Exhibit 10.27
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") is made as of
April 23, 2001, between Pharmanetics, Inc, a North Carolina corporation (the
"Company"), and Bayer Corporation, an Indiana corporation (the "Purchaser").
Section 1. Authorization and Sale of Common Stock
1.1 Authorization. The Company has authorized the sale and issuance to
Purchaser of up to one million, four hundred fifty thousand (1,450,000) shares
of its Common Stock, no par value per share (the "Common Stock").
1.2 Sale of Common Stock. Subject to the terms and conditions hereof, the
Company will issue and sell to the Purchaser and the Purchaser will buy from the
Company one million, four hundred fifty thousand (1,450,000) shares of Common
Stock (the "Shares") at a per share purchase price of $12.00 (the "Purchase
Price Per Share"), for an aggregate purchase price of seventeen million, four
hundred thousand dollars ($17,400,000.00).
Section 2. Closing Date; Delivery
2.1 Closing Date. The Closing of the purchase and sale of the Shares
hereunder (the "Closing") shall be held at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, at 12:00
p.m. on May 1, 2001, or at such other time, date and place upon which the
Company and the Purchaser shall mutually agree (the date of the Closing is
hereinafter referred to as the "Closing Date").
2.2 Delivery. At the Closing, the Company will deliver to the Purchaser a
certificate or certificates representing the Shares against payment of the
purchase price therefor by wire transfer of immediately available funds or by
certified or cashier's check drawn on a United States bank, payable to the
Company in the amount of the applicable purchase price. The certificate or
certificates shall be subject to a legend restricting transfer under the
Securities Act of 1933, as amended (the "Securities Act"), and referring to
restrictions on transfer and rights of first refusal herein, such legend to be
substantially as follows:
The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of
1933, as amended. Such shares may not be sold or transferred in the
absence of such registration or an opinion of counsel satisfactory to
the Company as to the availability of an exemption from registration.
The shares represented by this certificate are subject to restrictions
on transfer, including any sale, pledge or other hypothecation, set
forth in an agreement between the Company and Bayer Corporation, a
copy of which agreement may be obtained at no cost by written request
made by the holder of record of this
1
certificate to the Secretary of the Company at the Company's principal
executive offices.
Section 3. Representations and Warranties of the Company
The Company hereby represents and warrants to the Purchaser as follows:
3.1 Organization. The Company and each of its Subsidiaries is a corporation
duly organized and validly existing under the laws of the State of North
Carolina and is in good standing under such laws. The Company and each of its
Subsidiaries has requisite corporate power and authority to own, lease and
operate its properties and assets, and to carry on its business as presently
conducted and as proposed to be conducted. The Company and each of its
Subsidiaries is qualified to do business as a foreign corporation in each
jurisdiction in which the ownership of its property or the nature of its
business requires such qualification, except where failure to so qualify would
not have a Material Adverse Effect. The Company has furnished to the Purchaser
true and correct copies of the Articles of Incorporation and Bylaws as amended
of the Company and each of its Subsidiaries and will furnish upon request to the
Purchaser true and correct copies of any amendments thereto through the term of
this Agreement. The Company has two subsidiaries, Cardiovascular Diagnostics,
Inc. and Coeur Laboratories, Inc., each of which is wholly-owned by the Company.
References in Section 3 to the Company shall be deemed to include, where
appropriate, and to be given separately with respect to, the Company and each
Subsidiary.
3.2 Capitalization. The authorized capital stock of the Company consists of
40,000,000 shares of Common Stock, no par value per share, of which 7,869,285
shares were issued and outstanding as of April 23, 2001 and 1,000,000 shares of
preferred stock, no par value, of which 120,000 shares designated as Series A
Convertible Preferred Stock (the "Preferred Stock") have been issued and 97,500
shares of Preferred Stock were issued and outstanding as of April 23, 2001. All
such issued and outstanding shares have been duly authorized and validly issued
and are fully paid and non-assessable. Upon Closing, the Company shall have at
least 10,294,285 "voting shares" within the meaning of the North Carolina
Shareholder Protection Act. The Company has reserved an additional (a) 1,477,399
shares of its Common Stock for issuance to employees, officers, directors and
consultants to the Company as may be determined by the Company's Board of
Directors from time to time pursuant to its stock option plans, of which
1,311,898 shares were subject to outstanding options as of ▇▇▇▇▇ ▇▇, ▇▇▇▇ (▇)
975,000 shares of its Common Stock for issuance to holders of the Preferred
Stock upon conversion thereof, and (c) 251,000 shares of Common Stock for
issuance to holders of the Warrants upon exercise thereof. There are no other
options, warrants, conversion privileges or other contractual rights presently
outstanding to purchase or otherwise acquire any authorized but unissued shares
of the Company's or of any Subsidiary's capital stock or other securities.
3.3 Authorization. The Company has all corporate right, power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby and thereby. All corporate action on the part of the Company and its
Board of Directors necessary for the authorization, execution, delivery and
performance of this Agreement by the Company, the authorization, sale, issuance
and delivery of shares of Common Stock contemplated hereby, and
2
the performance of the Company's obligations hereunder has been taken. No
approval of the holders of capital stock of the Company is necessary under any
laws or under requirements of NASDAQ for the authorization, execution, delivery
and performance of this Agreement by the Company, the authorization, sale,
issuance and delivery of shares of Common Stock contemplated hereby, and the
performance of the Company's obligations hereunder. This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. Upon the issuance and delivery of the Shares as contemplated by this
Agreement, the Shares will be validly issued, fully paid and nonassessable. The
issuance and sale of the Shares contemplated hereby will not give rise to any
preemptive rights or rights of first refusal in existence on the date hereof on
behalf of any person. There are no preemptive rights, rights of first refusal or
other similar rights on behalf of any Person under any provision of applicable
law or any provision of the Articles of Incorporation or Bylaws of the Company
or of any agreement or instrument to which the Company is a party or by which
the Company is bound in respect of any capital stock or other securities of the
Company other than pursuant to this Agreement and the Preferred Stock
anti-dilution provisions. The issuance, sale and delivery of the Shares to the
Purchaser will convey to the Purchaser good and marketable title to such shares,
free and clear of all liens.
3.4 No Conflict. The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not (a) result in
any violation of, or default (with or without notice of lapse of time, or both),
or give rise to a right of termination, cancellation or acceleration of any
material obligation or to a loss of a material benefit, under, any provision of
the Certificate of Incorporation or Bylaws of the Company or any Subsidiary or
any mortgage, indenture, lease or other agreement or instrument, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any Subsidiary, or any of their respective properties or
assets; (b) result in the creation or imposition of any lien upon any assets or
properties of the Company or any Subsidiary except pursuant hereto; or (c)
violate or conflict with any law or Order applicable to the Company or any
Subsidiary or any of their respective assets or properties of any Governmental
Entity having jurisdiction over the Company or any Subsidiary or any of their
assets or properties.
3.5 Accuracy of Reports.
(a) SEC Reports. All reports required to be filed by the Company with the
Securities and Exchange Commission (the "SEC") under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), have been duly
filed, were in substantial compliance with the requirements of their
respective forms, were complete and correct in all material respects
as of the dates at which the information was furnished, and contained
(as of such dates) no untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were
made, not misleading. Other than the SEC Reports, the Company has not
filed or been required to file any other reports or statements with
the SEC since January 1, 1998.
3
(b) Financial Statements. Each of (i) the consolidated balance sheets
(including the related notes and schedules) included in or
incorporated by reference into the SEC Reports fairly presents the
consolidated financial position of the Company and its Subsidiaries as
of the date thereof, subject, in the case of unaudited statements, to
normal year-end adjustments, and (ii) the consolidated statements of
income (or statements of results of operations), shareholders' equity
and cash flows (including the related notes and schedules) included in
or incorporated by reference into the SEC Reports fairly presents the
results of operations, retained earnings and cash flows, as the case
may be, of the Company and its Subsidiaries (on a consolidated basis)
for the periods set forth therein (subject, in the case of unaudited
statements, to normal year-end adjustments and except as permitted by
Form 10-Q of the SEC) in each case in accordance with GAAP applied on
a consistent basis throughout the periods covered (except as stated
therein or in the notes thereto) and in compliance with the rules and
regulations of the SEC.
(c) Absence of Certain Changes. Except for transactions contemplated by
this Agreement or as disclosed in the SEC Reports, since December 31,
2000, there have not been any changes, conditions, occurrences,
circumstances or other events that have had or could reasonably be
expected to have a Material Adverse Effect.
3.6 Governmental Consents, etc. No consent, approval or authorization of or
designation, declaration or filing with any Governmental Entity on the part of
the Company or any Subsidiary is required in connection with the execution and
delivery of this Agreement, the offer, sale or issuance of the Shares, or the
consummation of any other transaction contemplated hereby, except such filings
as may be required to be made with the SEC, the National Association of
Securities Dealers, Inc. (the "NASD") and the North Carolina Secretary of State.
3.7 Litigation. Except as disclosed in SEC Reports, there are no claims,
suits, actions, proceedings, arbitrations or investigations pending or, to the
knowledge of the Company, threatened in writing against the Company or any of
its Subsidiaries; nor are there any Orders outstanding against or applicable to
the Company or any of its Subsidiaries or against or applicable to any of their
respective assets, properties or businesses.
3.8 Intellectual Property.
(a) All patents and trademark applications and registrations related to
the Intellectual Property exist and have been maintained in good
standing, including without limitation, the timely payment of any
maintenance fees and annuities thereon. The Company and its
Subsidiaries have taken all commercially reasonable actions and made
all commercially reasonable applications and filings pursuant to
applicable law to secure, perfect and protect their rights in the
Intellectual Property and neither the Company and its Subsidiaries nor
any of their respective agents, employees, investors and counsel have
practiced inequitable conduct under the patent
4
laws or other applicable laws with respect to any of the foregoing.
The Company and its Subsidiaries have taken all commercially
reasonable steps (including without limitation entering into employee
invention, confidentiality, non-disclosure and non-competition
agreements with all officers, directors, shareholders and employees of
the Company and its Subsidiaries with access to or knowledge of the
Intellectual Property used or held for use in the business of the
Company and its Subsidiaries (and the products and technology of the
Company and its Subsidiaries)) to safeguard and maintain the secrecy
and confidentiality of, and to assign to the Company and its
Subsidiaries, all of such officers, directors', shareholders' and
employees' as applicable, rights in all such Intellectual Property
invented or developed to the greatest extent, and not beyond the
greatest extent permitted by applicable law. All consultants and
contractors to the Company and its Subsidiaries have signed a
confidentiality and invention assignment agreement for the benefit of
the Company and its Subsidiaries to assign such consultants' or
contractors' as applicable, rights in Intellectual Property to the
Company and its Subsidiaries and to prohibit use or disclosure of
trade secrets and confidential information.
(b) The Company and its Subsidiaries own or are duly licensed or otherwise
have the right to use all the Intellectual Property and all such
Intellectual Property is valid and enforceable by the Company and its
Subsidiaries against third parties. The Company and its Subsidiaries
own on an exclusive basis, free and clear of any encumbrances, have
record title, and have the unrestricted right to use, license, sell or
dispose of, and the right to bring infringement actions with respect
to all the Intellectual Property. The Company and its Subsidiaries do
not pay, and have no obligation (whether absolute or contingent) to
pay, royalties, honoraria, fees or other payments to any Person by
reason of the ownership, use, license, sale or disposition of any
Intellectual Property right. Neither the Company nor any Subsidiary
has received notice (written or oral) of any claim of any Person
asserting rights in, or a conflict with, the Intellectual Property.
Without limiting the foregoing, no other Person has claimed the right
to use any Trademark which is identical or confusingly similar to any
Trademark used by the Company and its Subsidiaries. Neither the
Company nor any Subsidiary has provided notice (written or oral) to
any Person of infringement of any Intellectual Property right and,
there is no reasonable basis for such a claim.
(C) Except for the BMC litigation disclosed to Purchaser and which
litigation has been finally settled, (i) no written or unwritten claim
has been anticipated, evaluated or asserted against the Company or any
Subsidiary to the effect that the operation or proposed operation of
the business or making, using or selling any product or performance of
any service infringes upon or conflicts with the rights of any Person
with respect to any patents, patent application, Trademarks, trade
names, trade secrets,
5
designs, inventions, works of authorship or copyrights, and (ii) no
claim has been asserted, suspected or evaluated by the Company or any
Subsidiary against any Person that such Person has infringed any of
the Intellectual Property.
(d) Each of the parties thereto have performed, in all material respects,
all obligations under each Intellectual Property Agreement which are
required to be performed by such party, and there is no default (or
event which with notice or lapse of time would constitute a default)
thereunder. Each Intellectual Property Agreement is enforceable
against each of the parties thereto pursuant to its terms.
(e) To the knowledge of the Company, the operation of the business
(including without limitation the research and development operations
of the Company and its Subsidiaries or the manufacture, sale, use,
trade dress, packaging, license, or other exploitation of products and
technology currently or proposed to be marketed or in development and
delivery or performance of services) does not and will not infringe,
trespass or otherwise violate the Intellectual Property rights of any
Person. Without limiting the foregoing, neither the Company nor any
Subsidiary has received a notice (written or oral) of infringement of
any Intellectual Property right held by another Person and there is no
reasonable basis for such a claim. Neither the Company nor any
Subsidiary is obligated to indemnify any Person for any liability,
cost or expense arising from such Person's use, sale, licensing or
disposition of any Intellectual Property or such Person's manufacture,
use, sale, license or other exploitation of any product, service or
technology.
(f) No claim or potential claim has been evaluated or anticipated or
suspected (i) to the effect that any of the Intellectual Property is
invalid or unenforceable or (ii) otherwise related to the Intellectual
Property, except for the BMC litigation.
(g) The Company and its Subsidiaries have developed all Intellectual
Property used or held for use in the business through its own efforts
for its own account and has good and clear title thereto, and there is
no contract obligation, license, lien, encumbrance, alleged
infringement, dispute, potential dispute, claim or other cloud of
title concerning such Intellectual Property whatsoever. The
Intellectual Property used or held for use in the business of the
Company and its Subsidiaries is not being infringed by any third party
proprietary interest, including (without limitation) any third party
patent, copyright, Trademark, or trade secret interest. The
Intellectual Property used or held for use in the business is, to the
knowledge of the Company, fully eligible for protection under
applicable law and has not been forfeited, abandoned, lapsed or
donated in any way into the public domain. All of the trade secrets of
the Company and its Subsidiaries have been maintained in confidence
and are not known to any
6
third party. All personnel, including employees, agents, consultants
and contractors, who have contributed to or participated in the
conception and development of the Intellectual Property either (i)
have been a party to a work-for-hire relationship with the Company and
its Subsidiaries that has accorded the Company and its Subsidiaries
full, effective and exclusive original ownership of all tangible and
intangible property arising with respect to the Intellectual Property
or (ii) have executed instruments of assignment in favor of the
Company and its Subsidiaries as assignee that have conveyed to the
Company and its Subsidiaries full, effective and exclusive ownership
of all tangible and intangible property thereby arising with respect
to the Intellectual Property. No agreements or arrangements are in
effect with respect to the development, non-disclosure, marketing,
distribution, licensing or promotion of the Intellectual Property by
any independent contractor, salesperson, distributor, sublicensor or
other remarketer or sales organization.
3.9 Environmental Liability.
(a) Environmental Substance Liability. No event has occurred or condition
exists or has existed and no operating practice has been or is being
employed that could reasonably be expected to give rise to material
liability on the part of the Company or any Subsidiary or any Person
or entity for whose conduct the Company or any Subsidiary is or may be
held responsible (together referred to in this subparagraph 3.9 as the
"Company"), under any Environmental Law enacted on or prior to the
date hereof as a result of or in connection with, the following:
(i) the using, generating, manufacturing, refining, transporting,
treating, storing, handling, disposing, transferring, producing,
or processing of any Substances by the Company in or near or from
the Facilities or any other facilities owned or operated or used
by the Company; or
(ii) any intentional or unintentional Release or Threat of Release of
any Substances in, from or near facilities of the Company into
the Environment.
(b) Environmental Compliance. The Company has obtained and is in
material compliance with all applicable Environmental Law and
with all registrations, permits, licenses, approvals, consents,
orders, or authorizations issued by or on behalf of any federal,
state, or local Governmental Entity ("Environmental Permits")
that are required pursuant to Environmental Law in connection
with construction or operation of the Facilities
7
or any other facilities used or owned by the Company or the
generation, treatment, storage, transportation, or disposal of
any Substances by the Company. Such Environmental Permits are
currently effective and sufficient for the ownership and
operation of the Facilities and the operations of the Company as
currently conducted, and the Company has no reason to believe
that there is any basis for revocation, suspension, or
modification of any such Environmental Permits.
(c) Offsite Disposal. All Substances generated by the Company or the
Facilities have been transported, stored, treated and disposed of
by carriers or treatment, storage and disposal facilities
authorized or maintaining valid permits under all applicable
Environmental Law and the Company has no knowledge of any Release
or Threat of Release at any offsite disposal facility used by the
Company.
(d) Environmental Liens. No lien has been imposed on the Facilities
by any Governmental Entity at the federal, state, or local level
in connection with the presence on or off the Facilities of any
Substances;
(e) Environmental Litigation. The Company has not: (i) entered into
or been subject to any consent decree, compliance order, or
administrative order relating to the Facilities or operations
thereon; (ii) received notice under the citizen suit provisions
of any Environmental Law in connection with the Facilities or
operations thereon; (iii) received any request for information,
notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to any Environmental
Condition on or off the Facilities; (iv) been subject to or
threatened with any governmental or citizen enforcement action
relating to the Facilities or any operations thereon; or (v) been
subject to or threatened with any personal injury or property
damage claims relating to any Environmental Condition on or off
the Facilities, and the Company has no reason to believe that any
of the above will be forthcoming.
(f) Underground Storage Tanks. There are no underground storage tanks
at the Facilities.
(g) Asbestos-Containing Materials. To the knowledge of the Company,
there are no asbestos-containing materials at the New Facility
and to the knowledge of the Company, there is no
asbestos-containing material at the Current Facility for which
the Company is or will be responsible under Environmental Law or
under any agreement with any third party or Governmental Entity.
(h) Environmental Reports. The Company has provided to the Purchaser
all reports, audits, and assessments of Environmental Conditions
relating to the Facilities or operations thereon, and all such
reports, audits, and assessments are listed on Schedule 3.9.
3.10 Compliance with Laws; Regulatory Approvals. Except as disclosed in the
SEC Reports and except for matters which in the aggregate would not have a
Material Adverse Effect, the Company and its Subsidiaries are in compliance with
all applicable laws. Except for matters
8
which in the aggregate, as would not have a Material Adverse Effect, (a) all
Regulatory Approvals required by the Company and its Subsidiaries to conduct
their respective business as now conducted by them have been obtained and are in
full force and effect and (b) the Company and its Subsidiaries are in compliance
with the terms and requirements of such Regulatory Approvals.
3.11 Disclosure. All disclosures made in this Agreement are modified by any
information set forth in the SEC Reports. Subject to such modification, no
representation or warranty of the Company contained in this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein, in light
of the circumstances under which they were made, not misleading.
Section 4.Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants to the Company as follows:
4.1 Investment. It will acquire the Shares and any other shares purchased
from the Company pursuant to this Agreement for investment for its own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof. It understands that the Shares and any other
shares purchased by the Purchaser from the Company pursuant to this Agreement
have not been, and will not have been, registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
Purchaser's investment intent and the accuracy of the Purchaser's
representations as expressed herein. By reason of its business or financial
experience or the business or financial experience of its professional advisors
who are unaffiliated with and who are not compensated by the Company or any
affiliate or selling agent of the Company, it directly or indirectly, could be
reasonably assumed to have the capacity to protect its own interest in
connection with the purchase of the Shares from the Company at the Closing.
4.2 Organization. The Purchaser is a corporation duly organized and validly
existing in good standing under the laws of the State of Indiana, with all
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as presently conducted and as proposed
to be conducted.
4.3 Authority. The Purchaser has all corporate right, power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Purchaser and the
consummation by the Purchaser of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on behalf of the Purchaser.
This Agreement has been duly executed and delivered by the Purchaser and
constitutes a legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies, and to limitations of public policy. Subject to compliance
with such filings as may be required to be made with the SEC and the NASD, the
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, conflict with or result in any
violation of any
9
obligation under any provision of the Articles of Incorporation or Bylaws of the
Purchaser or any mortgage, indenture, lease or other agreement or instrument,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Purchaser.
4.4 Government Consents, etc. No consent, approval or authorization of or
designation, declaration or filing with any Governmental Entity on the part of
the Purchaser is required in connection with the valid execution and delivery of
this Agreement, the purchase of the Shares, or the consummation of any other
transaction contemplated hereby, except such filings as may be required to be
made with the SEC and the NASD.
4.5 Investigation. The Purchaser has had a reasonable opportunity to
discuss the Company's business, management and financial affairs with the
Company's management and the Purchaser has received satisfactory responses from
management of the Company to the Purchaser's inquiries.
Section 5. Conditions to Obligations of Purchaser
5.1 Conditions to Obligations of Purchaser. The Purchaser's obligation to
purchase the Shares at the Closing is, at the option of the Purchaser, which may
waive any such conditions to the extent permitted by law, subject to the
fulfillment on or prior to the Closing Date of the following conditions:
(a) Representations and Warranties Correct. The representations and
warranties made by the Company in Section 3 hereof shall be true
and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been
made on and as of said date.
(b) Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to such
purchase shall have been performed or complied with in all
material respects.
(c) No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this
Agreement.
(d) No Law Prohibiting or Restricting Such Sale. There shall not be
in effect any law, rule or regulation prohibiting or restricting
such sale or requiring any consent or approval of any person
which shall not have been obtained to issue the Shares (except as
otherwise provided in this Agreement).
(e) Opinion of Counsel. Counsel to the Company shall have delivered
an opinion of counsel in form reasonably satisfactory to the
Purchaser, in the form normally delivered by such counsel in
connection with similar transactions.
Section 6. Conditions to Obligations of Company
6.1 Conditions to Obligations of Company. The Company's obligation to sell
and issue the Shares at the Closing is, at the option of the Company, which may
waive any such
10
conditions to the extent permitted by law, subject to the fulfillment on or
prior to the Closing Date of the following conditions:
(a) Representations and Warranties Correct. The representations and
warranties made by the Purchaser in Section 4 hereof shall be
true and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been
made on and as of said date.
(b) Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Purchaser on or prior to
the Closing Date shall have been performed or complied with in
all material respects.
(c) No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this
Agreement.
(d) No Law Prohibiting or Restricting Such Sale. There shall not be
in effect any law, rule or regulation prohibiting or restricting
such sale or requiring any consent or approval of any person
which shall not have been obtained to issue the Shares (except as
otherwise provided in this Agreement).
Section 7. Covenants of the Company
Until the termination of this Agreement in accordance with Section 11.1
hereof or of the particular covenant, as the case may be:
7.1 No Objection. Provided the Purchaser is in compliance with and has
performed all covenants, agreements and conditions contained in this Agreement
to be performed by the Purchaser, the Company shall not interpose any objection
or take any legal action as a plaintiff in connection with the acquisition by
the Purchaser of such number of shares of Common Stock as is permitted to be
owned by the Purchaser pursuant to this Agreement and the Company hereby
approves any such acquisition in accordance with the applicable provisions of
the North Carolina Business Corporation Act.
7.2 Sale of Shares. The Company shall take such action as is reasonably
necessary, subject to compliance with applicable law, to issue and sell the
Shares to the Purchaser.
7.3 Board of Directors.
(a) Board Representation. The Company shall be obligated to include
in the slate of nominees recommended by the Company's Board of
Directors or management to shareholders, for election as
directors at the Company's next meeting of shareholders, one
person designated by the Purchaser and reasonably acceptable to
Company (any such person, a "Purchaser Nominee") In addition, if
at any time the number of members constituting the entire Board
of Directors shall equal or exceed nine, including the Purchaser
Nominee appointed pursuant to the previous sentence, the
Purchaser shall be entitled to designate and the Board shall
appoint to the Board, an additional Purchaser Nominee in
accordance with the provisions
11
of this Section. In the event of a vacancy caused by the
disqualification, removal, resignation or other cessation of
service of any Purchaser Nominee from the Board, the Board shall
elect as a Director (to serve until the Company's immediately
succeeding annual meeting of shareholders) a new Purchaser
Nominee who has been designated by the Purchaser. The Purchaser
shall nominate each Purchaser Nominee in advance of each meeting
of shareholders at which such Purchaser Nominee is to be elected.
Under no circumstances shall any holder of the Company's capital
stock (other than an individual) that Beneficially Owns fewer
shares of the Voting Securities than the Purchaser be entitled to
nominate, nor shall the Company nominate, more representatives of
such holder to the Board of Directors than the Purchaser is
entitled to nominate.
(b) Nominees. Any proposed Purchaser Nominee shall be a person
acceptable to the Board in its reasonable discretion prior to the
initial appointment, or election, as the case may be, of each
Purchaser Nominee to the Board; provided, that at any time the
President or Chief Financial Officer of the Purchaser's
Diagnostics Division or the Senior Vice President or the Vice
President - Marketing of the Near Patient Testing Segment of the
Purchaser's Diagnostics Division, each shall be conclusively
deemed to be acceptable to the Board for purposes of this
Section; and provided, further, that once a Purchaser Nominee is
accepted by, or deemed acceptable to, the Board, such person
shall thereafter be conclusively deemed to be acceptable pursuant
to this Agreement (together with such persons specified in the
foregoing clauses (i) and (ii), the "Pre-Approved Persons"). Any
objection by the Company to a proposed Purchaser Nominee must be
made no later than five business days after the Purchaser
delivers written notice of its proposed Purchaser Nominee;
provided, however, that the Company shall in all cases notify the
Purchaser of any such objection sufficiently in advance of the
date on which proxy materials are mailed by the Company in
connection with such election of directors to enable the
Purchaser to propose an alternate Purchaser Nominee pursuant to
and in accordance with the terms of this Agreement.
(c) Election of Directors. The Company agrees, subject to Section
7.3(b) above, to include such Purchaser Nominee to be added to or
retained on the Board pursuant to this Agreement in the slate of
nominees recommended by the Board to the Company's shareholders
for election as directors and shall use its reasonable efforts to
cause the election or reelection of each such Purchaser Nominee
to the Board at each meeting of shareholders at which such
Purchaser Nominee is up for election, including soliciting
proxies in favor of the election of such person(s), it being
understood that efforts consistent with those used for other
members of the slate recommended by the Board shall be deemed
reasonable.
(d) Committees. The Board will not establish an executive committee
authorized to exercise the power of the Board generally unless
the
11
Purchaser is granted representation on such committee
proportional to its representation on the Board, nor will the
Board establish or employ committees (unless the Purchaser is
granted proportional representation thereon) as a means designed
to circumvent or having the effect of circumventing the rights of
the Purchaser under this Agreement to representation on the
Board.
(e) Termination. The provisions of this Section 7.3 shall terminate
as at any time the Purchaser Beneficially Owns less than 5% of
the Voting Securities.
7.4 Change in Control. In the event of a Change in Control as defined in
subsections (b), (d) and (e) of the definition thereof, if the price per share
to be paid to shareholders of the Company in connection with the Change in
Control (the "Change in Control Price Per Share") is less than the Purchase
Price Per Share as to the Shares or $10.00 per share as to the Original Shares
and the Purchaser is not in default under that certain Distribution Agreement
dated as of April 23, 2001 between the Company and the Purchaser (the
"Distribution Agreement") through the date of the Change in Control, then the
Company shall be obligated to pay the Purchaser, (a) for each of the Shares the
Purchaser then holds, an amount equal to the Purchase Price Per Share minus the
Change in Control Price Per Share, and (b) for each of the Original Shares the
Purchaser then holds, an amount equal to $10.00 per Original Share minus the
Charge in Control Price Per Share, such amounts to be paid to the Purchaser in
addition to the Change in Control Price Per Share to be received in connection
with the Change in Control; provided that this covenant shall terminate as to
any Proposal for a Change in Control Transaction initiated after December 31,
2002, except with respect to closing of a Proposal or Change in Control
Transaction initiated prior to December 31, 2002.
7.5 Change in Control Transactions. In the event that the Company receives,
commences negotiations with respect to, or otherwise obtains knowledge of, a
Proposal, it will promptly notify Purchaser and will provide Purchaser with an
opportunity to propose a Change in Control Transaction in which the Purchaser or
an Affiliate thereof would be the acquiring company and, in connection therewith
will provide Purchaser with all information and equivalent access to the
management and Board of Directors (including any committee of the Board of
Directors which may be formed to consider such a transaction) as is made
available to any other Person making a Proposal. Notwithstanding anything to the
contrary contained in this Section 7.5, the Company shall have no obligations
under this Section 7.5 to the extent that the Board of Directors determines that
complying with the obligations set forth in this Section 7.5 would constitute a
breach of duty to the Company or the shareholders of the Company.
7.6 Registration Rights.
(a) Demand Registration.
(i) At any time on or after the date hereof, the Purchaser,
provided the registration rights hereunder have not
lapsed as set forth in Section 7.6(i) hereof, may
demand in writing that the Company effect a
registration under the Securities Act of all or any
portion (but not less
13
than Shares with an aggregate fair market value of
$1,000,000); provided, however, that the Purchaser may
request registration of any amount of Registrable
Securities where the request relates to all remaining
Registrable Securities for the purpose of sale in the
manner specified in such demand. Such demand shall also
specify the number of Registrable Securities that the
Purchaser wishes to have so registered. The Company
shall, within 10 days of receipt of such demand, give
written notice of such demand to all other holders of
the Company's securities with contractual rights on a
pari passu basis to have such securities registered
under the Securities Act. Any such holder may, within
30 days of its receipt of such notice from the Company,
give a written notice (the "Inclusion Notice") to the
Company specifying the number of the Company's
securities which such holder wishes to include in such
registration. The Company shall prepare and file a
registration statement on any available form of
registration statement, for the public sale of the
Registrable Securities as soon as practicable;
provided, however, that if the Company shall furnish to
the holders of Registrable Securities (including the
Purchaser, the "Participating Holders") a certificate
signed by the Chairman or President of the Company
stating that in the good faith judgment of the Board of
Directors of the Company, that such Demand Registration
would materially interfere with, or require premature
disclosure of, any material financing, acquisition,
reorganization or other material transaction involving
the Company or any of its Subsidiaries, then the
Company's obligation to file a registration statement
shall be deferred for a reasonable period not to exceed
180 days from the date of such request, but in no event
more than 180 days during any 24 month period. Upon
written notice from the Company to the Participating
Holders delivered within 30 days of a demand to
register Registrable Securities under this Section
7.6(a), the Purchaser's right to demand registration
pursuant to this Section 7.6(a) shall be suspended
during the period commencing 90 days before the date
estimated in writing by the Company to be the date of
filing of a registration statement, and ending six
months following the effective date (or withdrawal
date) of a registration statement, for an underwritten
public offering of the Common Stock.
(ii) All Participating Holders (including the Purchaser)
proposing to distribute securities through such
registration shall enter into an underwriting agreement
with the managing or lead managing underwriter in the
14
form customarily used by such underwriter with such
changes thereto as the parties thereto shall agree. If
any Participating Holder disapproves of the terms of
any such underwriting, it may elect to withdraw
therefrom by written notice to the Company and the
managing or lead managing underwriter. Any Registrable
Securities so withdrawn from such underwriting shall be
withdrawn from such registration.
(iii)Whenever a registration is demanded pursuant to this
Section 7.6(a), unless a managing or lead managing
underwriter objects thereto, the Company may include in
such registration securities for offering by the
Company and any other holder of securities, it being
understood, however, that the Company's and such other
holder right of inclusion in such registration shall be
subordinate to, and not pari passu with, the rights of
the Participating Holders.
(iv) If the managing underwriter thereof determines that the
total number of shares of Registrable Securities to be
sold in such offering shall be limited due to market
conditions or otherwise, the reduction in the total
number of shares offered shall be made by first
excluding any shares of selling stockholders who are
not holders of contractual rights to have such shares
registered under the Securities Act and shares of
selling stockholders who are holders of contractual
rights to have such shares registered under the
Securities Act that are subordinate to those of the
Participating Holders and shares of selling
stockholders who are holders of contractual rights to
have such shares registered under the Securities Act
that are subordinate to those of the Purchaser, then,
if necessary, by reducing the total number of shares to
be sold by the Company, and then, if necessary, by
excluding pro rata (based on the number of Registrable
Securities held) the Registrable Securities to be sold
by the Participating Holders.
(v) The Participating Holders shall have the right to
select the underwriter or underwriters and manager or
managers to administer such offering; provided,
however, that each Person so selected shall be
acceptable to the Company in its reasonable judgment.
(vi) The Company shall be obligated to effect not more than
two Demand Registrations. For purposes of the preceding
sentence, a Demand Registration shall not be deemed to
have been effected (i) unless a Demand Registration
Statement with respect thereto has become effective,
(ii) if after such Demand Registration Statement has
become effective, such Demand Registration Statement or
the related offer, sale or distribution of Registrable
Securities thereunder is interfered with by any stop
order, injunction or other order or requirement of the
SEC or other governmental agency or court for any
reason not attributable to the Participating Holders
and such interference is not thereafter eliminated,
(iii) if the conditions to closing specified in the
underwriting agreement entered into in connection with
15
such registration are not satisfied or waived, other
than by reason of a failure on the part of the
Participating Holders or (iv) the number of shares of
Registrable Securities to be sold by the Purchaser were
reduced pursuant to Subsection (iv) above. If the
Company shall have complied with its obligations under
this Agreement, a right to demand a registration
pursuant hereto shall be deemed to have been satisfied
upon the earlier of (x) the date as of which all of the
Registrable Securities included therein shall have been
distributed pursuant to the Demand Registration
Statement, and (y) the date as of which such Demand
Registration shall have been Continuously Effective for
a 60-day period or other period specified herein
following the effectiveness of such Demand Registration
Statement, provided no stop order or similar order, or
proceedings for such an order, is thereafter entered or
initiated.
(vii)The Company shall use the Company's commercially
reasonable efforts to keep the relevant registration
statement Continuously Effective, if a Demand
Registration Statement, for up to 60 days or until such
earlier date as of which all the Registrable Securities
under the Demand Registration Statement shall have been
disposed of in the manner described in the Registration
Statement, or such longer period (but in no event
longer than 120 days) as in the judgment of counsel for
the underwriters a prospectus is required by law to be
delivered in connection with sales of Registrable
Securities by an underwriter or dealer in accordance
with plan of distribution included in such Demand
Registration Statement. Notwithstanding the foregoing,
if for any reason the effectiveness of a Demand
Registration Statement pursuant to this Subsection is
delayed or suspended or filing of the Demand
Registration Statement or seeking effectiveness thereof
is postponed as permitted herein, the commencement of
the foregoing period shall be extended by the aggregate
number of days of such suspension or postponement.
(viii) Except for registration statements on Forms ▇-▇, ▇-▇
or any successor thereto, the Company will not file
with the SEC any other registration statement with
respect to its capital stock, whether for its own
account or that of other stockholders, from the date of
receipt of a notice from requesting holders pursuant to
this Section 7.6 until the completion of the period of
distribution of the registration contemplated thereby.
(b) Registration Statement Information Relating to the Purchaser. The
Purchaser shall promptly upon receipt of written request provide
the Company or any underwriter or counsel participating or
otherwise involved in any such registration with any information
16
relating to the Purchaser or the Registrable Securities that is
reasonably required to be included in the registration statement
or the prospectus, or any amendment thereof, relating to such
offering or required to cause the registration to be declared and
remain effective. Such information shall be submitted in writing,
signed by the Purchaser, or a duly authorized representative or
agent thereof, and shall state that the information is submitted
specifically for the purpose of inclusion in the registration
statement, prospectus, offering circular or other document
related to the registration or qualification of the Registrable
Securities pursuant hereto. If the Purchaser fails within a
reasonable time to provide such information, the Company may
exclude from such registration the Registrable Securities
requested by the Purchaser to be included therein.
(c) Registration Procedures. If and whenever the Company is required
to effect the registration of any Registrable Securities of the
Purchaser pursuant hereto, the Company will:
(i) prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use reasonable
efforts to cause such registration statement to become and
remain effective as provided herein; provided, however, that
before filing a Demand Registration Statement or prospectus
or any amendments or supplements thereto, including
documents incorporated by reference after the initial filing
of the Demand Registration Statement and prior to
effectiveness thereof, the Company shall furnish to counsel
for the Purchaser and underwriters, copies of all such
documents in the form substantially as proposed to be filed
with the SEC at a reasonable time prior to filing for review
and comment by such counsel;
(ii) prepare and file with the SEC such amendments and
supplements to such Demand Registration Statement and the
prospectus used in connection with such Demand Registration
Statement as may be necessary to comply with the provisions
of the Securities Act and rules thereunder with respect to
the distribution of all securities covered by such Demand
Registration Statement and as may be reasonably requested by
the Purchaser or necessary to keep such Demand Registration
Statement effective. If the registration is for an
underwritten offering, the Company shall amend the Demand
Registration Statement or supplement the prospectus whenever
required by the terms of the underwriting agreement. Pending
such amendment or supplement the Purchaser and all other
members of the Purchaser Group, upon written notice by the
Company, shall cease making offers or Transfers of
Registrable Securities pursuant to the prior prospectus. In
the event that any Registrable Securities included in a
Demand Registration Statement subject to, or required by,
this Agreement remain unsold at the end of the period during
17
which the Company is obligated to use its commercially
reasonable efforts to maintain the effectiveness of such
Demand Registration Statement, the Company may file a
post-effective amendment to the Demand Registration
Statement for the purpose of removing such securities from
registered status;
(iii)notify the Purchaser and the Underwriters' Representative
and (if requested) confirm such advise in writing, as soon
as practicable after notice thereof is received by the
Company (i) when the Demand Registration Statement or any
amendment thereto has been filed or becomes effective, the
prospectus or any amendment or supplement to the prospectus
included therein has been filed, and, to furnish the
Purchaser and the underwriters with copies thereof, (ii) of
any request by the SEC for amendments or supplements to the
Demand Registration Statement or the prospectus included
therein or for additional information, (iii) if at any time
the representations and warranties of the Company cease to
be true and correct, and (iv) of the receipt by the Company
of any notification with respect to the suspension or
qualification of the Registrable Securities for offering or
sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose;
(iv) immediately notify the Purchaser, at any time when a
prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a
result of which the prospectus included in the registration
statement, as then in effect, includes 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 the light of the
circumstances then existing, and if it is necessary, in the
opinion of counsel to the Company, to prepare and file with
the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement
effective and current and to comply with the provisions of
the Securities Act with respect to the sale or other
disposition of all shares covered by such registration
statement, including such amendments and supplements as may
be necessary to reflect the intended method of disposition
from time to time of the Purchaser if the registration is
effected in connection with an offering which is not
underwritten;
(v) cooperate with the Purchaser and the Underwriters'
Representatives to facilitate the timely preparation and
delivery of certificates representing Registrable Securities
to be sold and not bearing any restrictive legends; and
enable such Registrable Securities to be in such
denomination and registered in such names as the
18
Underwriters' Representative may request at least two
business days prior to the sale of Registrable Securities to
the underwriters;
(vi) cooperate with the Purchaser in connection with any filings
required to be made with the NASD, and otherwise use its
best efforts to comply with the rules, by-laws and
regulations of the NASD as they apply to the registration;
(vii) furnish to the Purchaser such number of copies of a
prospectus, including a preliminary prospectus and any
amendments and any supplements thereto, in conformity with
the requirements of the Securities Act, as the Purchaser may
reasonably request in order to facilitate the public sale or
other disposition of the Registrable Securities owned by the
Purchaser;
(viii) use reasonable efforts to register or qualify the
Registrable Securities covered by such registration
statement under such other securities or blue sky or other
applicable laws of such jurisdictions within the United
States as the Purchaser shall reasonably request to enable
the Purchaser to consummate the public sale or other
disposition of the Registrable Securities owned by the
Purchaser, and to obtain the withdrawal of any order
suspending the effectiveness of a Demand Registration
Statement, or the lifting of any suspension of the
qualification (or exemption from qualification) of the offer
and Transfer of any of the Registrable Securities in any
jurisdiction, at the earliest possible moment; except that
the Company shall not for any such purpose be required (i)
to qualify generally to do business as a foreign corporation
in any jurisdiction in which it would not be required to so
qualify but for such registration or qualification, (ii) to
subject itself to taxation in any such jurisdiction, or
(iii) to consent to general service of process in any such
jurisdiction;
(ix) use its best efforts to furnish to the Purchaser who has
included Registrable Securities in the registration
statement a signed counterpart, addressed to the Purchaser,
of (A) an opinion of counsel for the Company, dated the date
of the closing under the underwriting agreement, and (B) a
"cold comfort" letter signed by the independent public
accountants who have issued a report on the Company's
financial statements included in such registration statement
dated the date of effectiveness of the registration
statement and the date of the closing under the underwriting
agreement, covering substantially the same matters with
respect to such registration statement (and the prospectus
included therein) and, in the case of such accountants'
letters, with respect to events subsequent to the date of
such financial statements, as are customarily covered in
19
opinions of issuer's counsel and in accountants' letters
delivered to underwriters in underwritten public offerings
of securities and, in the case of the accountants' letters,
such other financial matters as the Purchaser may reasonably
request;
(x) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least 12
months, beginning with the first month of the first fiscal
quarter after the effective date of such registration
statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(xi) use its best efforts to list such Registrable Securities on
each securities exchange or over-the-counter market on which
shares of Common Stock are then listed, if such Registrable
Securities are not already so listed and if such listing is
then permitted under the rules of such exchange and, if
shares of Common Stock are not then listed on a securities
exchange or over-the-counter market, to use its best efforts
to cause such Registrable Securities to be listed on such
securities exchange or over-the-counter market as the
managing or lead managing underwriter shall reasonably
request;
(xii)use its best efforts to provide a transfer agent and
registrar for such Registrable Securities not later than the
effective date of such registration statement;
(xiii)if requested by the managing or lead managing underwriter
for any underwritten offering that includes any Registrable
Securities, enter into an underwriting agreement with the
underwriters of such offering, such agreement to contain
such representations and warranties by the Company and such
other terms and conditions as are contained in underwriting
agreements customarily used by such managing or lead
managing underwriter with such changes as the parties
thereto shall agree, including, without limitation,
provisions relating to indemnification and contribution in
lieu thereof;
(xiv)cooperate with the Purchaser, and the Underwriters'
Representative for such offering in the marketing, and
customary selling efforts relating to the Registrable
Securities, including participating for a period not in
excess of five (5) business days per Demand Registration in
customary "road show" presentations as may be reasonably
requested by the Underwriters' Representative;
(xv)promptly notify the Purchaser of any stop order issued or
threatened to be issued by the SEC in connection therewith
20
and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered; and
(xvi)make available for inspection by the Purchaser, any
underwriter participating in such offering and the
representatives of the Purchaser and such underwriter all
financial and other information as shall be reasonably
requested by them, and provide the Purchaser, any
underwriter participating in such offering and the
representatives of the Purchaser and such underwriter the
reasonable opportunity to discuss the business affairs of
the Company with its principal executives and independent
public accountants who have certified the audited financial
statements included in such registration statement, in each
case all as necessary to enable them to exercise their due
diligence responsibilities under the Securities Act;
provided, however, that information that the Company
determines, in its reasonable and good faith judgment, to be
confidential and which the Company advises such Person in
writing, is confidential shall not be disclosed unless such
Person signs a confidentiality agreement reasonably
satisfactory to the Company.
(d) Termination of Sales. During the effective period of any registration
statement covering Registrable Securities, the Purchaser will not
effect sales thereof after receipt of telegraphic or written notice
from the Company to suspend sales to permit the Company to correct or
update a registration statement or prospectus until the Purchaser
receives written notice from the Company that the registration
statement or prospectus has been corrected or updated. At the end of
the effective period of any registration statement covering any
Registrable Securities, the Purchaser shall discontinue sales of
shares pursuant to such registration statement upon receipt of notice
from the Company of its intention to remove from registration the
shares covered by such registration statement which remain unsold, and
the Purchaser shall notify the Company of the number of shares
registered which remain unsold immediately upon receipt of such notice
from the Company.
(e) Expenses of Registration. With respect to the Demand Registrations
effected pursuant to Subsection (a) hereof, the Company shall bear and
pay all expenses incurred in connection with any registration, filing,
or qualification of Registrable Securities with respect to such Demand
Registration, including all registration, filing and NASD fees, all
fees and expenses of complying with securities or blue sky laws, all
word processing, duplicating and printing expenses, messenger and
delivery expenses, and the reasonable fees and disbursements of
counsel for the Company, and of the Company's independent public
accountants, including the expenses of "cold comfort" letters required
by or incident to such performance and compliance (the "Registration
Expenses"), but in no event shall the Company bear underwriting
21
discounts and commissions relating to Registrable Securities or fees
and expenses of the Purchaser's counsel (which shall be paid by the
Purchaser) and provided that the Company shall not be required to pay
for any expenses of any registration begun pursuant to Subsection (a)
if the registration is subsequently withdrawn at the request of the
Purchaser (in which case the Purchaser shall bear such expense), other
than by reason of failure of the Company to comply with its covenants
contained herein unless the Purchaser agrees that such withdrawn
registration shall constitute one of the Demand Registrations under
Subsection (a) hereof.
(f) Indemnification.
(i) In any registration in which the Purchaser participates, the
Company will indemnify the Purchaser and each underwriter and
selling broker for the Purchaser and each officer and director of
the Purchaser and each person, if any, who controls the Purchaser
or any such underwriter or broker within the meaning of Section
15 of the Securities Act, against all claims, losses, damages,
expenses and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on
any untrue statement (or alleged untrue statement) of a material
fact contained in any preliminary prospectus or amended
preliminary prospectus or in the prospectus, offering circular or
other document incident to any registration, qualification or
compliance (or in any related registration statement,
notification or the like) as such may be amended or supplemented
from time to time or any omission (or alleged omission) to state
therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or any
violation by the Company of the Securities Act or any rule or
regulation promulgated thereunder or any state securities laws or
regulations applicable to the Company in connection with any such
registration, qualification or compliance, and will reimburse the
Purchaser and each such underwriter, broker and controlling
person for any legal and any other expenses reasonably incurred,
as such expenses are incurred, in connection with investigating
or defending any such claim, loss, damage, liability or action;
provided, however, that the Company will not be liable in any
such case to the extent that any such claim, loss, damage or
liability arises out of or is based on any untrue statement or
omission made in reliance upon and in conformity with written
information furnished to the Company in an instrument executed by
the Purchaser or the underwriter for the Purchaser or any
representative of the Purchaser or the underwriter for the
Purchaser and stated to be specifically for use therein.
22
(ii) In any registration in which the Purchaser participates, the
Purchaser will indemnify the Company and its officers and
directors, each person, if any, who controls any thereof within
the meaning of Section 15 of the Securities Act and their
respective successors and any underwriter for the Company for
such registration and each other security holder participating in
the registration against all claims, losses, damages, expenses
and liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a
material fact contained in any preliminary prospectus or amended
prospectus or in the prospectus, offering circular or other
document incident to any registration statement, qualification or
compliance (or in any related registration statement,
notification or the like) as such may be amended or supplemented
from time to time or any omission (or alleged omission) to state
therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and
will reimburse the Company and each other person indemnified
pursuant to this paragraph (ii) for any legal and any other
expenses reasonably incurred, as such expenses are incurred, in
connection with investigating or defending any such claim, loss,
damage, liability or action; provided, however, that this
paragraph (ii) shall apply only if (and only to the extent that)
such statement or omission was made in reliance upon and in
conformity with written information (including, without
limitation, written negative responses to inquiries) furnished to
the Company specifically for inclusion in the prospectus,
offering circular, or other document incident to the registration
statement by an instrument duly executed by the Purchaser or its
representatives, and as to which the Company had no actual
knowledge. Notwithstanding the foregoing, the liability of the
Purchaser under this paragraph (ii) shall be limited to an amount
equal to the aggregate proceeds received by the Purchaser from
the sale of its shares in such registration, unless such
liability arises out of or is based on willful misconduct by the
Purchaser.
(iii)Each party entitled to indemnification hereunder (the
"Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying
Party (at its expense) to assume the defense of any claim or any
litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be satisfactory to the Indemnified Party,
and the Indemnified Party may participate in such defense at such
party's expense, and provided, further, that the omission by any
Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this
23
Section 7.6(f) except to the extent that the omission results
from a failure of actual notice to the Indemnifying Party by the
Indemnified Party and such Indemnifying Party is damaged solely
as a result of the failure to give notice; and provided further,
however, that the Indemnifying Party shall not be entitled to
assume the defense for matters as to which there is, in the
opinion of counsel to the Indemnified Party, a conflict of
interest or separate and different defenses. No Indemnifying
Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation.
(iv) The payments with respect to any indemnity required by this
Section 7.6(f) shall be made by periodic payments during the
course of the investigation or defense, as and when bills are
received or expenses incurred, upon submission of supporting
invoices or other claims for payment, including any calculations
necessary to pro-rate any amounts payable pursuant to the
indemnity.
(g) Contribution.
(i) If the indemnification provided for in Section 7.6(f) hereof is
unavailable to the Indemnified Parties in respect of any losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) referred to therein, then each such Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute
to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages, liabilities or expenses
(or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and the Indemnified Party on the other in
connection with the statement or omission which resulted in such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue statement
(or alleged untrue statement) of a material fact or the omission
(or alleged omission) to state a material fact relates to
information supplied by the Indemnifying Party or the Indemnified
Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission. The Company and each Purchaser agree that it would
not be just and equitable if contribution pursuant to this
24
Section 7.6(g) were determined by pro rata allocation or by any
other method of allocation which does not take account of the
equitable considerations referred to above. The amount paid or
payable by an Indemnified Party as a result of the losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) referred to above in this Section 7.6(g) or in Section
7.6(f) shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim.
(ii) Notwithstanding anything to the contrary contained herein, the
obligation of the Purchaser to contribute pursuant to this
Section 7.6(g ) is several and not joint and the Purchaser shall
not be required to contribute any amount in excess of the amount
by which the total price at which the shares of the Purchaser
were offered to the public exceeds the amount of any damages
which the Purchaser has otherwise been required to pay by reason
of such untrue statement (or alleged untrue statement) or
omission (or alleged omission).
(iii)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.
(h) Rule 144 Requirements. The Company shall make whatever filings
with the SEC or otherwise and undertake to make publicly
available and available to the Purchaser, pursuant to Rule 144 of
the SEC under the Securities Act (or any successor rule or
regulation), such information as is necessary to enable the
Purchaser to make sales of Registrable Securities pursuant to
that Rule. The Company shall furnish to the Purchaser, upon
request, a written statement executed by the Company as to the
steps it has taken to comply with the current public information
requirements of Rule 144.
(i) Survival and Termination of Rights. The agreements and covenants
contained in this Section 7.6 shall be continuing and shall
survive any Transfer of the Shares to any member of the Purchaser
Group. However, the rights of the Purchaser to cause the Company
to register its Registrable Securities hereunder shall terminate
with respect to such securities and such securities shall no
longer be deemed to be Registrable Securities following a bona
fide, firmly underwritten public offering of such Registrable
Securities under the Securities Act or at such time as the
Purchaser is able to dispose of all of its Registrable Securities
in one three-month period pursuant to the provisions of Rule 144.
25
(j) Sales During Registration. If so requested by the Underwriters'
Representative in connection with an offering of any Registrable
Securities, the Company shall agree not to effect any sale or
distribution of shares of Common Stock during the 7-day period
prior to, and during the 90-day period beginning on, the date
such Demand Registration Statement is declared effective under
the Securities Act by the SEC. The Company agrees to use its
commercially reasonable efforts to obtain from each holder of
restricted securities of the Company the same as or similar to
those being registered by the Company on behalf of the Purchaser,
or any restricted securities convertible into or exchangeable or
exercisable for any of its securities, an agreement not to effect
any sale or distribution of such securities (other than
securities purchased in a public offering) during any period
referred to in this paragraph, except as part of any such Demand
Registration Statement if permitted. Without limiting the
foregoing, if the Company grants any Person (other than a holder
of Registrable Securities) any rights to demand or participate in
a Registration, the Company agrees that the agreement with
respect thereto shall include such Person's agreement as
contemplated by the previous sentence.
(k) Granting of Registration Rights. Notwithstanding anything to the
contrary contained herein, the Company shall not, without the
prior written consent of the Purchaser Group, grant any rights to
any Persons to register any shares of capital stock or other
securities of the Company if such rights could reasonably be
expected to be superior to or be on parity with, the rights of
the holders of Registrable Securities granted pursuant to this
Agreement upon the exercise of Demand Registration rights
contained herein.
7.7 No Restrictions. The Company will not, prior to January 1, 2003, make
or recommend to its shareholders any amendment to the Company's Articles of
Incorporation or Bylaws which would impose limitations on the legal rights of
the Purchaser Group as Company shareholders (other than those imposed pursuant
to this Agreement) based upon the size of security holding permitted under this
Agreement, the business in which a security holder is engaged or other
considerations applicable to the Purchaser Group and not to security holders
generally.
7.8 Share Listing. As soon as practicable, the Company shall take
reasonable action as is required to cause the Shares to be listed for trading on
The NASDAQ Stock Market ("NASDAQ").
7.9 Preemptive Rights. The Company shall, prior to any issuance by the
Company of any of its securities (other than debt securities with no equity
feature), offer to the Purchaser by written notice the right, for a period of
thirty (30) days, to purchase the Purchaser's Pro Rata Share (as such term is
defined below) of such securities for cash at a price equal to the price or
other consideration for which such securities are to be issued; provided,
however, that the preemptive rights of the Purchaser pursuant to this Section
7.9 shall not apply to securities issued (A) upon conversion of any shares of
26
the Preferred Stock outstanding on the Closing Date (B) as a stock dividend or
upon any subdivision of shares of Common Stock, provided that the securities
issued pursuant to such stock dividend or subdivision are limited to additional
shares of Common Stock, (C) pursuant to options or other rights which are issued
pursuant to the 1994 or 1995 Stock Option Plans or any similar plan approved by
the Board of Directors of the Company and the holders of Voting Securities
within one year of such Board approval or (D) in payment of dividend obligations
on the Preferred Stock. The Company's written notice to the Purchaser shall
describe the securities proposed to be issued by the Company and specify the
number, price and payment terms. The Purchaser may accept the Company's offer as
to the full number of securities offered to it or any lesser number by written
notice thereof given by it to the Company prior to the expiration of the
aforesaid thirty (30) day period, in which event the Company shall promptly sell
and the Purchaser shall buy, upon the terms specified, the number of securities
agreed to be purchased by the Purchaser. For purposes of this Section 7.9, the
Purchaser's "Pro Rata Share" of offered securities shall be determined by
multiplying the full number of securities offered by the Company by a fraction,
the numerator of which shall be the number of shares of Common Stock held by the
Purchaser as of the date of the Company's notice of offer and the denominator of
which shall be the aggregate number of shares of Common Stock (calculated as
aforesaid) held on such date by all holders of capital stock of the Company. The
Company shall be free at any time following expiration of the thirty-day offer
period and prior to ninety (90) days after the expiration of the thirty day
offer period, to offer and sell to any third party or parties the number of the
securities not agreed by the Purchaser to be purchased by it, all at a price and
on payment terms no less favorable to the Company than those specified in such
notice of offer to the Purchaser. However, if such third party sale or sales are
not consummated within such ninety (90) day period, the Company shall not sell
such securities as shall not have been purchased within such period without
again complying with this Section 7.9.
7.10 Share Buyback. In the event the Company or any of its Affiliates shall
repurchase shares of Voting Securities, including any redemption of the
Preferred Stock, the Company shall offer to purchase such number of shares of
Voting Securities as would be necessary on a pro rata basis to ensure that
Purchaser as an "other entity" does not exceed 20% Beneficial Ownership of the
Company's "Voting Shares" within the meaning of the North Carolina Shareholder
Protection Act. The purchase price per share of such Voting Securities shall be
the Average Market Price as of the date of the Purchaser's acceptance of the
offer to purchase.
Section 8. Covenants of the Purchaser
Until the termination of this Agreement in accordance with Section 11.1
hereof or of the particular covenant, as the case may be:
8.1 Limitation on Ownership of Voting Securities.
(a) The Purchaser shall not (and shall not permit any Subsidiary to
directly or indirectly) acquire Beneficial Ownership of any
Voting Securities, or any other rights to acquire Voting
Securities (except, in any case, by way of stock dividends or
other distributions or offerings made available to holders of any
Voting Securities generally) or authorize or make a tender,
27
exchange or other offer, without the written consent of the
Company, if the effect of such acquisition would be to increase
the Voting Power of all Voting Securities then owned by the
Purchaser or which it has a right to acquire to more than 20 % of
the Total Voting Power of the Company.
(b) Nothing in Section 8.1 (a) above shall prevent the Purchaser from
acquiring Voting Securities without regard to the limitation set
forth therein (i) if an offer is made (as evidenced by the filing
with the SEC of a Schedule 14D-1) by another person or group
(which is not controlled by or under common control with the
Purchaser) to purchase or exchange for cash or other
consideration any Voting Securities which, if successful, would
result in such Person or group owning or having the right to
acquire more than 20 % of the Total Voting Power of the Company
then in effect and such offer is not withdrawn, terminated or
enjoined prior to the Purchaser acquiring Voting Securities in
response thereto, or (ii) if it is publicly disclosed or the
Purchaser otherwise learns that another Person or group has
acquired any Voting Securities (or rights to acquire Voting
Securities) which results in such Person or group owning or
having the right to acquire Voting Securities that would result
in a Total Ownership Percentage of not less than 20 % or (iii) a
Proposal for a Change in Control Transaction is made to the
Company other than by the Purchaser.
8.2 Voting. The Purchaser shall vote all shares of Voting Securities which
it Beneficially Owns, at any shareholder meeting or in connection with any
action by written consent at or in which such shares of Voting Securities are
entitled to vote, (a) in favor of the slate of nominees (including any Purchaser
Nominee to be included in such slate in accordance with Section 7.3) proposed by
the Board, provided that the Company has complied with Section 7.3, and (b) on
any non-Company sponsored shareholder proposal which is opposed by the Company,
in accordance with the direction of the Board as to how such shares of Voting
Securities shall be voted. On all other matters the Purchaser shall be entitled
to vote the Voting Securities held by it in its discretion. The Purchaser, as
the holder of shares of Voting Securities, shall be present, in person or by
proxy, at all meetings of shareholders of the Company so that all shares of
Voting Securities beneficially owned by the Purchaser may be counted for the
purposes of determining the presence of a quorum at such meetings.
8.3 Voting Trust, etc. The Purchaser shall not deposit any shares of Voting
Securities in a voting trust or, except as otherwise provided herein, subject
any Voting Securities to any arrangement or agreement with respect to the voting
of such Voting Securities.
8.4 Solicitation of Proxies. The Purchaser shall not solicit proxies with
respect to any Voting Securities, and shall not become a "participant" in any
"election contest" (as such terms are used in Rule 14a-11 of Regulation 14A
under the Exchange Act relating to the election of directors of the Company).
8.5 Acts in Concert with Others. The Purchaser Group shall not join a
partnership, limited partnership, syndicate or other group, or otherwise act in
concert with any third person, for the purpose of acquiring, holding, or
disposing of Voting Securities.
28
8.6 Restrictions on Transfer of Voting Securities.
(a) The Purchaser shall not, directly or indirectly, sell or Transfer
any Voting Securities for a period of one year commencing with
the Closing Date.
(b) Subject to Section 8.6(a), the Purchaser shall not, directly or
indirectly, sell or Transfer any Voting Securities, except
(i) to the Company or any person or group approved by the
Company;
(ii) to an Affiliate of the Purchaser, as long as such Affiliate
agrees to hold such Voting Securities subject to all the
provisions of this Agreement, including this Section 8.6,
and agrees to Transfer such Voting Securities to the
Purchaser or another Affiliate of the Purchaser if it ceases
to be an Affiliate of the Purchaser;
(iii)pursuant to Rule 144 under the Securities Act (but only to
the extent the sale or Transfer of Voting Securities at any
time is in compliance with the volume limitations of
paragraph (e) thereunder);
(iv) pursuant to an effective registration statement under the
Securities Act;
(v) subject to the Company's right of first refusal as set forth
in Section 9.1 hereof, in transactions not otherwise
described in this Section 9.1(b) as long as such
transactions do not, directly or indirectly, individually or
in the aggregate, result, to the best knowledge of the
Purchaser, after reasonable inquiry, in any single person or
group owning or having the right to acquire Voting
Securities representing 5% or more of the Total Voting Power
of the Company then in effect;
(vi) pursuant to a bona fide pledge of such Voting Securities to
an institutional lender to secure a loan, guarantee or other
financial support, provided that such lender agrees to hold
such Voting Securities subject to all provisions of this
Agreement and any sale or disposition by such lender of such
pledged Voting Securities shall be subject to the
limitations of this Section 8.6; or
(vii)pursuant to a pro rata dividend to the stockholders of the
Purchaser.
(c) Notwithstanding Section 8.6(a), Purchaser may, directly or indirectly,
sell or Transfer any Voting Securities:
(i) in response to (A) an offer to purchase or exchange for cash or
other consideration any Voting Securities (I) which is made by or
29
on behalf of the Company, or (II) which is made by another person
or group and is either recommended to the shareholders of the
Company by the Board of Directors or not opposed by the Board of
Directors of the Company within the time such Board is required,
pursuant to regulations under the Exchange Act, to advise the
Company's shareholders of such Board's position on such offer, or
(III) in the case of a merger or other business combination
transaction, which has been approved by the shareholders of the
Company (including approval without a meeting pursuant to the
short-form merger provisions of the North Carolina Business
Corporation Act) in a manner so as to be legally binding on all
shareholders of the Company and so as to require the disposition
by such shareholders of their shares pursuant to such merger or
other business combination transaction (without regard to this
Agreement) or (B) subject to the Company's rights of first
refusal as set forth in Section 9.1, any other offer made by
another person or group to purchase or exchange for cash or other
consideration any Voting Securities which, if successful, would
result in such person or group owning or having the right to
acquire Voting Securities representing more than 50 % of the
Total Voting Power of the Company then in effect;
(ii) in the event of a merger or consolidation in which the holders of
Voting Securities of the Company prior to the merger or
consolidation cease to hold at least 51% of the voting securities
of the surviving entity; or
(iii) pursuant to a plan of liquidation of the Company.
Any shares permitted to be sold hereunder shall be free and clear of the
restrictions contained in this Agreement.
8.7 Non-Disclosure.
(a) During the duration of this Agreement and for a period of five
(5) years thereafter, neither party shall disclose to third
parties, or use for its benefit, in whole or in part, any
Proprietary Information received from other party, except to the
extent required to comply with the Food, Drug and Cosmetic Act
(21 U.S.C. ▇▇.▇▇. 301 et seq.) and the regulations promulgated
thereunder and all foreign equivalents thereof or other laws.
Each party shall take all reasonable steps to minimize the risk
of disclosure of Proprietary Information, including, without
limitation:
(i) ensuring that only its employees whose duties require them
to possess such information have access thereto; and
30
(ii) exercising at least the same degree of care that it uses for
its own Proprietary Information.
(b) Duties Upon Termination. Except as otherwise permitted under this
Agreement, upon request by the disclosing party after expiration
or termination of this Agreement, the other party shall either
return all of such disclosing party's Proprietary Information
(including data, memoranda, drawings and other writings and tapes
and all copies thereof) received or prepared by it or destroy the
same, and in any event shall make no further use of such
Proprietary Information at any time provided, however, that
counsel for the receiving party may keep one copy of the
Proprietary Information for purposes of ascertaining the
receiving party's obligations pursuant to this Section 8.7.
(c) Use of Proprietary Information. During the duration of this
Agreement and for a period of five (5) years thereafter, neither
party shall use the other party's Proprietary Information for any
purposes, except to perform its obligations hereunder. In no
event shall the Purchaser use any Proprietary Information for
commercial purposes subsequent to the termination of this
Agreement.
(d) Injunctive Relief. Each party acknowledges that the other party
would not have an adequate remedy at law for breach of any of the
covenants contained in this Section 8.7 and hereby consents to
the enforcement of same by the other party by means of temporary
or permanent injunction issued by any court having jurisdiction
thereof and further agrees that the other party shall be entitled
to assert any claim it may have for damages resulting from the
breach of such covenants in addition to seeking injunctive or
other relief. The provisions of this Agreement relating to
Proprietary Information shall supercede any prior agreements
relating to Proprietary Information between the Purchaser and the
Company.
8.8 Company Right of Repurchase. If at any time there is a Change in
Control of the Purchaser involving another entity having any operations related
to rapid coagulation monitoring systems, then the Company shall have the right
to purchase all, but not a part of, the Voting Securities then Beneficially
Owned by the Purchaser and its Subsidiaries upon or prior to the effective date
of the Change in Control of the Purchaser. The purchase price per share of such
Voting Securities shall be the Average Market Price as of the date of the
Company's exercise of its right to repurchase.
8.9 Acquisition of Stock. The Purchaser shall advise management of the
Company as to the Purchaser's acquisition of any additional shares of Voting
Securities, or rights thereto, in writing within 10 calendar days following any
such acquisition. All of the Purchaser's purchases of Voting Securities shall be
in compliance with applicable laws and regulations and the provisions of this
Agreement.
31
Section 9. Company Right of First Refusal
Until the termination of this Agreement in accordance with Section 11.1
hereof or of the particular covenant:
9.1 Right of First Refusal. Prior to making any sale or Transfer of Voting
Securities of the Company pursuant to Section 8.6(a)(v), the Purchaser shall
give the Company the opportunity to purchase such Voting Securities in the
following manner:
(a) The Purchaser shall give notice (the "Transfer Notice") to the
Company in writing of such intention specifying the approximate
number of the proposed purchasers or transferees, the amount of
Voting Securities proposed to be sold or transferred, the
proposed price per share therefor (the "Transfer Price") and the
other material terms upon which such disposition is proposed to
be made.
(b) The Company shall have the right, exercisable by written notice
given by the Company to the Purchaser within 30 days after
receipt of such Transfer Notice, to purchase all but not part of
the Voting Securities specified in such Transfer Notice for cash
per share equal to the Transfer Price.
(c) If the Company exercises its right of first refusal hereunder,
the closing of the purchase of the Voting Securities with respect
to which such right has been exercised shall take place within 60
calendar days after the Company receives notice, which period of
time shall be extended if necessary in order to comply with any
applicable laws and regulations. Upon exercise of its right of
first refusal, the Company and the Purchaser shall be legally
obligated to consummate the purchase contemplated thereby and
shall use their best efforts to secure any approvals required in
connection therewith.
(d) If the Company does not exercise its right of first refusal
hereunder within the time specified for such exercise, the
Purchaser shall be free, during the period of 90 calendar days
following the expiration of such time for exercise, to sell the
Voting Securities specified in such Transfer Notice and if no
sale occurs within such time period, the Voting Securities shall
again be subject to the provisions of this Section 9.1. The
Purchaser's transferee shall acquire such Voting Securities free
from any of the provisions of this Agreement; however, such
Voting Securities shall be subject to any restrictions imposed
under applicable securities laws.
(e) Notwithstanding anything to the contrary contained in this
Section 9.1, if Purchaser intends to sell or Transfer any Voting
Securities of the Company pursuant to Section 8.6(a)(v), and such
proposed sale or Transfer is to an institutional purchaser
approved by the Company at or above the Average Market Price,
then the Company must exercise its right of first refusal, if at
all, within ten (10) business days of receipt of the Transfer
32
Notice, and if not, the proposed Transfer shall thereafter be
subject to the provisions of subparagraph 9.1 (d) above.
9.2 Tender Offer Sale. Prior to making any sale or exchange of Voting
Securities pursuant to Section 8.6(c)(i)(B) in response to a tender or exchange
offer, the Purchaser shall give the Company the opportunity to purchase such
Voting Securities in the following manner:
(a) The Purchaser shall give notice (the "Tender Notice") to the
Company in writing of such intention no later than 10 calendar
days prior to the latest time by which Voting Securities must be
tendered in order to be accepted pursuant to such offer or to
qualify for any proration applicable to such offer (the "Tender
Date"), specifying the amount of Voting Securities proposed to be
tendered. For purposes hereof, a tender offer to purchase Voting
Securities shall be deemed to be an offer at the price specified
therein, without regard to any provisions thereof with respect to
proration or conditions to the offeror's obligation to purchase
(assuming such conditions are not impossible of performance when
the offer is made, without giving effect to the Company's right
of first refusal).
(b) If the Tender Notice is given, the Company shall have the right,
exercisable by giving notice to the Purchaser at least two
business days prior to the Tender Date, to purchase all but not
part of the Voting Securities specified in the Tender Notice for
cash. If the Company exercises such right by giving such notice,
the closing of the purchase of such Voting Securities shall take
place not later than one business day prior to the Tender Date;
provided, however, that if the purchase price specified in the
tender offer includes any property other than cash, the value of
any property included in the purchase price shall be jointly
determined by a nationally recognized investment banking firm
selected by each party or, in the event such firms are unable to
agree, a third nationally recognized investment banking firm to
be selected by such two firms.
(c) The parties shall use their best efforts to cause any
determination of the value of any securities included in the
purchase price to be made within three business days after the
date of delivery of the Tender Notice. If the firms selected by
the Purchaser and the Company are unable to agree upon the value
of any such securities within such three-day period, the firms
shall promptly select a third firm whose determination shall be
made promptly and shall be conclusive.
(d) The parties shall use their best efforts to cause any
determination of the value of property other than securities to
be made within four business days after the date of delivery of
the Tender Notice. If the firms selected by the Purchaser and the
Company are unable to agree upon a value within such four-day
period, the firms shall promptly select a third firm whose
determination shall be made promptly and shall be conclusive.
33
(e) The purchase price to be paid by the Company pursuant to this
Section 9.2 shall be (x) if such tender offer is consummated, the
purchase price that the Purchaser would have received if it had
tendered the Voting Securities purchased by the Company and all
such Voting Securities had been purchased in such tender offer,
including any increases in the price paid by the tender offeror
after exercise by the Company of its right of first refusal
hereunder, or (y) if such tender offer is not consummated, the
highest bona fide price offered pursuant thereto, in each case
with property, if any, to be valued as aforesaid. Each party
shall bear the cost of its own investment banking firm and the
parties shall share the cost of any third firm selected
hereunder.
(f) If the Company does not exercise such right by giving such notice
or fails to complete the purchase, then the Purchaser shall be
free to accept the tender offer with respect to which the Tender
Notice was given.
(g) If the Company does not purchase the shares, the Company will
provide such assurance as the tender offeror shall reasonably
request to provide the tender offeror with certificates for the
Purchaser's shares without legends referring to this Agreement.
9.3 Assignment of Rights. In the event that the Company elects to exercise
a right of first refusal under this Section 9, the Company may specify, prior to
closing such purchase and upon not less than three business days prior notice to
the Purchaser, another person as its designee to purchase the Voting Securities
to which such notice relates. If the Company shall designate another person as
the purchaser pursuant to this Section 9, the giving of notice of acceptance of
the right of first refusal by the Company shall constitute a legally binding
obligation of the Company to complete such purchase if such designee shall fail
to do so.
Section 10. Definitions
"Affiliate" of a Person has the meaning set forth in Rule 12b-2 under the
Exchange Act.
"Agreement" has the meaning set forth in the recitals hereof.
"Average Market Price" of any security at any date shall be the average of
the closing prices for a share or other single unit of such security on the 30
consecutive trading days ending on the trading date last preceding the date of
determination of such price on the principal national securities exchange on
which such security is listed, or, if such security is not listed on any
national securities exchange, the average of the closing sales prices for a
share of such security on NASDAQ or, if such closing sales prices shall not be
reported on NASDAQ, the average of the mean between the closing bid and asked
prices of a share of such security in such case as reported by The Wall Street
Journal, or, if such prices shall not be so reported, as the same shall be
reported by the National Quotation Bureau Incorporated, or, in all other cases,
the value as determined by a single nationally recognized investment banking
firm jointly selected by the Company and the Purchaser. For this purpose, the
parties shall use their best efforts to cause any determination of the value to
be made within 10 business days after the date on which the value is to be
34
measured. The determination by the investment banking firm selected in the
manner set forth above shall be conclusive.
"Beneficially Own" with respect to any securities means having "beneficial
ownership" of such securities (as determined pursuant to Rule 13d-3 under the
Exchange Act, as in effect on the date hereof, without limitation by the 60-day
provision in paragraph (d)(1)(i) thereof). The terms "Beneficial Ownership" and
"Beneficial Owner" have correlative meanings.
"Change in Control" means the occurrence of any of the following events:
(a) the direct or indirect purchase or acquisition by any Person or
13D Group (other than an Excluded Person) of Beneficial Ownership
of Voting Securities or Common Securities of the Company if,
after giving effect to such acquisition, such Person or 13D Group
would Beneficially Own Voting Securities or Common Securities
representing an Equity Percentage of 30% or more on a fully
diluted basis;
(b) the consummation by the Company or any of its Subsidiaries of a
merger, consolidation or other business combination with any
Person (other than an Excluded Person) that requires the approval
of the holders of the Company's capital stock, whether for such
transaction or the issuance of securities in such transaction, if
immediately after giving effect to such transaction, the Persons
who Beneficially Owned Voting Securities or Common Securities
immediately prior to such transaction Beneficially Own in the
aggregate Voting Securities or Common Securities (or voting
securities or common securities in the case of a surviving entity
other than the Company) representing a Voting Ownership
Percentage or a Total Ownership Percentage (or voting power or
common equity ownership of common securities in the case of a
surviving entity other than the Company) on a fully diluted basis
of less than 50% immediately after giving effect to such
transaction;
(c) the consummation by the Company of a plan of complete liquidation
or dissolution of the Company;
(d) the sale of all or substantially all of the Company's assets to
any Person (other than an Excluded Person); or
(e) the sale or transfer of all or substantially all of the Company's
rights related to the manufacture and sale of products in the
Company's Routine Product or Specialty Product division, as such
terms are defined in the Distribution Agreement, to any Person
(other than an Excluded Person).
"Change in Control of the Purchaser" shall mean any of the following: (i) a
merger or consolidation to which the Purchaser is a party if the shareholders of
the Purchaser immediately prior to the effective date of such merger or
consolidation have Beneficial Ownership of voting securities representing less
than 50 % of the Total Voting Power of the surviving corporation following such
merger or consolidation; (ii) an acquisition by any person, entity or group of
35
direct or indirect Beneficial Ownership of voting securities of the Purchaser
representing 40 % or more of the Total Voting Power of the Purchaser then issued
and outstanding; (iii) a sale of all or substantially all the assets of
Purchaser; (iv) a liquidation of Purchaser; or (v) a change in the composition
of the Board of Directors of the Purchaser such that during any consecutive
24-month period, directors who are members of the Board at the beginning of such
24-month period, or their successors who were elected, nominated or recommended
by at least a majority of the Board of Directors as constituted at the time of
their appointment to the Board, cease to constitute at least a majority of the
Board of Directors.
"Change in Control Transaction" means a transaction which, if consummated,
would result in a Change in Control.
"Change in Control Price Per Share" has the meaning set forth in Section
7.4.
"Closing" has the meaning set forth in Section 2.1.
"Closing Date" has the meaning set forth in Section 2.1.
"Common Stock" has the meaning set forth in Section 1.1.
"Common Securities" means the Common Stock, the Preferred Stock and any
other securities of the Company (excluding non-voting securities (other than
capital stock) issued to directors, officers or employees of the Company as
compensation) to the extent to which such securities by the terms thereof (i)
are not effectively limited in amount as to dividends or amounts payable upon
liquidation of the Company or (ii) are otherwise a substantial equivalent of
Common Stock as to dividends or upon liquidation of the Company or upon
consummation of a merger or other extraordinary transaction in which the
outstanding shares of Common Stock participate.
"Company" has the meaning set forth in the recitals hereof.
"Continuously Effective," with respect to a specified registration
statement, shall mean that such registration statement shall not cease to be
effective and available for transfers of Registrable Securities thereunder for
longer than either (i) any ten (10) consecutive business days, or (ii) an
aggregate of fifteen (15) business days during the period specified in the
relevant provision of this Agreement.
"Current Facility" means the equipment and space used in the operation of
the business prior to the effective date hereof, including the approximately
60,000 square feet of building space leased by the Company, and the surrounding
property leased, controlled, or used by the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
"Demand Registration" shall have the meaning set forth in Section 7.6(a).
"Distribution Agreement" has the meaning set forth in Section 7.4.
"Environment" shall mean soil, surface waters, groundwaters, land, stream
sediments, surface or subsurface strata, indoor or outdoor air, and any
environmental medium.
36
"Environmental Condition" shall mean any condition with respect to the
Environment on or off the Facilities, whether or not yet discovered, which could
or does result in any damage, loss, cost, expense, claim, demand, order, or
liability to or against the Company or the Purchaser by any third party
(including, without limitation, any government authority), including, without
limitation, any condition resulting from the operation of the Company's business
and/or the operation of the business of any other property owner or operator in
the vicinity of the Facilities and/or any activity or operation formerly
conducted by any person or entity on or off the Facilities.
"Environmental Law" shall mean any statute, rule, regulation, ordinance,
decree, or order of any Governmental Entity or court, including common law,
relating to (i) the control of any potential pollutant, pathogen, or waste; (ii)
protection of the Environment; or (iii) protection of public or occupational
health and safety, whether any of the foregoing are enacted or promulgated at
the federal, state, or local level, including but not limited to, the terms,
conditions, restrictions, and obligations imposed by any Environmental Permit
(as defined below). The term "Environmental Law" shall include, but not be
limited to, the following statutes and regulations promulgated thereunder: the
Clean Air Act, 42 U.S.C. ss. 7401 et seq., the Clean Water Act, 33 U.S.C. ss.
1251 et seq., the Superfund Amendments and Reauthorization Act, 42 U.S.C. ss.
1101 et seq.("▇▇▇▇"), the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et
seq., the Safe Drinking Water Act, 42 U.S.C. ss. 300f et seq., the Comprehensive
Environmental Response, Compensation, and Liability Act ("CERCLA"), and any
state, county, or local statues, regulations, or ordinances similar thereto.
"Environmental Permits" has the meaning set forth in Section 3.9(b).
"Equity Percentage" means, with respect to any Common Securities calculated
at any particular point in time, the ratio, expressed as a percentage of (a) the
total number of shares of Common Stock included in, or issuable upon conversion
of (whether or not then convertible), or otherwise constituting the economic
equivalent of, such Common Securities over (b) the total number of shares of
Common Stock then outstanding and the number of shares of Common Stock issuable
upon conversion of (whether or not then convertible), or otherwise constituting
the economic equivalent of, all outstanding Common Securities.
"Exchange Act" has the meaning set forth in Section 3.5.
"Excluded Person" shall mean (i) any member of the Purchaser Group, (ii)
any wholly owned Subsidiary of the Company, or (iii) any underwriter temporarily
holding Common Securities in connection with a public offering of such
securities.
"Facilities" means either the Current Facility or the New Facility or both
of them.
"Governmental Entity" means any government or any agency, bureau, board,
commission, court, department, political subdivision, tribunal, or other
instrumentality of any government (including any regulatory or administrative
agency), whether federal, state or local, domestic or foreign.
"Group" shall have the meaning comprehended by Section 13(d)(3) of the
Exchange Act and the rules and regulations promulgated thereunder.
37
"Inclusion Notice" has the meaning set forth in Section 7.6(a).
"Indemnified Party" has the meaning set forth in Section 7.6(f).
"Indemnifying Party" has the meaning set forth in Section 7.6(f).
"Intellectual Property" means any and all, whether domestic or foreign,
patents, patent applications, patent rights, trade secrets, confidential
business information, formulae, processes, copyrights, software methodologies,
claims of infringement against third parties, licenses (other than software or
similar licenses commercially available), permits, license rights, contract
rights with employees, consultants and third parties, joint venture rights or
rights under any contract or agreement involving the license or transfer of
technology (whether to or from the Company or its Subsidiaries with third
parties), rights of priority, goodwill, Trademarks, trademark rights, works of
authorships, inventions and discoveries, and other such rights generally
classified as intangible, intellectual property assets in accordance with
generally accepted accounting principles; provided that when used with respect
to the Company or its Subsidiaries, the term refers to Intellectual Property
used or held for use in or required for use in connection with the business of
the Company or its Subsidiaries as now operated or as proposed to be operated by
the Company or its Subsidiaries in the future.
"Intellectual Property Agreements" means all agreements, arrangements or
understandings (whether written or oral) pursuant to which the Company or any
Subsidiary has either purchased, sold, licensed, secured or disposed of rights
in Intellectual Property from or to another Person or agreed to do any of the
foregoing (other than licenses to commercially available off-the-shelf computer
software acquired or entered into by the Company or any Subsidiary in the
ordinary course of business).
"Material Adverse Effect" means any material adverse effect on the
financial condition, business or operations of the Company and its Subsidiaries
taken as a whole.
"NASD" has the meaning set forth in Section 3.6.
"NASDAQ" has the meaning set forth in Section 7.8.
"New Facility" means the equipment and space to which the Company has moved
the operation of the business, the approximately 60,000 square feet of building
space leased by the Company, and the surrounding property leased, controlled or
used by the Company at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Order" means any judgment, decree, order, writ, award, ruling,
stipulation, injunction or determination of an arbitrator or court or other
Governmental Entity.
"Original Shares" means the 600,000 shares of common stock of the Company
previously acquired by Chiron Diagnostics Corporation (predecessor to the
Company) as a result of the Company's exchange offer in 1998.
"Participating Holders" has the meaning set forth in Section 7.6(a).
38
"Permit" shall mean any permit, license, approval, consent, or
authorization issued by a federal, state, or local Governmental Entity pursuant
to Environmental Law, and any term, condition, restriction, or obligation
imposed thereby.
"Person" means any individual, corporation, company, association,
partnership, joint venture, limited liability company, trust or unincorporated
organization, group (within the meaning of Rule 13d-5 under the Exchange Act) or
a government or any agency or political subdivision thereof (whether foreign,
federal, state, local or otherwise).
"Pre-Approved Persons" has the meaning set forth in Section 7.3(b).
"Preferred Stock" has the meaning set forth in Section 3.2.
"Pro Rata Share" has the meaning set forth in Section 7.9.
"Proposal" means any inquiry, indication of interest, proposal or offer
made to the Company or publicly disclosed by any Person relating to any Change
in Control Transaction.
"Proprietary Information" means: all financial information, marketing
information, sales information, customer information, raw materials, know-how,
drawings, compositions, manufacturing and other specifications, analytical
procedures, flow sheets, reports, market studies, preclinical and clinical test
results, FDA and other regulatory submissions, software and other medical,
research, technical, and marketing information disclosed, directly or
indirectly, by either party or any of its Affiliates to the other party,
retroactively to December 17, 1997, in writing, marked "Confidential",
"Proprietary" or the like, or, if transmitted orally or by observation of
equipment or other material, confirmed by a writing so marked within sixty (60)
days of its disclosure, or which by its nature is information normally intended
to be held in confidence, unless the same: (a) is or becomes public knowledge
through no fault of the receiving party; (b) is legally in the possession of the
receiving party prior to receipt from the disclosing party; (c) is subsequently
and lawfully received from a third party without its breach of any nondisclosure
obligation; (d) is independently developed by employees of the receiving party
who have had no access to the Proprietary Information of the disclosing party;
or (e) is required to be disclosed by order of a court or administrative agency,
provided that in such event the party that is subject to the required disclosure
furnish the other party with adequate notice. Notwithstanding the immediately
preceding sentence, the Company agrees that all new materials and other
information which the Purchaser or its predecessor provided to the Company prior
to December 17, 1997, shall be treated as Proprietary Information.
"Purchase Price Per Share" has the meaning set forth in Section 1.2.
"Purchaser" has the meaning set forth in the recitals hereof.
"Purchaser Group" shall mean (a) the Purchaser, (b) any Subsidiary of the
Purchaser, (c) any Affiliate of the Purchaser controlled by the Purchaser such
that the Purchaser has the legal or contractual power (including, without
limitation, through negative control or through the Purchaser's designees or
representatives on the board of directors or other governing body of such
Affiliate or under the articles of incorporation or other constituent documents
of such Affiliate or as a result of the voting rights of any securities or other
39
instruments issued by such Affiliate) to cause such Affiliate to comply with the
terms of this Agreement applicable to the Purchaser, and (d) any Person with
whom the Purchaser or any Person included in the foregoing clauses (b) or (c) is
part of a 13D Group.
"Purchaser Nominee" has the meaning set forth in Section 7.3(a).
"Register," "registered," and "registration" shall refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act, and the declaration or ordering by the SEC
of effectiveness of such registration statement or document.
"Registrable Securities" shall mean (A) the Shares, (B) the Original Shares
and (C) any shares of Common Stock issued as (or issuable upon the conversion of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to or in replacement of the Common Stock described in
clauses (A), (B) and (C) above. In the event that the Common Stock is converted
into any other security pursuant to any merger, consolidation, recapitalization,
liquidation or other similar transaction, and if any securities are distributed
in respect of any Registrable Securities, then all of such securities shall be
considered Registrable Securities for purposes of this Agreement.
"Registration Expenses" shall have the meaning set forth in Section 7.6(e).
"Regulatory Approvals" means any and all certificates, permits, licenses,
franchises, concessions, grants, consents, approvals, orders, registrations,
authorizations, waivers, variances or clearance from a Governmental Entity.
"Release" shall mean any releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing, or
dumping into the Environment.
"Securities Act" has the meaning set forth in Section 2.2.
"SEC" has the meaning set forth in Section 3.5.
"SEC Reports" means (i) the Company's Annual Report on Form 10-K for the
fiscal years ended December, 2000, 1999 and 1998; and (ii) each registration
statement, report on Form 8-K and Form 8-A, proxy statement, information
statement or other document, report or statement filed by the Company or any of
its Subsidiaries with the SEC since January 1, 1998, in each case in the form
(including financial statements, schedules, exhibits and any amendments thereto)
filed with the SEC.
"Shares" has the meaning set forth in Section 1.2.
"Subsidiary" means, as to any Person, any other Person more than fifty
percent (50%) of the shares of the voting securities or other voting interests
of which are owned or controlled, or the ability to select or elect more than
fifty percent (50%) of the directors or similar managers is held, directly or
indirectly, by such first Person or one or more of its Subsidiaries or by such
first Person and one or more of its Subsidiaries. A Subsidiary that is directly
40
or indirectly wholly-owned by another Person except for directors' qualifying
shares shall be deemed wholly-owned for purposes of this Agreement.
"Substances" means any pollutant, toxic substance, hazardous substance,
hazardous material, pathogen, radioactive substance, solid waste, hazardous
waste, biological waste, petroleum, or petroleum substance as defined in or
regulated pursuant to any Environmental Law enacted on or prior to the date
hereof.
"13D Group" shall mean any group of Persons who, with respect to those
acquiring, holding, voting or disposing of Voting Securities would, assuming
ownership of the requisite percentage thereof, be required under Section 13(d)
of the Exchange Act and the rules and regulations thereunder to file a statement
on Schedule 13D with the SEC as a "person" within the meaning of Section
13(d)(3) of the Exchange Act, or who would be considered a "person" for purposes
of Section 13(g)(3) of the Exchange Act. "13D Group" when used with reference to
standards or tests that are based on securities other than Voting Securities
shall have the foregoing meaning except that the words "Voting Securities" in
the second line of the definition of "13D Group", in the case of standards or
tests based on "securities of the Company", shall be replaced with the words
"securities of the Company".
"Tender Notice" has the meaning set forth in Section 9.2(a).
"Tender Date" has the meaning set forth in Section 9.2(a).
"Threat of Release" shall mean a substantial likelihood of a Release that
requires action to prevent or mitigate damage to the Environment that may result
from such Release.
"Total Ownership Percentage" means, with respect to any Person calculated
at a particular point in time, the ratio, expressed as a percentage, of (a) the
total number of shares of Common Stock Beneficially Owned by such Person and
issuable upon conversion of (whether or not then convertible), or otherwise
constituting the economic equivalent of, all Common Securities Beneficially
Owned by such Person, over (b) the total number of shares of Common Stock then
outstanding and the number of shares of Common Stock issuable upon conversion
(whether or not then convertible) of, or otherwise constituting the economic
equivalent of, all outstanding Common Securities.
"Total Voting Power" means the total number of votes which may be cast in
the election of directors of a Person at any meeting of shareholders of the
Person if all securities entitled to vote in the election of directors of the
Person were present and voted at such meeting (other than votes that may be cast
only upon the happening of a contingency) plus, without duplication of any Votes
otherwise taken into account, the number of Votes attributable to any voting
securities issued by the Person since the most recent meeting of shareholders of
the Person.
"Trademark" shall mean any word, name, symbol or device or any combination
thereof, whether or not registered, used to identify and distinguish a Person's
goods or services, including unique products, from those manufactured or sold by
others and to indicate the source of the goods or services, even if that source
is unknown.
41
"Transfer" shall mean and include the act of selling, giving, transferring,
creating a trust (voting or otherwise), assigning or otherwise disposing of
(other than pledging, hypothecating or otherwise transferring as security) (and
correlative words shall have correlative meanings); provided, however, that any
transfer or other disposition upon foreclosure or other exercise of remedies of
a secured creditor after an event of default under or with respect to a pledge,
hypothecation or other transfer as security shall constitute a "Transfer."
"Transfer Notice" has the meaning set forth in Section 9.1(a).
"Transfer Price" has the meaning set forth in Section 9.1(a).
"Underwriters' Representative" shall mean the managing underwriter, or, in
the case of a co-managed underwriting, the managing underwriter designated as
the Underwriters' Representative by the co-managers.
"Votes" shall mean, at any time, with respect to any Voting Securities, the
total number of votes that would be entitled to be cast by the holders of such
Voting Securities generally (by the terms of such Voting Securities, the
Articles of Incorporation or any certificate of designations for such Voting
Securities) in a meeting for the election of Directors held at such time,
including the votes that would be able to be cast by holders of shares of any
preferred stock.
"Voting Ownership Percentage" shall mean, calculated at a particular point
in time, the Voting Power represented by the Voting Securities Beneficially
Owned by the Person whose Voting Ownership Percentage is being determined.
"Voting Power" shall mean, calculated at a particular point in time, the
ratio, expressed as a percentage, of (a) the Votes represented by the Voting
Securities with respect to which the Voting Power is being determined to (b)
Total Voting Power of the Company.
"Voting Securities" means the shares of Common Stock, the Preferred Stock
and any other securities of the Company entitled to vote generally for the
election of directors, and any securities (other than employee stock options)
which are convertible into, or exercisable or exchangeable for, Voting
Securities.
"Warrants" shall mean those certain warrants to purchase shares of the
Common Stock issued pursuant to that certain Preferred Stock and Warrant
Purchase Agreement dated as of February 24, 2000.
Section 11. Miscellaneous
11.1 Termination of Agreement.
(a) The Company may terminate its obligation to perform or observe
any of its covenants and agreements hereunder if the Purchaser
violates any of the covenants or agreements of the Purchaser
under this Agreement or the Distribution Agreement, and the
Purchaser may terminate its obligations to perform or observe any
of its covenants and agreements hereunder if the Company violates
42
or fails to perform any of the covenants or agreements of the
Company under this Agreement; provided, however, that the Company
or the Purchaser, as the case may be, may not terminate any of
its obligations under this Agreement pursuant to this sentence
unless it shall have delivered written notice of such default to
the other party and such default shall not have been cured within
30 calendar days after the delivery of such notice.
(b) From and after the termination of this Agreement, the covenants,
obligations and agreements of the parties set forth herein shall
be of no further force or effect and the parties shall be under
no further obligation with respect thereto.
(c) Notwithstanding the provisions of this Section 11.1, the
respective obligations of the Company and the Purchaser under
Sections 7.6 and 8.7 of this Agreement shall survive any
termination of this Agreement.
11.2 Best Efforts. As long as the other party hereto is not in default of
any material obligation under this Agreement, each of the Company and
the Purchaser shall use its best efforts to take all actions required
under any law, rule or regulation adopted subsequent to the date
hereto in order that the respective agreements and covenants of the
parties hereto may be carried out on a timely basis in the manner
contemplated by this Agreement.
11.3 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of North Carolina as applied to contracts entered
into solely between residents of, and to be performed entirely within,
such state.
11.4 Survival. The representations and warranties in Sections 3 and 4 of
this Agreement shall survive any investigation made by the Purchaser
or the Company and the Closing, and shall expire one year after the
Closing; provided that such representations and warranties shall not
be construed so as to constitute representations and warranties
concerning circumstances existing after the date of this Agreement
(except for the representation made in Section 4.1 hereof which shall
be deemed to be made by the Purchaser in connection with each purchase
of shares purchased from the Company pursuant to this Agreement).
11.5 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and assigns. Except as otherwise provided in this
Agreement, this Agreement may not be assigned by a party without the
prior written consent of the other party except by operation of law
and except, in the case of the Purchaser, to an Affiliate of the
Purchaser, in which case the assignee shall be subject to all of the
provisions of this Agreement. The Purchaser may not assign this
Agreement to any pledgee of its shares of Common Stock.
11.6 Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding
and agreement between the parties with regard to the subject matter
hereof and thereof and supersede all prior agreements and
understandings among the parties relating to the subject matter
hereof. No party shall be liable or bound to any other party in any
43
manner by any warranties, representations or covenants except as
specifically set forth herein. Neither this Agreement nor any term
hereof may be amended, waived, discharged or terminated other than by
a written instrument signed by the party against whom enforcement of
any such amendment, waiver, discharge or termination is sought.
11.7 Notices and Dates. Any notice or other communication given under this
Agreement shall be sufficient if in writing and delivered by hand, by
messenger or by courier, or transmitted by facsimile, to a party at
its address set forth below (or at such other address as shall be
designated for such purpose by such party in a written notice to the
other party hereto):
if to the Company, to it at:
Pharmanetics, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Purchaser, to it at:
Bayer Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President and General Manager,
Near Patient
Testing Segment
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
44
with copies to:
Bayer Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: NPT Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Each such notice or other communication shall for all purposes of this Agreement
be treated as effective or having been given when delivered if delivered
personally, by messenger or by courier, or, if sent by facsimile, upon
confirmation of receipt.
11.8 Specific Performance. The parties hereto acknowledge and agree that
irreparable damage would occur in the event any of the provisions of
this Agreement were not performed in accordance with their specific
terms or were otherwise breached and that such damage would not be
compensable in money damages and that it would be extremely difficult
or impracticable to measure the resultant damages. It is accordingly
agreed that any party hereto shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of the Agreement and
to enforce specifically the terms and provisions hereof, in addition
to any other remedy to which it may be entitled at law or equity, and
such party that is sued for breach of this Agreement expressly waives
any defense that a remedy in damages would be adequate and expressly
waives any requirement in an action for specific performance for the
posting of a bond by the party bringing such action.
11.9 Further Assurances. The parties hereto shall do and perform or cause
to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates,
instruments or documents as any other party may reasonably request
from time to time in order to carry out the intent and purposes of
this Agreement and the consummation of the transactions contemplated
hereby. Neither the Company nor the Purchaser shall voluntarily
undertake any course of action inconsistent with satisfaction of the
requirements applicable to them set forth in this Agreement and each
shall promptly do all such acts and take all such measures as may be
appropriate to enable them to perform as early as practicable the
obligations herein required to be performed by them.
11.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by fewer than all of the
parties, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one instrument.
45
11.11 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full
force and effect without said provision; provided, that no such
severability shall be effective if it materially changes the economic
impact of this Agreement on any party.
11.12 Captions. Headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be relied
upon in construing this Agreement. Use of any gender herein to refer
to any person shall be deemed to comprehend masculine, feminine and
neuter unless the context clearly requires otherwise.
11.13 Public Statements. The Company and the Purchaser agree not to issue
any public statement with respect to the Purchaser's investment or
proposed investment in the Company or the terms of any agreement or
covenant among them without the other party's reasonable prior written
consent, except such disclosures as may be required under applicable
law or under any applicable order, rule or regulation or, in the case
of the Company, except as necessary to pursue discussions with other
strategic Purchasers.
11.14 Brokers.
(a) The Company has not engaged, consented to or authorized any
broker, finder or intermediary to act on its behalf, directly or
indirectly, as a broker, finder or intermediary in connection
with the transactions contemplated by this Agreement. The Company
hereby agrees to indemnify and hold harmless the Purchaser from
and against all fees, commissions or other payments owing to any
such person or firm acting on behalf of the Company hereunder.
(b) The Purchaser has not engaged, consented to or authorized any
broker, finder or intermediary to act on its behalf, directly or
indirectly, as a broker, finder or intermediary in connection
with the transactions contemplated by this Agreement. The
Purchaser hereby agrees to indemnify and hold harmless the
Company from and against all fees, commissions or other payments
owning to any such person or firm acting on behalf of the
Purchaser hereunder,
11.15 Costs and Expenses. Each party hereto shall pay its own costs and
expenses incurred in connection herewith, including the fees of its
counsel, auditors and other representatives, whether or not the
transactions contemplated herein are consummated.
11.16 No Third-Party Rights. Nothing in this Agreement shall create or be
deemed to create any rights in any person or entity not a party to
this Agreement except for such rights as may exist by virtue of any
contract or other agreement existing on the date hereof.
11.17 Attorneys' Fees, The prevailing party in any litigation between the
Purchaser and the Company involving this Agreement shall be entitled
to recover from the other party its reasonable attorneys' fees and
costs,
46
11.18 Amendment. Sections 7, 8, 9, 10 and 11 of that certain Stock Purchase
Agreement dated August 28, 1998 between Cardiovascular Diagnostics,
Inc. (predecessor to the Company) and Chiron Diagnostics Corporation
(predecessor to the Purchaser) is hereby amended and restated in their
entirety in Sections 7, 8, 9, 10 and 11, respectively, of this
Agreement; provided that Section 8.6(a) shall be deemed satisfied with
respect to the Original Shares.
[The next page is the signature page.]
47
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective authorized officers as of the date first above written.
PHARMANETICS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
President
BAYER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President - Near Patient Testing
48