act and the rules and regulations of the
Securities and Exchange Commission thereunder; and no such document, when it was
filed (or, if an amendment with respect to any such document was filed, when
such amendment was filed), contained any untrue statement of a materila fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) All the outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid, non-assesable and not
subject to any preemptive or similar rights; the Shares initially issuable upon
conversion of the Convertible Note have been duly and validly authorized and
reserved for issuance out of the Company's authorized and unissued shares of
Common Stock and, when issued and delivered on conversion in accordance with the
provisions of the Convertible Note, will be duly and validly issued, fully paid
and non-assesable and will conform to the description of the Common Stock
contained in Annex III to this Agreement.
(c) The Convertible Note has been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed, issued and
delivered and will constitute a valid and legally binding obligation of the
Company; and the Registration Rights Agreement has been duly authorized and,
when executed and delivered by the parties thereto, will constitute a valid and
legally binding obligation of the Company, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(d) The execution, delivery and performance of this Agreement, the
Registration Rights Agreement and the Convertible Note, compliance by the
Company with all provisions hereof and thereof and the consummation of the
transactions contemplated hereby and the issuance and delivery of the
Convertible Note will not conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the charter or by-laws of the
Comapny or any of its subsidiaries, or any material agreement, indenture or
other instrument to which it or any of its subsidiaries is a party or by which
it or any of its subsidiaries or their respective properties are bound, or
violate or conflict with any laws, administrative regulations or rulings or
court decrees applicable to the Company, any of its subsidiaries; or their
respective property in any case which is reasonably likely to have a material
adverse effect on the
business, condition (financial or otherwise, stockholders' equity, properties or
results of operations of the Company and its subsidiaries, taken as a whole;
and, except (i) as required pursuant to the Registration Rights Agreement, or
(ii) for the disclosure required to be included in the Comapny's next
Quarterly Report on Form 10-Q, when filed, pursuant to Item 2(c) of Form
10-Q, no consent, approval, authorization or order of or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement, the Registration
Rights Agreement and the Convertible Note by the Company and the consummation of
the transactions contemplated hereby and thereby.
(e) Except as otherwise set forth in the Exchange Act Reports, there are no
material legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any of their respective property is
the subject which, if determined adversely to the Company or its subsidiaries,
might have a Material Adverse Effect, and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated.
(f) The Company is not, and the Company covenants that at any time when the
Convertible Note is outstanding it will not be, an open-end investment company,
unit investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the United States Investment Company Act of
1 940, as amended.
(g) When the Convertible Note is issued and delivered pursuant to this,
Agreement, the Convertible Note will not be of the same class (within the
meaning of Rule 144A under the Securities Act of 1933) as securities which are
listed on a national securities exchange registered under Section (3 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation system.
(h) The Company is, and the Company covenants that while the Convertible
Note is outstanding it will remain, subject to Section 13 or 15(d) of the
Exchange Act.
(i) Neither the Company nor any person acting on its behalf has offered or
sold the Convertible Note by means of any general solicitation or general
advertising within the meaning of Rule 502(c) under the Act.
ANNEX II
OPINION OF COMPANY COUNSEL
(a) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of incorporation
and has the corporate power and authority required to carry on its business and
to own, lease and operate its properties as described in the Exchange Act
Reports.
(b) All the outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid, non-assessable and not subject
to any preemptive or similar rights.
(c) The Shares initially issuable upon conversion of the Convertible
Note have been duly authorized and reserved for issuance and when issued and
delivered upon conversion in accordance with the provisions of the Convertible
Note, will have been validly issued and will be fully paid and non-assessable,
and the issuance of such Shares is not subject to any preemptive or similar
rights.
(d) This Agreement has been duly authorized, executed and delivered by
the Company.
(e) The Convertible Note has been duly authorized, executed, issued and
delivered, and constitutes the valid and legally binding obligation of the
Company enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(f) The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and legally
binding agreement of the Company, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; provided that such counsel
need express no opinion with respect to Section 6 of such Agreement.
(g) The authorized capital stock of the Company, including the Common
Stock, conforms as to legal matters to the description thereof contained in the
Annex III of this Agreement.
(h) Except (i) as required pursuant to the Registration Rights
Agreement, or (ii) for the disclosure required to be included in the Company's
next Quarterly Report on Form 10-Q, when filed, pursuant to Item 2(c) of Form
10-Q, or (iii) Federal and state securities or Blue Sky laws, as to which no
opinion is expressed, no consent,
approval, authorization or order of, or filing or registration with, any court
or New York, Delaware or Federal governmental agency or body is required for the
execution, delivery and performance of this Agreement, the Registration Rights
Agreement and the Convertible Note by the Company and the consummation of the
transactions contemplated by this Agreement and thereby.
(i) The execution, delivery and performance of this Agreement, the
Registration Rights Agreement and the Convertible Note by the Company,
compliance by the Company with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will not
conflict with or constitute a breach of any of the terms or provisions of, or a
default under, the charter or by-laws of the Company or any material agreement,
indenture or other instrument to which the Company is a party or by which the
Company or its properties are bound, or violate or conflict with any New York,
Delaware corporate of Federal law or administrative regulation (other than
Federal and state securities or Blue Sky laws, as to which no opinion is
expressed), or court decree applicable to the Company or its properties of which
such counsel is aware, in any case which is reasonably likely to have a Material
Adverse Effect.
(j) The Company is not an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be registered
under Section 8 of the United States Investment Company Act of 1940, as amended.
ANNEX III
DESCRIPTION OF COMNION STOCK
The holders of Common Stock are entitled to one vote for each share of
such stock held of record by them and may not cumulate votes. This means that
the holders of more than 50% of the shares; voting for the election of
directors can elect all of the directors if they choose to do so; and, in such
event, the holders of the remaining shares will not be able to elect any person
to -the Board of Directors. The holders of Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out of funds
legally available therefor, subject to the prior rights of preferred
stockholders, if any, and in the event of liquidation, dissolution or winding up
of the Company, to share ratably in all assets remaining after payment of
liabilities and after payment of any preferential amounts to which holders of
preferred stock are entitled. Holders of shares Common Stock, as such,
have no conversion, preemptive or other subscription rights, and there are no
redemption or sinking fund provisions applicable to the Common Stock.
THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON ITS CONVERSION HAVE
NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT AND IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UUNITED STATES AND OTHER JURISDICTIONS.
COLUMBIA LABORATORIES, INC.
7 1/8% CONVERTIBLE SUBORDINATED NOTE DUE MARCH 15, 2005
No. R-1 $10,000,000
Columbia Laboratories, Inc., a corporation duly organized and existing
under the laws of the state of Delaware (the "Company") for value received,
hereby promises to pay to SBC Warburg Dillon Read Inc., or registered assigns,
the principal sum of Ten Million Dollars ($10,000,000) on March 15, 2005 and to
pay interest thereon, from March 16, 1998, or from the most recent interest
payment date to which interest has been paid or duly provided for, semi-annually
on March 15 and September 15 in each year, commencing September 15, 1998 at the
rate of 7 1/8% per annum, until the principal hereof is due, and at the rate of
7 1/8% per annum on any over due principal and premium, if any, and, to the
extent permitted by law, on any overdue interest. The interest so payable, and
punctually paid or duly provided for, on any interest payment date will be paid
to the person in whose name this Security (or on or more predecessor Securities)
is registered at the close of business on the regular record date for such
interest, which shall be the March 1 or September 1 (whether or not a business
day), as the case may be next preceding such interest payment date. Payment of
the principal of (and premium, if any, on) this Security shall be made upon the
surrender of this Security to the Company, at its office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or such other office within the United States as
shall be notified by the Company to the holder hereof) (the "Designated
Office"), in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, by transfer to a U.S. dollar account maintained by the payee with a the
payee with a bank in the United States of America. Payment of interest on this
Security may be made by U.S. dollar check mailed to the address of the person
entitled thereto as such address shall appear in the Company security register,
or, upon written application by the holder to the Company setting forth wire
instructions not later ,than the relevant record date, by transfer to a U.S.
dollar account (such a transfer to be made only if the holder shall have
furnished wire instructions in writing to the Company no later than 15 days
prior to the relevant payment date) maintained by the payee with a bank in the
'United States of America.
1. REDEMPTION. This Security is subject to redemption upon not less
than 30 nor more than 60 days' notice by mail, at any time on or after March 15,
2001, as a whole or in part (in
any amount that is an integral multiple of $1000) at the election
of the Company, at a redemption price of 100% the principal amount
thereof, together with accrued interest to the redemption date.
2. CONVERSION. (a) The holder of this Security is entitled at any time
and before the close of business on March 15, 2005 (or, in case this Security or
a portion hereof is called for redemption or the holder hereof has exercised his
right to require the Company to repurchase this Security or a portion hereof,
then in respect of this Security or such portion hereof, as the case may be,
until and including, but (unless the Company default in making the payment due
upon redemption or repurchase, as the case may be) not after, the close of
business on the redemption date or the Repurchase Date, as the case may be) to
convert this Security (or any Portion of the principal amount hereof that is an
integral multiple of $1,000), into fully paid and nonassessable shares
(calculated as to each conversion to the nearest 1/100 of a share) of Common
Stock of the Company), at the rate of 62.8931 shares of Company Stock for each
$1,000 principal amount of Security (or at the current adjusted rate if an
adjustment has been made as provided below) (the "Conversion Rate") by surrender
of this Security, duly endorsed or assigned to the Company or in blank to the
Company at the Designated Office, accompanied by written notice to the Company
that the holder hereof elects to convert this Security (or if less than the
entire principal amount hereof is to be converted, specifying the portion hereof
to be converted). Upon surrender of this Security for conversion, the holder
will be entitled to receive the interest accruing on the principal amount of
this Security then being converted from the interest payment date next preceding
the date of such conversion to such date of conversion. No payment or adjustment
is to be made on conversion for dividend on the Common Stock issued on
conversion hereof. No fractions of shares or scrip representing fraction of
shares will be issued on conversion, but instead of any fractional interest, the
Company shall pay cash adjustment, computed on the basis of the Closing price of
the Common Stock on the date of conversion, or, at its option, the Company shall
round up the next higher whole share.
(b) The Conversion Rate shall be subject to adjustments from time to
time as follows:
(1) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company payable in shares
of Common Stock, the Conversion Rate in effect at the opening of business
on the day following the Determination Date for such dividend or other
distribution shall be increased by dividing such Conversion Rate by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on such Determination Date and
the denominator shall be the sum of such number of shares and the total
number of shares constitution such dividend or other distribution, such
increase to become effective immediately after the opening of business on
the day following such Determination Date. For the purposes of this
paragraph (1), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall
include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company will not pay any dividend
or make any distribution on shares of Common Stock field in the treasury of
the Company.
(2) Subject to the last sentence of paragraph (7) of this Section
2(b), in case the Company shall issue rights, options or warrants to all
holders of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the current market
price per share (determined as provided in paragraph (8) of this Section
2(b)) of
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the Common Stock on the Determination Date for such distribution (other
than Common Stock issued pursuant to employee stock option or stock
incentive plans), the Conversion Rate in effect at the opening of business
on the (lay following such Determination Date shall be increased by
dividing such Conversion Rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business
on such Determination Date plus the number of shares of Common Stock which
the aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on such Determination
Date plus the number of shares of Common Stock so offered for subscription
or purchase, such increase to become effective immediately after the
opening of business on the day following such Determination Date. For the
purposes of this paragraph (2), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not
issue any rights, options or warrants in respect of shares of Common Stock
held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Rate in
effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common Stock, the Conversion
Rate in effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately reduced,
such increase or reduction, as the case may be, to become effective
immediately after the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(4) Subject to the last sentence of paragraph (7) of this 2(b), in
case the Company shall, by dividend or otherwise, distribute to all holders
of its Common Stock evidences of its indebtedness, shares of any class of
capital stock, or other property (including securities, but excluding (i)
any rights, options or warrants referred to in paragraph (2) of this
Section 2(b) (ii) any dividend or distribution paid exclusively in cash,
(iii) any dividend or distribution referred to in paragraph (1) of this
Section 2(b) and (iv) any merger or consolidation to which Section 2(h)
applies), the Conversion Rate shall be adjusted so that the same shall
equal the rate determined by dividing the Conversion Rate in effect
immediately prior to the close of business on the Determination Date for
such distribution by a fraction of which the numerator shall be, the
current market price per share (determined as provided in paragraph (8) of
this Section 2(b)) of the Common Stock on such Determination Date less the
then fair market value (as determined in good faith by the Board of
Directors of the Company) of the portion of the assets, shares or evidences
of indebtedness so distributed applicable to one share of Common Stock and
the denominator shall be such current market price per share of the Common
Stock, such adjustment to become effective immediately prior to the opening
of business on the day following such, Determination ]Date. If the Board of
Directors determines the fair market value of any distribution for purposes
of this paragraph (,4) by reference to the actual or when issued trading
market for any securities comprising such distribution, it must in
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doing so consider the prices in such market over the same period used in
computing the current market price per share pursuant to paragraph (8) of
this Section 2(b).
(5) In case the Company shall, by dividend or otherwise, make a (,ash
Distribution, then, and in each such case, immediately after the close of
business on the Determination Date for such Cash Distribution, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by dividing the Conversion Rate in effect immediately prior to
the close of business on such Determination Date by a fraction (a) the
numerator of which shall be equal to the current market price per share
(determined as provided in paragraph (8) of this Section 2(b)) of the
Common Stock on such Determination Date less an, amount equal to the
quotient of (1) the amount of such Cash Distribution divided by (2) the
number of shares of Common Stock outstanding on such Determination Date and
(b) the denominator of which shall be equal to the current market price per
share (determined as provided by paragraph (8) of this Section 2(b)) of the
Common Stock on such Determination Date.
(6) In case the Company or any Subsidiary shall make an Excess
Purchase Payment, then, and in each such case, immediately prior to the
opening of business on the day after the tender offer in respect of which
such Excess Purchase Payment is to be made expires, the Conversion Rate
shall be adjusted so that the same shall equal the rate determined by
dividing the Conversion Rate in effect immediately prior to the close of
business on the Determination Date for such tender offer by a fraction (a)
the numerator of which shall be equal to the product of (A) the number of
shares of Common Stock outstanding (including any tendered shares) at such
Determination Date less (B) the amount of such Excess Purchase Payment and
(b) the denominator of which shall be equal to the product of (X) the
current market price per share of the Common Stock (determined as provided
in paragraph (8) of this Section 2(b) as of such Determination Date
multiplied by (Y) the number of shares of Common Stock outstanding
(including any tendered shares) as of the Determination Date less the
number of all shares validly tendered and not withdrawn as of the
Determination Date.
(7) The reclassification of Common Stock into securities other than
Common Stock (other than any reclassification upon a consolidation or
merger to which Section 2(h) applies) shall be deemed to involve (a) a
distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be
deemed to be the Determination Date), and (b) a subdivision or combination,
as the case may be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of shares of
Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination
becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of
paragraph (3) of this Section 2(b)). Rights or warrants issued by the
Company to all holders of its Common Stock entitling the holders thereof to
subscribe for or purchase shares of Common Stock, which rights or warrants
(i) are deemed to be transferred with such shares of Common Stock, (ii) are
not exercisable and (iii) are :also issued in respect of future issuances
of Common Stock, in each case in clauses (i) through (iii) until the
occurrence of a specified event or events ("Trigger Event"), shall for
purposes of this Section 2(b) not be deemed issued until the occurrence of
the earliest Trigger Event.
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(8) For the purpose of any computation under paragraphs (2), (4), (5)
or (6) of this Section 2(b) the current market price per share of Common
Stock on any date shall be calculated by the Company and be deemed to be
the average of the daily Closing Prices for the five consecutive Trading
Days selected by the Company commencing not more than 10 Trading Days
before, and ending not later than, the earlier of the day in question and
the day before the "ex" date with respect to the issuance or distribution
requiring such computation. For purposes of this paragraph, the term "ex"
date, when used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way in the applicable
securities market or on the applicable securities exchange without the
right to receive such issuance or distribution.
(9) No adjustment in the Conversion Rate shill be required unless such
adjustment (plus any adjustments not previously made by reason of this
paragraph (9)) would require an increase or decrease of at least one
percent in such rate; PROVIDED, HOWEVER, that any adjustments which by
reason of this paragraph (9) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 2 shall be made to the nearest cent or to
the nearest hundredth of a share, as the case may be.
(10) The Company may make such increases in the Conversion Rate, for
the remaining term of the Securities or any shorter term in addition to
those required by paragraph (10, (2), (3), (4), (5) and (6) of this Section
2(b) as it considers to be advisable in order to avoid or diminish any
income tax to any holders of shares of Common Stock resulting from any
dividend or distribution of stock or issuance of rights or warrants to
purchase or subscribe for stock or from any event treated as such for
income tax purposes.
(11) In addition to the foregoing adjustments, as of the opening of
business on the reset Date, the Conversion Rate will be adjusted to equal
$1,000 divided by the product of 1.20 and the average Closing Price of the
Common Stock for the immediately preceding five Trading Days, provided that
such Conversion Rate computed pursuant to this paragraph (11) shall not be
less than 52.4109 nor exceed 78.6164. The adjustment required pursuant to
this paragraph (11) will not be subject to the limitation set forth in
paragraph (9) of this Section 2(b). Upon surrender of this Security to the
Company at any time after the Reset Date, the Company will issue in
exchange a new Security of like tenor and principal amount, but restated to
reflect the new Conversion Rate.
(c) Whenever the Conversion Rate is adjusted as provided in Section
2(b), the Company shall compute the adjusted Conversion Rate in accordance with
Section 2(b) and shall prepare a certificate signed by the chief financial
officer of the Company setting forth the adjusted Conversion Rate and showing in
reasonable detail the facts upon which such adjustment is based, and shall
promptly deliver such certificate to the holder of this Security.
(d) In case:
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(1) the Company shall declare a dividend or other distribution on its
Common Stock payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require any adjustment pursuant
to Section 2(b); or
(2) the Company shall authorize the granting to the holders of its
Common Stock of rights, options or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights (other than
Common Stock issued pursuant to employee stock option or stock incentive
plans); or
(3) of any reclassification of the Common Stock of the Company, or of
any consolidation, merger or share exchange to which the Company is a party
and for which approval of any shareholders of the Company is required, or
of the conveyance, sale, transfer or lease of all or substantially all of
the assets of the Company; or
(4) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(5) the Company or any Subsidiary shall commence a tender offer for
all or a portion of the Company's outstanding shares of Common Stock (or
shall amend any such tender offer);
then the Company shall cause to be delivered to the holder of this Security, at
least 20 days (or 10 days in any case specified in clause (1) OR (2) above)
prior to the applicable record, expiration or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights, options or warrants, or, if
a record is not to be taken, the date as of which the holders of Common-Stock of
record to be entitled to such dividend, distribution,, rights, options or
warrants are to be determined, (y) the date on which the right to make tenders
under such tender offer expires or (z) the date on which such reclassification,
consolidation, merger, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cahs or other property
deliverable upon such reclassification, consolidation, merger, conveyance
transfer, sale, lease, dissolution, liquidation or winding up. Neither the
failure to give such notice nor any effect therein shall effect the legality or
validity of the proceedings described in clauses (1) through (5) of this Section
2(d).
(e) The Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Security, the full number of shares
of Conunon Stock then issuable upon the conversion of this Security.
(f) Except as provided in the next sentence, the Company will pay any
and all taxes and duties that may be payable in respect of the issue or delivery
of shares of Common Stock on conversion of the Security. The Company shall not,
however, be required to pay any tax or duty which may be payable in respect of
any transfer involved in the issue and delivery of shares of Common Stock in a
name other than that of the holder of this Security, and no such issue or
delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of
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any such tax or duty, or has established to the satisfaction of the Company that
such tax or duty has been paid.
(g) The Company agrees that all shares of Common Stock which may be
delivered upon conversion of the Security, upon such delivery, will have been
duly authorized and validly issued and will be fully paid and nonassessable (and
shall be issued out of the Company's authorized but unissued Common Stock) and,
except as provided in Section 2(f), the Company will pay all taxes, liens and
charges with respect to the issue thereof.
(h) In case of any consolidation of the Company with any other person,
any merger of the Company into another person or of another person into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company) or any conveyance, sale, transfer or lease of all or substantially
all of the properties and assets of the Company, the person formed by such
consolidation or resulting from such merger or which acquires such properties
and assets, as the case may be, shall execute and deliver to the holder of this
Security a supplemental agreement providing that such holder have the right
thereafter, during the period this Security shall be convertible as specified in
Section 2(a), to convert this Security only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer or lease (including any Common Stock retainable) by a
holder of the number of shares of Common Stock of the Company into which this
Security might have been converted immediately prior to such Consolidation,
merger, conveyance, sale, transfer or lease, assuming such holder of Common
Stock of the Company (i) is not a person with which the Company consolidated,
into which the Company merged or which merged into the Company or to which such
conveyance, sale, transfer or lease was made as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease PROVIDED that if the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer, or lease is not the same for each share of Common Stock of the Company
held immediately prior to such consolidation, merger, conveyance, sale, transfer
or lease by others than a Constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised
("Non-electing share"), then for the purpose of this Section 2(h) the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance, sale, transfer or lease by the holders of
each Non-electing Share shall be deemed to be the kind and amount so receivable
per share by a plurality of the Non-electing Shares). Such supplemental
agreement shall provide for adjustments which, for events subsequent to the
effective date of such supplemental agreement, shall be is nearly equivalent as
may be practicable to the adjustments provided for in this Section 2. The above
provisions of this Section 2(h) shall similarly apply to successive
consolidations, mergers, conveyances, sales, transfers or leases. In this
paragraph, "securities of the kind receivable" upon such consolidation, merger,
conveyance, transfer, sale or lease by a holder of Common Stock means securities
that, among other things, are registered and transferable under the Securities
Act, and listed and approved for quotation in all securities markets, in each
case to the same extent as such securities so receivable by a holder of Common
Stock.
(i) The Company (i) will effect all registrations with, and obtain all
approvals by, all governmental authorities that may be necessary under any
United States Federal or state law (including
-7-
the Securities Act of 1933, the Securities Exchange Act of 1934 and state
securities and Blue Sky laws) for the shares of Common Stock issuable upon
conversion of this Security to be lawfully issued and delivered as provided
herein, and thereafter publicly traded (if permissible under such Securities
Act) and qualified or listed as contemplated by clause (ii) (it being understood
that the Company shall not be required to register the Common Stock issuable in
conversion hereof under the Securities Act, except pursuant to the Registration
Rights Agreement between the Company and the initial holder of this Security);
and (ii) will list the shares of Common Stock required to be issued and
delivered upon conversion of Securities, prior to such issuance or delivery, on
each national securities exchange on which outstanding Common Stock is listed or
quoted at the time of such delivery, or if the Common Stock is not then listed
on any securities exchange, to qualify the Common Stock for quotation on the
NASDAQ National Market or such other inter-dealer quotation system, if any, on
which the Common Stock is then quoted.
(j) For purposes hereof:
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect controlling
control with such specified person. For the purposes of this definition,
"control", when used with respect to any specified person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Cash Distribution" means the distribution by the Company to all
holders of its Common Stock of cash, other than (A) any cash that is distributed
upon a merger or consolidation to which Section 2(h) applies or as part of a
distribution referred to in paragraph (4) of Section 2(b), or (B) any quarterly
cash dividend on the Company's outstanding Common Stock if the annualized per
share amount thereof does not exceed 2% of the Closing Price of the Common Stock
on the Trading Day immediately preceding the date of declaration thereof, or (C)
any cash dividend on preferred stock of the Company issued and outstanding on
March 16, 1998 in accordance with the terms of such preferred stock as in effect
on such date.
"Closing Price" means with respect to the Common Stock of the Company,
for any day, the reported last sale price per share on the American Stock
Exchange, or, if the Common Stock is not listed on the American Stock Exchange,
on the principal national securities exchange or interdealer quotation system on
which the Common Stock is listed or admitted to trading, or if not listed or
admitted to trading on any national securities exchange or inter-dealer
quotation system, the average of the closing bid and asked prices per share in
the Over-the-counter market as furnished by any New York Stock Exchange member
firm selected from time to time by the Company for that purpose.
"Common Stock" means the: Common Stock, par value $.Ol per share, of
the Company authorized at the date of this instrument as originally executed.
Subject to the provisions of Section 2(h), shares issuable on conversion or
repurchase of this Security shall include only shares of Common Stock or shares
of any class or classes of common stock resulting from any reclassification or
reclassifications thereof; PROVIDED, HOWEVER, that if at any time there shall be
more than one such resulting class, the shares so issuable on conversion of this
Security shall include shares of all such classes, and the shares of each such
class then so issuable shall be substantially in the proportion which
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the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
"Determination Date" means, in the case of a dividend or other
distribution, including the issuance of rights, options or warrants, to
shareholders, the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution and, in the case of a tender offer,
the last time that tenders could have been made pursuant to such tender offer.
"Excess Purchase Payment" means the excess, if any, of (i) the amount
of cash plus the fair market value (as determined in good faith by the Company's
Board of Directors) of any non-cash consideration required to be paid with
respect to one share of Common Stock acquired or to be acquired in a tender
offer made by the Company or any subsidiary of the Company for all or any
portion of the Common Stock over (ii) the current market price per share as of
the last time that tenders could have been made pursuant to such tender offer.
"Reset Date" means the day immediately following the period of five
Trading Days beginning on April 16, 1998 (or if April 16, 1998 is not a Trading
Day, beginning, on the next Trading Day thereafter).
"Trading Day" means (i) if the Common Stock is listed or admitted for
trading on the American Stock Exchange or any other national securities
exchange, a day on which such exchange is open for business; (ii) if the Common
Stock is not so listed but is admitted to trading on the NASDAQ National Market
or any other system of automated dissemination of quotations of securities
prices, a day on which trades may be effected through such system; or (iii) if
the Stock is not listed or admitted for trading on any national securities
exchange or admitted on the NASDAQ National Market or any other system of
automated dissemination of quotation of securities prices, a day on which the
Common Stock is traded regular way in the over-the-counter market and for which
a closing bid and a closing asked price for the Common Stock are available
3. RIGHT TO REQUIRE REPURCHASE. (a) In the event that a Change in
Control (as hereinafter defined) shall occur, then the holder of its Security
shall have the right, at such holder's option, to require the Company to
repurchase, and upon the exercise of such right the Company shall repurchase,
this Security, or any portion of the principal amount hereof that is equal to
$1,000 or any integral multiple thereof, on the date (the "Repurchase Date')
that is 15 Trading Days after the date on which the Company gives notice thereof
to the holder of this Security, at a purchase price equal to 100% of the
principal amount of this Security to be repurchased) plus interest accrued to
the Repurchase Date (the "Repurchase Price"); PROVIDED, HOWEVER, that
installments of interest on this Security whose stated maturity is on or prior
to the Repurchase Date shall be payable to the holder of this Security, or one
or more predecessor Securities, registered as such on the relevant Record Date
according to their terms. At the option of die Company, the Repurchase Price may
be paid in cash or, subject to the fulfillment by the Company of the: conditions
set forth in Section 3(b), by delivery of shares of Common Stock having a fair
market value equal to the Repurchase Price as described in Section 3(b). The
Company agrees to give the holder of this Security notice of any Change in
Control (and specifying whether the Repurchase Price payable in respect of any
Securities tendered for repurchase will be paid in cash or by delivery of shares
of Common Stock), by facsimile transmission
-9-
confirmed in writing by overnight courier service, promptly and in any event
within two Trading Days of the occurrence thereof.
(b) The Company may elect to pay the Repurchase Price by delivery of
shares of Common Stock pursuant to Section 3(a), if and only if the following
conditions have been satisfied:
(1) The shares of Common Stock deliverable in payment of the
Repurchase Price shall have a fair market value as of the Repurchase Date of not
less than die Repurchase Price. For purposes of this Section 3(b), the fair
market value of shares of Common Stock shall be equal to 95 % of the average of
the Closing Prices for the five consecutive Trading Days ending on and including
the third Trading Day immediately preceding the Repurchase Date;
(2) In the event any shares of Common Stock to be issued upon
repurchase of this Security require registration under any Federal securities
law before such shares may be freely transferrable without being subject to any
transfer restrictions under the; Securities Act of 1933 upon issuance, such
registration shall have been completed and shall have become effective prior to
the Repurchase Date;
(3) In the event any shares of Common Stock to be issued upon
repurchase of this Security require registration with or approval of any
governmental authority under any State law or any other Federal law before such
shares may be validly issued or delivered upon repurchase, such registration
shall have been completed, have become effective anand such approval shall have
been been obtained, in each case, prior to the Repurchase Date;
(4) The shares of Common Stock deliverable in payment of the
Repurchase Price shall have been listed on the American Stock Exchange or
approved for quotation in the NASDAQ National Market immediately prior to the
Repurchase Date; and
(5) All shares of Common Stock deliverable in payment of the
Repurchase Price shall be issued out of the Company's authorized but unissued
Common Stock and will, upon issue, be duly and validly issued and fully paid and
non-assessable and free of any preemptive rights.
If all of the conditions set forth in this Section 3(b) are not
satisfied in accordance with the terms thereof, the Repurchase Price shall be
paid by the Company only in cash..
(c) To exercise a repurchase right, the holder shall deliver to the
Company on or before the tenth Trading Day prior to the Repurchase Date,
together with this Security, written notice of the holder's exercise of such
right, which notice shall set forth the name of the holder, the principal amount
of this Security to be repurchased (and, if this Security is to be repurchased
in part, the portion of the principal amount thereof to be repurchased and the
name of the person in which the portion thereof to remain outstanding after such
repurchase is to be registered) and a statement that an election to exercise the
repurchase right is being made thereby, and, if the Company notice of Change of
Control specified that the Repurchase Price is to be paid in shares of Common
Stock, the name or names (with addresses) in which the certificate or
certificates for shares of Common, on Stock shall be issued. Such written notice
shall be irrevocable, except that the right of the holder to convert this
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Security (or the portion hereof) with respect to which the repurchase right is
being exercised) shall continue until the close of business on the Repurchase
Date.
(d) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the holder
the Repurchase Price in cash or shares of Common Stock, as provided above, or,
if ▇▇▇▇▇▇ of Common Stock are to be paid, as promptly after the Repurchase Date
as practicable, together with accrued and unpaid interest to the Repurchase
Date; provided, however, that installments of interest that mature on or prior
to the Repurchase Date shall be payable in cash, to the holders of this
Security, or one or more predecessor Securities, registered as such at the close
of business on the relevant regular record date.
(e) If this Security (or portion thereof) is surrendered for
repurchase and is not so paid on or prior to the Repurchase Date (or if shares
of Common Stock are to be delivered, as promptly after the Repurchase Date as
practicable), the principal amount of this Security (or such portion hereof, as
the case may be) shall, until paid, bear interest to the extent permitted by
applicable law from the Repurchase Date at the rate per annum borne by this
Security, and shall remain convertible into Common Stock until the principal of
this Security (or portion thereof, as the case may be) shall have been paid or
duly provided for.
(f) If this Security is to be repurchased only in part, it shall be
surrendered to the Company at the Designated Office (with, if the Company so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company duly executed by, the holder hereof or his attorney
duly authorized in writing, and the Company shall execute and make available for
deliver to the holder without service charge, a new Security or Securities,
containing identical terms and conditions, each in an authorized denomination in
aggregate principal amount equal to and in exchange for the unrepurchased
portion of the principal of the Security so surrendered.
(g) Any issuance of shares of Common Stock in respect of the
Repurchase Price shall be deemed to have been effected immediately prior to the
close of business on the Repurchase Date and the person or persons in whose name
or names any certificate or certificates for shares of Common Stock shall be
issuable upon such repurchase shall be deemed to have become on the Repurchase
Date the holder or holders of record of the shares represented thereby;
PROVIDED, HOWEVER, that any surrender for repurchase on a date whether the stock
transfer books of the Company shall be closed shall constitute the person or
persons in whose name or names the certificate or certificates for such shares
are to be issued as the record holder or holders thereof for all purposes at the
opening of business on the next succeeding day on which such stock transfer
books are open. No payment or adjustment shall be made for dividends or
distributions on any Common Stock issued upon repurchase of this Security
declared prior to the Repurchase Date.
(h) No fractions of shares shall be issued upon repurchase of this
Security. Instead of any fractional share of Common Stock which would otherwise
be issuable on the repurchase of this Security, the Company will deliver to the
holder its check for the (current market value of such fractional share. The
current market value of a fraction of a share shall be determined by multiplying
the current market price of a full share by the fraction, and rounding the
result to the nearest cent. For purposes of this Section 3 the current market
price of a share of Common Stock shall be the Closing Price of the Common Stock
on the Trading Day immediately preceding the Repurchase Date.
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(i) Any issuance and delivery of certificates for shares of Common
Stock on repurchase of this Security shall be made without charge to the holder
of this Security for such certificates or for any tax or duty in respect of the
issuance or delivery of such certificates or the securities represented thereby;
PROVIDED, HOWEVER, that the Company shall not be required to pay any tax or duty
which may be payable in respect of any transfer involved in the issuance or
delivery of certificates for shares of Common Stock in a name other than that of
the holder of this Security, and no such issuance or delivery shall be made
unless and until the person requesting such issuance or delivery has paid to the
Company the amount of any such tax or duty or has established, to the
satisfaction of the Company, that such tax or duty has been paid.
(j) For purposes of this Section 3.
(1) the term "beneficial owner" shall be determined in accordance with
Rule 13d-3 promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934;
(2) a "Change in Control" shall be deemed to have occurred at the
time, after the original issuance of this Securities, of:
(i) the acquisition by any person of beneficial ownership, directly or
indirectly, through a purchase, merger or other acquisition transaction or
series of transactions, of shares of capital stock of the Company entitling
such person to exercise 50% or more of the total voting power of all shares
of capital stock of the Company entitled to vote generally in the elections
of directors (any shares of voting stock of which such person is the
beneficial owner that are not then outstanding being deemed outstanding for
purposes of calculating such percentage) other than any such acquisition by
the Company or any employee benefit plan of the Company; or
(ii) any consolidation or merger of the Company with or into, any
other person, any merger of another person with or into the Company, or any
conveyance, transfer, sale, lease or other disposition of all or
substantially all of the assets of the Company to another person (other
than (a) any such transaction (x) which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock and (y) pursuant to which holders of Common Stock
immediately prior to such transaction have the entitlement to exercise,
directly or indirectly, 50% or more of the total voting power of all shares
of capital stock entitled to vote generally in the election of directors of
the continuing or surviving person immediately after such transaction and
(b) any merger which is effected solely to change the jurisdiction of
incorporation of the Company and results in a reclassification, conversion
or exchange of outstanding shares of Common Stock into solely ,;hares of
common stock);
PROVIDED, HOWEVER, that a Change in Control shall not be deemed I-.() have
occurred if the Closing Price for any five Trading Days within the period of 10
consecutive Trading Days (x) ending immediately after the later of the date of
the Change in Control or the date of the public announcement of the Change in
Control (in the case of a Change in Control under Claus (ii) above) or (y)
ending immediately prior to the date of the Change in Control (in the case of a
Change in Control under
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Clause (ii) above) shall equal or exceed 105 % of the Conversion Price in effect
on each such Trading Day; and
(3) the term "Conversion Price" on any day shall equal $1,000 divided
by the Conversion Rate in effect on each such day.
4. EVENTS OF DEFAULT. (a) "Event of Default", wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be occasioned by the provisions of Section 6 or be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest upon this Security when it
becomes due and payable, and continuance of such default for a period of 30
days; or
(2) default by the Company in the performance of its obligations in
respect of any conversion of this Security (or any portion hereof) in
accordance with Section 2;
(3) failure by the Company to give any notice of a Change of Control
required to be delivered in accordance with Section 3(a); or
(4) default in the performance, or breach, of any material covenant or
warranty of the Company herein (other than a covenant or warranty a default
in the performance or breach of which is specifically dealt with elsewhere
in this Section 4(a) and continuance of such default or breach for a period
of 30 days after there has been given, by registered or certified mail, to
the Company by the holder of this Security a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(5) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company, or under any agreement,
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any indebtedness for money borrowed
by the Company, with a principal amount then outstanding in excess of
$5,000,000, whether such indebtedness now exists or shall hereafter be
created, which default shall constitute a failure to pay the principal of
such indebtedness (in whole or in any part greater than $5,000,000) when
due and payable or shall have resulted in such indebtedness (in whole or in
any pail greater than $5,000,000) becoming or being declared due and
payable prior to the date on which it would otherwise have become due and
payable, without such indebtedness having been discharged, or such
acceleration having been rescinded or annulled, within a period of 30 days
after there shall have been given, by registered or certified mail, to the
Company by the holder of this Security a written notice specifying such
default and requiring the Company to cause such indebtedness to be
discharged or cause such acceleration to be rescinded or annulled and
stating that such notice is a "Notice of Default" hereunder; or
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(6) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestor
or other similar official of the Company or of any substantial part of its
property, or ordering the winding up or- liquidation of its affairs, and
the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive days;
or
(7) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or similar
relief under any applicable Federal or State law, or the consent by it to
the filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by
the Company), in furtherance of an
(b) If an Event of Default (other than an Event of Default specified
in Section 4(a)(6) or 4(a)(7)) occurs and is continuing, then in every such case
the holder of this Security may declare the principal hereof to be due and
payable immediately, by a notice in writing to the Company, and upon any such
declaration such principal and all accrued interes thereon shall become
immediately due and payable. If an Event of Default specified in Section 4(a)(6)
or 4(a)(7) occurs and is continuing, the principal of, and accrued interest on,
this Security shall IPSO FACTO become immediately due and payable without any
declaration or other act of the holders.
(c) In addition to any, other remedy available to the holder of this
Security hereunder, if the Company shall default in performance of any of its
obligations in respect of any conversion of this Security (or any portion
hereof) in accordance with Section 2, the Company shall indemnify the holder
hereof and hold it harmless from any loss or damage suffered by such holder
arrising from such holder's inability to transfer or otherwise deliver the
shares of Common Stock issuable upon such conversion.
5. CONSOLIDATION, MERGER, ETC. (a) The Company shall not consolidate
with or merge into any other person or, directly or indirectly, convey,
transfer, sell or lease all or substantially all of its properties and assets to
any person, and the Company shall not permit any person to consolidate with or
merge into the Company or, directly or indirectly, convey, transfer, sell or
lease all or substantially all of its properties and assets to the! Company,
unless:
-14-
(1) in case the Company shall consolidate with or merge into another
person or convey, transfer, sell or lease all or substantially all of its
properties and assets to any person, the person formed by such
consolidation or into which the Company is merged or the person which
acquires by conveyance, transfer or sale, or which leases, all or
substantially all the properties and assets of the Company shall be a
corporation, limited liability company, partnership or trust, shall be
organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall expressly
assume, by an agreement supplemental hereto, executed and delivered to the
holder of this Security in form satisfactory to the holder, the due and
punctual payment of the principal of (and premium, if any) and interest on
this Security and the performance or observance of every covenant of this
Security on the part of the Company to be performed or observed, including
the conversion rights provided herein;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or a subsidiary
of the Company as a result of such transaction as having been incurred by
the Company or subsidiary of the Company at the time of such transaction,
no Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be
continuing; and
(3) the Company has delivered to the holder of this Security an
officers' certificate stating that such consolidation, merger, conveyance,
transfer, sale or lease and, if a supplemental agreement is required in
connection with such transaction, such supplemental agreement, comply with
this Section and that all conditions precedent herein provided for relating
to such transaction have been complied with.
(b) Upon any consolidation of the Company with, or, merger of the
Company into, any other person or any conveyance, transfer, sale, or lease of
all substantially all of the properties and assets of the Company in accordance
with Section 5(a), the successor person formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer, sale or lease
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Security with the same effect as if such
successor person has been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor person shall be relieved of all obligations
and covenants under this security.
6. SUBORDINATION. The Company agrees, and the holder of this Security
by accepting a Security agrees, that the indebtedness evidenced by this Security
is subordinated in righ of payment to the prior payment in full of all Senior
Indebtedness, and that the subordination is for the benefit of the holders of
Senior Indebtedness.
"Senior Indebtedness" means:
(a) the principal of, interest (including, to the extent permitted by,
applicable law, interest on or after the commencement of any bankruptcy or
similar proceeding whether or not representing an allowed claim in such
proceeding) on and any other amounts owing with respect to (i) any indebtedness
of the Company, now or hereafter outstanding, in respect of borrowed money
(other than the Securities), (ii) any indebtedness of the Company, :now or
hereafter outstanding,
-15-
evidenced by a bond, note, debenture, capitalized lease, letter of credit or
other similar instrument, (iii) any other written obligation of the Company, now
or hereafter outstanding, to pay money issued or assumed as all or part of the
consideration for the acquisition of property, assets or securities and (iv) any
guaranty or endorsement (other than for collection or deposit in the ordinary
course of business) or discount with recourse of, or other agreement (contingent
or otherwise) to purchase, repurchase or otherwise acquire, to supply or advance
funds or to become liable with respect to (directly or indirectly), any
indebtedness or obligation of any person of the type referred to in the
preceding subclauses (i), (ii) and (iii) now or hereafter outstanding; and
(b) any refundings, renewals or extensions of any indebtedness or
other obligation described in clause (a) above.
Notwithstanding the foregoing, if, by the terms of the instrument
creating or evidencing any indebtedness or obligation referred to in clauses (a)
and (b) above, it is expressly provided that such indebtedness or obligation is
not senior in right of payment to this Security, such indebtedness or obligation
shall not be included as Senior Indebtedness.
7. OTHER. (a) No provision of this Security shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Security at the times,
places and rate, and in the coin or currency, herein prescribed or to convert
this Security as herein provided.
(b) The Company will give prompt written notice to the holder of
Security of any change in the location of the Designated Office.
(c) The transfer of this Security is registrable on the Security
Register of the Company upon surrender of this Security for registration of
transfer at the Designated Office, duly endorsed by, or accompanied by a written
instrument of transfer in for satisfactory to the Company duly executed by, the
holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
Such Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. No service charge
shall be made for any such registration of transfer, but the Company may require
payment of a sum sufficient to recover any tax or other governmental charge
payable in connection therewith. Prior to due presentation of this Security for
registration of transfer, the: Company and any agent of the Company may treat
the person in whose name this Security is registered, as the owner thereof for
all purposes, whether or not this Security be overdue, and neither the Company,
nor any such agent shall be affected by notice to the contrary.
Notwithstanding any other provision of this Security, this Security
and the shares of Common Stock issuable upon conversion hereof may only be
transferred by the holder of this Security (a) in the case of the Common Stock
only, in a widely dispersed public offering; (b) to one or more investors, in
one or more transactions, any one of whom, after such purchase, would hold not
more than 2% of the shares of Common Stock then outstanding (assuming conversion
of any portion of this Security so transferred); (c) to any person or entity
that already controls more than 50% of the voting securities of the Company
prior to such transfer; (d) in a transaction thit complies with the volume and
-16-
manner of sale restrictions of Rule 144 under the Securities Act of 1933 or (e)
in a transaction approved in advance by the Federal Reserve Board. The holder of
this Security, by acceptance thereof, shall be deemed to have agreed to the
forgoing restriction on transfers.
(d) This Security shall be governed by and construed in accordance
with the laws of the State of New York, United States of America.
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed under its corporate seal.
Dated: March 16, 1998
COLUMBIA LABORATORIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Attest:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Corporate Controll
-17-
ELECTION OF HOLDER TO REQUIRE ▇▇▇▇▇▇▇▇▇▇▇
▇. Pursuant to Section 3(a) of this Security, the undersigned hereby
elects to have all or a portion of this Security repurchased by the (company.
2. The undersigned hereby directs the Company to pay [choose one] (a)
it or (b) Name:_______________ ; address:________________; Social Security or
Other Taxpayer Identification Number, if any:_______________, an amount in cash
or, at the Company's election, Common Stock valued as set forth in the Security,
equal to 100 % of the principal amount to be repurchased (as set forth below),
plus interest accrued to the Repurchase Date, as provided herein.
Dated:___________________
___________________
Signature
Principal amount to be repurchased
(an integral multiple of $1,000): ___________________
Remaining principal amount following such repurchase:
(not less than $1,000): ___________________
NOTICE: The signature ot the foregoing Election must correspond to the name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever
CONVERSION NOTICE
The undersigned holder of this Security hereby irrevocably exercises
the option to convert this Security, or any portion of the principalamount
hereof (which is an integral multiple of $1,000) below designated, into shares
of Common Stock in accordance with the terms of this Security, and directs that
such shares, together with a check in payment for any fractional share and any
Security representing any unconverted principal amount hereof, be delivered to
and be@ registered in the name of the undersigned unless a different name has
been indicated below. If ▇▇▇▇▇▇ of Common Stock or Securities are to be
registered in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto. Any amount required to
be paid by the undersigned on account of interest accompanies this Security.
Dated:_____________________
________________________
Signature
-18-
If shares or Securities are to be registered in the If only a portion of the Securities is to be
name of a person other than the holder, please converted, please indicate
________________________ 1. Principal amount to be converted:
Name
$____________
2. Principal amount and denomination of
________________________ Security representing unconverted
Address principal amount to be issued:
Amount: $___________
Denominations: $________
________________________ (any integral multiple of $1,000)
Social Security or other Taxpayer Identification
Number, if any
-19-
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated ;is of March 16, 1998, by and
between Columbia Laboratories, Inc., a Delaware corporation (the "Company"), and
SBC Warburg Dillon Read Inc. (the "Purchaser") entered into in connection with
the issuance of a Convertible Subordinated Note due March 15, 2005 convertible
into shares of Common Stock, par value $.Ol per share ("Common Stock") of the
Company.
1. CERTAIN DEFINITIONS
For purposes of this Registration Rights Agreement, the following
terms shall have the following respective meanings:
(a) "COMMISSION" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the Exchange
Act or the Securities Act, whichever is the relevant statute for the
particular purpose.
(b) CONVERTIBLE NOTE" shall mean the Convertible Subordinated
Note due March 15, 2005, of the Company to be issued and sold to the
Purchaser and any Convertible Subordinated Note issued in exchange therefor
or in lieu thereof.
(c) "EFFECTIVE TIME" shall mean the date on which the Commission
declares the Shelf Registration effective or on which the Shelf Registration
otherwise becomes effective.
(d) "EXCHANGE ACT: shall mean the Securities Exchange Act of
1934, or any successor thereto, as the same shall be amendedfrom time to time.
(e) "ISSUE DATE" shall mean the date on which a Convertible
Note is initially issued.
(f) The term "PERSON" shall mean a corporation, association,
partnership, organization, business, individual, governmental or political
subdivision thereof or governmental agency.
(g) "REGISTRATION EXPENSES" shall have the meaning assigned
thereto in Section 4 hereof.
(h) "SECURITIES ACT" shall mean the Securities Act of 1933, or
any successor thereto, as the same shall be amended from time to time.
(i) "SHARES" means the shares of Common Stock issuable upon
exercise of the Convertible Note.
(j) "SHELF REGISTRATION" shall have the the meaning assigned
thereto in Section 2 hereof.
In addition, capitalized terms not defined herein shall hive the
meaning ascribed in the Convertible Note.
2. SHELF REGISTRATION OF SHARES.
(a) Upon the written request of the Purchaser, delivered at any time
after June 16, 1998, the Company shall file under the Securities Act, as soon as
practicable ;after such request, but no later than 20 business days therefrom a
"shelf" registration statement providing for the registration of, and the sale
on a continuous or delayed basis by the Purchaser of, all Shares issuable upon
conversion of the Convertible Notes, pursuant to Rule 415 under the Securities
Act and/or any similar rule that may be adopted by the Commission (die "Shelf
Registration"). The Company agrees to use its best efforts to cause the Shelf
Registration to become or be declared effective on or before the later of (x) 45
calendar days after receipt of such request and (y) the first anniversary of
this Registration Rights Agreement, and to keep such Shelf Registration
continuously effective for a period ending oil the earliest to occur of (i) the
second anniversary of the Issue Date. (ii) notification to the Company by tile
Purchaser that it has sold all Shares issuable upon conversion of the
Convertible Notes so owned by it, or (iii) such time as the Purchaser may sell
all of such shares pursuant to Rule 144(k) under the Securities Act. The Company
further agrees, 117 necessary, to supplement or make amendments to the Shelf
Registration, if required by tile rules, regulations or instructions applicable
to the registration form used by the Company for such Shelf Registration or by
the Securities Act or rules and regulations thereunder for shelf registration,
and the Company agrees to furnish to the Purchaser copies of any such supplement
or amendment prior to its being used and/or filed with the Commission, and will
not file any such supplement or amendment to which the Purchaser reasonably
objects.
(b) Notwithstanding the foregoing, following the effectiveness of the
Shelf Registration, the Company may, at any time, suspend the effectiveness of
such Shelf Registrition for up to 60 days, as appropriate (a "Suspension
Period"), by giving notice to the Purchaser, if the Company shall have
determined that the Company may be required to disclose any material corporate
development which disclosure may have a material adverse effect on the Company.
The Company will use its best efforts to minimize the length of any Suspension
Period. Notwithstanding the foregoing, no more than one Suspension Period may
occur within any 180 day period. The period of any such suspesion of the
registration statement shall be added to the period of time the Company agrees
to keep the Shelf Registration effective as provided in Section 2(a). The
Purchaser agrees that, upon receipt of any notice from the Company of a
Suspension Period, the Purchaser shall forthwith discontinue disposition of
shares covered by the Shelf Registration until the Purchaser (i) is advised in
writing by the Company that the use of the applicable prospectus may be resumed,
(ii) has received copies of a supplemental or amended prospectus, if applicable,
and (iii) has received copies of any additional or supplemental filings which
are incorporated or deemed to be incorporated by reference in such prospectus.
3. REGISTRATION PROCEDURES
(a) In connection with any obligation of the Company to register
Shares, the Company shall use its best efforts to effect or cause such
registration to permit the sale of the Shares by the Purchaser in accordance
with the intended method or methods of distribution thereof described in the
applicable registration statement. In connection therewith, the Company shall,
within the time specified in Section 2 above:
-2-
(i) prepare and file with the Commission a registration statement on
any form which may be utilized by the Company and which shall permit the
disposition of the Shares in accordance with the intended method or methods
thereof specified in writing by the Purchaser;
(ii) comply with the provisions of the Securities Act with respect to
the disposition of all of the Shares covered by such registration statement in
accordance with the intended methods of disposition by the Purchaser set forth
in such registration statement;
(iii) provide (A) the Purchaser, (B) the underwriters (which term, for
purposes of these Registration Rights, shall include a person deemed to be an
underwriter within the meaning of Section 2(l1) of the Securities Act), if any,
thereof, (C) the sales or placement agent, if any, therefor, (D) counsel for
such underwriters or agent, and (E) counsel for the Purchaser reasonable
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment or supplement thereto;
(iv) for a reasonable period prior to the filing of such
rcl,,istration statement, and throughout the period specified in Section 2
thereof, make available for inspection by the parties referred to in Section
3(a)(iii) above who shall certify to the Company that they have a current
intention to sell the Shares pursuant to the registration statement such
financial and other information and books and records of the Company, and use
its best efforts to cause the officers, employees, counsel and independent
certified public accountants of the Company to respond to such inquiries, as
shall be reasonably necessary, in the judgement of the respective counsel
referred to in such Section, to conduct a reasonable investigation within the
meaning of Section II of the Securities Act; PROVIDED, HOWEVER, that each such
party shall be required to maintain in confidence and not to disclose to any
other person any information or records provided by the Company until such time
as (A) such information becomes a matter of public record (whether by virtue of
its in such registration statement or otherwise), or (B) such person shall be
required so to disclose such information pursuant to the subpoena or order of
any court or other governmental agency or body having jurisdiction over the
matter (subject to the requirements of such order, and only after such person
shall have given the Company prompt prior written notice of such requirement),
or (C) such information is required Lo be set forth in such registration
statement or die prospectus included therein or In an amendment to such
registration statement or an amendment or supplement to such prospectus in order
that such registration statement prospectus, amendment or supplement, as the
case may be, does not contain an untrue statement of a material fact or omit to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading;
(v) promptly notify the Purchaser, the sales or placement agent, if
any, therefor and the managing underwriter or underwriters, if any, thereof and
confirm such advice in writing. (A) when such registration statement or the
prospectus included therein or any prospectus amendment or supplement or
post-effective amendment has been filed, and, with respect to such registration
statement or any post-effective amendment, when the same become effective, (B)
of any comments by the Commission and by the Blue Sky or securities commissioner
or regulator of any state with respect thereto or any request by the Commission
for amendments or supplements to such registration statement or prospectus or
for additional information, (C) of the issuance by the Commission of any stop
order suspending the effectiveness of such registration statement or the
initiation or overt threatening of any proceedings for that purpose (D) if at
any time the representations and warranties of the Company contemplated by
Section 5 hereof cease to be true and correct in all material respects, (E) of
the receipt by the Company of any notification with respect to the suspension of
the qualification
-3-
of the Shares for sale in any jurisdiction or the initiation or overt
threatening of any proceeding for such purpose, or (F) at any time when a
prospectus is required to be delivered under the Securities Act, if such
registration statement, prospectus, prospectus amendment or supplement or
post-effective amendment, or any document incorporated by reference in any of
the foregoing, contains an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(vi) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment thereto at the earliest practicable date;
(vii) if requested by any managing underwriter or underwriter, any
placement or sales agent or the Purchaser, promptly incorporate in a prospectus
supplement or post-effective amendment such information as is required (in the
reasonable good faith judgment of counsel to the Company) by the applicable
rules and regulations of the Commission that such managing underwriter or
underwriter, such agent or the Purchaser specify should be included therein
relating to the terms of the sale of such Shares, including, without limitation,
information with respect to the number of Shares being sold by the Purchaser or
agent or to any underwriters, the name and description of the Purchaser, agent
or underwriter, the offering price of such Shares and any discount, commission
or other compensation payable in respect thereof, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
offering of the Shares to be sold by the Purchaser or agent or to such
underwriter; and make all required filing of such prospectus supplement or
post-effective amendment promptly after notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment;
(viii) furnish to the Purchaser, each placement or sales agent, if
any, therefor, each underwriter, if any, thereof and the respective counsel
referred to in Section 3(a)(iii) a copy of such registration statement in the
form in which it became effective, each such amendment and supplement thereto
(in each case including all exhibits thereto and documents incorporated by
reference therein) and such number of copies of such registration statement
(excluding exhibits thereto and documents incorporated by reference therein
unless specifically so requested by the Purchaser, agent or underwriter, as the
case may be) and of the prospectus included in such registration statement
(including each preliminary prospectus and any summary prospectus). in
conformity with the requirements of the Securities Act, and such other
documents, as the Purchaser, agent, if any, and underwriter, if any, may
reasonably request in order to facilitate the offering and dispostion of the
Shares owned by the Purchaser, offered or sold by such agent or underwritten by
such underwriter and to permit the Purchaser; agent and underwriter to satisfy
the prospectus delivery requirement of the Securities Act; and the Company
hereby consents to the use of such prospectus (including such preliminary and
summary prospectus) and any amendment or supplement thereto by the Purchaser and
by any such agent and underwriter, in each case in the form most recently
provided to such party by the Company, in connection with the offering and sale
of the Shares covered by the prospectus (including such preliminary and summary
prospectus) or any supplement or amendment therein.
(ix) use its best efforts to (A) register or qualify the Shares to be
included in such registration statement under such Securities laws or blue sky
laws of such jurisdictions as the Purchaser and each placement or sales agent,
if any, therefor and underwriter, if any, thereof shall reasonably request. (B)
keep such registrations or qualifications in effect and comply with such laws so
as to permit the continuance of offers, sales and dealings therein in such
jurisdictions during tile respective periods
-4-
such registration statements are required to remain effective under Section 2
above and for so long as may be necessary to enable the Purchaser or any agent
or underwriter to complete its distribution of Shares pursuant to such
registration statement and (C) take any and all other actions as may be
reasonably necessary or advisable to enable the Purchaser, agent, if any, and
underwriter, if any, to consummate the disposition in Such jurisdictions of such
Shares; PROVIDED, HOWEVER, that the Company shall not be required for any such
purpose to (I) qualify as a foreign corporation in any jurisdiction wherein it
would not otherwise be required to qualify but for the requirements of this
Section 3(a)(ix) or (II) consent to general service of process in any such
jurisdiction;
(x) use its best efforts to obtain the consent or approval of each
Governmental agency or authority, whether federal, state or local, which may be
required to effect the Shelf Registration or the offering or sale in connection
therewith or to enable the Purchaser to offer, or to consummate the disposition
of, its Shares-,
(xi) cooperate with the Purchaser and the managing underwriters, if
any, to facilitate the timely preparation and delivery of any certificates
representing Shares to be sold, which certificates shall be printed,
lithographed or engraved, or produced by any combination of such methods, and
which shall not, once sold under the Shelf Registration, bear any restrictive
legends; and, in the case of an underwritten offering, enable such Shares to be
in such denominations and registered in such names as the managing underwriters
may request at least two business days prior to any sale of the Shares;
(xii) enter into one or underwriting agreements, engagement letters,
agency agreements or similar agreements, as appropriate, including (without
limitation) customary provisions relating to indemnification and contribution,
and take such other actions in connections therewith as the Purchaser shall
reasonably request in order to expedite or facilitate the disposition of the
Shares;
(xiii) notify the Purchaser in writing of any proposal by die Company
to amend or waive any provision of these Registrition Rights pursuant to Section
7(g) hereof and of any amendment or waiver effected pursuant thereto, each of
which notices shall contain the text of the amendment or waiver proposed or
effected, as the case may be:
(xiv) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Shares or participate as a member of an
underwriting syndicate or selling group or " assist in the distribution" (within
the meaning of the Rules of Fair Practice and the By-Laws of the National
Association of Securities Dealers, Inc. ("NASD")) thereof, whether as an
underwriter, a placement or sales agent or a broker or dealer in respect thereof
or otherwise, provide reasonable assistance to such broker-dealer in complying
with the requirement of such Rules and By-Laws, including, without limitation,
by providing such information to such broker-deaier as may be required in order
for such broker-dealer to comply with the requirements of the Rules of Fair
Practice of the NASD;
(xv) comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders as soon as
practicable but in any event not later than eighteen months after the effective
date of such registration statement, an earning statement of the Company and its
subsidiaries complying with Section II(a) of the Securities Act (including, at
the option of the Company, Rule 158 thereunder): and
-5-
(xvi) use its best efforts to have the Shares approved for listing on
the American Stock Exchange.
(b) In the event that the Company would be required, pursuant to
Section 3(a)(v)(F) above, to notify the Purchaser, the placement or sales agent,
if any, therefor and the managing underwriters, if any, thereof, the Company
shall without delay prepare and furnish to the Purchaser, to each placement or
sales agent, if any, and to each underwriter, if any, a reasonable number of
copies of a prospectus supplemented or amended in form and substance reasonably
satisfactory to them, so that, as thereafter delivered to purchasers of Shares,
such prospectus shall not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
The Purchaser agrees that upon receipt of any notice from the Company pursuant
to Section 3(a)(v)(F) hereof, the Purchaser shall forthwith discontinue the
disposition of Shares pursuant to the registration statement applicable to such
Shares until the Purchaser shall have received copies of such amended or
supplemented prospectus, and if so directed by die Company, the Purchaser shall
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in the Purchaser's possession of the prospectus
covering such Shares at the time of receipt of such notice.
(c) The Company may require the Purchaser to furnish to the Company
such information regarding the Purchaser and the Purchaser's intended method of
distribution of die Shares as the Company may from time to time reasonably
request in writing, but only to the extent that such information is required in
order to comply with the Securities Act. The Purchaser @agrees to notify the
Company as promptly as practicable of any inaccuracy or change in information
previously furnished by the Purchaser to the Company or of the occurrence of any
event in either case as a result of which any prospectus relating to such
registration contains or would contain an untrue statement of a material fact
regarding the Purchaser or the Purchaser's intended method of distribution of
such Shares or omits to state any material fact regarding the Purchaser or the
Purchaser's intended method of distribution of such Shares required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, and promptly to furnish to the Company any
additional informations required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with respect
to the Purchaser or the distribution of such Shares, an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing. The Purchaser agrees that upon delivering any
notice to the Company pursuant to this Section 3(c), the Purchaser shall
forthwith discontinue the disposition of Shares pursuant to the registration
statement applicable to such Shares until the Purchaser shall have the received
copies of such amended or supplemented prospectus, and if so directed by the
Company, the Purchaser shall deliver to the Company, (at the Company's expense)
all copies, other than permanent file copies then in the purchaser's possession
ofthe prospectus covering such Shares at the time of receipt of such notice.
4. REGISTRATION EXPENSES.
The Company agrees to bear and to pay or cause to be paid promptly
upon request being made therefor all expenses incident to the Company's
performance of or compliance with these Registration Rights as they relate to
the Shelf Registration, including, without limitation, (i) all Commission and
any NASD registration and filing fees and expenses, (ii) all fees and expenses
in connection with the qualification of the Shares for offering and sale under
the State securities and blue sky laws referred to in Section 3(a)(ix) hereof,
including reasonable fees and disbursements of counsel for the placement or
sales agemt or underwriters in connection with such qualifications, (iii) all
fees and expenses in connection with the approval for listing of the Shares on
the American Stock Exchange (iv) all expenses relating to the preparation,
printing, distribution and
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reproduction of each registration statement required to be filed hereunder each
prospectus included therein or prepared for distribution pursuant hereto, each
amendment or supplement to the foregoing, the certificates representing the
Shares and all other document relating hereto, (v) internal expenses (including,
without limitation, all salaries and expenses of the Company's officers and
employees performing legal or accounting duties), and (vi) fees, disbursements
and expenses of counsel and independent certified public accountants of the
Company (including the expenses of any opinions or "cold comfort" letters
required by or incident to such performance and compliance) (collectively, the
"Registration Expenses"). Notwithstanding the foregoing, the Purchaser shall pay
all agency fees and commissions and underwriting discounts and commissions
attributable to the sale of the Shares and the fees and disbursements of any
counsel or other advisors or experts retained by the Purchaser.
5. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to, and agrees with, the Purchaser
that:
(a) Each registration statement covering Shares and each
prospectus (including any preliminary or summary prospectus) contained therein
or furnished pursuant to Section 3(a)(viii) hereof and any further amendments or
supplements to any such registration statement or prospectus, when it becomes
effective or is filed with the Commission, as the case may be, and, in the case
of an underwritten offering of Shares, at the time of the closing under the
underwriting agreement relating thereto will conform in all material respects to
the requirements of the Securities Act, and will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and at all
times subsequent to the Effective Time when a prospectus would be required to be
delivered under the Securities Act, other than from (i) such time as a notice
has been given to the Purchaser pursuant to Section 3(a)(v)(F) hereof until (ii)
such time as the Company furnishes an amended or supplemented prospectus
pursuant to Section 3(b) hereof, each such registration statement and each
prospectus (including any summary prospectus) contained therein or furnished
pursuant to Section 3(a)(viii) hereof, as then amended or supplemented, will
conform in all material respects to the requirements of the Securities Act, and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to made the statements
therein not misleading in the light of the circumstances then existing;
provided, however, that his representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished to the Company by the Purchaser expressly for use
therein.
((b) Any documents incorporated by reference in any prospectus
referred to in Section 5(a) hereof, when they become or became effective or are
or were filed with the Commission, or if amended, when amended, as the case may
be, will conform or conformed in all material respect to the requirements of the
Exchange Act, and none of such documents will contain or contained an untrue
statement of a material fact or will omit or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; PROVIDED, HOWEVER, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in the Company by the Purchaser expressly for use
therein.
6. INDEMNIFICATION
(a) INDEMNIFICATION BY THE COMPANY. Upon the registration of
Shares pursuant to Section 2 hereof, and in consideration of the agreements of
the Purchaser contained herein, and as an inducement to the Purchaser to
purchase the Convertible Notes, the Company shall, and it hereby agrees to,
indemnify and hold harmless the Purchaser and each person who participates as a
placement or sales agent or
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as an underwriter in any offering or sale of such Shares against any losses,
claims, damages or liabilities, joint or several, to which the Purchaser or any
such agent or underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any registration statement
under which such Shares were registered under the Securities Act, or any
preliminary, final or summary prospectus contained therein or furnished by the
Company to tile Purchaser, agent or underwriter, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or Necessary to make
the statements therein not misleading, and the Company shall, and it hereby
agrees to, reimburse the Purchaser, such agent and such underwriter for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such action or claim as such expenses are
incurred; PROVIDED, HOWEVER, that the Company shall not be liable to any such
person in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
or preliminary, final or summary prospectus, or amendment or supplement in
reliance upon and in conformity with information furnished to the Company by
such person expressly for use therein.
(b) INDEMNIFICATION BY THE PURCHASER AND ANY AGENTS AND
UNDERWRITER. The Company may require, as a condition to including, any Shares in
any registration statement filed pursuant to Section 2 hereof and to entering
into any underwriting agreement with respect thereto, that the Company shall
have received an undertaking reasonably satisfactory to it from the Purchaser
and from each underwriter named in any such underwriting agreement, severally
and not jointly, to (i) indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof arise out of or are based upon an
untrue statement or alleged untrue statement of material fact contained in such
registration statement, or any preliminary, final or summary prospectus
contained therein or furnished by the Company to the Purchaser, agent or
underwriter, or any amendment or Supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with information furnished to the Company by
the Purchaser or underwriter expressly for use therein, and (ii) reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party under subsection (a) or (b) above of written notice of the
commencement of any action, such indemnified party shall, if claim in respect
thereof is to be made against an indemnifying party pursuant to the
indemnification provisions of or contemplated by this Section 6, notify such
indemnifying party in writing of the commencement of such action; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party other than under the
indemnification provisions of or contemplated by Section 6(a) or 6(b) hereof. In
case any such action shall be brought against any indemnified party and it
shall notify an indemnifying party of the commencement thereof, such
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, such indemnifying party shall not be liable to such indemnified
party for any legal expenses of other counsel or any
-8-
other expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation.
(d) CONTRIBUTION. Each party hereto agrees that, if for any
reason the indemnification provisions contemplated by Section 6(a) or Section
6(b) are unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by
indemnified party on the one hand and the indemnifying party on the other from
any offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the indemnifying party and
the indemnified party in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Purchaser on the other
shall be deemed to be in the same proportion as the total purchase price
received by the Company upon issuance of the Convertible Note bears to the
difference between the proceeds from the offering of the Shares received by the
Purchaser and such purchase price. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this Section 6(d) were determined by
pro rata allocation (even if the Purchaser or any agents or underwriters or all
of them were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this section 6(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, or liabilities (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), the Purchaser shall not be required to
contribute any amount in excess of the amount by the Purchaser from the sale of
any Shares (after deducting any fees, discounts and commissions applicable
thereto) exceeds the amount of any damages which the Purchaser have otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, and no underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such underwriter has otherwise been
required to pay by reason or such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Purchaser's and any underwriters' obligations in this
Section 6(d) to contribute shall be several in proportion to the principal
amount of Shares registered or underwritten, as the case may be, by them and not
joint.
(e) The obligations of the Company under this Section 6 shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each officer, director and
partner of the Purchaser, any agent and any underwriter and each person, if any,
who controls the Purchaser or any agent or underwriter within the meaning of the
Securities Act; and the obligations of the Purchaser and any agent and
underwriters contemplated by this Section 6 shall be in addition to any
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liability which the Purchaser or any such agent or underwriter, respectively,
may otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company (including any person who, with his consent,
is named in arty registration statement as about to become a director of the
Company) and to each person, if any, who controls the Company within the meaning
of the Securities Act.
7. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company represents, warrants,
covenants and agrees that it has not granted, and shall not grant, registration
rights with respect to Shares or any other securities which would be
inconsistent with the terms contained in these Registration Rights.
(b) SPECIFIC PERFORMANCE. (b) The parties hereto acknowledge that
there may be no adequate remedy at law if any party fails to perform any of its
obligations hereunder and that each party may be irreparably harmed by any such
failure, and accordingly agree that each party, in addition to any other remedy
to which it may be entitled at law or in equity, shall be entitled to compel
specific performance of the obligations of any other party under these
Registration Rights in accordance with the terms and conditions of these
Registration Rights, in any court of the United States or State thereof having
jurisdiction.
(c) NOTICES. Any notice or other communication required or
permitted to be given hereunder may be given by personal delivery, transmitted
by facsmile, sent by nationally-recognized, overnight courier or mailed by
pre-paid certified mail, return receipt requested, or may given by telephone
when confirmed in writing by one of the preceding methods, addressed is follows
(as applicable):
If to the Company, to:
Columbia Laboratories, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Purchaser, to:
SBC Warburg Dillon Read Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel Capital Markets
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (203) 719-601)7
or to such other address or number and to the attention of such other person as
either party may designate by written notice to the other party. Any notice or
other communication required or permitted hereunder shall be effective upon
actual receipt, in the case of personal delivery, facsimile transmission,
overnight courier or certified mail, or upon actual receipt of written
confirmation, in the case of notice by telephone.
-10-
(d) SURVIVAL. The respective indemnities, agreements, representations,
warranties and each other provision set forth in these Registration Rights or
made pursuant hereto shall remain in full force and effect regardless of any
investigation (or statement as to the results thereof) made by or on behalf of
the Purchaser, any director, officer or partner of the Purchaser, any agent or
underwriter or any director, officer or partner thereof, or any controlling
person of any of the foregoing.
(e) LAW GOVERNING. These Registration Rights shall be governed by and
construed in accordance with the laws of the State of New York.
(f) HEADINGS. The descriptive headings of the several Sections and
paragraphs of these Registration Rights are inserted for convenience only, do
not constitute a part of these Registration Rights and shall not affect in any
way the meaning or interpretation of these Registration Rights.
(g) ENTIRE AGREEMENT AMENDMENTS. These Registration Rights and the
other writings referred to herein or delivered pursuant hereto which form part
hereof contain the entire understanding of the parties with respect to its
subject matter, These Registration Rights supersede all prior agreements and
understandings between the parties with respect to its subject matter. These
Registration Rights may be amended and the observance of any term Of these
Registration Rights may be waived (either generally or in a particular instance
and either retroactively or prospectively) only by a written instrument duly
executed by the Company and the Purchaser.
(h) ASSIGNMENT. In connection with any permitted transfer of the
Convertible Note or any portion thereof in a principal amount of not less than $
1,000,000 the Purchaser may assign its rights hereunder in respect of such
Convertible Note to the transferee. Upon such assignment the transferee shall,
insofar as the transferred Convertible Notes are concerned, be entitled to all
of the rights, and be subject to all of the obligations, of the Purchaser under
these Registration Rights, and all references to thee "Purchaser" herein shall
thereafter be deemed to refer to the Purchaser, or such transferee, or both, as
the circumstances warrant; PROVIDED that the right to request registration of
Shares under Section 2 hereof may only be exercised by holders of a majority in
interest of die Shares (including for this purpose, as holders of Shares,
holders of Convertible Notes convertible for such Shares) then subject to these
Registrition Rights.
(i) COUNTERPARTAS. This agreement may be executed by the parties
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.
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Agreed to and accepted as of the date referred to above.
COLUMBIA LABORATORIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
SBC WARBURG DILLON READ INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director
Convertibles
SBC WARBURG DILLON READ INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
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