EXECUTION COPY
Exhibit 2
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SECURITIES PURCHASE AGREEMENT
BY AND BETWEEN
THE INVESTORS LISTED ON THE SIGNATURE PAGES HERETO
AND
ALLOS THERAPEUTICS, INC.
MARCH 2, 2005
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ALLOS THERAPEUTICS, INC.
SECURITIES PURCHASE AGREEMENT
Dated as of March 2, 2005
TO THE INVESTORS LISTED
ON THE SIGNATURE PAGES HERETO
Ladies and Gentlemen:
Allos Therapeutics, Inc., a Delaware corporation (the
"Company"), hereby agrees with each of the Investors (each an "Investor" and
collectively the "Investors") listed on the signature pages to this Securities
Purchase Agreement, dated as of March 2, 2005 (this "Agreement"), as follows:
SECTION 1. INTERPRETATION OF THIS AGREEMENT
1.1. Defined Terms
As used in this Agreement, the following terms have the
respective meanings set forth below or set forth in the Section hereof following
such term:
Additional Shares: shall have the meaning set forth in
Section 2.5.
Affiliate: shall mean any Person or entity, directly or
indirectly, controlling, controlled by or under common control with such Person
or entity.
Agreement: shall have the meaning set forth in the
Introduction hereto.
Board: shall have the meaning set forth in Section 3.3(c).
Business Day: shall mean a day other than a Saturday, Sunday
or other day on which banks in the State of New York are required or authorized
to close.
Certificate of Designations: shall mean the Certificate of
Designations, Number, Voting Powers, Preferences and Rights of Series A
Exchangeable Preferred Stock of the Company, a copy of which is attached hereto
as Exhibit B.
Closing: shall have the meaning set forth in Section 2.3.
Closing Date: shall have the meaning set forth in Section 2.3.
Code: shall mean the Internal Revenue Code of 1986, as
amended.
Common Stock: shall mean the common stock, par value $0.001
per share, of the Company.
Company: shall have the meaning set forth in the Introduction
hereto.
Company SEC Reports: shall have the meaning set forth in
Section 3.7.
Contract: shall mean any material agreement, contract,
commitment, understanding, arrangement, restriction or other instrument to which
the Company is currently a party, and which is or was required to be filed as an
exhibit to any Company SEC Report.
DGCL: shall mean the Delaware General Corporation Law.
Environmental Laws: shall mean federal, state, local and
foreign laws, regulations, and codes, as well as orders, decrees, judgments or
injunctions, issued, promulgated, approved or entered thereunder relating to
pollution, protection of the environment or public health and safety.
Exchange: shall mean the exchange of the Exchangeable
Preferred Stock for shares of Common Stock in accordance with the terms of the
Certificate of Designations.
Exchange Act: shall mean the Securities Exchange Act of 1934,
as amended.
Exchange Date Shares: shall have the meaning set forth in
Section 5.4(a).
Exchange Shares: shall mean those shares of Common Stock to be
issued upon exchange of the Exchangeable Preferred Stock.
Exchangeable Preferred Stock: shall have the meaning set forth
in Section 2.1(a).
FDA: shall mean the United States Food and Drug
Administration.
Filed Company SEC Reports: shall have the meaning set forth in
Section 3.7.
GAAP: shall have the meaning set forth in Section 3.7.
Governmental Authority: shall mean the government of any
nation, state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
HSR Act: shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
Initial Closing: shall have the meaning set forth in
Section 2.3.
Initial Closing Date: shall have the meaning set forth in
Section 2.3
Intellectual Property: shall mean all of the following, owned
or used primarily in the current or contemplated business of the Company: (i)
registered and unregistered trademarks and service marks, trade dress, product
configurations, trade names and other indications of origin, applications or
registrations in any jurisdiction pertaining to the foregoing and all goodwill
associated therewith; (ii) patentable and unpatentable inventions, discoveries,
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improvements, ideas, know-how, formula methodology, processes, compounds,
technology, software (including password unprotected interpretive code or source
code, object code, development documentation, programming tools, drawings,
specifications and data) and applications and patents in any jurisdiction
pertaining to the foregoing, including re-issues, continuations, divisions,
continuations-in-part, renewals or extensions; (iii) trade secrets, including
confidential information and the right in any jurisdiction to limit the use or
disclosure thereof; (iv) copyrights in writings, designs software, mask works or
other works, applications or registrations in any jurisdiction for the foregoing
and all moral rights related thereto; (v) database rights; (vi) Internet Web
sites, domain names and applications and registrations pertaining thereto and
all intellectual property used in connection with or contained in all versions
of the Company's Web sites; (vii) rights under all agreements relating to the
foregoing; (viii) books and records pertaining to the foregoing; and (ix) claims
or causes of action arising out of or related to past, present or future
infringement or misappropriation of the foregoing.
Institutional Investors: shall have the meaning set forth in
Section 2.5.
Investor(s): shall have the meaning set forth in the
Introduction hereto.
Investor Designees: shall have the meaning set forth in
Section 5.4(a).
Majority Investors: shall mean the Investors having
commitments to purchase at least 70% of the Shares at the Initial Closing.
Material Adverse Effect: shall mean, collectively, a material
adverse effect on, or a material adverse change in, or group of such effects on
or changes in the business, properties, business prospects, assets, liabilities,
operations or condition (financial or otherwise) of the Company taken as a
whole.
NASD: shall mean National Association of Securities
Dealers, Inc.
NASDAQ Stock Market: shall have the meaning set forth in
Section 3.23.
Organizational Documents: shall have the meaning set forth in
Section 3.1(a).
Owns, Own, Owned: shall mean the aggregate beneficial
ownership, within the meaning of Rule 13d-3 under the Exchange Act, of an
Investor and any of its Affiliates.
Person: shall mean an individual, partnership, joint-stock
company, corporation, limited liability company, trust or unincorporated
organization, and a government or agency or political subdivision thereof.
Preferred Stock: shall mean the preferred stock, par value
$0.001 per share, of the Company.
Preferred Stock Purchase Price: shall mean $22.10 per share.
Product: shall have the meaning set forth in Section 3.29.
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Prospectus: shall have the meaning set forth in Section 3.18.
Proposed Securities: shall have the meaning set forth in
Section 5.5(a)(1).
Proxy Statement: shall have the meaning set forth in
Section 5.6(b).
Registration Rights Agreement: shall have the meaning set
forth in Section 6.7.
Registration Statement: shall have the meaning set forth in
Section 3.18.
Rights Amendment: shall have the meaning set forth in
Section 6.9.
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act: shall mean the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
SEC: shall mean the Securities and Exchange Commission.
Securities Act: shall mean the Securities Act of 1933,
as amended.
Shares: shall mean the shares of Exchangeable Preferred Stock
to be purchased by the Investors hereunder.
Standstill Agreement: shall have the meaning set forth in
Section 6.8.
Subsequent Closing: shall have the meaning set forth in
Section 2.3
Subsidiary: shall mean an entity of which a Person owns,
directly or indirectly, more than 50% of the Voting Stock.
Stockholder Approval: shall have the meaning set forth in
Section 5.6(b).
Takeover Statute: shall mean any corporate takeover provision
under laws of the State of Delaware or any other state or federal "fair price",
"moratorium", "control share acquisition" or other similar antitakeover statute
or regulation.
Voting Stock: shall mean securities of any class or classes of
an entity, the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors (or Persons performing
similar functions).
WP: shall mean Warburg Pincus Private Equity VIII, L.P., a
Delaware limited partnership.
SECTION 2. AUTHORIZATION OF SHARES; PURCHASE AND SALE OF SHARES
2.1. Authorization of Shares
On or prior to the Initial Closing, the Company shall have
authorized the sale and issuance of up to an aggregate of two million seven
hundred fourteen thousand nine hundred thirty-two (2,714,932) shares of its
Series A Exchangeable Preferred Stock, par value $0.001 per share (the
"Exchangeable Preferred Stock"), on the terms and conditions set forth in this
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Agreement. The terms, limitations and relative rights and preferences of the
Exchangeable Preferred Stock shall be as set forth in the Certificate of
Designations.
2.2. Issuance of Shares
Subject to the terms and conditions set forth in this
Agreement, and in reliance upon the Company's and the Investors' representations
set forth below, at the Initial Closing, the Company shall sell to the
Investors, and the Investors shall purchase from the Company, the number of
shares of Exchangeable Preferred Stock set forth opposite each Investor's
respective name on Exhibit A, at a purchase price equal to the Preferred Stock
Purchase Price per share.
2.3. Closing and Closing Date
The closing of the transactions contemplated by Section 2.2
(the "Initial Closing") shall take place at 10:00 A.M., New York City time, on
the first Business Day following the date on which the last to be fulfilled or
waived of the conditions set forth in Sections 6 and 7 hereof shall have been
fulfilled or waived in accordance with this Agreement, or on such earlier date
as may be mutually agreed by the Company and the Majority Investors (the
"Initial Closing Date"), at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other location as the Majority
Investors and the Company shall mutually select. The subsequent closing(s) of
the sale and purchase of Shares as set forth in Section 2.5 below shall take
place at such time and place as the Company and the Investors participating
therein shall mutually agree (a "Subsequent Closing") (the Initial Closing and
any Subsequent Closing shall collectively be referred to herein as a "Closing"
and each such date is referred to as a "Closing Date"). The Company's agreement
with each Investor is a separate agreement and the sales to each Investor are
separate sales.
2.4. Delivery
The sale and purchase of the Shares shall be effected on the
applicable Closing Date by the Company executing and delivering to each
Investor, duly registered in such Investor's name, duly executed stock
certificates evidencing the Shares being purchased by it, against payment of the
purchase price therefore by wire transfer of immediately available funds to such
account as the Company shall designate in writing.
2.5. Subsequent Sales of Shares.
At any time on or before March 8, 2005, the Company may sell
up to the balance of the authorized shares of Exchangeable Preferred Stock
authorized for sale as set forth in Section 2.1 above that are not sold to the
Investors at the Initial Closing (the "Additional Shares") to not more than
three (3) institutional investors (the "Institutional Investors") each Owning
more than four percent (4%) of the Common Stock outstanding on the date of this
Agreement (as certified by such Institutional Investors in writing). All such
sales shall be made on the terms and conditions set forth in this Agreement, and
(i) the representations and warranties of the Company set forth in Section 3
hereof (and the Disclosure Schedule) shall speak as of the Initial Closing and
the Company shall have no obligation to update any such disclosure, and (ii) the
representations and warranties of the Institutional Investors in Section 4
hereof shall speak as of such Subsequent Closing. Not more than an aggregate of
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four hundred fifty-two thousand four hundred eighty-nine (452,489) Additional
Shares of Exchangeable Preferred Stock may be sold to the Institutional
Investors, and no Institutional Investor shall acquire more than the number of
shares of Exchangeable Preferred Stock that results in such Institutional
Investor Owning the same percentage of the Company's outstanding Common Stock
(including, for purposes of this determination, all shares of Common Stock
issuable upon exchange of the Exchangeable Preferred Stock) immediately after
the Subsequent Closing (assuming, for purposes of this determination, the
issuance of all shares of Exchangeable Preferred Stock authorized for sale
pursuant to Section 2.1) as such Institutional Investor Owned on the date of
this Agreement (as certified by such Institutional Investor in writing). The
signature pages to this Agreement may be amended by the Company without the
consent of the Investors to include any Institutional Investors upon the
execution by such Institutional Investors of a counterpart signature page
hereto. Any Shares sold pursuant to this Section 2.5 shall be deemed to be
"Shares" for all purposes under this Agreement and any Institutional Investors
shall be deemed to be "Investors" for all purposes under this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by
the Company to the Investors at the Initial Closing or any Subsequent Closing,
as the case may be, the Company represents and warrants to the Investors as of
the date of this Agreement (or, if made as of a specified date, as of such date)
that:
3.1. Corporate Organization
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Attached
hereto as Exhibits C and D, respectively, are true and complete copies of the
Restated Certificate of Incorporation and By-laws of the Company, as amended
through the date hereof (collectively, the "Organizational Documents").
(b) The Company has all requisite corporate power and
authority to carry on its business as now conducted. The Company has all
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder.
(c) The Company has filed all necessary documents to qualify
to do business as a foreign corporation in each jurisdiction in which the
conduct of the Company's business or the nature of the property owned requires
such qualification, except where the failure to so qualify would not be
reasonably likely to have a Material Adverse Effect.
3.2. Subsidiaries
The Company has no subsidiaries and no equity interests or
investments in any partnership, trust or other entity or organization.
3.3. Capitalization
(a) The authorized capital stock of the Company, immediately
prior to the Initial Closing, shall consist of (i) 75,000,000 shares of Common
Stock and (ii) 10,000,000 shares of Preferred Stock, of which 2,714,932 shares
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shall be designated as Exchangeable Preferred Stock and 1,000,000 shares shall
be designated as Series A Junior Participating Preferred Stock. As of March 2,
2005, the issued and outstanding shares of capital stock of the Company
consisted of 31,175,783 shares of Common Stock and no shares of Preferred Stock.
(b) All the outstanding shares of capital stock of the Company
have been duly and validly issued and are fully paid and non-assessable, and
were issued in accordance with the registration or qualification requirements of
the Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom. As of the Initial Closing Date, the Shares will be duly
authorized and, upon issuance, sale and delivery as contemplated by this
Agreement, the Shares will be validly issued, fully paid and non-assessable
securities of the Company. Upon their issuance in accordance with the terms of
the Exchangeable Preferred Stock, the shares of Common Stock issuable upon
exchange of the Exchangeable Preferred Stock will be free and clear of any and
all security interests, pledges, liens, charges, claims, options, restrictions
on transfer, preemptive or similar rights, proxies and voting or other
agreements, or other encumbrances of any nature whatsoever, except for those
provided for herein or otherwise created or imposed upon the Investors and other
than restrictions on transfer imposed by federal or state securities laws, and
except as set forth in the Standstill Agreement.
(c) On the Initial Closing Date, except for the Exchangeable
Preferred Stock and except as disclosed in the Filed Company SEC Reports, there
will be no shares of Common Stock or any other equity security of the Company
issuable upon conversion, exchange or exercise of any outstanding security of
the Company, nor will there be any rights, options, calls or warrants
outstanding or other agreements to acquire shares of Common Stock nor will the
Company be contractually obligated to purchase, redeem or otherwise acquire any
of its outstanding shares. Except to the extent otherwise provided in this
Agreement or the Standstill Agreement or as disclosed in the Filed Company SEC
Reports, (i) no stockholder of the Company is entitled to any preemptive or
similar rights to subscribe for shares of capital stock of the Company and no
stockholder of the Company has any rights, contractual or otherwise, to
designate members of the Company's Board of Directors (the "Board"), other than
in accordance with the DGCL, and (ii) there are no stockholder, voting or other
agreements relating to the rights and obligations of the Company's stockholders.
3.4. Corporate Proceedings, etc.
The Company has authorized the execution, delivery and
performance of this Agreement and each of the transactions and agreements
contemplated hereby. No other corporate action is necessary to authorize such
execution, delivery and performance of this Agreement, and upon such execution
and delivery, this Agreement shall constitute the valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and general principles of equity. The Company has
authorized the issuance and delivery of the Shares in accordance with this
Agreement and, subject to the issuance of the Shares, the Company has reserved
for issuance shares of Common Stock initially issuable upon exchange of the
Shares.
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3.5. Consents and Approvals
Except as otherwise provided in this Agreement, the execution
and delivery by the Company of this Agreement, the issuance of any of the
Shares, the performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby do not
require the Company to obtain any consent, approval, clearance or action of, or
make any filing, submission or registration with, or give any notice to, any
governmental authority or judicial authority.
3.6. Absence of Defaults, Conflicts, etc.
(a) The execution and delivery of this Agreement by the
Company does not, and the fulfillment of the terms hereof and thereof by the
Company, and the issuance, sale and delivery of the Shares will not, (i) violate
or conflict with the Organizational Documents; (ii) result in a breach of any of
the terms, conditions or provisions of, or constitute a default (with or without
the giving of notice or the passage of time (or both)) under, or result in the
modification of, or permit the acceleration of rights under or termination of,
any Contract of the Company; (iii) violate any law, ordinance, standard,
judgment, rule or regulation of any court or federal, state or foreign
regulatory board or body or administrative agency having jurisdiction over the
Company or over its properties or business; or (iv) result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company, except,
in the cases of clauses (ii), (iii) or (iv), where such event would not be
reasonably likely to have a Material Adverse Effect.
(b) The Company is not in default under or in violation of
(and no event has occurred and no condition exists which, upon notice or the
passage of time (or both), would constitute a default under) (i) the Company's
Organizational Documents, (ii) any Contract of the Company, (iii) any license,
permit or authorization to which the Company is a party or by which it may be
bound or (iv) any order, writ, injunction or decree of any court or any Federal,
state, municipal or other domestic or foreign governmental department,
commission, board, bureau, agency or instrumentality except, in the case of
clause (ii), (iii) or (iv), for defaults or violations which would not be
reasonably likely to have a Material Adverse Effect. Each Contract of the
Company is valid, binding and enforceable against the Company and, to the
Company's best knowledge, the other parties thereto, in accordance with its
terms, and in full force and effect on the date hereof.
3.7. Reports and Financial Statements
The Company has furnished or made available to the Investors,
via its ▇▇▇▇▇ filings with the SEC, true and complete copies of the Company's
(i) Annual Reports on Form 10-K for the fiscal years ended December 31, 2003,
December 31, 2002, December 31, 2001, and December 31, 2000, as amended, as
filed with the SEC, (ii) proxy statements, as amended, related to all meetings
of its stockholders (whether annual or special) held since March 27, 2000, and
(iii) all other reports filed with or registration statements declared effective
by the SEC since March 27, 2000, except registration statements on Form S-8
relating to employee benefit plans, which are all the documents (other than
preliminary material) that the Company was required to file with the SEC since
that date (the documents referred to in clauses (i) through (iii), together with
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all accompanying exhibits and all information incorporated therein by reference,
being referred to herein collectively as the "Company SEC Reports"). The Company
has timely made all filings and furnishings with the SEC required of the Company
pursuant to the Exchange Act during the 12 months preceding the date of this
Agreement. As of their respective dates, the Company SEC Reports were duly filed
or furnished with the SEC and complied in all material respects with the
requirements of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations promulgated by the SEC and
NASDAQ Stock Market thereunder applicable to such Company SEC Reports. Except to
the extent that information contained in any Company SEC Report filed or
furnished with the SEC and made publicly available prior to the date of this
Agreement (a "Filed Company SEC Report") has been revised or superseded by a
later Filed Company SEC Report, as of their respective dates, none of the Filed
Company SEC Reports contained any untrue statement of a material fact or omitted
to state 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. The audited consolidated financial statements included in the
Filed Company SEC Reports comply in all material respects with applicable
accounting requirements of the Securities Act or the Exchange Act and with the
published rules and regulations of the SEC with respect thereto. The financial
statements (including the schedules and notes thereto) included in the Company's
SEC Reports (i) have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods indicated, except as disclosed therein, and (ii) present fairly, in all
material respects, the financial position of the Company as at the dates thereof
and the results of its operations and cash flow for the periods then ended,
except that the unaudited financial statements may not be in accordance with
GAAP because of the absence of footnotes normally contained therein and are
subject to normal year-end audit adjustments.
3.8. Absence of Certain Developments
Except as disclosed in the Filed Company SEC Reports, since
December 31, 2003, there has been no (i) change or event which is reasonably
likely to have a Material Adverse Effect, (ii) declaration, setting aside or
payment of any dividend or other distribution with respect to the capital stock
of the Company, (iii) issuance of capital stock (other than pursuant to (1) the
exercise of options, warrants, or convertible securities outstanding at such
date or (2) employee benefit plans) or options, warrants or rights to acquire
capital stock (other than the rights granted pursuant to employee benefit
plans), (iv) material loss, destruction or damage to any property of the
Company, whether or not insured, (v) acceleration of any indebtedness for
borrowed money or the refunding of any such indebtedness, (vi) labor trouble
involving the Company or any material change in its personnel or the terms and
conditions of employment, (vii) waiver of any valuable right in favor of the
Company, (viii) loan or extension of credit to any officer of the Company or to
any employee of the Company in an amount in excess of $25,000 or (ix)
acquisition or disposition of any material assets (or any contract or
arrangement therefore) or any other material transaction by the Company
otherwise than for fair value in the ordinary course of business.
3.9. Compliance with Law
(a) The Company is not in violation of any laws, ordinances,
governmental rules or regulations to which it is subject, including without
limitation laws or regulations relating to the environment or to occupational
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health and safety, except for violations that would not be reasonably likely to
have a Material Adverse Effect, and no material expenditures are known to be or
expected to be required in order to cause its current operations or properties
to comply with any such laws, ordinances, governmental rules or regulations,
except such expenditures as may be required in order for the Company to comply
with Section 404 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(b) The Company has all licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its property or to the
conduct of its business in the manner described in the Filed Company SEC
Reports, which if violated or not obtained would be reasonably likely to have a
Material Adverse Effect. The Company has not been finally denied any application
for any such licenses, permits, franchises or other governmental authorizations
necessary to its business.
(c) The Company has not received any written notice from the
FDA or any other federal, state or foreign regulatory agency questioning the
manufacturing practices of any of the Company's contractors and the Company is
not aware of any intent to deliver any such written notice.
(d) The Company is in material compliance with and is taking
all action required for the Company to remain in material compliance with all
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the rules and regulations promulgated
thereunder and all provisions of the NASDAQ Stock Market, in each case as to
which the Company is required to be in compliance.
3.10. Litigation
Except as disclosed in the Filed Company SEC Reports, there is
no legal action, suit, arbitration or other legal, administrative or other
governmental investigation, inquiry or proceeding (whether federal, state, local
or foreign) pending or, to the best of the Company's knowledge, threatened
against or affecting the Company or any of its properties, assets or business
which would be reasonably likely to have a Material Adverse Effect. The Company
is not subject to any order, writ, judgment, injunction, decree, determination
or award of any court or of any governmental agency or instrumentality (whether
federal, state, local or foreign).
3.11. Absence of Undisclosed Liabilities
Except as disclosed in the Filed Company SEC Reports,
subsequent to the respective dates as of which such information is given in the
Filed Company SEC Reports, the Company has not incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company taken as a whole,
and there has not been any change in the capital stock, or material increase in
the short-term or long-term debt, of the Company taken as a whole.
3.12. Employees
(a) The Company is not engaged in any unfair labor practice or
discriminatory employment practice and no complaint of any such practice against
the Company has been filed or, to the best of the Company's knowledge,
threatened to be filed with or by the National Labor Relations Board, the Equal
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Employment Opportunity Commission or any other administrative agency, federal or
state, that regulates labor or employment practices, nor is any grievance filed
or, to the best of the Company's knowledge, threatened to be filed, against the
Company by any employee pursuant to any collective bargaining or other
employment agreement to which the Company is a party or is bound which, in any
such case, would be reasonably likely to have a Material Adverse Effect. The
Company is in compliance with all applicable foreign, federal, state and local
laws and regulations regarding occupational safety and health standards except
to the extent that noncompliance would not be reasonably likely to have a
Material Adverse Effect, and has received no complaints from any foreign,
federal, state or local agency or regulatory body alleging such violations of
any such laws and regulations.
(b) The Company is not aware that any officer or key employee,
or that any group of key employees, intends to terminate their employment with
the Company, nor does the Company have a present intention to terminate the
employment of any of the foregoing.
3.13. Tax Matters
There are no federal, state, county or local taxes due and
payable by the Company which have not been paid or will not be paid prior to the
time they become delinquent. The Company has duly filed (except in cases where
valid extensions have been obtained) all federal, state, county and local tax
returns required to have been filed by it and there are in effect no waivers of
applicable statutes of limitations with respect to taxes for any year. No tax
deficiency has been determined adversely to the Company which would be
reasonably likely to have Material Adverse Effect. The Company is not currently
subject to a federal or state tax audit of any kind.
3.14. Intellectual Property
(a) The Company owns all right, title and interest in and to,
or has a valid and enforceable license to use all the Intellectual Property used
by it in connection with its business, which represents all intellectual
property rights necessary to the conduct of its business as now conducted and
presently contemplated, except where the failure to own or license such
Intellectual Property would not be reasonably likely to have a Material Adverse
Effect. The Company is not in breach of any license agreement concerning the
Company's Intellectual Property, including the agreements between or among the
Company and the Center for Innovating Technology, the Virginia Commonwealth
University or the Virginia Commonwealth University Intellectual Property
Foundation, except for breaches that would not be reasonably likely to have a
Material Adverse Effect. Except as disclosed in the Filed Company SEC Reports,
to the best knowledge of the Company, there are no conflicts with or
infringements of any Intellectual Property by any third party, except for
conflicts or infringements that would not be reasonably likely to have a
Material Adverse Effect. To the knowledge of the Company, the conduct of the
business of the Company as currently conducted or contemplated does not conflict
with or infringe any proprietary right of any third party, except for conflicts
or infringements that would not be reasonably likely to have a Material Adverse
Effect. There is no claim, suit, action or proceeding pending or, to the
knowledge of the Company, threatened against the Company: (i) alleging any such
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conflict or infringement with any third party's proprietary rights or (ii)
challenging the Company's ownership or use of, or the validity or enforceability
of any Intellectual Property.
(b) To the Company's knowledge, no present or former employee,
officer or director of the Company, or agent or outside contractor of the
Company, holds any right, title or interest, directly or indirectly, in whole or
in part, in or to any Intellectual Property, except those formally assigned or
transferred to the Company by such employees, officers or directors. No person
has claimed rights to any patent owned by or licensed to the Company by reason
of being an inventor or co-inventor of any claim in such patents, other than the
inventors named on each such patent, and all such inventors have duly assigned
their rights to the patents to the Company or the assignor or licensor of such
patents to the Company.
(c) Neither the execution nor delivery of this Agreement, nor
the carrying on of the Company's business by the employees of and consultants to
the Company will, to the Company's knowledge, conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
any Contract (including covenants or commitments of any nature) which any of
such employees or consultants is now obligated. The Company does not believe it
is or will be necessary to utilize any inventions of any of its employees (or
people it currently intends to hire) made prior to their employment by the
Company, except those formally assigned or transferred to the Company by such
employees.
(d) To the Company's knowledge: (i) no trade secret of the
Company has been used, disclosed or appropriated to the detriment of the Company
or for the benefit of any Person other than the Company; and (ii) no employee,
independent contractor or agent of the Company has misappropriated any trade
secrets or other confidential information of any other Person in the course of
the performance of his or her duties as an employee, independent contractor or
agent of the Company, except in the cases of clauses (i) and (ii) as would not
be reasonably likely to have a Material Adverse Effect. All employees of the
Company have executed agreements acknowledging their obligation to assign all
inventions made in the course of their employment to the Company.
(e) Each employee, consultant and contractor of the Company
who has had access to confidential information of the Company which is necessary
for the conduct of the Company's business as currently conducted or as currently
proposed to be conducted has executed an agreement to maintain the
confidentiality of such confidential information and has executed appropriate
agreements that are substantially consistent with the Company's standard forms
thereof.
3.15. Title to Tangible Assets
The Company has good and marketable title to its properties
and assets and good title to all its leasehold estates, in each case except as
disclosed in the Filed Company SEC Reports subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than or resulting from taxes which have not
yet become delinquent and minor liens and encumbrances which do not in any case
materially detract from the value of the property subject thereto or materially
impair the operations of the Company and which have not arisen otherwise than in
the ordinary course of business.
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3.16. Condition of Properties
The property, assets and operations of the Company comply with
all applicable ordinances, regulations and laws, except where the failure to so
comply would not be reasonably likely to have a Material Adverse Effect.
3.17. Transactions with Related Parties
Except as disclosed in the Filed Company SEC Reports, the
Company is not a party to any agreement with any of the Company's directors,
officers or stockholders or any Affiliate or family member of any of the
foregoing under which it: (i) leases any real or personal property (either to or
from such Person); (ii) licenses technology (either to or from such Person);
(iii) is obligated to purchase any tangible or intangible asset from or sell
such asset to such Person; (iv) purchases products or services from such Person;
or (v) has borrowed money from or lent money to such Person. The Company does
not employ as an employee or engage as a consultant any family member of any of
the Company's directors, officers or stockholders. Except as set forth in the
Standstill Agreement, to the best knowledge of the Company, there exist no
agreements among stockholders of the Company to act in concert with respect to
the voting or holding of the Company's securities.
3.18. Registration Statement and Prospectus
A registration statement on Form S-3 (File No. 333-113353)
(the "Registration Statement") with respect to the Shares has been prepared by
the Company in conformity with the requirements of the Securities Act and the
rules and regulations of the SEC thereunder and has been filed with the
Commission under the Securities Act. The Registration Statement, which shall be
deemed to include all information omitted therefrom in reliance upon Rule 430A
and contained in the Prospectus referred to below, has been declared effective
by the SEC under the Securities Act and no post-effective amendment to the
Registration Statement has been filed as of the date of this Agreement. The form
of the prospectus filed by the Company with the SEC pursuant to its Rule 424(b)
and Rule 430A and dated April 21, 2004, is herein referred to as the
"Prospectus."
The SEC has not issued an order preventing or suspending the
use of the Prospectus relating to the offering of the Shares nor instituted
proceedings for that purpose. The Registration Statement and the Prospectus
contain all statements which are required to be stated therein by, and in all
respects conform, as the case may be, to the requirements of the Securities Act
and the rules and regulations of the SEC thereunder. Neither the Registration
Statement nor any amendment thereto, nor the Prospectus, contains, as the case
may be, any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.
3.19. Registration Rights
Except as disclosed in the Filed Company SEC Reports and
pursuant to the Registration Rights Agreement, the Company will not, as of the
Initial Closing Date, be under any obligation to register any of its securities
under the Securities Act.
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3.20. Brokerage
Except for fees payable pursuant to that certain letter
agreement dated February 24, 2005, by and between the Company and ▇▇▇▇▇▇▇ &
Company, a copy of which has been provided to WP, there are no claims for
brokerage commissions or finder's fees or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement
made by or on behalf of the Company and the Company agrees to indemnify and hold
the Investors harmless against any costs or damages incurred as a result of any
such claim.
3.21. Illegal or Unauthorized Payments; Political
Contributions
Neither the Company nor, to the best of the Company's
knowledge (after reasonable inquiry of its officers and directors), any of the
officers, directors, employees, agents or other representatives of the Company
or any other business entity or enterprise with which the Company is or has been
affiliated or associated, has, directly or indirectly taken any action
prohibited by Section 30A of the Exchange Act.
3.22. Takeover Statute
The Board has taken all action necessary to approve the
transactions contemplated hereby, as it relates to the Investors, for the
purposes of the provisions of Section 203 of the DGCL. To the Company's
knowledge, no other Takeover Statute is applicable to the transactions
contemplated hereby.
3.23. NASDAQ Compliance
The Common Stock is registered pursuant to Section 12(g) of
the Exchange Act, and is listed on The NASDAQ National Market (the "NASDAQ Stock
Market"), and trading in the Common Stock has not been suspended and the Company
has taken no action designed to, or that is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the NASDAQ Stock Market, nor has the Company
received any notification that the SEC or the NASD is contemplating terminating
such registration or listing. To the best of the Company's knowledge, the
Company and the Common Stock meet the criteria for continued listing and trading
on the NASDAQ Stock Market.
3.24. Reporting Status
The Company is currently eligible to register the resale of
Common Stock in a secondary offering on a registration statement on Form S-3
under the Securities Act.
3.25. No Manipulation of Common Stock
The Company has not taken and will not take any action outside
the ordinary course of business designed to or that might reasonably be expected
to cause or result in unlawful manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares or the Exchange Shares.
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3.26. Accountants
PricewaterhouseCoopers LLP has advised the Company that it is,
and to the best knowledge of the Company it is, an independent accountant as
required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder.
3.27. Internal Accounting Controls
The Company maintains a system of internal accounting controls
sufficient, in the judgment of the management of the Company, to provide
reasonable assurance that: (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
3.28. Environmental Matters
To its knowledge, the Company is in compliance with all
applicable Environmental Laws, except where any failure to comply would not be
reasonably likely to have a Material Adverse Effect. There is no civil, criminal
or administrative judgment, action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending or to the
Company's knowledge threatened against the Company pursuant to Environmental
Laws. To the Company's knowledge, there are no past or present events,
conditions, circumstances, activities, practices, incidents, agreements, actions
or plans which could reasonably be expected to prevent compliance with, or which
have given rise to or will give rise to liability which would have a Material
Adverse Effect, under Environmental Laws.
3.29. FDA Approval
After due investigation, (i) the Company has no knowledge that
any Governmental Authority, including, but not limited to, the FDA, will
ultimately prohibit the marketing, sale, license or use in the United States or
elsewhere of any product (including, but not limited to, EFAPROXYN) proposed to
be developed, produced or marketed by the Company (each, a "Product"), (ii) to
the Company's knowledge, the FDA has not prohibited any product or process from
being marketed or used in the United States which product or process is
substantially similar in function or composition to the Company's lead product
candidate, EFAPROXYN, (iii) the Company has no Product on clinical hold nor does
the Company have any reason to expect that any Product is reasonably likely to
be placed on clinical hold, (iv) the Company has made available to WP all
submissions to the FDA and the FDA responses (and other material correspondence
received from or submitted to the FDA), including, but not limited to, all FDA
warning letters, regulatory letters and notice of adverse finding letters and
the relevant responses, received by the Company or any agent thereof relative to
the development of its Products, including, but not limited to, EFAPROXYN, (v)
none of the Company or its Affiliates or, to the Company's knowledge, its
employees or agents, has ever been sanctioned, formally or otherwise, by the
FDA, and (vi) there has not been any suspensions or debarments by the FDA or
other federal departments and state regulatory bodies against the Company or, to
the knowledge of the Company, any current or former employee of the Company.
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3.30. Insurance
The Company maintains and will continue to maintain insurance
with financially sound and reputable insurers in such amounts and covering such
risks as is reasonably adequate and consistent with industry practice for the
conduct of its business and the value of its property, all of which insurance is
in full force and effect. The Company has not received notice from, and has no
knowledge of any threat by, any insurer that has issued any insurance policy to
the Company that such insurer intends to deny coverage under or cancel,
discontinue or not renew any insurance policy presently in force.
3.31. Transfer Taxes
On the Initial Closing Date, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
sale and issuance of the Shares hereunder will be, or will have been, fully paid
or provided for by the Company and the Company will have complied with all laws
imposing such taxes.
3.32. Investment Company
The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for an investment company,
within the meaning of the Investment Company Act of 1940, as amended.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor severally represents and warrants to the Company
as of the date of this Agreement (or, if made as of a specified date, as of such
date) that:
(a) It is acquiring the Shares and, subject to Stockholder
Approval, the Exchange Shares for its own account for investment and not with a
view towards the resale, transfer or distribution thereof, nor with any present
intention of distributing the Shares or the Exchange Shares, but subject,
nevertheless, to any requirement of law that the disposition of the Investor's
property shall at all times be within the Investor's control, and without
prejudice to the Investor's right at all times to sell or otherwise dispose of
all or any part of such securities under a registration under the Securities Act
or under an exemption from said registration available under the Securities Act.
(b) It has full power and legal right to execute and deliver
this Agreement and to perform its obligations hereunder.
(c) It is a validly existing partnership, limited liability
company, trust or corporation, as the case may be, duly organized under the laws
of its jurisdiction of organization or formation.
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(d) It has taken all action necessary for the authorization,
execution, delivery, and performance of this Agreement and its obligations
hereunder, and, upon execution and delivery by the Company, this Agreement shall
constitute the valid and binding obligation of such Investor, enforceable
against such Investor in accordance with its terms, except that such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
general principles of equity.
(e) There are no claims for brokerage commissions or finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement made by or on behalf of such Investor
and such Investor agrees to indemnify and hold the Company harmless against any
costs or damages incurred as a result of any such claim.
(f) It has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of its
investment in the Company as contemplated by this Agreement, and is able to bear
the economic risk of such investment for an indefinite period of time. It has
been furnished access to such information and documents as it has requested and
has been afforded an opportunity to ask questions of and receive answers from
representatives of the Company concerning the terms and conditions of this
Agreement and the purchase of the Shares contemplated hereby. It is a "qualified
institutional buyer" within the meaning of Rule 144A(a) of the Securities Act or
an "accredited investor" within the meaning of Rule 501(a) of Regulation D under
the Securities Act.
(g) Except such consents, approvals and filings, the failure
to obtain or make would not, individually or in the aggregate, have a material
adverse effect on the ability of the Investor to consummate the transactions
contemplated by this Agreement, the execution and delivery by it of this
Agreement and the performance by such Investor of its obligations hereunder and
the consummation by such Investor of the transactions contemplated hereby do not
require such Investor to obtain any consent, approval, clearance or action of,
or make any filing, submission or registration with, or give any notice to, any
governmental authority or judicial authority.
(h) The execution and delivery of this Agreement by such
Investor do not, and the fulfillment of the terms hereof and thereof by such
Investor will not, (i) violate or conflict with its partnership agreement, trust
agreement, the articles of incorporation, other constitutive documents or
by-laws (or other similar applicable documents) of the Investor, as applicable;
(ii) result in a breach of any of the terms, conditions or provisions of, or
constitute a default (with or without the giving of notice or the passage of
time (or both)) under, or result in the modification of, or permit the
acceleration of rights under or termination of, any material contract to which
such Investor is a party or (iii) violate any law, ordinance, standard,
judgment, rule or regulation of any court or federal, state or foreign
regulatory board or body or administrative agency having jurisdiction over such
Investor or over its respective properties or businesses; except, in the cases
of clauses (ii) and (iii) where such event would not be reasonably likely to
have a material adverse effect on the Investor's ability to consummate the
transactions contemplated by this Agreement.
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(i) On the date of this Agreement, the Investor (1) is not an
"interested stockholder" within the meaning of Section 203(c)(5) of the DGCL or
(2) has been an "interested stockholder" for a period of more than three years
preceding the date of this Agreement.
SECTION 5. ADDITIONAL AGREEMENTS OF THE PARTIES
5.1. Resale of Shares
Each Investor severally covenants that it will not sell or
otherwise transfer the Shares or, subject to Stockholder Approval, the Exchange
Shares, except pursuant to an effective registration under the Securities Act or
in a transaction which, in the opinion of counsel reasonably satisfactory to the
Company, qualifies as an exempt transaction under the Securities Act and the
rules and regulations promulgated thereunder.
5.2. Covenants Pending Closing
Pending the Initial Closing, the Company will conduct its
business in the ordinary course, and will not, without the Investors' prior
written consent, such consent not to be unreasonably withheld, delayed or
conditioned, take any action which would result in any of the representations or
warranties contained in this Agreement not being true at and as of the time
immediately after such action, or in any of the covenants contained in this
Agreement becoming incapable of performance. Pending the Initial Closing, the
Company will promptly advise the Investors of any action or event of which it
becomes aware which has the effect of making materially incorrect any of such
representations or warranties or which has the effect of rendering any of such
covenants incapable of performance.
5.3. Further Assurances
The Company and each Investor shall execute such documents and
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. The Company and each Investor shall use its reasonable efforts to
fulfill or obtain the fulfillment of the conditions to the Closing as promptly
as practicable.
5.4. Investor Designees
(a) For so long as WP Owns at least two thirds of (i) the
aggregate number of Shares acquired by it on the Initial Closing Date, or (ii)
in the event the Exchange occurs, the aggregate number of shares of Common Stock
Owned by WP immediately after giving effect to the Exchange (the "Exchange Date
Shares"), then, subject to applicable law and the rules and regulations of the
SEC and NASDAQ Stock Market, the Company will nominate and use its reasonable
best efforts to cause to be elected and cause to remain as directors on the
Board two individuals designated by WP (each, an "Investor Designee" and
collectively, the "Investor Designees").
(b) In the event Section 5.4(a) is no longer applicable and
for so long as WP Owns at least 50% of (i) the aggregate number of Shares
acquired by it on the Initial Closing Date, or (ii) in the event the Exchange
occurs, the Exchange Date Shares, then, subject to applicable law and the rules
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and regulations of the SEC and NASDAQ Stock Market, the Company will nominate
and use its reasonable best efforts to cause to be elected and cause to remain
as a director on the Board, one Investor Designee.
(c) Subject to applicable law and the rules and regulations of
the SEC and NASDAQ Stock Market, for so long as at least one Investor Designee
continues to serve as a director on the Board, the Company will use its
reasonable best efforts to cause one of the Investor Designees to be a member of
each principle committee of the Board.
5.5. Subscription Right
(a) If at any time after the date hereof, the Company
determines to issue equity securities of any kind (for these purposes, the term
"equity securities" shall include, without limitation, Common Stock, warrants,
options or other rights to acquire equity securities convertible or exchangeable
into equity securities) of the Company (other than: (i) to the public in a firm
commitment underwriting pursuant to a registration statement filed under the
Securities Act; (ii) the issuance of equity securities to employees, officers or
directors of, or consultants or advisors to the Company pursuant to any employee
benefit plan approved by the Board; (iii) any equity securities issued as
consideration in connection with an acquisition, merger or consolidation by the
Company provided such acquisition, merger or consolidation has been approved by
the Board; (iv) securities issued in connection with licensing, marketing or
distribution arrangements or similar strategic transactions approved by the
Board; (v) stock issued or issuable pursuant to any rights or agreements
outstanding as of the date of this Agreement, including warrants outstanding as
of the date of this Agreement to purchase up to 1,706,893 shares of Common
Stock, and stock issued pursuant to any such rights or agreements granted after
the date of this Agreement approved by the Board; provided that the subscription
rights established by this Section 5.5 apply with respect to the initial sale or
grant by the Company of such rights or agreements; (vi) shares of Exchangeable
Preferred Stock issued as dividends with respect to the Shares purchased by the
Investors hereunder, or (vii) shares of Common Stock issued or issuable upon
exchange of the Exchangeable Preferred Stock) then, for so long as WP Owns at
least two-thirds of (i) the aggregate number of Shares acquired by it on the
Initial Closing Date, or (ii) in the event the Exchange occurs, the Exchange
Date Shares, the Company shall:
(1) give written notice to WP setting forth in reasonable
detail (A) the designation and all of the terms and provisions of the
securities proposed to be issued (the "Proposed Securities"),
including, where applicable, the voting powers, preferences and
relative participating, optional or other special rights, and the
qualification, limitations or restrictions thereof and interest rate
and maturity; (B) the price and other terms of the proposed sale of
such securities; (C) the amount of such Proposed Securities; and (D)
such other information as WP may reasonably request in order to
evaluate the proposed issuance; and
(2) subject to applicable law and the rules and regulations of
the SEC and NASDAQ Stock Market, offer to issue to WP upon the terms
described in the notice delivered pursuant to Section 5.5(a)(1) above,
a portion of the Proposed Securities equal to (i) the percentage of the
Common Stock (including the Exchange Shares issuable upon the Exchange,
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if the Exchange has not occurred) Owned by WP immediately prior to the
issuance of the equity securities relative to the total number of
shares of Common Stock (including the Exchange Shares issuable upon the
Exchange, if the Exchange has not occurred) outstanding immediately
prior to the issuance of the equity securities, multiplied by (ii) the
total number of Proposed Securities. Notwithstanding the foregoing, the
Company shall not be required to offer or sell such Proposed Securities
to WP if it would cause the Company to be in violation of applicable
federal securities laws by virtue of such offer or sale.
(b) WP must exercise its purchase rights hereunder within 5
Business Days after receipt of such notice from the Company. To the extent that
the Company offers two or more securities in units, WP must purchase such units
as a whole and will not be given the opportunity to purchase only one of the
securities making up such unit.
(c) Upon the expiration of the offering period described
above, the Company will be free to sell such Proposed Securities that WP has not
elected to purchase during the 90 days following such expiration on terms and
conditions no more favorable to the purchasers thereof than those offered to WP.
(d) The election by WP not to exercise its subscription rights
under this Section 5.5 in any one instance shall not affect its right (other
than in respect of a reduction in its percentage holdings) as to any subsequent
proposed issuance. Any sale of such securities by the Company without first
giving WP the rights described in this Section 5.5 shall be void and of no force
and effect.
(e) The subscription rights established by this Section 5.5
shall not apply to, and shall terminate upon a consolidation, merger,
reorganization or other form of acquisition of or by the Company in which the
Company's stockholders immediately prior to the transaction retain less than 50%
of the voting power of or economic interest in the surviving or resulting entity
(or its parent), or a sale of the Company's assets in excess of a majority of
the Company's assets (valued at fair market value as determined in good faith by
the Board).
(f) Injunctive Relief. The Company and WP hereby declare that
it is impossible to measure in money the damages which will accrue to the
parties hereto by reason of the failure of any party to perform any of its
obligations set forth in this Section 5.5. Therefore, the Company and WP shall
have the right to specific performance of such obligations, and if any party
hereto shall institute any action or proceeding to enforce the provisions
hereof, each of the Company and WP hereby waive the claim or defense that the
party instituting such action or proceeding has an adequate remedy at law.
5.6. Consents and Approvals; Proxy Statement
(a) From and after the date hereof, the Company shall use its
reasonable best efforts to obtain as promptly as practicable any consent or
approval of any Person, including any regulatory authority, required in
connection with the transactions contemplated hereby.
(b) From and after the date of the Initial Closing, the
Company shall use its reasonable best efforts to obtain as promptly as
practicable any vote of stockholders necessary for approval of the Exchange
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("Stockholder Approval"). In furtherance of the foregoing statement, as promptly
as reasonably practicable after the date hereof and in any event no later than
March 25, 2005, the Company shall prepare and file with the SEC, and shall use
its reasonable best efforts to have cleared by the SEC, a preliminary proxy
statement, and as soon as practicable thereafter (subject to applicable waiting
periods under the Exchange Act, review by the SEC or as required by the
Organizational Documents and applicable law) file with the SEC and promptly
thereafter mail a definitive proxy statement to the Company's stockholders (the
"Proxy Statement"). The Proxy Statement shall contain the recommendation of the
Board, to the extent consistent with its fiduciary duties, that the Company's
stockholders approve the Exchange in accordance with the Organizational
Documents and applicable law, including without limitation, the requirements of
NASD Rule 4350. WP will be given a reasonable opportunity to review and comment
on drafts of the Proxy Statement and the Company will use its reasonable best
efforts to accept comments thereto given by WP and its representatives. The
Company shall promptly take all action necessary in accordance with applicable
law and its Organizational Documents to convene a meeting of the Company's
stockholders, no later than May 30, 2005 or, if such date is impracticable due
to review by the SEC, as soon as practicable thereafter. To the extent
consistent with its fiduciary duties, the Company shall use its reasonable best
efforts to solicit from the Company's stockholders proxies in favor of the
Exchange and shall take all other action reasonably necessary to secure
Stockholder Approval.
5.7. Use of Proceeds
The proceeds received by the Company from the issuance and
sale of the Shares shall be used by the Company for working capital and other
general corporate purposes.
5.8. Takeover Statute
If any Takeover Statute shall become applicable to the
transactions contemplated hereby, including without limitation any takeover
provision under the laws of the State of Delaware, the Company and the members
of the Board shall, to the extent consistent with its fiduciary duties, grant
such approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise use their reasonable best efforts to act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby.
SECTION 6. INVESTORS' CLOSING CONDITIONS
The Investors' obligations to purchase the Shares at each
Closing shall be subject to the performance by the Company of its agreements
theretofore to be performed hereunder and to the satisfaction (or waiver), prior
thereto or concurrently therewith, of the following further conditions:
6.1. Representations and Warranties
The representations and warranties of the Company contained in
Section 3 of this Agreement shall be true on and as of the Initial Closing Date
in all material respects (except for such representations and warranties that
are qualified as to materiality, which shall be true in all respects) as though
such representations and warranties were made at and as of such date.
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6.2. Compliance with Agreement
The Company shall have performed and complied in all material
respects with all agreements, covenants and conditions contained in this
Agreement which are required to be performed or complied with by the Company
prior to or on the applicable Closing Date.
6.3. Injunction
There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided.
6.4. Counsel's Opinion
Each Investor shall have received an opinion, dated the
applicable Closing Date from the Company's counsel, Cooley Godward LLP,
substantially in the form of Exhibit E attached hereto.
6.5. Adverse Development
There shall have been no developments in the business of the
Company which would be reasonably likely to have a Material Adverse Effect.
6.6. Directors
▇▇▇▇▇▇▇ Hen and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ shall have been elected to
the Board, effective on the Initial Closing Date. Subject to the applicable law
and the rules and regulations of the SEC and NASDAQ Stock Market, one of the
Investor Designees shall be a member of each principle committee of the Board.
6.7. Registration Rights Agreement
The Company and the Investors shall have executed the
Registration Rights Agreement, the form of which is attached as Exhibit F hereto
(the "Registration Rights Agreement").
6.8. Standstill Agreement
The Company and WP shall have executed the letter agreement,
the form of which is attached as Exhibit G hereto (the "Standstill Agreement").
6.9. Rights Amendment
The Company and Mellon Investor Services LLC, as Rights Agent,
shall have executed the Amendment to Rights Agreement, the form of which is
attached as Exhibit H hereto (the "Rights Amendment").
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6.10. Stop Orders
No stop order or suspension of trading shall been imposed by
the NASDAQ Stock Market, the SEC or any other governmental regulatory body with
respect to public trading in the Common Stock.
6.11. Listing of the Common Stock
In connection with the issuance of the Shares and the
transactions contemplated hereby, the Company shall have submitted to the NASDAQ
Stock Market a "Notification Form: Listing of Additional Shares" as well as any
necessary supporting documentation.
6.12. Nasdaq Interpretative Ruling
The NASDAQ Stock Market shall have issued a written
interpretation confirming that the transactions contemplated hereby, including
the terms of the Exchangeable Preferred Stock, comply with all applicable Nasdaq
rules, including the requirements of Rule 4350(i) and IM-4350-2 ("Interpretive
Material Regarding the Use of Share Caps to Comply with Rule 4350(i)") and the
voting rights requirements of Rule 4351 and IM-4351 ("Voting Rights Policy").
6.13. Filing of Certificate of Designations
The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware and shall continue to be in full
force and effect as of the applicable Closing Date.
6.14. Officer's Certificate
Each Investor shall have received a certificate, dated the
applicable Closing Date, signed by a duly authorized executive officer of the
Company, certifying that the conditions specified in the foregoing Sections 6.1,
6.2, 6.3 and 6.5 hereof have been fulfilled.
6.15. Secretary's Certificate
Each Investor shall have received a certificate, dated the
applicable Closing Date, of the Secretary of the Company attaching: (i) a true
and complete copy of the Restated Certificate of Incorporation of the Company,
with all amendments thereto; (ii) true and complete copies of the Company's
By-laws, as amended, in effect as of such date; (iii) a certificate from the
Secretary of State of the State of Delaware as to the good standing of the
Company; (iv) certificates of good standing from the appropriate officials of
the jurisdictions in each state in which the Company is qualified to do business
as a foreign corporation; and (iv) resolutions of the Board authorizing the
execution and delivery of this Agreement, the transactions contemplated hereby,
and the issuance of the Shares.
-24-
6.16. Approval of Proceedings
All proceedings to be taken in connection with the
transactions contemplated by this Agreement, and all documents incident thereto,
shall be satisfactory in form and substance to WP and its special counsel,
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP. WP shall have received copies of all documents or
other evidence which they and ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP may reasonably
request in connection with such transactions and of all records of corporate
proceedings in connection therewith in form and substance reasonably
satisfactory to WP and ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP.
SECTION 7. COMPANY CLOSING CONDITIONS
The Company's obligation to issue and sell the Shares at each
Closing shall be subject to the performance by each Investor of its agreements
theretofore to be performed hereunder and to the satisfaction (or waiver), prior
thereto or concurrently therewith, of the following further conditions:
7.1. Representations and Warranties
The representations and warranties of the Investors contained
in Section 4 of this Agreement shall be true in all material respects on and as
of the applicable Closing Date (except for such representations and warranties
that are qualified as to materiality, which shall be true in all respects) as
though such representations and warranties were made at and as of such date.
7.2. Compliance with Agreement
The Investors shall have performed and complied in all
material respects with all agreements, covenants and conditions contained in
this Agreement which are required to be performed or complied with by them prior
to or on the applicable Closing Date.
7.3. Investors' Certificates
The Company shall have received a certificate from each
Investor, dated the applicable Closing Date, signed by a duly authorized
representative of the Investor, certifying that the conditions specified in the
foregoing Sections 7.1 and 7.2 hereof have been fulfilled.
7.4. Injunction
There shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as herein provided.
7.5. Standstill Agreement
The Company and WP shall have executed the letter agreement,
the form of which is attached as Exhibit G hereto (the "Standstill Agreement").
-25-
7.6. Rights Amendment
The Company and Mellon Investor Services LLC, as Rights Agent,
shall have executed the Amendment to Rights Agreement, the form of which is
attached as Exhibit H hereto (the "Rights Amendment").
7.7. Nasdaq Interpretative Ruling
The NASDAQ Stock Market shall have issued a written
interpretation confirming that the transactions contemplated hereby, including
the terms of the Exchangeable Preferred Stock, comply with all applicable Nasdaq
rules, including the requirements of Rule 4350(i) and IM-4350-2 ("Interpretive
Material Regarding the Use of Share Caps to Comply with Rule 4350(i)") and the
voting rights requirements of Rule 4351 and IM-4351 ("Voting Rights Policy").
7.8. Filing of Certificate of Designations
The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware and shall continue to be in full
force and effect as of the applicable Closing Date.
7.9. Approval of Proceedings
All proceedings to be taken in connection with the
transactions contemplated by this Agreement, and all documents incident thereto,
shall be reasonably satisfactory in form and substance to the Company. The
Company shall have received copies of all documents or other evidence which it
may have reasonably requested in connection therewith in form and substance
reasonably satisfactory to the Company.
SECTION 8. COVENANTS
8.1. Inspection
As long as an Investor Owns at least twenty percent (20%) of
the outstanding Common Stock, the Company shall permit the Investor, its
nominee, assignee, and its representative to visit and inspect any of the
properties of the Company, to examine all its books of account, records, reports
and other papers, to make copies and extracts therefrom, and provide reasonable
access to and the right to consult with, its officers, directors, key employees
and independent public accountants or any of them (and by this provision the
Company authorizes said accountants to discuss with such Investor, its nominees,
assignees and representatives the finances and affairs of the Company), all at
such reasonable times and as often as may be reasonably requested; provided,
however, that the Company shall not be obligated under this Section 8.1 with
respect to information the Company is contractually obligated to keep
confidential or secret or which the Board of Directors determines in good faith
is confidential and should not, therefore, be disclosed.
-26-
8.2. Confidentiality
(a) As to so much of the information and other material
furnished under or in connection with this Agreement (including without
limitation information furnished pursuant to Section 8.1 hereof) as constitutes
or contains confidential business, financial or other information of the
Company, each Investor covenants for itself and its members and officers that it
will use due care to prevent its officers, members, employees, counsel,
accountants, consultants, advisors and other representatives from disclosing
such information to Persons other than their respective authorized employees,
counsel, accountants, stockholders, partners, limited partners and other
authorized representatives or from using such information except as an Investor
or for the benefit of the Company; provided, however, that such Investor may
disclose or deliver any information or other material disclosed to or received
by it should the Investor be advised by its counsel that such disclosure or
delivery is required by law, regulation or judicial or administrative order. In
the event of any termination of this Agreement prior to the Initial Closing
Date, the Investor shall return to the Company all confidential material
previously furnished to the Investor or its officers, members, employees,
counsel, accountants and other representatives in connection with this
transaction. For purposes of this Section 8.2, "due care" means at least the
same level of care that such Investor would use to protect the confidentiality
of its own sensitive or proprietary information, and this obligation shall
survive termination of this Agreement.
(b) Notwithstanding the foregoing or anything else contained
herein to the contrary, the terms and conditions of (i) that certain
Non-Disclosure Agreement dated January 11, 2005, between the Company and WP, and
(ii) that certain Non-Disclosure Agreement dated January 27, 2005, between the
Company and WP, shall remain in full force and effect in accordance with their
terms with respect to all confidential information of the Company disclosed to
WP thereunder.
8.3. Lost, etc. Certificates Evidencing Shares; Exchange
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any
certificate evidencing any Shares or Exchange Shares owned by an Investor, and
(in the case of loss, theft or destruction) of an unsecured indemnity
satisfactory to it, and upon reimbursement to the Company of all reasonable
expenses incidental thereto, and upon surrender and cancellation of such
certificate, if mutilated, the Company will make and deliver in lieu of such
certificate a new certificate of like tenor and for the number of securities
evidenced by such certificate which remain outstanding. Each Investor's
agreement of indemnity shall constitute indemnity satisfactory to the Company
for purposes of this Section 8.3. Upon surrender of any certificate representing
any Shares or Exchange Shares, for exchange at the office of the Company, the
Company at its expense will cause to be issued in exchange therefor new
certificates in such denomination or denominations as may be requested for the
same aggregate number of Shares or Exchange Shares represented by the
certificate so surrendered and registered as such holder may request. The
Company will also pay the cost of all deliveries of certificates for such Shares
or Exchange Shares to the office of the Investor (including the cost of
insurance against loss or theft in an amount satisfactory to the holders) upon
any exchange provided for in this Section 8.3.
-27-
8.4. Securities Law Disclosure; Publicity
The Company shall, at or prior to 8:30 a.m., Eastern Standard
Time, on the first day following the date of this Agreement on which trading
occurs on the NASDAQ Stock Market, (i) issue a press release reasonably
acceptable to the Majority Investors disclosing the transactions contemplated
hereby, and (ii) file a Current Report on Form 8-K with the SEC (the "8-K
Filing") describing the transactions contemplated hereby and including this
Agreement as an exhibit thereto, in the form required by the Exchange Act.
Thereafter, the Company shall timely file any filings and notices required by
the SEC or the NASD with respect to the transactions contemplated hereby.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Investor, or include the name of any Investor in any filing with the SEC
(other than pursuant to the Registration Statement and exhibits to the 8-K
Filing and other periodic filings made by the Company under the Exchange Act) or
the NASD (other than pursuant to an application for the listing of the Shares on
the NASDAQ Stock Market), without the prior written consent of such Investor,
except to the extent such disclosure is required by law or NASD regulations, in
which case the Company shall provide the Investors with prior notice of such
disclosure.
8.5. HSR Act Filing
The Company and WP shall, as soon as practicable after the
date of this Agreement, but in no event later than April 3, 2005, file
Notification and Report Forms under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") relating to the transaction contemplated by this
Agreement and shall use their reasonable best efforts to respond as promptly as
practicable to all inquiries received from the FTC or the Antitrust Division for
additional information or documentation; provided, however, that no such filing
shall be made if, on or before March 15, 2005 (or such later date as agreed upon
by the Company), WP notifies the Company of its determination that such filing
will not be required by applicable law.
8.6. Insurance
The Company will use its best efforts to maintain all
insurance, including without limitation directors and officers insurance, with
responsible and reputable insurance companies or associations in at least such
amounts and covering such risks as the Company has previously maintained.
SECTION 9. MISCELLANEOUS
9.1. Notices
(a) All communications under this Agreement shall be in
writing and shall be delivered by hand or facsimile or mailed by overnight
courier or by registered mail or certified mail, postage prepaid:
-28-
(1) if to an Investor, at the address or facsimile number set
forth on Exhibit A, or at such other address or facsimile number as
such Investor may have furnished the Company in writing; and
(2) if to the Company, at: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ (facsimile: (▇▇▇) ▇▇▇-▇▇▇▇), Attention:
General Counsel, or at such other address or facsimile number as it may
have furnished the Investors in writing, with a copy (which shall not
constitute notice) to ▇▇▇▇▇▇ Godward LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇ (facsimile: (720)
566-4099), Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
(b) Any notice so addressed shall be deemed to be given: if
delivered by hand or facsimile, on the date of such delivery; if mailed by
overnight courier, on the first Business Day following the date of such mailing;
and if mailed by registered or certified mail, on the third Business Day after
the date of such mailing.
9.2. Expenses and Taxes
(a) The Company shall reimburse WP, within fifteen Business
Days of such request by WP and in an amount not to exceed $250,000, all of WP's
out-of-pocket fees and expenses incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and the transactions
contemplated hereby, including, without limitation, the fees and expenses of
WP's attorneys, accountants and consultants employed in connection with WP's
consideration, negotiation and consummation of the transactions contemplated
hereby, WP's due diligence on the Company and any documentation relating to the
transactions contemplated hereby.
(b) The Company will pay, and save and hold each Investor
harmless from any and all liabilities (including interest and penalties) with
respect to, or resulting from any delay or failure in paying, stamp and other
taxes (other than income taxes), if any, which may be payable or determined to
be payable on the execution and delivery or acquisition of the Shares or the
Exchange Shares.
9.3. Reproduction of Documents
This Agreement and all documents relating thereto, including,
without limitation, (i) consents, waivers and modifications which may hereafter
be executed, (ii) documents received by the Investors on the applicable Closing
Date (except for certificates evidencing the Shares themselves), and (iii)
financial statements, certificates and other information previously or hereafter
furnished to the Investors, may be reproduced by the Company and the Investors
by any photographic, photostatic, microfilm, micro-card, miniature photographic
or other similar process and the Company and the Investors may destroy any
original document so reproduced. All parties hereto agree and stipulate that any
such reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the Company or any
such Investor in the regular course of business) and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.
-29-
9.4. Termination and Survival
Notwithstanding anything to the contrary contained herein,
this Agreement may be terminated at any time (i) by mutual consent of the
Company and the Majority Investors, (ii) by either the Company or WP if the
Initial Closing shall not have occurred on or prior to March 11, 2005 (unless
such date is extended by mutual written consent); (iii) by the Investors, for
any material breach of this Agreement by the Company; and (iv) by the Company,
for any material breach of this Agreement by the Investors. In the event of
termination pursuant to this Section 9.4, this Agreement shall become null and
void and have no effect, with no liability on the part of the Company or the
Investors, or their members, partners, directors, officers, agents or
stockholders, with respect to this Agreement, except for the (i) liability of
the Company for expenses pursuant to Section 9.2 and (ii) subject to the
foregoing sentence, liability for any breach of any representation, warranty or
covenant contained in this Agreement.
9.5. Successors and Assigns
Except as otherwise expressly provided herein, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties. The Company may not assign its rights or obligations
hereunder without the prior written consent of the Majority Investors. WP may
assign its rights and obligations hereunder to not more than three (3) of its
members or Affiliates or Affiliates of its members; provided, that the assignee
provides the Company with written representations and warranties substantially
similar to those provided in Section 4.
9.6. Severability
In the event that any part or parts of this Agreement shall be
held illegal or unenforceable by any court or administrative body of competent
jurisdiction, such determination shall not affect the remaining provisions of
this Agreement which shall remain in full force and effect.
9.7. Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed entirely within such State.
9.8. Paragraph and Section Headings
The headings of the sections and subsections of this Agreement
are inserted for convenience only and shall not be deemed to constitute a part
thereof.
9.9. Limitation on Enforcement of Remedies
The Company hereby agrees that it will not assert against the
limited partners of any members of any Investor any claim it may have under this
Agreement by reason of any failure or alleged failure by such Investor to meet
its obligations hereunder.
-30-
9.10. Counterparts
This Agreement may be executed in one or more counterparts
(including by facsimile), each of which shall be deemed an original and all of
which together shall be considered one and the same agreement.
9.11. Entire Agreement; Amendment and Waiver
This Agreement, the schedules and exhibits attached hereto
constitute the entire understandings of the parties hereto and supersede all
prior agreements or understandings with respect to the subject matter hereof
among such parties. This Agreement may be amended, and the observance of any
term of this Agreement may be waived, with (and only with) the written consent
of the Company and the Majority Investors.
[SIGNATURE PAGE TO FOLLOW.]
-31-
Very truly yours,
ALLOS THERAPEUTICS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief
Executive Officer
ACCEPTED AND AGREED:
WARBURG PINCUS PRIVATE EQUITY VIII, L.P.
By: Warburg Pincus & Co.,
General Partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: Partner
EXHIBIT A
SCHEDULE OF INVESTORS
SHARES OF
EXCHANGEABLE
PREFERRED
STOCK
INVESTOR NAME AND ADDRESS
Warburg Pincus Private Equity VIII, L.P. 2,262,443
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
-------------------------------------------------------------------------------
EXHIBIT B
CERTIFICATE OF DESIGNATIONS
EXHIBIT C
CERTIFICATE OF INCORPORATION
EXHIBIT D
BYLAWS
EXHIBIT E
FORM OF LEGAL OPINION
EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
EXHIBIT G
STANDSTILL AGREEMENT
EXHIBIT H
RIGHTS AMENDMENT
(iii)
TABLE OF CONTENTS
SECTION 1. INTERPRETATION OF THIS AGREEMENT...........................2
1.1. Defined Terms..............................................2
SECTION 2. AUTHORIZATION OF SHARES; PURCHASE AND SALE OF SHARES.......5
2.1. Authorization of Shares....................................5
2.2. Issuance of Shares.........................................6
2.3. Closing and Closing Date...................................6
2.4. Delivery...................................................6
2.5. Subsequent Sales of Shares.................................6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............7
3.1. Corporate Organization.....................................7
3.2. Subsidiaries...............................................7
3.3. Capitalization.............................................7
3.4. Corporate Proceedings, etc.................................8
3.5. Consents and Approvals.....................................9
3.6. Absence of Defaults, Conflicts, etc........................9
3.7. Reports and Financial Statements...........................9
3.8. Absence of Certain Developments...........................10
3.9. Compliance with Law.......................................10
3.10. Litigation................................................11
3.11. Absence of Undisclosed Liabilities........................11
3.12. Employees.................................................11
3.13. Tax Matters...............................................12
3.14. Intellectual Property.....................................12
3.15. Title to Tangible Assets..................................13
3.16. Condition of Properties...................................14
3.17. Transactions with Related Parties.........................14
3.18. Registration Statement and Prospectus.....................14
3.19. Registration Rights.......................................14
3.20. Brokerage.................................................15
3.21. Illegal or Unauthorized Payments;
Political Contributions...................................15
3.22. Takeover Statute..........................................15
3.23. NASDAQ Compliance.........................................15
3.24. Reporting Status..........................................15
3.25. No Manipulation of Common Stock...........................15
3.26. Accountants...............................................16
3.27. Internal Accounting Controls..............................16
3.28. Environmental Matters.....................................16
3.29. FDA Approval..............................................16
3.30. Insurance.................................................17
3.31. Transfer Taxes............................................17
3.32. Investment Company........................................17
(i)
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS...........17
SECTION 5. ADDITIONAL AGREEMENTS OF THE PARTIES......................19
5.1. Resale of Shares..........................................19
5.2. Covenants Pending Closing.................................19
5.3. Further Assurances........................................19
5.4. Investor Designees........................................19
5.5. Subscription Right........................................20
5.6. Consents and Approvals; Proxy Statement...................21
5.7. Use of Proceeds...........................................22
5.8. Takeover Statute..........................................22
SECTION 6. INVESTORS' CLOSING CONDITIONS.............................22
6.1. Representations and Warranties............................22
6.2. Compliance with Agreement.................................23
6.3. Injunction................................................23
6.4. Counsel's Opinion.........................................23
6.5. Adverse Development.......................................23
6.6. Directors.................................................23
6.7. Registration Rights Agreement.............................23
6.8. Standstill Agreement......................................23
6.9. Rights Amendment..........................................23
6.10. Stop Orders...............................................24
6.11. Listing of the Common Stock...............................24
6.12. Nasdaq Interpretative Ruling..............................24
6.13. Filing of Certificate of Designations.....................24
6.14. Officer's Certificate.....................................24
6.15. Secretary's Certificate...................................24
6.16. Approval of Proceedings...................................25
SECTION 7. COMPANY CLOSING CONDITIONS................................25
7.1. Representations and Warranties............................25
7.2. Compliance with Agreement.................................25
7.3. Investors' Certificates...................................25
7.4. Injunction................................................25
7.5. Standstill Agreement......................................25
7.6. Rights Amendment..........................................26
7.7. Nasdaq Interpretative Ruling..............................26
7.8. Filing of Certificate of Designations.....................26
7.9. Approval of Proceedings...................................26
SECTION 8. COVENANTS.................................................26
8.1. Inspection................................................26
8.2. Confidentiality...........................................27
8.3. Lost, etc. Certificates Evidencing Shares; Exchange.......27
8.4. Securities Law Disclosure; Publicity......................28
(ii)
8.5. HSR Act Filing............................................28
8.6. Insurance.................................................28
SECTION 9. MISCELLANEOUS.............................................28
9.1. Notices...................................................28
9.2. Expenses and Taxes........................................29
9.3. Reproduction of Documents.................................29
9.4. Termination and Survival..................................30
9.5. Successors and Assigns....................................30
9.6. Severability..............................................30
9.7. Governing Law.............................................30
9.8. Paragraph and Section Headings............................30
9.9. Limitation on Enforcement of Remedies.....................30
9.10. Counterparts..............................................31
9.11. Entire Agreement; Amendment and Waiver....................31
Exhibit A Schedule of Investors
Exhibit B Certificate of Designations
Exhibit C Certificate of Incorporation
Exhibit D Bylaws
Exhibit E Form of Legal Opinion
Exhibit F Registration Rights Agreement
Exhibit G Standstill Agreement
Exhibit H Rights Amendment
(iii)