STOCK PURCHASE AGREEMENT
by and between
DEPOTECH CORPORATION
and
SKYEPHARMA PLC
Dated as of October 19, 1998
TABLE OF CONTENTS
Page
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I. PURCHASE AND SALE........................................................1
1.1 PURCHASE AND SALE. ..............................................1
1.2 PURCHASE PRICE...................................................1
1.3 CLOSING. ........................................................1
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................2
2.1 DUE ORGANIZATION, ETC............................................2
2.2 COMPLIANCE WITH LAW..............................................2
2.3 AUTHORIZATION; EXECUTION AND DELIVERY OF AGREEMENT...............3
2.4 NO CONFLICT; NO CONSENT..........................................3
2.5 CAPITAL STOCK....................................................4
2.6 SEC REPORT. .....................................................4
2.7 FINANCIAL STATEMENTS.............................................4
2.8 NO BROKERS. .....................................................5
2.9 CONTRACTS. ......................................................5
2.10 LITIGATION. .....................................................5
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER..........................5
3.1 DUE ORGANIZATION, ETC............................................5
3.2 AUTHORIZATION; EXECUTION AND DELIVERY OF AGREEMENT...............5
3.3 NO CONFLICT; NO CONSENT..........................................5
3.4 NO BROKERS.......................................................6
3.5 INVESTMENT PURPOSES..............................................6
IV. COVENANTS OF THE COMPANY.................................................6
4.1 EXCLUSIVITY/NON-SOLICITATION.....................................6
4.2 EXCHANGE OF STOCK CERTIFICATES...................................7
4.3 LOST, STOLEN, DESTROYED OR MUTILATED STOCK CERTIFICATES..........7
4.4 PREEMPTIVE RIGHTS................................................7
V. COVENANTS OF THE PURCHASER AND THE COMPANY...............................8
5.1 TECHNOLOGY LICENSE.(.............................................8
(i)
Table of Contents (Continued)
Page
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5.2 PUBLIC DISCLOSURE AND CONFIDENTIALITY............................8
5.3 RESTRICTIONS ON TRANSFER; REPURCHASE.............................9
5.4 EFFORTS TO CONSUMMATE; FURTHER ACTIONS...........................9
5.5 CERTAIN REPORTING REQUIREMENTS...................................9
VI. REGISTRATION RIGHTS......................................................9
6.1 "PIGGYBACK" REGISTRATION........................................10
6.2 DEMAND REGISTRATION.............................................10
6.3 GENERAL PROVISIONS..............................................11
6.4 INFORMATION, DOCUMENTS, ETC.....................................11
6.5 EXPENSES........................................................12
6.6 COOPERATION.....................................................12
6.7 ACTION TO SUSPEND EFFECTIVENESS; SUPPLEMENT TO
REGISTRATION STATEMENT..........................................13
6.8 INDEMNIFICATION.................................................14
VII. INDEMNIFICATION.........................................................17
7.1 INDEMNIFICATION BY THE COMPANY..................................17
7.2 INDEMNIFICATION BY THE PURCHASER................................18
7.3 CLAIMS PROCEDURE................................................18
7.4 CAP.............................................................18
VIII. GENERAL PROVISIONS.....................................................18
8.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS..........18
8.2 NOTICES.........................................................18
8.3 GENERAL.........................................................19
8.4 GOVERNING LAW...................................................19
8.5 SEVERABILITY OF PROVISION.......................................20
8.6 CAPTIONS........................................................20
8.7 EXPENSES........................................................20
8.8 EQUITABLE RELIEF................................................20
8.9 NO OTHER REPRESENTATIONS AND WARRANTIES.........................20
8.10 DISCLOSURE DEFINITION...........................................20
(ii)
STOCK PURCHASE AGREEMENT (this "Agreement") dated as of October 19,
1998 by and between DEPOTECH CORPORATION, a California corporation (the
"Company"), and SKYEPHARMA PLC, a company registered in the United Kingdom
#107582 (the "Purchaser").
WHEREAS, the Purchaser wishes to purchase from the Company, and the
Company wishes to sell to the Purchaser, two million eight hundred thousand
fifty-seven one hundred forty-three (2,857,143) shares (the "Shares") of the
Company's authorized but unissued common stock, no par value (the "Common
Stock"), at a price of one and 0.75 U.S. dollars (U.S. $1.75) per share of
Common Stock;
WHEREAS, the Purchaser and the Company are entering into this Agreement
to provide for such purchase and sale and to establish various rights and
obligations in connection therewith;
NOW, THEREFORE, in consideration of these premises and for other good
and valuable consideration, the parties hereto hereby agree as follows:
I. PURCHASE AND SALE
1.1 Purchase and Sale. Upon the terms and subject to the conditions set
forth in this Agreement, the Company agrees to issue, sell and deliver to the
Purchaser, and the Purchaser agrees to purchase from the Company, 2,857,143
Shares. The Shares purchased and sold hereunder shall be free and clear of any
liens, security interests, pledges, voting agreements, claims, options and
encumbrances of every kind, character and description whatsoever
("Encumbrances"), except as expressly contemplated by this Agreement.
1.2 Purchase Price. As consideration for the sale of the Shares, at the
Closing (as hereinafter defined) the Purchaser shall pay to the Company in
immediately available funds by wire transfer, a purchase price of U.S.
$5,000,000 to an account designated by the Company in writing on the Closing
Date.
1.3 Closing.
(a) On the terms and subject to the conditions of this Agreement,
the purchase and sale of the Shares pursuant to this Agreement shall take place
at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ "▇" ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. (Pacific Coast Time) on October
19, 1998 or as soon thereafter as practicable. The consummation of the purchase
and sale transactions described in this Section 1.3 are hereinafter referred to
collectively as the "Closing." The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
(b) Company Closing, Deliveries. At the Closing, the Company will
deliver to the Purchaser the following:
(i) a stock certificate or certificates representing the
Shares; and
(ii) a certificate of the Secretary of the Company certifying
as to the adoption and effect of resolutions of the Board of Directors of the
Company (the "Board") authorizing the execution, delivery and performance of
this Agreement.
(c) Purchaser Closing Deliveries. At the Closing, the Purchaser
will deliver to the Company the following:
(i) a certificate of an authorized officer of the Purchaser
certifying as to the adoption and effect of resolutions of the Purchaser
authorizing the execution, delivery and performance of this Agreement;
(ii) payment of the purchase price provided by Section 1.2;
and
(iii) an irrevocable proxy effective until June 30, 1999, in
substantially the form attached hereto as Exhibit A, to the Company's Board of
Directors to vote the Shares in favor of an offer to acquire all or
substantially all of the stock, business or assets of the Company which the
Company's Board of Directors has recommended for approval by its shareholders,
and subject to the Company's agreements hereunder.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants, except as set forth on the
Schedule of Exceptions attached hereto as Exhibit B, to the Purchaser as of the
date hereof and as of the date of the issuance of the Shares that:
2.1 Due Organization, Etc. The Company is a corporation duly organized,
validly existing and in good standing under the laws of California, and it has
all requisite corporate or other necessary power and authority to own, operate
and lease its respective properties and assets and to conduct its respective
businesses as now conducted and is qualified to do business in each state or
other jurisdiction where the nature of its properties, assets or businesses
requires such qualification other than where the failure to be so qualified
would not have or be reasonably likely to have a material adverse effect
(including effects occurring or existing prior to the date hereof) on or
materially delay the consummation of the transactions contemplated hereunder or
the condition (financial or otherwise), business, operations, properties, assets
or liabilities of the Company (collectively, a "Material Adverse Effect"). The
Company has no subsidiaries.
2.2 Compliance with Law. Except as Disclosed in the SEC Reports (as
defined hereinafter) (including, among other things, the lack of FDA approvals
for the future commercial
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sale of the Company's product candidates; provided no such sales have been made
except in compliance with law), the Company has obtained and maintains in full
force and effect all permits, licenses, consents, approvals, registrations,
memberships, authorizations and qualifications under all federal, state, local
and foreign laws and regulations, and with all Authorities, required for the
conduct by it of its business and the ownership or possession by it of its
properties and assets other than where the failure to obtain or maintain such
permits, licenses, consents, approvals, registrations, memberships,
authorizations or qualifications would not, individually or in the aggregate,
have or be reasonably likely to have a Material Adverse Effect. The Company is
in compliance with all laws, regulations, ordinances, orders and decrees
(including, without limitation, all environmental and occupational, health and
safety laws) of any federal, state, local or foreign governmental or regulatory
authority (an "Authority") applicable to the conduct by the Company of its
business and to its ownership and possession of its properties and assets, other
than where the failure so to comply would not, individually or in the aggregate,
have or be reasonably likely to have a Material Adverse Effect.
2.3 Authorization; Execution and Delivery of Agreement.
(a) The execution and delivery of this Agreement, the issuance and
sale of the Shares to the Purchaser and the consummation of the transactions
contemplated hereby (i) do not require the approval or consent of any
shareholders of the Company and (ii) have been duly authorized by all necessary
corporate action on the part of the Company for all purposes. This Agreement has
been duly executed and delivered by the Company and this Agreement constitutes
the legal, valid, binding and enforceable obligation of the Company, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity. The Company has full
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder.
(b) The Shares have been duly authorized by all necessary corporate
action on the part of the Company, and, when issued and delivered by the Company
pursuant to this Agreement against payment of the consideration therefor set
forth herein, the Shares will be validly issued, fully paid and non-assessable.
The Purchaser will acquire valid and marketable title to the Shares, free and
clear of any Encumbrances except as expressly disclosed in this Agreement.
2.4 No Conflict; No Consent. The execution and delivery of this
Agreement, the issuance and sale of the Shares to the Purchaser and the
consummation of the transactions contemplated hereby do not, and will not,
conflict with, act as a triggering event directly resulting in any payment or
material obligation or result in any violation of or default under, or permit
the acceleration of any obligation or loss of any benefits under, or the
creation or imposition of any Encumbrance on any of the properties or assets of
the Company under, (i) any provision of the articles of incorporation or by-laws
or similar constituent documents of the Company, (ii) any indenture, lease,
mortgage, deed of trust, loan agreement or other contract, agreement,
arrangement or instrument, or any permit, license, registration, membership,
authorization or qualification from any Authority, of the Company or any
employment or consulting agreement,
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bonus, deferred compensation, pension plan or any other employee benefit plan or
similar arrangement including any stock option or similar plan or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation of any
Authority to which the Company is a party or by which it is bound, other than,
in the case of clause (ii) above, where such conflict, violation, default,
acceleration, loss of benefits or Encumbrance would not, individually or in the
aggregate, have or be reasonably likely to have a Material Adverse Effect. No
consent, approval, order or authorization of, or registration, declaration,
filing with or notice to, any Authority or third party is required to be made or
obtained by the Company (including, without limitation, under any environmental
or occupational, health and safety laws) in order to execute or deliver this
Agreement, issue and sell the Shares or to consummate the transactions
contemplated hereby, other than as a result of the periodic reporting
requirements under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or except where the failure to make or obtain any such consent,
approval, order, authorization, registration, declaration, filing or notice
would not have a Material Adverse Effect.
2.5 Capital Stock.
(a) The authorized capital stock of the Company consists of thirty
million (30,000,000) shares of Common Stock, no par value, of which, as of
September 30, 1998, fourteen million six hundred seven thousand one hundred
eighty-one (14,607,181) shares were outstanding and no shares were held in
treasury and as of September 30, 1998, three million two hundred fifty-nine
thousand one hundred fifty-one (3,259,151) shares are reserved for future
issuance pursuant to any option, warrant or other rights agreement, arrangement
or other commitment. All of the issued and outstanding shares of Common Stock
have been validly issued and are fully paid and non-assessable. No shares of
Common Stock have been issued since September 30, 1998, except for customary
stock option exercises.
(b) (i) Other than this Agreement or as Disclosed in the SEC Reports,
there are not authorized or outstanding any subscriptions, options, conversion
rights, warrants or other agreements, securities or commitments of any nature
whatsoever (whether oral or written and whether firm or conditional) obligating
the Company to issue, deliver or sell, or cause to be issued, delivered or sold,
to any Person any shares of Common Stock or any other shares of the capital
stock of the Company or any securities convertible into or exchangeable for any
such shares, or obligating any such Person to grant, extend or enter into any
such agreement or commitment; and (ii) except as Disclosed in the SEC Reports,
there is no obligation, contingent or otherwise, of the Company to repurchase,
redeem or otherwise acquire any share of capital stock or other equity interests
of the Company.
2.6 SEC Report. The Company has filed with the Securities and Exchange
Commission (the "Commission") all proxy statements, reports, forms and other
documents required to be filed by it after January 1, 1996 under the Exchange
Act (collectively, the "SEC Reports"). As of their respective dates, the SEC
Reports (i) complied as to form in all material respects with the applicable
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder and (ii) did not contain any untrue statement of a material fact or
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omit 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.
2.7 Financial Statements.
(a) The financial statements (including any related notes) included
in the SEC Reports (the "Financial Statements") have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved (except as may be noted therein) and fairly present the
consolidated financial condition, results of operations and cash flows of the
Company as of the dates thereof and for the periods ended on such dates (in each
case subject, as to interim statements, to changes resulting from year-end
adjustments (none of which were or, except as otherwise disclosed to the
Purchaser in writing, will be material in amount or effect) and except as
permitted by Form 10-Q pursuant to Section 13 or 15(d) of the Exchange Act).
(b) On the date hereof, except as Disclosed in the SEC Reports, the
Company has no liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due and whether
or not required to be disclosed in the SEC Reports, other than liabilities that
have been disclosed to the Purchaser in writing, have been incurred in the
ordinary course of business consistent with past practice or are not in the
aggregate material to the Company.
2.8 No Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Company.
2.9 Contracts. Except as Disclosed in the SEC Reports, the Company is
not, nor, to the best knowledge of the Company, is any other party in breach of
or default under any contracts that are required to be described in the SEC
Reports or to be filed as exhibits thereto, except for such breaches and
defaults as in the aggregate would not have or be reasonably likely to have a
Material Adverse Effect.
2.10 Litigation. Except as Disclosed in the SEC Reports, there are no
civil, criminal, administrative, arbitral or other regulatory actions, suits,
claims, hearings, investigations or proceedings pending or, to the knowledge of
the Company, threatened against the Company that, alone or in the aggregate,
would have or are reasonably likely to have a Material Adverse Effect.
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III. REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company that as of
the date hereof:
3.1 Due Organization, Etc. The Purchaser is a corporation duly
organized and validly existing under the laws of the United Kingdom.
3.2 Authorization; Execution and Delivery of Agreement. The Purchaser
has all requisite power and authority to execute this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser and this Agreement constitutes the legal, valid,
binding and enforceable obligation of the Purchaser, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
3.3 No Conflict; No Consent. The execution and delivery of this
Agreement, the issuance and sale of the Shares to the Purchaser and the
consummation of the transactions contemplated hereby do not, and will not,
conflict with, (i) any provision of the charter and by-laws or similar
constituent documents of the Purchaser, (ii) any indenture, lease, mortgage,
deed of trust, loan agreement or other agreement or instrument, or any permit,
license, registration, membership, authorization or qualification from any
Authority of the Purchaser, or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation of any Authority to which the Purchaser is a party
or by which it is bound, other than, in the case of clause (ii) above, where
such conflict, violation, default, acceleration or Encumbrance would not
individually or in the aggregate, have a Purchaser Material Adverse Effect.
Other than as a result of the reporting requirements of the Exchange Act, no
consent, approval, order or authorization of, or registration, declaration,
filing with or notice to, any Authority is required to be made or obtained by
the Purchaser in order to execute or deliver this Agreement or to consummate the
transactions contemplated hereby.
3.4 No Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Purchaser, for which the Company will become liable.
3.5 Investment Purposes.
(a) The Purchaser, by reason of its business and financial
experience, has such knowledge, sophistication and experience in business and
financial matters as to be capable of evaluating the merits and risks of its
investment in the Shares, and is purchasing the Shares hereunder for its own
account, for investment only and not with a view to, or any present intention
of, effecting a distribution of such securities or any part thereof. The
Purchaser
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acknowledges that the Shares to be purchased hereunder have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or the
securities laws of any state or other jurisdiction and cannot be disposed of
unless they are subsequently registered under the Securities Act and any
applicable state laws or exemption from such registration is available.
Furthermore, the Purchaser acknowledges that the Company shall place upon each
certificate representing the Shares, a legend substantially in the following
form:
"The securities represented by this certificate have
been issued without registration or qualification
under the Securities Act of 1933, as amended (the
"Securities Act"), or any applicable state
securities laws (the "State Acts"). Such securities
may not be sold, assigned, transferred or otherwise
disposed of, beneficially or on the records of the
company, unless the securities represented by this
certificate have been registered or qualified under
the Securities Act and the applicable State Acts or
there has been delivered to the company an opinion
of counsel, reasonably satisfactory to the company,
to the effect that such registration and
qualification are not required."
(b) The Purchaser is an "accredited investor" as that term is
defined in Rule 501 promulgated under the Securities Act.
IV. COVENANTS OF THE COMPANY
The Company covenants and agrees that:
4.1 Exclusivity/Non-Solicitation. For a period ("Restricted Period")
commencing at the Closing Date and ending on October 30, 1998, the Company and
the officers, directors, employees or other agents of the Company will not,
directly or indirectly, take any action to solicit, initiate, facilitate or
encourage the making of any Acquisition Proposal (as hereinafter defined) and
shall use its best efforts to cause its agents and advisors to do the same;
provided, however, that the Board of Directors of the Company may engage in
negotiations with, or disclose any nonpublic information relating to the Company
or afford access to the properties, books or records of the Company to, any
person or entity that has made an unsolicited Acquisition Proposal to the
Company subject to the customary conditions, but only to the extent the Company,
after consulting with outside counsel, reasonably determines that such third
party is capable of completing the transaction covered by the Acquisition
Proposal and such cooperation and consideration is required by applicable law
and fiduciary duties. The Company will promptly notify Purchaser after receipt
of any Acquisition Proposal or any request for nonpublic information relating to
the Company in connection with an Acquisition Proposal or for access to the
properties, books or records of the Company by any person or entity that informs
the Board of Directors that it is considering making, or has made an Acquisition
Proposal. The term "Acquisition Proposal" as used herein means any offer or
proposal for, or any indication of
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interest in, a merger or other business combination involving the Company or the
acquisition of a majority by voting power of the outstanding shares of capital
stock of the Company or a majority of the assets of the Company, other than the
transactions contemplated by this Agreement.
4.2 Exchange of Stock Certificates. Promptly upon surrender of any
certificates representing Shares at the office of the Company, the Company will,
at its expense, execute and deliver to the Purchaser a new certificate or
certificates in denominations specified by the Purchaser for an aggregate number
of Shares equal to the number of Shares represented by the certificates
surrendered.
4.3 Lost, Stolen, Destroyed or Mutilated Stock Certificates. Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any certificate for Shares and, in the case of
loss, theft or destruction, upon delivery of an indemnity reasonably
satisfactory to the Company and customary under the circumstances, or, in the
case of mutilation, upon surrender and cancellation thereof, the Company will
issue a new certificate of like tenor for a number of Shares equal to the number
of Shares represented by the certificate lost, stolen, destroyed or mutilated.
4.4 Preemptive Rights. The Company shall not issue, reissue or
otherwise dispose of any shares of Common Stock or any securities convertible
into, or any rights, warrants or options to acquire, shares of Common Stock,
without affording the Purchasers the preemptive right to acquire such shares of
Common Stock or other securities in proportion to its then-existing holdings of
outstanding shares of Common Stock, on the same terms and conditions and for the
same consideration as the Company proposes to issue such shares of Common Stock
or other securities to Persons other than the Purchaser; provided, however, that
the provisions of this Section 4.4 shall not apply to any of the following:
(a) shares of Common Stock issued on a pro rata basis pursuant to a
stock split, subdivision or dividend;
(b) shares of Common stock issued in connection with a bona fide
business acquisition of or by the Company, whether by merger, consolidation,
sale of assets, sale or exchange of stock or otherwise;
(c) shares of Common Stock issued to a corporation, partnership,
educational institution or other entity in connection with a research and
development partnership or licensing or other collaborative arrangement between
the Company and such institution or entity; or
(d) shares of Common Stock (or options, warrants or other rights to
purchase such shares of Common Stock) issuable or issued to employees,
consultants or directors of this corporation (pursuant to now existing benefit
plans or future plans approval by the shareholders to be in the ordinary course
of business consistent with past practice) upon the express approval of the
Board of Directors, whether issued or issuable after the Closing Date;
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and provided, further, however, that the aggregate number of shares
of Common Stock issued pursuant to Sections 4.4(a), 4.4(b) and 4.4(c) shall not
exceed, on a cumulative basis, ten percent (10%) of the outstanding shares of
Common Stock as of the date hereof. As used herein, "Person" means any
individual, partnership, joint venture, firm, corporation, association, trust or
other entity or any government or political subdivision or agency, department or
instrumentality thereof.
V. COVENANTS OF THE PURCHASER AND THE COMPANY
5.1 Technology License. (TERMS TO BE AGREED), Provided the Company will
fund not more than U.S. $1 million in the first stage of a development program
mutually agreed upon related to lipid-based drug delivery technologies arising
out of its DepoFoam expertise and technologies. The development program shall
focus on oral, pulmonary, and macromolecule applications as mutually agreed
upon.
Provided also, Purchaser shall enjoy rights, benefits, rewards and
interests in the outcome of the development program, including any exploitation
thereof upon terms to be agreed.
Detailed terms to be agreed upon not later than December 30, 1998.
5.2 Public Disclosure and Confidentiality. Each party hereby agrees
that, prior to the Closing, except as required by applicable law foreign or
domestic (or under the rules and regulations of the Nasdaq Stock Market (or any
national foreign or domestic securities exchange on which the Common Stock or
Purchaser's capital stock is listed)), no press release or public announcement
or communication will be made or caused to be made concerning the execution or
performance of this Agreement, the terms hereof or the transactions contemplated
hereby, except in the form attached hereto as Exhibit C, unless specifically
approved in advance by both parties. In the event that a party views disclosure
as required by applicable law foreign or domestic (or the rules and regulations
of the Nasdaq Stock Market or any such national foreign or domestic stock
exchange) as contemplated by the previous sentence, such disclosing party shall
provide a copy of such disclosure to the other party within a reasonable period
of time prior to such disclosure.
5.3 Restrictions on Transfer; Repurchase.
(a) Unless otherwise expressed herein, the rights contained in this
Agreement, including the registration rights, may be transferred by the
Purchaser only to one of its "Affiliates", as determined under Rule 12b-2 of the
General Rules and Regulations under the Exchange Act. Prior to such transfer,
the Company shall be furnished with prior written notice of the name and address
of such transferee, and such transferee shall agree to be bound by the terms and
provisions of this Agreement. The restrictions on the transfer of rights
contained in this Section 5.3(a) shall terminate on September 30, 1999; provided
that in the event that after
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September 30, 1999, Purchaser elects to transfer the Shares and the registration
rights hereunder, in accordance with the terms of this Agreement, to a business
entity the business operations of which are in the same industry as the Company
and are in substantial and direct competition with the Company (as determined by
the Company in its good faith reasonable judgement), the Company shall have the
right, exercisable within 10 days of Purchaser's notice of its election to sell
the Shares and the registration rights hereunder, to buy back the Shares and the
rights hereunder for $5,000,000, the closing of such buy back to take place
within 20 days of the Company's election to do so (subject to any extensions as
required by applicable law).
(b) The Shares may not be sold or otherwise disposed of except as
follows:
(i) to a person or persons who, in the opinion of counsel
reasonably satisfactory to the Company, is a person to whom the Shares may
legally be transferred without registration and without the delivery of a
current prospectus with respect thereto;
(ii) to any person upon delivery of a prospectus then meeting
the requirements of the Securities Act relating to such securities (as to which
a registration statement under the Securities Act shall then be in effect) and
the offering thereof for such sale or disposition; or
(iii) to the extent available, pursuant to Rule 144 under the
Securities Act.
5.4 Efforts to Consummate; Further Actions. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement.
5.5 Certain Reporting Requirements. Purchaser understands that as a
result of the purchase of the Shares hereunder, Purchaser may be subject to
certain reporting requirements, including without limitation, the filing of
reports pursuant to Rule 13d-1 of the Exchange Act, immediately following the
Closing. Purchaser agrees to comply with and consult with independent counsel
regarding any such obligations.
VI. REGISTRATION RIGHTS
The Company covenants and agrees to provide the following registration
rights:
6.1 "Piggyback" Registration. If, at any time while the Purchaser shall
hold shares of Common Stock, the Company proposes to file a registration
statement relating to the offering of any of its capital stock under the
Securities Act (other than (i) a registration statement required to be filed in
respect of employee benefit plans of the Company on Form S-8 or any similar form
from time to time in effect, (ii) any registration statement on Form S-4 or
similar successor form,
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or (iii) a registration statement relating to a transaction pursuant to Rule 145
of the Securities Act), whether or not for sale for its own account, the Company
shall, at least twenty-one days (or if such twenty-one day period is not
practicable, then a reasonable shorter period which shall not be less than seven
days) prior to such filing, give written notice of such proposed filing to the
Purchaser. Upon receipt by the Company not more than seven days (unless the
notice given to the Purchaser pursuant to the previous sentence is less than ten
days, in which case such seven-day period shall be shortened to five days) after
such notice of a written request from the Purchaser for registration of
Purchaser's Stock (as hereinafter defined), (i) the Company shall, subject to
Section 6.3, include such Purchaser's Stock in such registration statement, and
shall use all reasonable efforts to cause such registration statement to become
effective with respect to such Purchaser's Stock, unless the managing
underwriter therefor concludes in its reasonable judgment that the number of
securities requested to be included in such registration exceeds the number
which can reasonably be sold using best efforts in (or during the time of) such
offering, in which case the Company may (i) include all securities initially
proposed by the Company to be sold for its own account and (ii) decrease the
number of shares of Purchaser's Stock and any other securities (other than
securities included by virtue of clause (i) above) proposed to be sold to the
extent necessary to reduce the number of securities to be included in the
registration to the level recommended by the managing underwriter; provided that
prior to substantially excluding Purchaser's Stock from any such offering, the
Company shall, at the request of Purchaser (or other permitted transferees), use
its diligent efforts to include Purchaser's Stock in such offering. "Purchaser's
Stock" means any shares of Common Stock held by the Purchaser or its permitted
transferees hereunder.
6.2 Demand Registration. In the event that, subsequent to one hundred
eighty (180) days following the Closing Date, the Company shall receive at any
time or from time to time a written request from the Purchaser requesting the
Company to register any shares of Purchaser's Stock under the Securities Act on
Form S-3, or any other similar form then in effect, the Company agrees that it
will use all reasonable efforts to cause the prompt registration of all shares
of Purchaser's Stock as to which such request is made (or will amend or
supplement an effective registration statement to include Purchaser's Stock);
provided, however, that the Company shall in no event be required to register
shares of Purchaser's Stock pursuant to this Section 6.2 unless the number of
such shares of Purchaser's Stock exceeds 500,000. The Company may postpone for a
limited time, which in no event shall be longer than forty-five (45) days (in
the aggregate under all postponements permitted under this Section 6.2 in any
twelve (12) month period) with respect to (i) and (ii) below and the termination
of the definitive agreement referred to in (iii) below, compliance with a
request for registration pursuant to this Section 6.2 if (i) the Company shall
have given notice to the Purchaser of the occurrence of a Suspension Event (as
hereinafter defined), (ii) the Company is conducting a public offering of
capital stock and the managing underwriter concludes in its reasonable judgment
that such compliance would materially adversely affect such offering or (iii)
the Company has, in compliance with its obligations hereunder, executed a
definitive purchase agreement for the merger or consolidation of the Company
with another entity or for the sale of all or substantially all the assets of
the Company. Notwithstanding anything in this Section 6.2 to the contrary, the
Company shall not be required to prepare or cause to be prepared audited
financial statements
-11-
of the Company other than those prepared in the normal course of the Company's
business at its fiscal year end.
6.3 General Provisions.
(a) As long as the Purchaser or any permitted assignee hereunder
owns at least 500,000 shares of Common Stock, the Company will use all
reasonable efforts to cause any registration statement referred to in Sections
6.1 and 6.2 to become effective and to remain effective (with a prospectus at
all times meeting the requirement of the Securities Act), subject, however, to
the Company's suspension rights set forth in Section 6.7(b). The Company will
use all reasonable efforts to effect such qualifications under applicable Blue
Sky or other state securities laws as may be reasonably requested by the
Purchaser (provided that the Company shall not be obligated to file a general
consent to service of process or qualify to do business as a foreign corporation
or otherwise subject itself to taxation in any jurisdiction solely for the
purpose of any such qualification) to permit or facilitate such sale or other
distribution. The Company will cause the Purchaser's Stock to be listed on the
principal stock exchange on which the shares of Common Stock are listed.
(b) Subject to Section 6.1, the Purchaser agrees, if requested by
the managing underwriter or underwriters in an underwritten offering (an
"Offering"), not to effect any public sale or distribution of any of the
securities of the Company of any class included in such Offering, including a
sale pursuant to Rule 144 or Rule 144A under the Securities Act (except as part
of such Offering), during the 15-day period prior to, and during the 90-day
period beginning on, the date of pricing of each Offering, to the extent timely
notified in writing by the Company or the managing underwriters. Furthermore,
notwithstanding anything to the contrary set forth in the Agreement but provided
that Purchaser's Stock is included in the Offering in accordance with Section
6.1, the Company's obligation under this Agreement to cause a registration
statement and any filings with any state securities commission to be made or to
become effective or to amend or supplement such registration statement shall be
suspended in the event and during such period as the Company is proceeding with
an Offering if the Company is advised by the underwriters that the sale of
shares of Purchaser's Stock under such registration statement would have a
material adverse effect on the Offering.
(c) Following the effectiveness of a registration statement and the
filings with any state securities commissions, the Purchaser agrees that it will
not effect any sales of the Purchaser's Stock pursuant to such registration
statement or any such filings at any time after it has received notice from the
Company to suspend sales (i) as a result of the occurrence or existence of any
Suspension Event, or (ii) so that the Company may amend or supplement such
registration statement or such filing. The Purchaser may recommence effecting
sales of the Purchaser's Stock pursuant to the registration statement or such
filings following further notice to such effect from the Company, which notice
shall be given by the Company not later than three (3) business days after the
conclusion of any such Suspension Event or amendment or supplement.
-12-
6.4 Information, Documents, Etc. Upon making a request for registration
pursuant to Sections 6.1 or 6.2, the Purchaser shall furnish to the Company such
information regarding its holdings and the proposed manner of distribution
thereof as the Company may reasonably request and as shall be required in
connection with any registration, qualification or compliance referred to in
this Article VI. The Company agrees that it will furnish to the Purchaser the
number of prospectuses, offering circulars or other documents, or any amendments
or supplements thereto, incident to any registration, qualification or
compliance referred to in this Article VI as the Purchaser from time to time may
reasonably request.
6.5 Expenses. The Company will bear all expenses of registrations
(including amendments and supplements related thereto) pursuant to Sections 6.1
and 6.2 (in each case, other than underwriting discounts and commissions and
brokerage commissions and fees, if any, payable with respect to shares of
Purchaser's Stock sold by the Purchaser, and fees and expenses of any
accountants, counsel or other parties retained or employed by holders of
Purchaser's Stock) including, without limitation, registration fees, the fees
and expenses covered by Section 6.6(d) below, printing expenses, expenses of
compliance with Blue Sky or other state securities laws, and legal and audit
fees incurred by the Company in connection with such registration and amendments
or supplements in connection therewith.
6.6 Cooperation. In connection with any registration of Purchaser's
Stock pursuant to this Article VI, the Company agrees to, as promptly as
practicable:
(a) prepare and file with the Commission a registration statement
with respect to such securities and use its reasonable efforts to cause such
registration statement covering the Purchaser's Stock to become and remain
effective for up to 120 days;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement covering the Purchaser's Stock and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all securities
covered by such registration statement;
(c) use its reasonable efforts to register or qualify the
securities covered by such registration statement covering Purchaser's Stock
under such other securities or Blue Sky laws of such jurisdictions within the
United States as each holder of such securities shall reasonably request,
provided that the Company shall not be required in connection therewith to
qualify to do business or to file a general consent to service of process in any
such states;
(d) use its reasonable efforts to list prior to the effective date
of such registration statement, subject to notice of issuance, the Purchaser's
Stock covered by such registration statement on any securities exchange on which
securities of the same class or then listed or, if such class is not then so
listed, to have the Purchaser's Stock accepted for quotation and trading on the
NASDAQ National Market System (or a comparable interdealer quotations system
then in effect);
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(e) enter into such customary agreements (including an underwriting
agreement containing such representations and warranties by the Company and such
other terms and provisions, including indemnification provisions, as are
customarily contained in underwriting agreements for comparable offerings and,
if no underwriting agreement is entered into, an indemnification agreement on
such terms as is customary in transactions of such nature) and take all such
other actions as the Purchaser or the underwriters, if any, participating in
such offering and sale may reasonably request in order to expedite or facilitate
such offering and sale;
(f) furnish, at the request of the Purchaser or any underwriters
participating in such offering and sale, (i) a comfort letter or letters, dated
the date of the final prospectus with respect to the Purchaser's Stock and/or
the date of the closing for the sale of the Purchaser's Stock from the
independent certified public accountants of the Company and addressed to the
Purchaser and any underwriters participating in such offering and sale, which
letter or letters shall state that such accountants are independent with respect
to the Company within the meaning of Rule 1.01 of the Code of Professional
Ethics of the American Institute of Certified Public Accountants and shall be in
form reasonably satisfactory to the managing underwriter (or, if there is no
underwriter, to the Purchaser) and shall cover matters of the type customarily
covered in "cold comfort" letters in connection with transactions of a similar
nature for similar entities and (ii) an opinion, dated the date of the closing
for the sale of the Purchaser's Stock, of the counsel representing the Company
with respect to such offering and sale (which counsel may be the General Counsel
of the Company or other counsel reasonably satisfactory to the Purchaser),
addressed to the Purchaser and any such underwriters, which opinion shall be in
form reasonably satisfactory to the managing underwriter (or, if there is no
underwriter, to the Purchaser) and shall address such matters as are customary
in transactions of a similar nature for similar entities;
(g) make available for inspection by the Purchaser, the
underwriters, if any, participating in such offering and sale (which inspecting
underwriters shall, if reasonably possible, be limited to any manager or
managers for such participating underwriters), counsel for the Purchaser, one
accountant or accounting firm retained by the Purchaser and any such
underwriters, or any other agent retained by the Purchaser or such underwriters,
all financial and other records, corporate documents and properties of the
Company, and supply such additional information, as they shall reasonably
request; provided that any such party shall keep the contents thereof
confidential in the manner prescribed by Section 5.2.
6.7 Action to Suspend Effectiveness; Supplement to Registration
Statement.
(a) The Company will notify the Purchaser and its counsel promptly
of (i) any action by the Commission to suspend the effectiveness of the
registration statement covering the Purchaser's Stock or the institution or
threatening of any proceeding for such purpose (a "stop order") or (ii) the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Purchaser's Stock for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. Immediately upon
receipt of any such notice, the Purchaser shall cease to offer or sell any
Purchaser's Stock pursuant to the registration statement in the
-14-
jurisdiction to which such stop order or suspension relates. The Company will
use all reasonable efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if any such stop order is issued or
any such qualification is suspended, to obtain as soon as possible the
withdrawal or revocation thereof, and will notify the Purchaser and its counsel
at the earliest practicable date of the date on which the Purchaser may offer
and sell Purchaser's Stock pursuant to the registration statement.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, the Company's obligation under this Agreement to cause the
registration of Purchaser's Stock and any filings with any state securities
commission to be made or to become effective or to amend or supplement a
registration statement shall be suspended in the event and during such period
that there are pending negotiations relating to, or consummation of, a
transaction or the occurrence of an event that would require additional
disclosure of material information by the Company in such registration statement
or such filing (such circumstances being hereinafter referred to as a
"Suspension Event") that would make it impractical or inadvisable to cause such
registration statement or such filings to be made or to become effective or to
amend or supplement such registration statement, but such suspension shall
continue only for so long as such event or its effect is continuing but in no
event will any such suspensions exceed forty-five (45) days in the aggregate
under all suspensions permitted under this 6.7(b) in any twelve (12) month
period. Immediately upon receipt by the Purchaser of notice of a Suspension
Event, the Purchaser shall cease to offer or sell any Purchaser's Stock pursuant
to such registration statement, cease to deliver or use such registration
statement and, if so requested by the Company, return to the Company, at
Company's expense, all copies (other than permanent file copies) of such
registration statement.
(c) In the event the Company shall determine that it is necessary
to amend or supplement any registration statement relating to Purchaser's Stock,
the Company will furnish copies of such proposed amendment or supplement to the
Purchaser and its counsel and will not file or distribute such amendment or
supplement without the prior consent of the Purchaser, which consent shall not
be unreasonably withheld.
6.8 Indemnification. In the event any Purchaser's Stock is included in
a registration statement under this Article VI:
(a) Subject to the Purchaser's rights under Section 7.1 hereof, the
Company will indemnify and hold harmless the Purchaser and each subsequent
holder of Purchaser's Stock as set forth in Section 8.3(d) and Section 5.3
hereof (each, a "Holder") and the affiliates of such Holder, and their
respective directors, officers, employees, general and limited partners,
members, agents and representatives (and the directors, officers, affiliates and
controlling Persons thereof), and each other Person, if any, who controls such
Holder within the meaning of the Securities Act or the Exchange Act, from and
against any losses, claims, damages, or liabilities (joint or several),
including any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action, to which they may become subject under the Securities Act, the Exchange
Act or other federal or
-15-
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of: (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus, any final prospectus contained therein or any
amendments or supplements thereto, (ii) any omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company in connection with the registration of Purchaser's
Stock under the Securities Act, the Exchange Act, any state securities law or
any rule or regulation promulgated under the Securities Act, the Exchange Act or
any state securities law ((i), (ii) and (iii) individually and collectively, a
"Violation"); provided the Company shall not be liable hereunder in any case for
any loss, claim, damage, liability or action to the extent that it arises out of
or is based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in the preparation of such
registration statement by the Purchaser or controlling Person; and provided,
further, that the Company shall not be liable hereunder in any such case to the
extent it is determined that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made:
(A) in any such preliminary prospectus, if (I) it was the
responsibility of such Holder seeking indemnification hereunder to provide the
Person asserting-such loss, claim, damage, liability or expense with a current
copy of the prospectus and such Holder failed to deliver or cause to be
delivered a copy of the prospectus to such Person after the Company had timely
furnished such Holder with a sufficient number of copies of the same and (II)
the prospectus corrected such untrue statement or omission; or
(B) in such prospectus, if such untrue statement or omission is
corrected in an amendment or supplement to such prospectus and such Holder
seeking indemnification hereunder thereafter fails to deliver the prospectus as
so amended or supplemented prior to or concurrently with the sale of Purchaser's
Stock to the Person asserting such loss, claim, damage, liability or expense
after the Company had timely furnished such Holder with a sufficient number
copies of the same.
Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such Holder or any such director,
officer, employee, general or limited partner, member, agent, representative or
controlling Person and shall survive the transfer of such securities by such
Holder. Each Holder shall furnish such information regarding itself or the claim
in question as the Company may reasonably request in writing and as shall be
reasonably required in connection with defense of such claim and litigation
resulting therefrom, in accordance with the terms hereof.
(b) Subject to the Company's rights under Section 7.2 hereof, each
selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each
Person, if any, who controls the Company within the meaning of the Securities
Act (and to agree to enter into customary indemnification arrangements to
indemnify and hold harmless any underwriter or controlling Person thereof in
-16-
connection with the exercise of registration rights hereunder, as the case may
be), against any losses, claims, damages or liabilities (joint or several),
including any legal or other expenses reasonably incurred by any such Person in
connection with investigating or defending any such loss, claim, damage,
liability or action to which any of the foregoing Persons become subject, under
the Securities Act, the Exchange Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon (i) any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder (from whom
indemnification is sought under this subsection (b)) expressly for use in the
preparation of such registration statement or (ii) an untrue statement or
alleged untrue statement or omission or alleged omission made in the
circumstances described in clauses (A) or (B) of Section 6.8(a); provided, that,
in no event shall any indemnity under this Section 6.8(b) exceed the gross
proceeds from the offering received by such Holder; and provided, further, that
the obligation to provide indemnification pursuant to this Section 6.8(b) shall
be several, and not joint and several, among such indemnifying parties. Such
indemnity shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer,
representative or controlling Person and shall survive the transfer of such
securities by such prospective Seller.
(c) Promptly after receipt by an indemnified party under this
Section 6.8 or Article VII of notice of the commencement of any action
(including any governmental action) by a person not party to this Agreement for
which indemnification is sought hereunder, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 6.8 or Article VII, deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof if and to the extent such claim seeks monetary damages only with counsel
selected by the indemnifying party or parties and reasonably satisfactory to the
indemnified party; provided that the indemnified party is, pursuant to the
indemnifying party's defense and settlement of such claim or proceeding, fully
released from and covered for any obligations, losses with respect to the
Violation which is the basis of indemnification, in accordance with the terms
hereof. The failure to deliver written notice to the indemnifying party within a
reasonable time after the indemnifying party first learns of the commencement of
any such action, if actually and materially prejudicial to the indemnifying
party, shall relieve such indemnifying party of any liability to the indemnified
party under this Section 6.8 or Article VII to the extent of such actual
prejudice, but the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 6.8 or Article VII. The indemnified
party shall have the right, but not the obligation, to participate in the
defense of any action referred to above through counsel of its own choosing and
shall have the right, but not the obligation, to assert any and all separate
defenses, cross claims or counterclaims which it may have, and the fees and
expenses of such counsel shall be at the expense of such indemnified party,
unless in any of such cases (i) the employment of such counsel has been
specifically authorized in advance by the indemnifying party, (ii) there is a
conflict of interest that prevents counsel for the indemnifying party from
-17-
adequately representing the interests of the indemnified party or there are
defenses available to the indemnified party that are different from, or
additional to, the defenses that are available to the indemnifying party, or
(iii) the indemnifying party fails to assume the defense or does not reasonably
contest such action in good faith, in which case, if the indemnified party
notifies the indemnifying party that it elects to employ separate counsel, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party and the reasonable fees and expenses of such
separate counsel shall be borne by the indemnifying party; provided, however,
that, the indemnifying party shall not, in connection with any proceeding or
related proceedings, be liable for the reasonable fees and expenses of more than
one separate firm (in addition to one firm acting as local counsel) for all
indemnified parties. To the extent a claim or proceeding is for other than
monetary damages, the indemnified party shall be entitled to assume the defense
of and settle such claim or proceeding with the consent of the indemnifying
party, not to be unreasonably withheld, at the indemnifying party's sole expense
as to both indemnification for Violations and expenses of counsel and similar
expenses in accordance with the terms hereof.
(d) Contribution. If for any reason (other than the reasons
expressly specified in this Section 6.8) the foregoing indemnity and payment
obligation is unavailable or is insufficient to hold harmless an indemnified
party under paragraphs (a) or (b) of this Section 6.8, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any loss, claim, damage or liability (or actions or proceedings
in respect thereof), including, without limitation, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, action or proceeding all as specified in
(a), (b) and (c) above, in such proportion as is appropriate to reflect the
relative fault of each of the indemnifying parties, severally and not jointly,
on the one hand and the indemnified party on the other. The relative fault shall
be determined by reference to, among other things, whether the action in
question, including any untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact has been taken or made
by, or relates to information supplied severally by each of the indemnifying
parties or the indemnified party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such action, untrue
statement or omission. If, however, the allocation provided in the second
preceding sentence is not permitted by applicable law, or if the allocation
provided in the second preceding sentence provides a lesser sum to the
indemnified party than the amount hereinafter calculated, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative fault but
also the relative benefits to the indemnifying party and the indemnified party
as well as any other relevant equitable considerations and not, in any event, to
exceed the amount of liability for which such party is responsible hereunder.
The parties agree that it would not be just and equitable if contributions
pursuant to this Section 6.8(d) were to be determined by pro rata allocation or
by any other method of allocation which does not take account of the equitable
considerations referred to in the preceding sentences of this Section 6.8(d).
Notwithstanding anything in this Section 6.8(d) to the contrary, no indemnifying
party (other than the Company) shall be required pursuant to this Section 6.8(d)
to contribute any amount in excess of the gross proceeds received by such
indemnifying party from the sale of
-18-
Purchaser's Stock in the offering to which the losses, claims, damages or
liabilities of the indemnified parties relate. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of the Company and the Holders under this
Section 6.8 shall survive the completion of any offering of Purchaser's Stock in
a registration statement under this Article VI.
(f) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement (if any) entered into in connection with any underwritten public
offering of the Purchaser's Stock are in direct conflict with the foregoing
provisions, the provisions in such underwriting agreement shall control.
VII. INDEMNIFICATION
7.1 Indemnification by the Company. The Company shall indemnify and
hold the Purchaser harmless from and against any and all losses, claims, damages
or liabilities whatsoever (including legal fees and expenses) incurred by the
Purchaser including with respect to its members, employees and officers based
upon, resulting from or arising out of any breach of any representation,
warranty, covenant or agreement of the Company contained in this Agreement, to
the extent any such losses, claims, damages or liabilities in the aggregate
exceeds US$35,000, including all amounts recoverable under this Section.
7.2 Indemnification by the Purchaser. The Purchaser shall indemnify and
hold the Company harmless from and against any and all losses, claims, damages
or liabilities whatsoever (including legal fees and expenses) incurred by the
Company including with respect to its employees, directors and officers
resulting from or arising out of any breach of any representation, warranty,
covenant or agreement of the Purchaser contained in this Agreement, to the
extent any such losses, claims, damages or liabilities in the aggregate exceeds
US$35,000, including all amounts recoverable under this Section.
7.3 Claims Procedure. The provisions of Section 6.8(c) shall apply to
indemnification under this Article VII to the extent there is a claim,
proceeding or action by a Person not party to this Agreement, for which
indemnification is sought
7.4 Cap. Notwithstanding anything else to the contrary, Purchaser's
maximum liability, in the aggregate, under Section 7.2 hereof, shall not exceed
$5,000,000, except in the event of gross negligence or fraud by the Purchaser.
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VIII. GENERAL PROVISIONS
8.1 Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation conducted or notice or knowledge obtained by
or on behalf of any party hereto, each representation and warranty in this
Agreement and each agreement or covenant in this Agreement shall survive the
Closing without limitation as to time, except as otherwise specifically referred
to herein.
8.2 Notices. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given, (i) when received if given in Person, or (ii) on the date of
transmission if sent by nationally recognized overnight courier, certified or
registered mail, return receipt requested or (iii) three days after being
deposited in the U.S. mail, postage prepaid:
(a) if to the Purchaser, addressed as follows:
SkyePharma PLC
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: Company Secretary
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
(b) if to the Company, addressed as follows:
DepoTech Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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or to such other individual or address as a party hereto may
designate for itself by notice given as herein provided.
8.3 General.
(a) This Agreement (including the documents and instruments
referred to or incorporated herein) constitutes the entire agreement, and
supersedes all of the prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
(b) This Agreement is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder other than as
contemplated in Article VI, Article VII and Section 8.3(d) and shall not be
assigned by any party by operation of law or otherwise.
(c) This Agreement may be executed in two or more counterparts
which together shall constitute a single agreement.
(d) This Agreement shall be binding upon and inure to the benefit
of the parties and their respective successors, heirs and permitted assigns.
This Agreement is not assignable except by consent of each of the parties hereto
or by operation of law, except as otherwise permitted hereunder. Any purported
assignment of this Agreement in violation of this Section 8.3 shall be null and
void.
8.4 Governing Law.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
CREATED HEREBY SHALL BE GOVERNED BY THE LAW OF THE STATE OF CALIFORNIA WITHOUT
REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(b) Each party agrees that any proceeding relating to this
Agreement shall be brought in a state court of California. Each party hereby
consents to personal jurisdiction in any such action brought in any such
California court, consents to service of process by mail made upon such party
and such party's agent and waives any objection to venue in any such California
court or to any claim that any such California court is an inconvenient forum.
8.5 Severability of Provision. If any provision or any portion of any
provision of this Agreement or the application of any such provision or any
portion thereof to any Person or circumstance, shall be held invalid or
unenforceable, to the extent permitted by law, the remaining portion of such
provision and the remaining provisions of this Agreement, or the application of
such provision or portion of such provision as is held invalid or unenforceable
to Persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby.
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8.6 Captions. All section titles or captions contained in this
Agreement are for convenience only, shall not be deemed a part of this Agreement
and shall not affect the meaning or interpretation of this Agreement. All
references herein to Sections shall be deemed references to such parts of this
Agreement, unless the context shall otherwise require.
8.7 Expenses. Except as otherwise expressly provided in this Agreement,
each party hereto shall pay its own expenses incidental to the preparation of
this Agreement, the carrying out of the provisions hereof and the consummation
of the transactions contemplated hereby.
8.8 Equitable Relief. Each party acknowledges that, in the event of any
breach of this Agreement by a party, the other party would be irreparably and
immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that such other party, in addition to any other remedy to
which it may be entitled, shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to compel specific
performance of this Agreement. Any requirements for the securing or posting of
any bond with respect to such remedy are hereby waived by each of the parties
hereto.
8.9 No Other Representations and Warranties. Other than the
representations and warranties contained in Article II and III hereof, neither
the Purchaser nor the Company makes any other representations or warranties,
express or implied, in connection with transactions contemplated hereunder.
8.10 Disclosure Definition. "Disclosed in the SEC Report" shall mean,
for purposes of this Agreement, specifically described in the SEC Reports which
are publically available, such that the nature and details of the breach of the
representation or warranty to which this definition applies are reasonably
identified and including the identity of any third parties involved, as the case
may be; provided that notwithstanding any contrary disclosure in the SEC
reports, this definition shall not apply to any breach of a representation or
warranty if such breach would or would be reasonably likely to prohibit or
substantially impair the consummation of the transactions contemplated hereby.
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IN WITNESS WHEREOF, each of the parties hereto have duly executed and
delivered this Agreement as of the date first written above.
DEPOTECH CORPORATION, a California
corporation
By:
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Title:
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SKYEPHARMA PLC, a company registered
in the United Kingdom
By:
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Title:
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[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]