EXHIBIT 2.6
================================================================================
Nexell Therapeutics Inc.
Securities Agreement
Dated as of November 24, 1999
63,000 Shares Series B Cumulative Convertible Preferred Stock
Class A Warrants to Purchase Common Stock
Class B Warrants to Purchase Common Stock
and
Put Right Certificates by
▇▇▇▇▇▇ International Inc.
================================================================================
Table of Contents
Section Heading Page
Section 1. Issue and Sale of Series B Preferred Stock; Put
Rights; Warrants; Commitment; Closing Date.......................................... 1
Section 1.01. Creation and Description of Series B Preferred Stock................................ 1
Section 1.02. Put Rights.......................................................................... 2
Section 1.03. Warrants to Purchase Common Stock................................................... 2
Section 1.04. Sale of Subject Securities; Closing Date............................................ 3
Section 1.05. Forms of Subject Securities......................................................... 3
Section 1.06. Failure to Deliver.................................................................. 3
Section 1.07. Several Obligations................................................................. 3
Section 1.08. Certain Tax Treatment of Series B Preferred Stock................................... 4
Section 2. Representations..................................................................... 4
Section 2.01. Representations of the Purchasers................................................... 4
Section 2.02. Representations of the Company...................................................... 5
Section 3. Closing Conditions.................................................................. 6
Section 3.01. Execution of Documents.............................................................. 6
Section 3.02. Company Closing Certificate......................................................... 6
Section 3.03. Certificate of Designation.......................................................... 6
Section 3.04. Legal Opinions...................................................................... 6
Section 3.05. Concurrent Sale of Subject Securities............................................... 7
Section 3.06. Corporate Existence and Authority................................................... 7
Section 3.07. Charter and By-laws................................................................. 7
Section 3.08. Consent of Holders of Other Securities.............................................. 7
Section 3.09. Use of Proceeds..................................................................... 7
Section 3.10. Private Placement Number............................................................ 7
Section 3.11. Funding Instructions................................................................ 7
Section 3.12. Special Counsel Fees................................................................ 8
Section 3.13. Legality of Investment.............................................................. 8
Section 3.14. Proceedings and Documents........................................................... 8
Section 3.15. Waiver of Conditions................................................................ 8
Section 4. Covenants of the Company............................................................ 8
Section 4.01. Reports and Rights of Inspection.................................................... 8
Section 4.02. Use of Proceeds..................................................................... 11
Section 4.03. Corporate Existence; SEC Reporting Status........................................... 11
Section 4.04. Properties, Business, Insurance..................................................... 12
Section 4.05. Taxes, Claims for Labor and Materials............................................... 12
Section 4.06. Maintenance, Etc.................................................................... 12
Section 4.07. Compliance with Laws................................................................ 12
-i-
Section 4.08. Restrictive Agreements Prohibited................................................... 13
Section 4.09. Reservation of Common Stock......................................................... 13
Section 4.10. Transactions With Affiliates........................................................ 14
Section 4.11. Nature of Business.................................................................. 14
Section 4.12. Purchase of Securities.............................................................. 14
Section 4.13. Mergers, Consolidations and Sales of Assets......................................... 14
Section 4.14. Amendments to Certain Agreements.................................................... 15
Section 4.15. Remedies and Default................................................................ 15
Section 5. Purchasers' Special Rights.......................................................... 16
Section 5.01. Direct Payment...................................................................... 16
Section 5.02. Delivery Expense.................................................................... 17
Section 5.03. Taxes............................................................................... 17
Section 5.04. Replacement of Series B Preferred Stock Certificates................................ 17
Section 5.05. Exchange of Series B Preferred Stock Certificates................................... 17
Section 5.06. Register............................................................................ 18
Section 6. Amendments, Modifications and Waivers............................................... 19
Section 6.01. Consent Required.................................................................... 19
Section 6.02. Solicitation of Holders............................................................. 19
Section 6.03. Effect of Amendment or Waiver....................................................... 20
Section 7. Interpretation of Agreement......................................................... 20
Section 7.01. Certain Definitions................................................................. 20
Section 7.02. Accounting Principles............................................................... 25
Section 8. Miscellaneous....................................................................... 26
Section 8.01. Expenses............................................................................ 26
Section 8.02. Legends on Series B Preferred Stock Certificates.................................... 26
Section 8.03. Notices............................................................................. 27
Section 8.04. Successors and Assigns.............................................................. 27
Section 8.05. Survival of Covenants and Representations........................................... 28
Section 8.06. Severability........................................................................ 28
Section 8.07. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial..................... 28
Section 8.08. Captions............................................................................ 29
Section 8.09. Counterparts........................................................................ 29
Signature Page................................................................................................. 30
-ii-
Exhibits to Securities Agreement:
Exhibit A -- Form of Certificate of Designation
Exhibit B -- Form of Put Right Certificate
Exhibit C-1 -- Form of Class A Warrant
Exhibit C-2 -- Form of Class B Warrant
Exhibit D -- Form of Closing Certificate
Exhibit E -- Form of Closing Opinion of Counsel to the Company
Exhibit F -- Form of Closing Opinion of Counsel to ▇▇▇▇▇▇
Exhibit G -- Form of Closing Opinion of Special Counsel to the
Purchasers
-iii-
Nexell Therapeutics Inc.
▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Securities Agreement
63,000 Shares Series B Cumulative Convertible Preferred Stock
Class A Warrants to Purchase Common Stock
and
Class B Warrants to Purchase Common Stock
Dated as of
November 24, 1999
To the Purchasers Named in Schedule I
to this Agreement
Ladies and Gentlemen:
Nexell Therapeutics Inc., a Delaware corporation (together with any Person
who succeeds to all, or substantially all, of the assets and business of Nexell
Therapeutics Inc., the "Company"), hereby confirms its agreement with the
purchasers named in Schedule I to this Agreement (the "Purchasers") as follows:
Section 1. Issue and Sale of Series B Preferred Stock; Put Rights; Warrants;
Commitment; Closing Date.
Section 1.01. Creation and Description of Series B Preferred Stock. The
Company proposes to create, issue and sell a new series of its preferred stock,
$0.001 par value, to be designated "Series B Cumulative Convertible Preferred
Stock" and to consist of 80,000 shares (together with any shares issued in
exchange therefor or replacement thereof, the "Series B Preferred Stock"). The
Series B Preferred Stock will have the designations, preferences, limitations
and relative rights set forth in the form of the Certificate of Designation (the
"Certificate of Designation") attached hereto as Exhibit A setting forth the
Resolution (the "Resolution") to be adopted by the Board of Directors of the
Company designating the Series B Preferred Stock, which Resolution will be duly
adopted by the Board of Directors of the Company prior to the Closing Date in
accordance with the provisions of Article Fourth of the Company's Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), and will be
filed by the Company with the Secretary of State of the State of Delaware prior
to the Closing Date pursuant to the Delaware General Corporation Law. A true and
correct copy of the Certificate of Incorporation of the Company as currently in
effect and prior to the adoption and filing of the Certificate of Designation
has heretofore been furnished to each of the Purchasers by the Company. The
shares of Series B Preferred Stock are convertible into shares of Common Stock
of the Company on the terms and conditions set forth in the Certificate of
Designation.
The Series B Preferred Stock will rank, as to preferences on payment of
dividends, redemption and distribution of assets upon liquidation, dissolution
or winding-up, equally with the Company's Series A Cumulative Convertible
Preferred Stock (the "Series A Preferred Stock") and prior to any and all shares
of Common Stock or other equity Securities of whatever class or series now or
hereafter issued by the Company.
The terms which are capitalized herein shall have the meanings set forth in
Section 7 unless the context shall otherwise require.
Section 1.02. Put Rights. Each of the shares of Series B Preferred Stock
shall be issued and sold on the Closing Date (as defined below) together with
one put right (individually referred to herein as a "Put Right" and,
collectively, as the "Put Rights") granted by ▇▇▇▇▇▇ International Inc., a
Delaware corporation (together with any Person who succeeds to all, or
substantially all, of the assets and business of ▇▇▇▇▇▇ International Inc.,
"▇▇▇▇▇▇"), evidenced by a certificate substantially in the form of Exhibit B
attached hereto (individually referred to herein as a "Put Right Certificate"
and, collectively, as the "Put Right Certificates"). The Put Right Certificates
shall be transferable only upon the concurrent transfer to the same transferee
of the number of shares of Series B Preferred Stock underlying the Put Rights so
transferred and shall have such other terms and provisions as set forth in the
form of Put Right Certificate.
Section 1.03. Warrants to Purchase Common Stock. (a) In consideration of,
and as an inducement to, the purchase by the Purchasers of the Series B
Preferred Stock, the Company agrees to deliver to the Purchasers on the Closing
Date (as defined below):
(i) Class A Warrants of the Company in the form of Exhibit C-1
attached hereto (the "Class A Warrants") to purchase in the aggregate
the Adjusted Number of Shares (as such term is defined in the Class A
Warrants) of the Common Stock of the Company for an exercise price of
$0.01 per share; and
(ii) Class B Warrants of the Company in the form of Exhibit C-2
attached hereto (the "Class B Warrants") to purchase in the aggregate
3,000,000 shares of the Common Stock of the Company for an exercise
price of $3.00 per share.
The number of shares which may be acquired upon the exercise of the Warrants and
the price per share are subject to adjustment in the manner and on the terms and
conditions set forth in the Warrants. The Class A Warrants and the Class B
Warrants are collectively referred to herein as the "Warrants." The shares of
Series B Preferred Stock, the Put Right Certificates and the Warrants, in each
case, to be issued and sold on the Closing Date, are collectively referred to
herein as the "Subject Securities."
(b) The Class A Warrants shall be transferable only upon the concurrent
transfer to the same transferee of that number of shares of Series B Preferred
Stock which represents the same proportion of the transferring holder's
investment in the Series B Preferred Stock as the Class A Warrants so
transferred represent in such holder's investment in the Class A Warrants
immediately prior to the transfer.
-2-
Section 1.04. Sale of Subject Securities; Closing Date. Subject to the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, the Company hereby agrees to issue and sell to
each Purchaser, and each such Purchaser agrees to purchase from the Company on
the Closing Date hereinafter mentioned, the Subject Securities set forth
opposite such Purchaser's name on Schedule I attached hereto and at the price
indicated on Schedule I.
Delivery of the Subject Securities will be made at the offices of ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 A.M.,
Chicago, Illinois time, on November 24, 1999 (or on such other date, not later
than November 30, 1999, as the Purchasers shall agree) against payment of the
purchase price therefor by transfer (of federal or other immediately available
funds) to the Company's Account No. 937-▇▇▇▇▇▇▇ at Fleet Bank, ABA No.
▇▇▇▇▇▇▇▇▇, and as further specified in the funding instructions delivered
pursuant to Section 3.11 (said date of delivery and payment being herein called
the "Closing Date").
Section 1.05. Forms of Subject Securities. The shares of the Series B
Preferred Stock delivered to each Purchaser on the Closing Date will be printed
and will be delivered in the form of a single certificate for the full amount of
such Purchaser's purchase, registered in the name of such Purchaser or the name
of its nominee and in such denomination or denominations as are specified in
Schedule I hereto. The Put Rights granted to each Purchaser on the Closing Date
will be evidenced by Put Right Certificates in the form attached hereto as
Exhibit B, registered in the name of such Purchaser or the name of its nominee
and in such denomination or denominations as are specified in Schedule I hereto.
The Warrants delivered to each Purchaser on the Closing Date will be delivered
in the forms attached hereto as Exhibit C-1 and Exhibit C-2, as appropriate,
registered in the name of such Purchaser or in the name of its nominee and in
such denomination or denominations as are specified in Schedule I hereto.
Section 1.06. Failure to Deliver. If on the Closing Date, the Company
fails to tender to each Purchaser against payment therefor the Subject
Securities to be purchased by such Purchaser on the Closing Date, or if the
conditions to such Purchaser's obligations specified in Section 3 have not been
fulfilled or waived by such Purchaser, such Purchaser may thereupon elect to be
relieved of all further obligations under this Agreement. Nothing in this
Section shall operate to relieve the Company from its obligations hereunder or
to waive any Purchaser's rights against the Company.
Section 1.07. Several Obligations. The obligations of the Purchasers shall
be several and not joint and no Purchaser shall be liable or responsible for the
acts of any other Purchaser.
Section 1.08. Certain Tax Treatment of Series B Preferred Stock. The
issuance of the Series B Preferred Stock as contemplated hereunder and under the
Certificate of Designation is not an issuance of the type described in Treasury
Regulation Section 1.305-5(b)(1), and the Company and each of the Purchasers
agree that for Federal income tax reporting purposes there will be no redemption
premium with respect to the Series B Preferred Stock under Treasury Regulation
Section 1.305-5(b).
-3-
Section 2. Representations.
Section 2.01. Representations of the Purchasers. (a) Each Purchaser
severally represents, and in entering into this Agreement the Company
understands, that (i) such Purchaser is acquiring the Subject Securities for the
purpose of investment and not with a view to the distribution thereof, and that
such Purchaser has no present intention of selling, negotiating or otherwise
disposing of the Subject Securities; it being understood, however, that the
disposition of such Purchaser's property shall at all times be and remain within
its control, and (ii) such Purchaser is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended.
(b) Each Purchaser further represents that at least one of the following
statements concerning each source of funds to be used by such Purchaser to
purchase the Subject Securities is accurate as of the Closing Date:
(i) if the Purchaser is an insurance company, the source of
funds from which its investment is to be made is a general account of an
insurance company, and the amount of the reserves and liabilities for the
general account contract(s) held by or on behalf of any Benefit Plan (as
defined by the annual statement for life insurance companies approved by
the National Association of Insurance Commissioners (the "NAIC Annual
Statement")) together with the amount of the reserves and liabilities for
the general account contract(s) held by or on behalf of any other Benefit
Plans maintained by the same employer (or affiliate thereof as defined in
Department of Labor Prohibited Transaction Exemption ("PTE") 95-60) or by
the same employee organization (as defined by the NAIC Annual Statement) in
the general account do not exceed 10% of the total reserves and liabilities
of the general account (exclusive of separate account liabilities) plus
surplus as set forth in the NAIC Annual Statement filed with the state of
domicile of the insurance company (for purposes of the percentage
limitation in this clause (i), the amount of reserves and liabilities for
the general account contract(s) held by or on behalf of a plan shall be
determined before reduction for credits on account of any reinsurance ceded
on a coinsurance basis);
(ii) all or a part of such funds constitute assets of one or
more separate accounts, trusts or a commingled pension trust maintained by
such Purchaser, and such Purchaser has disclosed to the Company the names
of such employee benefit plans whose assets in such separate account or
accounts or pension trusts exceed 10% of the total assets or are expected
to exceed 10% of the total assets of such account or accounts or trusts as
of the date of such purchase (for the purpose of this clause (ii), all
employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan);
(iii) all or part of such funds constitute assets of a bank
collective investment fund maintained by such Purchaser, and such Purchaser
has disclosed to the Company the names of such employee benefit plans whose
assets in such collective investment fund exceed 10% of the total assets or
are expected to exceed 10% of the total assets of such fund as of the date
of such purchase (for the purpose of this clause (iii), all employee
-4-
benefit plans maintained by the same employer or employee organization are
deemed to be a single plan);
(iv) all or part of such funds constitute assets of one or more
employee benefit plans, each of which has been identified to the Company in
writing;
(v) such Purchaser is acquiring the Subject Securities for the
account of one or more pension funds, trust funds or agency accounts, each
of which is a "governmental plan" as defined in Section 3(32) of ERISA;
(vi) the source of funds is an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (A) the identity
of such QPAM and (B) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this clause (vi); or
(vii) if such Purchaser is other than an insurance company, all
of such funds consists of funds which do not constitute "plan assets."
As used in this Section 2.01(b), the terms "separate account" and "employee
benefit plan" shall have the respective meanings assigned to them in ERISA and
the term "plan assets" shall have the meaning assigned to it in Department of
Labor Regulation 29 C.F.R. ss.2510.3-101.
Section 2.02. Representations of the Company. The Company represents and
warrants to each Purchaser that all representations and warranties set forth in
the Closing Certificate attached hereto as Exhibit D are true and correct as of
the date of the execution and delivery of this Agreement by the Company.
Section 3. Closing Conditions.
The obligation of each Purchaser to make the purchases herein provided for
shall be subject to the performance by the Company of its agreements hereunder
which by the terms hereof are to be performed at or prior to the time of
delivery of the Subject Securities and to the following further conditions
precedent:
-5-
Section 3.01. Execution of Documents. The following documents shall be
satisfactory in scope and form to such Purchaser, shall have been duly executed
and delivered by the parties thereto, and shall be in full force and effect:
(a) this Agreement;
(b) the Certificate of Designation and the share certificates
representing the Series B Preferred Stock;
(c) the Put Right Certificates;
(d) the Class A Warrants;
(e) the Class B Warrants; and
(f) the Registration Rights Agreement.
Section 3.02. Company Closing Certificate. Such Purchaser shall receive
from the Company a Closing Certificate dated the Closing Date and executed by
the Chief Executive Officer, the President or a Vice President of the Company,
in substantially the form attached hereto as Exhibit D, the truth and accuracy
of which shall be a condition to such Purchaser's obligation to accept and pay
for the Subject Securities to be purchased by it hereunder.
Section 3.03. Certificate of Designation. The Board of Directors of the
Company shall have duly adopted the Resolution set forth in the Certificate of
Designation and the Certificate of Designation shall have been duly filed with
the Secretary of State of the State of Delaware all in compliance with the
applicable provisions of the Delaware General Corporation Law, and the
Certificate of Designation shall constitute a legal and valid amendment of the
Certificate of Incorporation of the Company.
Section 3.04. Legal Opinions. Such Purchaser shall receive from (a)
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, who are acting as special counsel to the Purchasers in this
transaction, (b) ▇▇▇▇▇ ▇▇▇▇ LLP, counsel for the Company, and (c) ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇., Esq., General Counsel for ▇▇▇▇▇▇, their respective opinions,
dated the Closing Date, in form and substance satisfactory to such Purchaser and
covering substantially the respective matters set forth in Exhibits E, F and G,
respectively, hereto.
Section 3.05. Concurrent Sale of Subject Securities. The Company shall
have consummated the sale of all of the Subject Securities scheduled to be sold
on the Closing Date.
Section 3.06. Corporate Existence and Authority. (a) On or prior to the
Closing Date, such Purchaser shall have received, in form and substance
reasonably satisfactory to such Purchaser and the Purchasers' special counsel,
such documents and evidence with respect to the Company as they may reasonably
request in order to establish the existence and good standing of the Company and
the authorization of the transactions contemplated by this Agreement and the
other Operative Documents to which it is a party.
-6-
(b) On or prior to the Closing Date, such Purchaser shall have received,
in form and substance reasonably satisfactory to such Purchaser and the
Purchasers' special counsel, such documents and evidence with respect to ▇▇▇▇▇▇
as they may reasonably request in order to establish the existence and good
standing of Baxter and the authorization of the transactions contemplated by
this Agreement and the Put Right Certificates.
Section 3.07. Charter and By-laws. The Certificate of Incorporation and
By-laws of the Company shall in all respects be satisfactory in form and
substance to such Purchaser and the Purchasers' special counsel.
Section 3.08. Consent of Holders of Other Securities. Any consents or
approvals required to be obtained from any holder or holders of any outstanding
Security of the Company (including, without limitation, the holders of the
Series A Preferred Stock) and any amendments of agreements pursuant to which any
Security may have been issued which shall be necessary to permit the
consummation of the transactions contemplated hereby shall have been obtained
and all such consents or amendments shall be satisfactory in form and substance
to such Purchaser and the Purchasers' special counsel.
Section 3.09. Use of Proceeds. The Company shall have delivered to such
Purchaser and the Purchasers' special counsel a detailed statement setting forth
the uses of funds from the issuance of the Subject Securities on the Closing
Date in form and substance satisfactory to such Purchaser and the Purchasers'
special counsel.
Section 3.10. Private Placement Numbers. On or prior to the Closing Date,
special counsel to the Purchasers shall have duly made the appropriate filings
with Standard & Poor's CUSIP Service Bureau, as agent for the National
Association of Insurance Commissioners, and shall have obtained private
placement numbers for the Subject Securities.
Section 3.11. Funding Instructions. At least three business days prior to
the Closing Date, such Purchaser shall have received written instructions
executed by a Responsible Officer of the Company directing the manner of the
payment of funds and setting forth (a) the name and address of the transferee
bank, (b) such transferee bank's ABA number, (c) the account name and number
into which the purchase price for the Subject Securities is to be deposited, and
(d) the name and telephone number of the account representative responsible for
verifying receipt of such funds.
Section 3.12. Special Counsel Fees. On or prior to the Closing Date, the
charges and disbursements of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, the Purchasers' special
counsel, shall have been paid by the Company.
Section 3.13. Legality of Investment. The Subject Securities shall on the
Closing Date (a) be permitted by the laws and regulations of each jurisdiction
to which such Purchaser is subject, without recourse to provisions (such as
Section 1405(a)(8) of the New York Insurance Law) permitting limited investments
by insurance companies without restriction as to the character of the particular
investment, (b) not violate any applicable law or regulation (including, without
limitation, Regulation T, U or X of the Board of Governors of the Federal
Reserve
-7-
System) and (c) qualify as a legal investment for such Purchaser and such
purchase shall not subject such Purchaser to any penalty or other onerous
condition under or pursuant to any applicable law or governmental regulation,
and such Purchaser shall have received such evidence as it may reasonably
request to establish compliance with this condition.
Section 3.14. Proceedings and Documents. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary to the consummation thereof, shall be satisfactory in form
and substance to such Purchaser and the Purchasers' special counsel, and such
Purchaser and the Purchasers' special counsel shall have received copies
(executed or certified as may be appropriate) of all legal documents or
proceedings which they may request in connection with the consummation of said
transactions.
Section 3.15. Waiver of Conditions. If on the Closing Date, the Company
fails to tender to any Purchaser the Subject Securities to be issued to such
Purchaser on such date or if the conditions specified in this Section 3 have not
been fulfilled, such Purchaser may thereupon elect to be relieved of all further
obligations under this Agreement. Without limiting the foregoing, if the
conditions specified in this Section 3 have not been fulfilled, such Purchaser
may waive compliance by the Company with any such condition to such extent as
such Purchaser may in its sole discretion determine.
Section 4. Covenants Of The Company.
The Company covenants that so long as any of the Subject Securities are
outstanding:
Section 4.01. Reports and Rights of Inspection. (a) The Company will keep,
and will cause each Subsidiary to keep, proper books of record and account in
which full and correct entries will be made of all dealings or transactions of,
or in relation to, the business and affairs of the Company or such Subsidiary,
in accordance with GAAP consistently applied and will furnish to each original
holder of any of the Series B Preferred Stock (so long as such holder continues
to hold any Series B Preferred Stock) and to each other Institutional Holder of
the Series B Preferred Stock:
(i) Quarterly Statements. As soon as available and in any event
within 45 days after the end of each quarterly fiscal period (except
the last) of each fiscal year, copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such quarterly fiscal period,
setting forth in comparative form the consolidated figures for
the fiscal year then most recently ended,
(2) a consolidated statement of operations of the Company
and its Subsidiaries for such quarterly fiscal period and for the
portion of the fiscal year ending with such quarterly fiscal
period, in each case setting forth in comparative form the
consolidated figures for the corresponding periods of the
preceding fiscal year, and
-8-
(3) a consolidated statement of cash flows of the Company
and its Subsidiaries for the portion of the fiscal year ending
with such quarterly fiscal period, setting forth in comparative
form the consolidated figures for the corresponding period of the
preceding fiscal year,
all in reasonable detail and certified as complete and correct by an
authorized financial officer of the Company, which certificate shall state
that such consolidated financial statements present fairly, in all material
respects, the consolidated financial statements of the Company and its
Subsidiaries as of the end of the fiscal quarter set forth therein and the
consolidated results of operations and cash flows for such fiscal quarter,
subject to normal year-end audited adjustments, provided that the delivery
within the time period specified above of the Company's Quarterly Report on
Form 10-Q prepared in compliance with the requirements therefore and filed
with the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 4.01(a)(i);
(ii) Annual Statements. As soon as available and in any event within
90 days after the close of each fiscal year of the Company, copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such fiscal year, and
(2) consolidated statements of operations, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated figures for
the preceding fiscal year, all in reasonable detail and accompanied by a
report thereon of a firm of independent public accountants of recognized
national standing selected by the Company to the effect that the
consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Company and its Subsidiaries as
of the end of the fiscal year being reported on and the consolidated
results of the operations and cash flows for said year in conformity with
GAAP and that the examination of such accountants in connection with such
financial statements has been conducted in accordance with generally
accepted auditing standards and included such tests of the accounting
records and such other auditing procedures as said accountants deemed
necessary in the circumstances, provided that the delivery within the time
period specified above of copies of the Company's Annual Report on Form 10-
K for such fiscal year (together with the Company's Annual Report to
Shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange
Act) prepared in accordance with the requirements therefor and filed with
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 4.01(a)(ii);
(iii) Audit Reports; Management Letters. Promptly upon receipt
thereof, one copy of each interim or special audit made by independent
accountants or management consultants of the books of the Company or any
Subsidiary and any management letter received from such accountants or
consultants;
-9-
(iv) SEC and Other Reports. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Company to its stockholders generally and of each regular or
periodic report, and any registration statement or prospectus filed by the
Company or any Subsidiary with any securities exchange or the Securities
and Exchange Commission or any successor agency, and copies of any orders
in any proceedings to which the Company or any of its Subsidiaries is a
party, issued by any governmental agency, Federal or state, having
jurisdiction over the Company or any of its Subsidiaries, which proceedings
could reasonably be expected to have a Material Adverse Effect;
(v) Material Adverse Effect. Promptly upon the occurrence thereof,
written notice of any condition or event which has had, or which could
reasonably be expected to have, a Material Adverse Effect, including,
without limitation, the commencement of litigation or governmental
investigation or the assertion of any material claim against or default by
the Company or any of its Subsidiaries;
(vi) Notice of Defaults. Immediately upon becoming aware that the
holder of any evidence of Indebtedness or other Security of the Company or
any Subsidiary has given notice or taken any other action with respect to a
claimed default or event of default with respect to any such evidence of
Indebtedness or other Security, a written notice specifying the notice
given or action taken by such holder and the nature of the claimed default
or event of default and what action the Company is taking or proposes to
take with respect thereto; and
(vii) Requested Information. With reasonable promptness, such other
data and information as any such Institutional Holder may reasonably
request.
(b) Inspections. The Company will permit each original holder of any of
the Series B Preferred Stock (so long as such holder continues to hold any
Series B Preferred Stock), and each other Institutional Holder of the Series B
Preferred Stock (or such Persons as such holder may designate), to visit and
inspect, under the Company's guidance, any of the properties of the Company or
any Subsidiary, to examine all of their books of account, records, reports and
other papers, to make copies and extracts therefrom and to discuss their
respective affairs, finances and accounts with their respective officers,
employees, and independent public accountants (and by this provision the Company
authorizes said accountants to discuss with such holder the finances and affairs
of the Company and its Subsidiaries), all at such reasonable times and as often
as may be reasonably requested. Any visitation or inspection shall be subject to
the confidentiality terms of Section 4.01(c) and shall be at the sole expense of
such holder, unless a default shall have occurred and be continuing under this
Agreement, the Registration Rights Agreement, or the provisions of the
Certificate of Designation or the holder of any of the Series B Preferred Stock
or of any evidence of Indebtedness of the Company or any Subsidiary gives any
written notice or takes any other action with respect to a claimed default, in
which case, any such visitation or inspection shall be at the sole expense of
the Company.
(c) Confidentiality. Each holder of any of the Subject Securities, by its
acceptance thereof, agrees that it will keep confidential in accordance with its
internal policies and
-10-
procedures in effect from time to time any written information with respect to
the Company or its Subsidiaries which is furnished pursuant to this Agreement
that is proprietary in nature and which is designated by the Company or its
Subsidiaries in writing when received by such holder as confidential, provided
that such holder may disclose any such information (i) as has become generally
available to the public or to such holder on a non-confidential basis from a
source other than the Company or its Subsidiaries or as was known to such holder
on a non-confidential basis prior to its disclosure by the Company or its
Subsidiaries, (ii) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state or Federal regulatory body having or
claiming to have jurisdiction over such holder or to the National Association of
Insurance Commissioners or similar organizations or their successors, (iii) as
may be required or appropriate in response to any summons or subpoena or in
connection with any litigation, (iv) to the extent that such holder reasonably
believes it appropriate in order to protect its investment in the Subject
Securities or in order to comply with any law, order, regulation or ruling
applicable to such holder, (v) to such holder's officers, trustees, employees,
auditors or counsel who have been advised of the confidential nature of such
information and directed to treat it accordingly or to rating agencies or
another holder of the Subject Securities, (vi) to Persons who are parties to
similar confidentiality agreements with the Company, or (vii) to the prospective
permitted transferee in connection with any contemplated transfer of any of the
Subject Securities by such holder.
Section 4.02. Use of Proceeds. The proceeds from the sale of the Subject
Securities shall be used to redeem in full the Company's 6-1/2% convertible
subordinated debentures held by ▇▇▇▇▇▇, to pay certain fees and expenses
incurred in connection with the issue and sale of the Subject Securities and for
general corporate purposes.
Section 4.03. Corporate Existence; SEC Reporting Status. The Company will
preserve and keep in full force and effect, and will cause each Material
Subsidiary to preserve and keep in full force and effect, its corporate
existence and all licenses and permits necessary to the proper conduct of the
business of the Company and its Subsidiaries taken as a whole, provided that the
foregoing shall not prevent any transaction permitted by Section 4.13. In
addition to the foregoing, the Company shall maintain its status as a reporting
Company under Sections 13(a) and 15(d) of the Exchange Act.
Section 4.04. Insurance. The Company shall maintain and cause each of its
Subsidiaries to maintain as to their respective properties and businesses, with
financially sound and reputable insurers, insurance against such casualties and
contingencies and of such types and in such amounts as is customary for
companies similarly situated.
Section 4.05. Taxes, Claims for Labor and Materials. The Company will pay
and discharge, and will cause each Subsidiary to pay and discharge, all lawful
Material taxes, assessments and governmental charges or levies imposed upon the
Company or such Subsidiary, respectively, or upon or in respect of all or any
part of the Material property or business of the Company or such Subsidiary, in
all cases before the same shall become delinquent, all Material trade accounts
payable in accordance with usual and customary business terms, and all Material
claims for work, labor or materials, which if unpaid might become a lien or
encumbrance upon any property of the Company or such Subsidiary; provided the
Company or such Subsidiary shall
-11-
not be required to pay any such tax, assessment, charge, levy, account payable
or claim if (a) the validity, applicability or amount thereof is being contested
in good faith by appropriate actions or proceedings which will prevent the
forfeiture or sale of any property of the Company or such Subsidiary or any
material interference with the use thereof by the Company or such Subsidiary,
and (b) the Company or such Subsidiary shall set aside on its books, reserves
deemed by it to be adequate with respect thereto.
Section 4.06. Maintenance, Etc. The Company will maintain, preserve and
keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be maintained;
provided that the Company may discontinue the operation or maintenance of any of
its properties if in the good faith judgment of management such discontinuance
is desirable in the conduct of its business and such discontinuance could not
reasonably be expected to have a Material Adverse Effect.
Section 4.07. Compliance with Laws. The Company shall comply and shall
cause each Subsidiary to comply with all applicable laws, rules, regulations and
orders, including, without limitation, the Occupational Safety and Health Act of
1970, as amended, ERISA, the Americans with Disabilities Act of 1990, as
amended, and all Environmental Laws, noncompliance with which could reasonably
be expected to have a Material Adverse Effect.
Section 4.08. Restrictive Agreements Prohibited. (a) The Company will not
enter into, become a party to, allow to exist or adopt any contract, indenture,
agreement or instrument, or any note, debenture, bond or other security or enter
into any amendment of any provision of its Certificate of Incorporation or By-
laws, containing provisions which would by its terms restrict or limit the
ability of the Company to pay the full amount of the dividends on the Series B
Preferred Stock at the rates and on the dates fixed in the Certificate of
Designation or which otherwise restrict the Company's performance of this
Agreement, the terms of the Series B Preferred Stock, the Warrants or the
Registration Rights Agreement; provided that covenants or other provisions
requiring the maintenance of reasonable minimum levels of shareholders' equity
or net worth, cash flow, current assets and similar items shall not be deemed to
limit, impair or otherwise modify the obligations of the Company to declare and
pay dividends on the Series B Preferred Stock as and when the same are due and
payable.
(b) The Company will not permit any Subsidiary to be a party to or bound
by any contract, indenture, agreement, instrument or any note, debenture, bond
or other security under the terms of which such Subsidiary's right to declare
and pay dividends or make other distributions on or in respect of its capital
stock is restricted; provided that covenants or other provisions requiring the
maintenance of reasonable minimum levels of shareholders' equity or net worth,
cash flow, current assets and similar items shall not be deemed to limit, impair
or otherwise modify the obligations of the Subsidiaries to declare and pay
dividends on capital stock as and when the same are due and payable or to redeem
shares of capital stock.
Section 4.09. Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, for the purpose of
-12-
effecting the conversion of the Series B Preferred Stock and exercise of the
Warrants and otherwise complying with the terms of this Agreement, such number
of its duly authorized shares of Common Stock as shall be sufficient to effect
the conversion of the Series B Preferred Stock and exercise of the Warrants all
as from time to time outstanding or otherwise to comply with the terms of this
Agreement. Notwithstanding the foregoing, because there is no "floor" or minimum
conversion or exercise price applicable to the Subject Securities, it is
mathematically possible that the Subject Securities could convert into or become
exercisable for a number of shares of Common Stock that it is in excess of the
Company's authorized capital thereof. If at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of the Series B Preferred Stock or the exercise of the Warrants or
otherwise to comply with the terms of this Agreement, the Company will forthwith
take such corporate action (including the obtaining of stockholder approval) as
may be necessary to increase its authorized but unissued shares of Common Stock
to such number of shares as shall be sufficient for such purposes. The Company
will obtain any authorization, consent, approval or other action by or make any
filing with any court or administrative body that may be required under
applicable Federal or state Securities laws in connection with the issuance or
delivery of shares of Common Stock upon conversion of the Series B Preferred
Stock and exercise of the Warrants. The Company will not, by amendment to its
Certificate of Incorporation or through any reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, issue or sale of Securities
or other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of the Series B Preferred Stock or the Conversion Shares or
the Warrants, if any, and will at all times carry out all such terms and take
all such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series B Preferred Stock and exercise
rights of the holders of the Warrants.
Section 4.10. Transactions With Affiliates. The Company will not, and will
not permit any Subsidiary to, enter into or be a party to any transaction or
arrangement with any Affiliate (including, without limitation, the purchase
from, sale to or exchange of property with, or the rendering of any service by
or for, any Affiliate), except (a) arrangements between the Company and ▇▇▇▇▇▇
either existing or, in the case of the transfer by ▇▇▇▇▇▇ to the Company of its
cell therapies business pursuant to the Asset Transfer Agreement dated June 30,
1999, in the process of implementation on the Closing Date and generally
described in the Private Placement Memorandum and in the Company's public
reports filed with the Commission and (b) transactions or arrangements entered
into in the ordinary course of and pursuant to the reasonable requirements of
the Company's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to the Company or such Subsidiary than would be obtainable in
a comparable arm's-length transaction with a Person other than an Affiliate.
Section 4.11. Nature of Business. Neither the Company nor any Subsidiary
will engage in any business if, as a result, the general nature of the business,
taken on a consolidated basis, which would then be engaged in by the Company and
its Subsidiaries would be substantially changed from the general nature of the
business engaged in by the Company and its Subsidiaries as of the date of this
Agreement, which is the business of cellular therapy and the development of
healthcare products involving cellular therapy.
-13-
Section 4.12. Purchase of Securities. The Company will not, directly or
indirectly, through any Subsidiary or Affiliate or otherwise, purchase, redeem
or retire, or make any offer to purchase, redeem or retire, any of the shares of
Series B Preferred Stock, the Put Right Certificates, the Class A Warrants or
the Class B Warrants (other than, in the case of the Series B Preferred Stock,
pursuant to and in accordance with the applicable provisions of the Certificate
of Incorporation and the Certificate of Designation), unless the offer has been
made to repurchase the shares of Series B Preferred Stock, the Put Right
Certificates, the Class A Warrants or the Class B Warrants, as applicable, pro
rata from all holders thereof at the same time and at the same price and upon
the same terms.
Section 4.13. Mergers, Consolidations and Sales of Assets. Without the
prior written consent of the holders of 66-2/3% or more of the shares of Series
B Preferred Stock, the Company will not, and will not permit any of its Material
Subsidiaries to, consolidate with or merge into any other Person, or sell, lease
or otherwise dispose of all or substantially all of its property (pursuant to a
single transaction or a series of transactions) to any Person or Person (each
and every such action is hereinafter referred to as a "Significant
Transaction"). Notwithstanding the foregoing, the Company may consummate a
Significant Transaction without such prior written consent if:
(a) in connection with such Significant Transaction, the holders
of the Series B Preferred Stock receive cash or cash equivalents in
respect of the Series B Preferred Stock in an amount greater than (i)
in the case of a Significant Transaction occurring on or prior to
November 24, 2002, $4.26 per share of Common Stock issuable upon
conversion of the Series B Preferred Stock (as adjusted for any stock
dividends, stock splits, stock combinations, recapitalizations and
similar events) and (ii) in the case of a Significant Transaction
occurring after November 24, 2002 and on or prior to November 24,
2004, $4.95 per share of Common Stock issuable upon conversion of the
Series B Preferred Stock (as so adjusted); or
(b) in connection with such Significant Transaction, the holders
of the Series B Preferred Stock receive common stock (or equivalent
equity interests) of an Acceptable Acquiring Company, in respect of
the Series B Preferred Stock, valued (as provided below) at greater
than (i) in the case of a Significant Transaction occurring on or
prior to November 24, 2002, $4.26 per share of Common Stock issuable
upon conversion of the Series B Preferred Stock (as adjusted for any
stock dividends, stock splits, stock combinations, recapitalizations
and similar events) and (ii) in the case of a Significant Transaction
occurring after November 24, 2002 and on or prior to November 24,
2004, $4.95 per share of Common Stock issuable upon conversion of the
Series B Preferred Stock (as so adjusted); such valuation shall be (A)
determined, at the expense of the Company, by an independent
investment banking firm selected by the Company and reasonably
satisfactory to the Required Holders and (B) delivered in writing to
all holders of the Series B Preferred Stock prior to the effective
date of such Significant Transaction; or
-14-
(c) prior to any such Significant Transaction, the Company shall
have obtained the approval of the holders of 75% or more of the shares
of Series B Preferred Stock then outstanding (an "Approved Significant
Transaction"); or
(d) prior to any such Significant Transaction, the Put Right
Certificates shall have been fully exercised by all holders thereof
and ▇▇▇▇▇▇ shall have paid the purchase price in full and otherwise
performed its obligations in connection with such exercise.
Section 4.14. Amendments to Certain Agreements. Without the written
consent of the holders of 66-2/3% of the Series B Preferred Stock then
outstanding, the Company will not enter into any amendment to either (a) the
Side Letter Agreement dated as of November 24, 1999 between the Company and
▇▇▇▇▇▇ or (b) Section 10.1 of the Put Agreement between dated as of November 24,
1999 between the Company and ▇▇▇▇▇▇, each as entered into on the Closing Date in
connection with the issuance of the Put Right Certificates by ▇▇▇▇▇▇.
Section 4.15. Remedies and Default.
(a) Notice of Default. If the Company shall default in performing
and complying with its covenants contained in this Agreement or in any other
Operative Document, it shall, promptly after any Responsible Officer of the
Company obtains knowledge of such default, give notice thereof to all holders of
the outstanding Subject Securities, such notice to be in writing and sent in the
manner provided in Section 8.03.
(b) Remedies. (i) If the Company shall default in the performance
and observance of any of its covenants contained in this Agreement or in any
other Operative Document, the holder of any of the Subject Securities
outstanding at the time may proceed to protect and enforce any or all of its
rights and remedies resulting from such failure, by suit in equity or action at
law or by other appropriate proceedings.
(ii) The Company further agrees, to the extent not prohibited by law,
to pay to the holder or holders of the the Subject Securities all reasonable
costs and expenses incurred by them in enforcing the observance by the Company
of its covenants contained in this Agreement and the other Operative Documents,
including reasonable compensation to such holder's or holders' attorneys for all
services rendered and related disbursements in connection therewith.
(iii) The Company stipulates that the remedies at law of the holder or
holders of the Subject Securities in the event of any breach or threatened
breach by it in the performance of or compliance with any covenant or agreement
in this Agreement or any of the other Operative Documents are not and will not
be adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance thereof, whether
by an adjunction against a violation thereof or otherwise.
(iv) No remedy conferred in this Agreement or in any of the other
Operative Documents upon the holder of any Subject Security is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy
-15-
given hereunder or thereunder or now or hereafter existing at law or in equity
or by statute or otherwise.
(v) No delay or failure on the part of the holder of any Subject
Security in the exercise of any power or right shall operate as a waiver
thereof; nor shall any single or partial exercise of the same preclude any other
or further exercise thereof, or the exercise of any other power or right.
Section 5. Purchasers' Special Rights.
Section 5.01. Direct Payment. The Company will pay punctually all amounts
with respect to each of the Subject Securities (whether as dividends, upon
redemption of shares, if any, or otherwise) payable to any Purchaser or its
nominee or any other Institutional Holder of the Subject Securities, without any
presentment or surrender of any certificate for any such shares on partial
redemption of any of the shares evidenced by such certificate: (a) by wire
transfer in immediately available funds to such bank account at a commercial
bank in the United States of America as may be designated under such Purchaser's
name in Schedule I or as may hereafter be designated or redesignated by written
notice to the Company from such Purchaser or such Institutional Holder of the
Subject Securities, and (b) if payment in the manner provided by the foregoing
clause (a) has not been specified, by check duly mailed and addressed to such
address as may be specified in a written notice to the Company by such Purchaser
or such Institutional Holder of the Subject Securities.
Section 5.02. Delivery Expense. If any Purchaser surrenders any
certificate for shares of Series B Preferred Stock or any Warrant to the Company
or a transfer agent of the Company for exchange for certificates or Warrants of
other denominations or for registration in another name or names, the Company
will pay the cost of insurance and delivery to such place as such Purchaser may
designate from the Company or its transfer agent of the certificates issued in
substitution or replacement for the surrendered certificate.
Section 5.03. Taxes. The Company will pay all stamp and other taxes (other
than (a) income taxes and (b) taxes which are the result of the ownership of the
Subject Securities which may be payable in connection with the execution and
delivery of this Agreement or the authorization, issuance and delivery upon the
sale of the Subject Securities hereunder or in connection with any modification
of this Agreement or the other Operative Documents, and will indemnify and save
the Purchasers harmless, without limitation as to time, from and against any and
all liabilities with respect to all such taxes and the Company agrees to pay to
the Purchasers such additional amounts as may be necessary in respect of such
taxes in order that the Purchasers shall incur no greater cost or expenses than
the Purchasers would have incurred had there been no such taxes payable in
connection with such execution and delivery, such authorization and issuance or
such modification. The obligations of the Company under this Section 5.03 shall
survive the termination of this Agreement, any redemption, repurchase or
conversion of the Series B Preferred Stock by the Company and any exercise of
the Warrants.
-16-
Section 5.04. Replacement of Series B Preferred Stock Certificates. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of any certificate evidencing any shares of
Series B Preferred Stock and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided, if the owner of such shares is a
Purchaser or an Institutional Holder, its own agreement to indemnify shall
be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company, at its expense, will execute and deliver, in lieu thereof, a new
certificate for an equal number of shares of Series B Preferred Stock.
Section 5.05. Exchange of Series B Preferred Stock Certificates. Upon
surrender at the office of the Company of any certificate for shares of Series B
Preferred Stock and at the request of the holder of such shares, the Company
will execute and deliver, at the Company's expense (except as provided below),
new certificates for shares of Series B Preferred Stock in exchange for such
surrendered certificates, which new certificates shall be in denominations of
100 shares or any multiple thereof (except as may be necessary to reflect any
number of shares not evenly divisible by 100 as requested by such holder), in an
aggregate number of shares equal to the number of shares represented by such
surrendered certificates. In the event a certificate being surrendered is for
less than 100 shares, a new certificate will be issued for not less than the
number of shares represented by the certificate being surrendered. Such new
certificates shall be registered in the name of such Person as such holder may
request. The Company may require payment of a sum sufficient to cover any stamp
tax or governmental charge imposed in respect of any such exchange.
Section 5.06. Register. The Company shall keep at its principal executive
office a register for the initial registration and registration of transfers of
the Subject Securities. The name and address of each holder of one or more of
the Subject Securities, each transfer thereof and the name and address of each
transferee of one or more of the Subject Securities shall be registered in such
register. Prior to due presentment for registration of transfer, the Person in
whose name any Subject Security shall be registered shall be deemed and treated
as the owner and holder thereof for all purposes hereof, and the Company shall
not be affected by any notice or knowledge to the contrary. The Company shall
give to any Institutional Holder promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders of all Subject
Securities.
Section 5.07. Transfer. (a) Subject to the further provisions of this
Section 5.07, the Subject Securities may be transferred or assigned by the
holders thereof in whole or in part and from time to time.
(b) Each Purchaser agrees that the shares of Series B Preferred Stock
may be transferred or assigned only upon the concurrent transfer or
assignment to the same transferee or assignee of (i) that portion of the
Put Right Certificate representing the Put Rights corresponding to such
shares of Series B Preferred Stock and (ii) that portion of
-17-
the Class A Warrants representing the same proportion of the transferring
holder's investment in the Class A Warrants as the Series B Preferred Stock
so transferred represents in such holder's investment in the Series B
Preferred Stock immediately prior to the transfer.
(c) Each Purchaser agrees that it will not transfer the Subject
Securities or any part or portion of any thereof to a Competitor.
(d) Each Purchaser agrees that, in addition to the restrictions in
clauses (a) through (c) above, it will not transfer any of the Subject
Securities in denominations which constitute less than (i) in the case of
the Series B Preferred Stock, 5% of the aggregate number of shares then
outstanding, (ii) in the case of each of the Class A Warrants and the Class
B Warrants, 5% of the aggregate number of shares of Common Stock into which
such Warrants, respectively, are exercisable and (iii) in the case of the
Put Right Certificates, 5% of the aggregate number of all shares of Put
Stock (as defined therein) at the time outstanding, or in all cases, such
lesser amount as shall constitute the Purchaser's entire investment in such
class of Subject Securities being transferred.
Any purported transfer of Subject Securities in a manner contrary to the
foregoing provisions of this Section 5.07 shall be deemed invalid and of no
force or effect.
Section 6. Amendments, Modifications and Waivers.
Section 6.01. Consent Required. Any covenant, agreement, provision or
condition of this Agreement or any other Operative Document may, with the
consent of the Company, be amended or modified, or compliance therewith may be
waived (either generally or in any particular instance and either retroactively
or prospectively), by and only by one or more written instruments signed by the
Required Holders; provided that:
(a) no such amendment, modification or waiver of the provisions
of Sections 1 and 3 shall be effective as to any particular Purchaser
unless consented to by such Purchaser in writing;
(b) no amendment, modification or waiver shall, without the
consent in writing of the holders of all of the Subject Securities then
outstanding, amend any provision of this Section 6;
(c) no amendment, modification or waiver shall, without the
consent in writing of the holders of all of the shares of Series B
Preferred Stock, amend any provision of the Certificate of Designation
which would have the effect of changing the amount or time of any dividend
payment or the initial Conversion Price (as defined therein); and
(d) no amendment, modification or waiver shall, without the
consent in writing of the holder of a Put Right Certificate, amend any
provision of or terminate (other than pursuant to its express terms) the
Put Right Certificate held by such holder.
-18-
Except to the extent not effective as to any particular Purchaser because not
consented to by such Purchaser pursuant to the terms hereof, any amendment,
modification or waiver pursuant to this Section 6 shall apply equally to all
holders of Subject Securities and shall be binding on them, on each future
holder of any such securities (or successor or assignee of such holder) and on
the Company.
Section 6.02. Solicitation of Holders. So long as any Subject Securities
are outstanding, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or any other Operative Document, unless each holder of Subject
Securities (irrespective of the amount then owned by it) shall be informed
thereof by the Company and shall be afforded the opportunity of considering the
same and shall be supplied by the Company with sufficient information to enable
it to make an informed decision with respect thereto. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by way
of fee or otherwise, to any holder of Subject Securities as consideration for or
as an inducement to the entering into by such holder of any waiver or amendment
of any of the terms and provisions of this Agreement or any other Operative
Document, unless such remuneration is concurrently paid, on the same terms,
ratably to the holders of all of the Subject Securities then outstanding.
Section 6.03. Effect of Amendment or Waiver. The Company will give prompt
notice to all holders of the Subject Securities of the effectiveness of any
amendment, modification or waiver entered into in accordance with the provisions
of this Section 6. Such notice shall state the terms of any such amendment,
modification or waiver and shall be accompanied by at least two conformed copies
(which may be composite conformed copies) of each written instrument which
embodies such amendment, modification or waiver.
Section 6.04. Subject Securities held by Company, etc. Solely for the
purpose of determining whether the holders of the requisite percentage of the
Subject Securities then outstanding, or any class thereof, approved or consented
to any amendment, waiver or consent to be given under this Agreement or any
other Operative Document, Subject Securities directly or indirectly owned by the
Company or any of its Subsidiaries shall be deemed not to be outstanding.
Section 7. Interpretation Of Agreement.
Section 7.01. Certain Definitions. The terms hereinafter set forth when
used herein shall have the following meanings:
"Acceptable Acquiring Company" shall mean a corporation (a) engaged in
the health care business, (b) whose common stock is at the time listed on a
national securities exchange or traded on the NASDAQ National Market and is
current in its periodic reporting with the Commission and (c) which has annual
revenues of at least $500,000,000 and a market capitalization of at least $2
billion.
"Affiliate" shall mean any Person (other than a Subsidiary) (a) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common
-19-
control with, the Company, (b) which beneficially owns or holds 10% or more of
any class of the Voting Stock of the Company or (c) 10% or more of the Voting
Stock (or in the case of a Person which is not a corporation, 10% or more of the
equity interest) of which is beneficially owned or held by the Company or a
Subsidiary. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by contract or otherwise.
"Approved Significant Transaction" is defined in Section 4.13.
"▇▇▇▇▇▇" is defined in Section 1.02.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Certificate of Designation" is defined in Section 1.01.
"Certificate of Incorporation" is defined Section 1.01.
"Class A Warrants" is defined in Section 1.03.
"Class B Warrants" is defined in Section 1.03.
"Closing Date" is defined in Section 1.04.
"Commission" means the Securities and Exchange Commission, and any
successor thereto.
"Common Stock" means (a) the Company's Common Stock, $0.001 par value,
authorized on the Closing Date, and (b) any other class or series of capital
stock of the Company now or hereafter authorized the right of which to share in
distributions either of earnings or assets of the Company is without limit as to
any amount or percentage as and to the extent no amounts payable on or in
respect of such Common Stock and no rights arising in connection therewith have
preference over any other Common Stock upon dissolution, liquidation or winding
up of the Company.
"Company" is defined in the introductory paragraph to this Agreement.
"Competitive Business Line" shall mean either (a) the business of
cellular therapy or the development of health care products involving cellular
therapy or (b) the sale, marketing or manufacture of medical devices for use in
the health care industry.
"Competitor" shall mean (a) any Person which is engaged in a
Competitive Business Line or (b) any Person which at the time owns more than
forty percent (40%) of the Voting Stock
-20-
of such Competitor and in connection therewith exercises control over management
of a Person that is engaged in a Competitive Business Line, provided in any
event that:
(i) the provision of investment advisory services by a Person
to a Plan which is owned or controlled by a Person which would
otherwise be a Competitor shall not in any event cause the Person
providing such services to be deemed to be a Competitor;
(ii) in no event shall an Institutional Holder be deemed a
Competitor unless such Institutional Holder owns or holds more than
50% of the Voting Stock of, and in connection therewith exercises
control over management of, a Person that is engaged in a Competitive
Business Line;
(iii) in no event shall an Institutional Holder be deemed a
Competitor if such Institutional Holder is a pension plan sponsored by
a Person which would otherwise be a Competitor but which is a regular
investor in privately placed Securities and such pension plan has
established procedures which will prevent confidential information
supplied to such pension plan by the Company from being transmitted or
otherwise made available to such plan sponsor; and
(iv) an Institutional Holder that would otherwise be deemed a
Competitor pursuant to the foregoing provisions of this definition by
virtue of its ownership or control as a portfolio investment of the
equity Securities of any Person primarily engaged in a Competitive
Business Line, shall not be deemed a Competitor if such Institutional
Holder has established procedures which will prevent confidential
information supplied to such Institutional Holder by the Company from
being transmitted or otherwise made available to such Person.
"Conversion Shares" shall mean the shares of Common Stock of the
Company (or any other Securities of the Company or any other Person) issued or
issuable from time to time upon conversion of the Series B Preferred Sock.
"Environmental Laws" shall mean any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that
is, along with the Company, a member of a controlled group of corporations or a
controlled group of trades or
-21-
businesses, as described in section 414(b) and 414(c), respectively, of the Code
or Section 4001 of ERISA.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States of America.
"Hazardous Material" shall mean any and all pollutants, toxic or
hazardous wastes or any other substances, including all substances listed in or
regulated in any Environmental Law that might pose a hazard to health or safety,
the removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, regulated, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"Indebtedness" with respect to any Person shall mean, at any time,
without duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable preferred stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or
arising under any conditional sale or other title retention agreement
with respect to any such property);
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of capitalized leases;
(d) all liabilities secured by any lien or other encumbrance
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities) other
than non-consensual liens arising in the ordinary course of business
and not in connection with borrowed money;
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money); and
(f) any guaranty or similar support or keep well agreement or
arrangement of such Person with respect to liabilities of a type
described in any of clauses (a) through (e) hereof.
"Institutional Holder" shall mean (a) any original purchaser of the
shares of Series B Preferred Stock (so long as such holder continues to hold any
such shares), (b) any holder of 10% or more of the shares of the Series B
Preferred Stock, and (c) any bank, trust company, savings and loan association
or other financial institution, any pension plan, any investment company,
-22-
any insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form, provided that for purposes of
the definition of "Competitor," a holder of the type described in clause (b)
(and no other clause) shall not be included in the term "Institutional Holder".
"Intellectual Property Rights" shall mean and include patents,
registered and common law trademarks, service marks, trade names, brand names,
copyrights, licenses and other similar rights (including, without limitation,
know-how, trade secrets and other confidential information) and applications for
each of the foregoing, if any.
"Investments" shall mean all investments, in cash or by delivery of
property, made directly or indirectly in any property or assets or in any
Person, whether by acquisition of shares of capital stock, Indebtedness or other
obligations or Securities or by loan, advance, capital contribution or
otherwise; provided that "Investments" shall not mean or include routine
investments in property to be used or consumed in the ordinary course of
business.
"Licenses" shall mean certificates of public convenience and
necessity, franchises, licenses and other permits and authorizations from
governmental authorities.
"Material" shall mean material in relation to the properties,
business, prospects, profits or financial condition of the Company and its
Subsidiaries taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the properties, business, prospects, profits or financial condition of the
Company and its Subsidiaries, (b) the legality, validity or enforceability of
this Agreement, the Subject Securities or any of the other Operative Documents,
(c) the rights and remedies of any holders of the Subject Securities with
respect to any such Subject Securities or (d) the ability of the Company to
perform its obligations under any of the Operative Documents.
"Material Subsidiary" shall have the same meaning as the term
"significant subsidiary" is given in Rule 1.02(w) of Regulation S-X under the
Securities Act.
"Multiemployer Plan" shall have the same meaning as in ERISA.
"Operative Documents" shall mean and include this Agreement, the
Certificate of Designation, the Certificate of Incorporation, the shares of
Series B Preferred Stock, the Put Rights Certificates, the Class A Warrants, the
Class B Warrants and the Registration Rights Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity, limited liability company or government (whether national,
Federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
-23-
"Plan" shall mean a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Private Placement Memorandum" is defined in paragraph 4 of Exhibit D.
"Purchasers" is defined in the introductory paragraph hereof.
"Put Right Certificate" and "Put Right Certificates" are defined in
Section 1.02.
"Put Right" and "Put Rights" are defined in Section 1.02.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement of the Company dated as of November 24, 1999 by the Company in favor
of the Purchasers.
"Required Holders" shall mean, at the time of any determination, the
holders of (a) 66-2/3% of the Series B Preferred Stock (determined by the number
of shares of Common Stock represented by each such share, as if converted), (b)
66-2/3% of the Class A Warrants (determined by the number of shares of Common
Stock represented by each such Warrant, as if exercised) and (c) 66-2/3% of the
Class B Warrants (determined by the number of shares of Common Stock represented
by each such Class B Warrant, as if exercised).
"Resolution" is defined in Section 1.01.
"Responsible Officer" shall mean the Chief Executive Officer, the
President, the Chief Financial Officer or the Treasurer of the Company.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act.
"Series A Preferred Stock" is defined in Section 1.01.
"Series B Preferred Stock" is defined in Section 1.01.
"Subject Securities" is defined in Section 1.03.
"Subsidiary" shall mean, as to any Person, any corporation,
association or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient
equity or voting interests to enable it or them (as a group) ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership or joint
venture if more than a 50% interest in the profits or capital thereof is owned
by such Person or one or more of its Subsidiaries or such Person and one or more
of its Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or
-24-
more of its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the Company.
"Voting Stock" shall mean Securities of any class or classes, 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).
"Warrants" is defined in Section 1.03.
Section 7.02. Accounting Principles. Where the character or the amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in accordance
with GAAP, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
Section 8. Miscellaneous.
Section 8.01. Expenses. Whether or not the transactions herein
contemplated shall be consummated, the Company agrees to pay directly all of the
Purchasers' out-of-pocket expenses in connection with the preparation, execution
and delivery of this Agreement and the other Operative Documents and the
transactions contemplated thereby and hereby, including but not limited to the
charges and disbursements of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, the Purchasers' special
counsel, duplicating and printing costs and charges for shipping the Series B
Preferred Stock, the Put Right Certificates and the Warrants, adequately insured
to the Purchasers at their respective home offices or at such other place as the
Purchasers may designate, and all expenses relating to any amendments, waivers
or consents pursuant to the provisions of this Agreement or any of the other
Operative Documents (whether or not the same are actually executed and
delivered), including, without limitation: (a) any such amendments, waivers, or
consents resulting from any work-out, renegotiation or restructuring relating to
the performance by the Company of its obligations under this Agreement or the
other Operative Documents, (b) the cost and expenses incurred in enforcing or
defending (or determining whether or how to enforce or defend) any rights under
or in respect of this Agreement or the other Operative Documents or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or the other Operative Documents
or by reason of being a holder of any share of the Series B Preferred Stock, the
Put Right Certificates or the Warrants, and (c) the cost and expenses, including
financial advisors' fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any work-out
or restructuring of the transactions contemplated by this Agreement or the other
Operative Documents. The Company also agrees to pay, within 30 days of receipt
thereof, supplemental statements of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ for disbursements
unposted or not incurred as of the Closing Date. The Company agrees to protect
and indemnify each Purchaser against any liability for any and all brokerage
fees and commissions payable or claimed to be payable to any Person (other than
Persons retained by a Purchaser) in connection with the transactions
contemplated by this Agreement or the other Operative Documents. Without
limiting the foregoing, the Company agrees to pay the cost of obtaining the
private placement numbers for the Series B Preferred
-25-
Stocks and the Warrants and authorizes the submission of such information as may
be required by Standard & Poor's CUSIP Service Bureau for the purpose of
obtaining such numbers.
Section 8.02. Legends on Series B Preferred Stock Certificates. Each
certificate representing shares of the Series B Preferred Stock shall be stamped
or otherwise imprinted with legends in substantially the following forms:
(a) "The shares evidenced by this certificate have not been
registered or qualified under the Securities Act of 1933, as amended,
or any state securities laws and may not be sold or transferred unless
registered or qualified pursuant to such Act and applicable state
securities laws or an exemption from registration under such Act or
such applicable state securities laws is available."
(b) "The shares evidenced by this certificate are subject to
certain restrictions on transfers and certain rights specified in the
Securities Agreement dated as of November 24, 1999, as amended from
time to time, between the Company and the original holders of the
shares of Series B Preferred Stock, a copy of which will be mailed to
any requesting holder by the Company within five business (5) days of
written request therefor."
In the event that a registration statement covering the Series B
Preferred Stock shall become effective under the Securities Act and under any
applicable state securities laws or in the event that the Company shall receive
an opinion of counsel to the holder thereof (which may be internal counsel to
such holder) that, in the opinion of such counsel, the legend in clause (a) is
not, or is no longer, necessary or required (including, without limitation,
because of the availability of the exemptions afforded by Rule 144 or Rule 144A
of the General Rules and Regulations of the Commission), the Company shall, or
shall instruct its transfer agents and registrars to, remove such legend from
the certificates evidencing the Series B Preferred Stock or issue new
certificates without such legend in lieu thereof. The Company agrees to bear all
expenses in connection with the matters covered by this Section 8.02.
Section 8.03. Notices. All communications provided for hereunder shall be
in writing and, if to a Purchaser, delivered or mailed prepaid by registered or
certified mail or prepaid overnight air courier, or by facsimile communication,
in each case addressed to such Purchaser at its address appearing on Schedule I
to this Agreement or such other address as such Purchaser or the subsequent
holder of any Subject Security may designate to the Company in writing, and if
to the Company, delivered or mailed by registered or certified mail or prepaid
overnight air courier, or by facsimile communication, to the Company at:
Nexell Therapeutics Inc.
▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-26-
or to such other address as the Company may in writing designate to each
Purchaser or to the subsequent holders of any Subject Security; provided that a
notice by overnight air courier shall only be effective if delivered at a street
address designated for such purpose above or in Schedule I, and a notice by
facsimile communication shall only be effective if confirmed by transmission of
a copy thereof by prepaid overnight air courier.
Section 8.04. Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and permitted assigns and shall inure to the
benefit of each Purchaser and its successors and permitted assigns, including
each successive holder or holders of shares of Series B Preferred Stock, the Put
Right Certificates, the Warrants or any share of Common Stock issuable upon
conversion of the Series B Preferred Stock or exercise of any of the Warrants.
The Company may not assign any of its rights or obligations under this Agreement
or any other Operative Document without the written consent of the Required
Holders.
Section 8.05. Survival of Covenants and Representations. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of the Operative
Documents.
Section 8.06. Severability. Should any part of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any remaining portion, which remaining portion
shall remain in force and effect as if this Agreement had been executed with the
invalid or unenforceable portion thereof eliminated and it is hereby declared
the intention of the parties hereto that they would have executed the remaining
portion of this Agreement without including therein any such part, parts or
portion which may, for any reason, be hereafter declared invalid or
unenforceable.
Section 8.07. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial. This Agreement, including the construction, validity and performance
hereof and the obligations arising hereunder, and all amendments and supplements
hereof and all waivers and consents hereunder, shall be construed in accordance
with and governed by the laws of the State of New York without giving effect to
any choice of law or conflicts of law provision or rule that would cause the
application of the laws of any other jurisdiction. Any legal action or
proceeding with respect to this Agreement or any document related hereto shall
be brought in the courts of the State of New York sitting in the County of New
York or of the United States of America for the State of New York sitting in the
County of New York or the courts of the State of Illinois sitting in the County
of ▇▇▇▇ or of the United States of America for the State of Illinois sitting in
the Northern District of Illinois, and, by execution and delivery and/or
acceptance of this Agreement, the Company and the Purchasers each hereby accepts
the non-exclusive jurisdiction of the aforesaid courts. In addition, the Company
hereby irrevocably and unconditionally waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions, suits or
proceedings arising out of or in connection with this Agreement or any document
related hereto brought in any of the aforesaid courts, and hereby further
irrevocably and unconditionally waives and agrees not
-27-
to plead or claim that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
The Company and each Purchaser hereby irrevocably waives all right to a
trial by jury in any suit, action or other proceeding instituted by or against
it in respect of its obligations hereunder or the transactions contemplated
hereby.
Section 8.08. Captions. The descriptive headings of the various Sections
or parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
Section 8.09. Counterparts. This Agreement may be executed in any number
of counterparts and each counterpart shall be deemed to be an original; and all
such counterparts shall constitute one and the same instrument.
-28-
The execution hereof by the Purchasers shall constitute a contract among
the Company and the Purchasers for the uses and purposes hereinabove set forth.
Nexell Therapeutics Inc.
By /s/
-------------------------------
Name:
Title:
Accepted and agreed to as of the first date written above.
[Purchaser]
By /s/
-------------------------------
Name:
Title:
[Purchaser]
By /s/
-------------------------------
Name:
Title:
[Purchaser]
By /s/
-------------------------------
Name:
Title:
[Purchaser]
By /s/
-------------------------------
Name:
Title:
-29-
Schedule I
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance $25,500,000
Company Series B Preferred Stock -- 25,500 shares
▇▇▇▇ ▇▇▇▇▇▇▇ Place Class A Warrant -- 40.48%
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Class B Warrant -- 1,214,286 shares
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Put Right Certificates -- 25,500 Put Rights
$4,500,000
Series B Preferred Stock -- 4,500 shares
Class A Warrant -- 7.14%
Class B Warrant -- 214,285 shares
Put Right Certificates -- 4,500 Put Rights
Payments
All payments on account of the Series B Preferred Stock or other obligations in
accordance with the provisions thereof shall be made by bank wire transfer of
immediately available funds for credit, not later than 12 noon, Boston time, to:
BankBoston
ABA #▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Account of: ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company
Private Placement Collection Account
Account Number 541-55417
On Order of: Nexell Therapeutics Inc., Series B Cumulative Convertible
Preferred Stock, PPN 65332H 2# 0
Notices
Contemporaneous with the above wire transfer, advice setting forth (1) the full
name and description of the securities or other obligations and (2) name and
address of Bank (or Trustee) from which wire transfer was sent, shall be
delivered or faxed and mailed to:
Schedule I
(to Securities Agreement)
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Investment Accounting Division, B-3
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All notices with respect to prepayments, both scheduled and unscheduled, whether
partial or in full, and notice of maturity shall be delivered or faxed and
mailed to:
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Investment Accounting Division, B-3
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All other communications which shall include, but not be limited to, financial
statements and certificates of compliance with financial covenants, shall be
delivered or faxed and mailed to:
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Bond and Corporate Finance Group, T-57
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
A copy of any notices relating to change in issuer's name, address or principal
place of business or location of collateral and a copy of any legal opinions
shall be delivered or faxed and mailed to:
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Investment Law Division, T-50
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Name in which Subject Securities are to be issued: ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life
Insurance Company
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
-2-
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
▇▇▇▇ ▇▇▇▇▇▇▇ Variable Life Insurance $2,000,000
Company Series B Preferred Stock -- 2,000 shares
▇▇▇▇ ▇▇▇▇▇▇▇ Place Class A Warrant -- 3.17%
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Class B Warrant -- 95,238 shares
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Put Right Certificates -- 2,000 Put Rights
Payments
All payments on account of the Series B Preferred Stock or other obligations in
accordance with the provisions thereof shall be made by bank wire transfer of
immediately available funds for credit, not later than 12 noon, Boston time, to:
BankBoston
ABA #▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Account of: ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company
Private Placement Collection Account
Account Number 541-55417
On Order of: Nexell Therapeutics Inc., Series B Cumulative Convertible
Preferred Stock, PPN 65332H 2# 0
Notices
Contemporaneous with the above wire transfer, advice setting forth (1) the full
name and description of the securities or other obligations; and (2) name and
address of Bank (or Trustee) from which wire transfer was sent, shall be
delivered or faxed and mailed to:
▇▇▇▇ ▇▇▇▇▇▇▇ Variable Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Investment Accounting Division, B-3
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All notices with respect to prepayments, both scheduled and unscheduled, whether
partial or in full, and notice of maturity shall be delivered or faxed and
mailed to:
-3-
▇▇▇▇ ▇▇▇▇▇▇▇ Variable Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Investment Accounting Division, B-3
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All other communications which shall include, but not be limited to, financial
statements and certificates of compliance with financial covenants, shall be
delivered or faxed and mailed to:
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Bond and Corporate Finance Group, T-57
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
A copy of any notices relating to change in issuer's name, address or principal
place of business or location of collateral and a copy of any legal opinions
shall be delivered or faxed and mailed to:
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Investment Law Division, T-50
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Name in which Subject Securities are to be issued: ▇▇▇▇ ▇▇▇▇▇▇▇ Variable Life
Insurance Company
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
-4-
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
Investors Partner Life Insurance $1,000,000
Company Series B Preferred Stock -- 1,000 Shares
▇▇▇▇ ▇▇▇▇▇▇▇ Place Class A Warrant -- 1.59%
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Class B Warrant -- 47,619 shares
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Put Right Certificates -- 1,000 Put Rights
Payments
All payments on account of the Series B Preferred Stock or other obligations in
accordance with the provisions thereof shall be made by bank wire transfer of
immediately available funds for credit, not later than 12 noon, Boston time, to:
BankBoston
ABA #▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Account of: ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company
Private Placement Collection Account
Account Number 541-55417
On Order of: Nexell Therapeutics Inc., Series B Cumulative Convertible
Preferred Stock, PPN 65332H 2# 0
Notices
Contemporaneous with the above wire transfer, advice setting forth (1) the full
name and description of the securities or other obligations and (2) name and
address of Bank (or Trustee) from which wire transfer was sent, shall be
delivered or faxed and mailed to:
Investors Partner Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Investment Accounting Division, B-3
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All notices with respect to prepayments, both scheduled and unscheduled, whether
partial or in full, and notice of maturity shall be delivered or faxed and
mailed to:
-5-
Investors Partner Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Investment Accounting Division, B-3
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
All other communications which shall include, but not be limited to, financial
statements and certificates of compliance with financial covenants, shall be
delivered or faxed and mailed to:
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Bond and Corporate Finance Group, T-57
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
A copy of any notices relating to change in issuer's name, address or principal
place of business or location of collateral and a copy of any legal opinions
shall be delivered or faxed and mailed to:
▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Investment Law Division, T-50
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Name in which Subject Securities are to be issued: Investors Partner Life
Insurance Company
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
-6-
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
The Lincoln National Life Insurance $5,000,000
Company Series B Preferred Stock -- 5,000 Shares
c/o Lincoln Investment Management, Inc. Class A Warrant -- 7.94%
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Class B Warrant -- 238,095 shares
Renaissance Square Put Right Certificates -- 5,000 Put Rights
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Investments/Private Placements
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Private Placements
Payments
All payments on or in respect of the Series B Preferred Stock to be by bank wire
transfer of Federal or other immediately available funds (identifying each
payment as "Nexell Therapeutics Inc., Series B Cumulative Convertible Preferred
Stock, PPN 65332H 2# 0, principal, premium or interest") to:
Bankers Trust Company
New York, New York
ABA #021-00-1033
A/C #▇▇-▇▇▇-▇▇▇
Private Placement Processing
For Further Credit: The Lincoln National Life Insurance Company (Surplus)
Custodial Account Number 98449.
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above with duplicate notices with respect to payments to:
Bankers Trust Company
P. O. Box ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Private Placement Unit
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Private Placements
Name of Nominee in which the Subject Securities are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
-7-
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
Massachusetts Mutual Life Insurance $3,875,000
Company Series B Preferred Stock -- 3,875 Shares
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Class A Warrant -- 6.15%
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Class B Warrant -- 184,524 shares
Attention: Securities Investment Division Put Right Certificates -- 3,875 Put Rights
Payments
All payments on or in respect of the Series B Preferred Stock to be by bank wire
transfer of Federal or other immediately available funds (identifying each
payment as "Nexell Therapeutics Inc., Series B Cumulative Convertible Preferred
Stock, PPN 65332H 2# 0, principal, premium or interest") to:
Citibank, N.A. (ABA #▇▇▇▇▇▇▇▇▇)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
for credit to: MassMutual Long-Term Pool Account Number 4067-3488
Re: Description of security, principal and interest split
With telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (▇▇▇) ▇▇▇-▇▇▇▇.
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments, to be addressed Attention: Securities Custody
and Collection Department, F 381.
Name of Nominee in which the Subject Securities are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
-8-
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
Massmutual Corporate Investors $3,875,000
c/o Massachusetts Mutual Life Insurance Series B Preferred Stock -- 3,875 shares
Company Class A Warrant -- 6.15%
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Class B Warrant -- 184,524 shares
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Put Right Certificates -- 3,875 Put Rights
Attention: Securities Investment Division
Payments
All payments on or in respect of the Series B Preferred Stock to be by bank wire
transfer of Federal or other immediately available funds (identifying each
payment as "Nexell Therapeutics Inc., Series B Cumulative Convertible Preferred
Stock, PPN 65332H 2# 0, principal, premium or interest") to:
Chase/NYC/Cust
ABA #▇▇▇▇▇▇▇▇▇
A/C No. ▇▇▇-▇-▇▇▇▇▇▇ for F/C/T
MassMutual Corporate Investors
A/C No. G06109
Attention: Bond Interest
Re: Description of Security (principal and interest split, if applicable)
With telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (▇▇▇) ▇▇▇-▇▇▇▇.
If payment made by check: MassMutual Corporate Investors
(include A/C No. G06109 (or ▇▇▇▇ & Co., if securities are registered in the
nominee name)
on the check) c/o Chase Manhattan Bank, N.A.
Attention: Income Processing, ▇▇▇▇▇ ▇▇
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Station
New York, New York 10008
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments, to be addressed Attention: Securities Custody
and Collection Department, F381.
Name of Nominee in which the Subject Securities are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
-9-
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
Massmutual Participation Investors $2,250,000
c/o Massachusetts Mutual Life Insurance Series B Preferred Stock -- 2,250 shares
Company Class A Warrant -- 3.57%
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Class B Warrant -- 107,143 shares
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Put Right Certificates -- 2,250 Put Rights
Attention: Securities Investment Division
Payments
All payments on or in respect of the Series B Preferred Stock to be by bank wire
transfer of Federal or other immediately available funds (identifying each
payment as "Nexell Therapeutics Inc., Series B Cumulative Convertible Preferred
Stock, PPN 65332H 2# 0, principal, premium or interest") to:
Chase/NYC/Cust
ABA #▇▇▇▇▇▇▇▇▇
A/C No. ▇▇▇-▇-▇▇▇▇▇▇ for F/C/T
MassMutual Participation Investors
A/C No. G06110
Attention: Bond Interest
Re: Description of Security (principal and interest split, if applicable)
With telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (▇▇▇) ▇▇▇-▇▇▇▇.
If payment made by check: MassMutual Participation Investors
(include A/C No. G06110 (or ▇▇▇▇ & Co., if securities are registered in the
nominee name)
on the check) c/o Chase Manhattan Bank, N.A.
Attention: Income Processing, ▇▇▇▇▇ ▇▇
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Station
New York, New York 10008
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments, to be addressed Attention: Securities Custody
and Collection Department, F381.
Name of Nominee in which the Subject Securities are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
-10-
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
Metropolitan Life Insurance Company $15,000,000
Corporate Equities Series B Preferred Stock -- 15,000 shares
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Class A Warrant -- 23.81%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Class B Warrant -- 714,286 shares
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇ Put Right Certificates -- 15,000 Put Rights
Payments
All payments on or in respect of the Series B Preferred Stock to be by bank wire
transfer of Federal or other immediately available funds (identifying each
payment as "Nexell Therapeutics Inc., Series B Cumulative Convertible Preferred
Stock, PPN 65332H 2# 0, principal, premium or interest") to:
The Chase Manhattan Bank
New York, New York
ABA #▇▇▇-▇▇▇-▇▇▇
Account Number 002-2-410591
for credit to: Metropolitan Life Insurance Company
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above with a copy to:
Metropolitan Life Insurance Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (Area 6-H)
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
Metropolitan Life Insurance Company
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Ascension ▇▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Name of Nominee in which the Subject Securities are to be issued: None
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
-11-
NEXELL THERAPEUTICS INC.
CLOSING CERTIFICATE
To Each of the Purchasers Named in Schedule I to
the Securities Agreement described below
Ladies and Gentlemen:
Nexell Therapeutics Inc., a Delaware corporation (the "Company"), as an
inducement to and as part of the consideration for your purchase on this date of
an aggregate of 63,000 shares of the Series B Cumulative Convertible Preferred
Stock (the "Series B Preferred Stock"), the Class A Warrants and the Class B
Warrants (collectively, the "Warrants") of the Company pursuant to the
Securities Agreement dated as of November 24, 1999 (the "Securities Agreement",
words and phrases not otherwise defined herein having the meanings assigned
thereto in the Securities Agreement) among each of you and the Company, and in
compliance with the Securities Agreement, hereby represents and warrants to you
as follows:
1. Corporate Organization and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite power and authority to own, lease and
operate its properties and to conduct the business now being conducted by it, to
enter into and perform each of the Operative Documents to which it is a party
and to create, issue and sell the Series B Preferred Stock and the Warrants as
contemplated in the Securities Agreement. Except as set forth in Annex I (Part
1), no approval of the stockholders of the Company or any of its Subsidiaries is
required in connection with the consummation of the transactions contemplated by
the Operative Documents. Each such approval has heretofore been obtained.
2. Qualification to Do Business. The Company is duly qualified and in
good standing as a foreign corporation authorized to do business in each
jurisdiction wherein the nature of properties owned or leased or activities
conducted by it makes such licensing or qualification necessary, except where
the failure to so qualify could not be reasonably be expected to have a Material
Adverse Effect.
3. Subsidiaries. Annex I (Part 2) attached hereto states the name of
each Subsidiary of the Company, its jurisdiction of incorporation and the
percentage of its capital stock owned by the Company and/or each Subsidiary.
Nexell of California, Inc. is the Company's only Material Subsidiary. Each such
Subsidiary has been duly organized and is validly existing and in good standing
under the laws of its jurisdiction of incorporation, and is duly qualified and
in good standing as a foreign corporation under the laws of each jurisdiction
wherein the nature of the properties owned or leased or activities conducted by
it make such qualification necessary, except where the failure to so qualify
could not be reasonably be expected to have a Material Adverse Effect, and has
all requisite power and authority to own and operate its properties and to
EXHIBIT D
(to Securities Agreement)
conduct the business now being conducted by it. All of the outstanding shares of
stock of each Subsidiary have been validly issued, are fully paid and
nonassessable.
4. Private Placement Memorandum. The information with respect to the
Company and its Subsidiaries contained in the Private Placement Memorandum dated
July, 1999, prepared by ▇▇▇▇▇▇ Brothers Inc. for use in connection with the
placement of the Subject Securities, a copy of which has been furnished to you,
is true and correct in all material respects, except that: (a) the term sheet
set forth therein has been replaced by the final term sheet distributed on or
about October 29, 1999; (b) the financial and other information contained
therein has been updated by the Company's Quarterly Reports on Form 10-Q for the
quarterly periods ended June 30, 1999 and September 30, 1999; (c) the references
therein to the Company's arrangements with ▇▇▇▇▇▇ in the event the Put Rights
are exercised are replaced by the Side Letter Agreement dated the Closing Date
between the Company and ▇▇▇▇▇▇; (d) the references to the Company's hiring of
▇▇▇▇▇▇ personnel in Europe has been updated to reflect the current status of
such activities which has been discussed with you; and (e) the Company's Board
of Directors has expanded to seven members. The Private Placement Memorandum,
taken together with the matters set forth in the foregoing clauses (a) through
(e), is hereafter referred to as the "Private Placement Memorandum."
5. Financial Statements. (a) The consolidated balance sheet of the
Company and Subsidiaries as of December 31, 1998, and the related consolidated
statements of operations and changes in shareholder' equity and cash flows for
the fiscal year ended on said date, certified by KPMG LLP, independent public
accountants, a copy of which has heretofore been delivered to you, were prepared
in accordance with generally accepted accounting principles consistently applied
throughout the period involved and present fairly the financial position and
results of operations and changes in their cash flows of the Company and
consolidated Subsidiaries for and as at the end of each of such fiscal year.
(b) The unaudited consolidated balance sheet and the unaudited
consolidated statements of operations and cash flows of the Company and its
consolidated Subsidiaries for the six-month period ended September 30, 1999, a
true and correct copy of which has been furnished to you by the Company, were
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved and present fairly the
financial position and results of operations of the Company and its consolidated
Subsidiaries for and as at the end of the respective periods set forth therein,
subject to normal year-end audit adjustments.
(c) Since December 31, 1998 there has been no change in the
condition, financial or otherwise, of the Company and its consolidated
Subsidiaries as shown on the consolidated balance sheet as of such date, except
changes in the ordinary course of business, none of which individually or in the
aggregate has been adverse and no condition or event has occurred which has had,
or which could reasonably be expected to have, a Material Adverse Effect, it
being understood that the Company's losses have continued since December 31,
1998.
6. Indebtedness, Liens, Investments, etc. Annex I (Part 3) attached
hereto correctly describes all Indebtedness, including all capitalized leases,
operating leases and liens and
D-2
encumbrances securing Indebtedness of the Company and its Subsidiaries
outstanding on the Closing Date.
7. Solvency and Consideration. (a) On the Closing Date, the Company is
solvent, has capital not unreasonably small in relation to its business or any
contemplated or undertaken transaction and has assets having a value both at
fair valuation and a present fair salable value greater than the amount required
to pay its debts as they become due and greater than the amount that will be
required to pay its probable liability on its existing debts as they become due
and matured. The Company does not intend to incur, nor does it believe, that it
will incur, debts beyond its ability to pay such debts as they become due.
Neither the Company nor any of its Subsidiaries will be rendered insolvent by
the execution, delivery and performance of its respective obligations under or
in respect of the Securities Agreement, the Series B Preferred Stock, the
Warrants and the Registration Rights Agreement. Neither the Company nor any of
its Subsidiaries intends to hinder, delay or defraud its creditors by or through
the execution, delivery or performance of its respective obligations under or in
respect of the Securities Agreement, the Series B Preferred Stock, the Warrants
and the Registration Rights Agreement.
(b) There will be provided to the Company and each of its Subsidiaries a
substantial economic benefit and adequate consideration for the execution and
delivery of the Securities Agreement, the Series B Preferred Stock, the Warrants
and the Registration Rights Agreement by the Company and its Subsidiaries
because, among other reasons, the proceeds of the Series B Preferred Stock will
be used in the manner set forth in paragraph 19 of this Closing Certificate and
therefore will enhance the financial position of the Company and its
Subsidiaries taken as a whole.
8. Capital Stock; Stockholder Matters. The authorized, issued and
outstanding Capital Stock of the Company and each Subsidiary is set forth in
Annex I (Part 4) attached hereto. All of the outstanding Capital Stock of the
Company and each Subsidiary has been validly issued and is fully paid and
non-assessable and is subject to no liens and encumbrances. No Stockholders of
the Company are entitled to any preemptive rights with respect to the Common
Stock of the Company. Neither the Company nor any of its Subsidiaries has
outstanding any warrants, options, convertible Securities or preemptive or other
rights for the purchase, or is a party or is bound by any agreement or other
instrument restricting or affecting the issuance, of capital stock of the
Company or any of its Subsidiaries, other than the Certificate of Designation,
the Warrants and as set forth in Annex I (Part 4(a)). The shares of Series B
Preferred Stock which are to be issued and sold to you on the Closing Date will,
upon the issuance to you, have the designations, preferences, qualifications,
limitations, restrictions and such special and relevant rights as are set forth
in the Certificate of Incorporation, the Certificate of Designation and the laws
of the State of Delaware. The shares of Series B Preferred Stock upon issuance
on the Closing Date, and the shares of Common Stock issuable upon conversion of
the Series B Preferred Stock and upon exercise of the Warrants, if and when
converted or exercised in compliance with the terms and provisions of the
Certificate of Designation or the Warrants, as applicable, will be validly
issued, fully paid and nonassessable shares. Neither the Company nor any of its
Subsidiaries or to the Company's knowledge any of their respective stockholders
is a party to any agreement, document or instrument relating to voting or
similar requirements with respect to actions taken or
D-3
to be taken by the board of directors or stockholders of the Company or any
Subsidiary, except as set forth in Annex I (Part 4(b)).
9. Full Disclosure. Neither the financial statements referred to in
paragraph 5 hereof nor the Securities Agreement, the Private Placement
Memorandum or any other written statement furnished by the Company to you in
connection with the negotiation of the sale of the Series B Preferred Stock, the
Put Right Certificates and the Warrants, contains any untrue statement of a
material fact or omits a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact peculiar to the
Company or its Subsidiaries which the Company has not disclosed to you in
writing which affects adversely the Company and its Subsidiaries nor, so far as
the Company can now foresee could reasonably be expected to have a Material
Adverse Effect, except as set forth in Annex I (Part 4(c)).
10. Pending Litigation or Proceedings. There are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company or its Subsidiaries, at law or in equity or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
11. Title to Properties; Leases. The Company and each of its Subsidiaries
has good and marketable title to all Material property, real and personal, which
each of them purports to own and good and valid leasehold interests in all
property, real and personal, which it purports to lease as lessee, except
certain defects affecting the Company's title to certain properties which do not
individually or in the aggregate adversely affect the marketability of title or
the use by the Company of such property for its intended purpose and such
property is free of any Material lien or encumbrance. The Company and each of
its Subsidiaries enjoy peaceful and undisturbed possession under all material
leases of property leased as lessee, and all of such leases are valid,
subsisting and in full force and effect.
12. Patents, Trademarks and Licenses. Annex I (Part 5) attached hereto
correctly describes all material Intellectual Property Rights and material
Licenses owned or otherwise possessed by the Company and its Subsidiaries. The
Company and each Subsidiary own or possess all the material Intellectual
Property Rights and material Licenses, and have obtained all material Food and
Drug Administration approvals, necessary for the present and planned future
conduct of its business, without any known conflict with the rights of others.
13. Sale is Legal and Authorized. The authorization, creation, issuance
and sale of the Series B Preferred Stock and the Warrants and compliance by the
Company with all of the provisions of the Operative Documents to which it is a
party (a) are within the corporate powers of the Company, (b) have been duly
authorized by all necessary corporate action on the part of the Company, and (c)
are legal and will not conflict with nor result in any breach of any of the
provisions of, or constitute a default under, or result in the creation of any
lien or encumbrance upon any property of the Company under the provisions of,
any loan agreement, charter instrument, by-law or other agreement or instrument
to which the Company is a party or by which it may be bound or to which any of
its properties may be subject. The shares of the
D-4
Series B Preferred Stock, the Warrants, the Securities Agreement and the
Registration Right Agreement have been duly executed and delivered by the
Company and constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms and the shares of Series B Preferred
Stock and the Warrants issued on this date are validly issued, fully paid and
nonassessable.
14. No Defaults. Neither the Company nor any Subsidiary is in default in
the payment of principal or interest on any Indebtedness for borrowed money, nor
is the Company or any Subsidiary in default under any Material instrument or
instruments or agreements under and subject to which it has incurred any
Indebtedness for borrowed money and no event has occurred and is continuing
under the provisions of any such instrument or agreement which with the lapse of
time or the giving of notice, or both, would constitute an event of default
thereunder. No waiver of any default in respect of any Indebtedness of the
Company is currently in effect.
15. Governmental Consent. Neither the nature of the Company, its
business or property, nor any relationship between the Company and any other
Person, nor any circumstances in connection with the offer, creation, issue,
sale or delivery of the Series B Preferred Stock and the Warrants is such as to
require a consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority or any stock exchange on the part
of the Company in connection with the execution, delivery and performance of the
Securities Agreement or the offer, creation, issue, sale or delivery of the
Series B Preferred Stock or the Warrants, except for the filing of the
Certificate of Designation described in Section 1 of the Securities Agreement,
the filing with The NASDAQ Stock Market, Inc. of a NASDAQ National Market
Notification Form for Listing of Additional Shares, and the filing of a Form D
with the Commission.
16. Employee Controversies. There are no material controversies pending
or, to the knowledge of the Company, threatened or anticipated between the
Company or any of its Subsidiaries, on the one hand, and any of their respective
employees, on the other hand, and there are no labor disputes, grievances,
arbitration proceedings or any strikes, work stoppages or slowdowns pending, or
threatened, between the Company or any of its Subsidiaries, on the one hand and
their respective employees and representatives on the other hand, which could
reasonably be expected to have a Material Adverse Effect.
17. Taxes. The Company has and each of its Subsidiaries has filed all
Federal, State and other income tax returns which, to the best knowledge of the
officers of the Company, are required to be filed, and each has paid all taxes
as shown on such returns and on all assessments received by it to the extent
that such taxes have become due, except such taxes as are being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established in accordance with generally accepted accounting principles.
18. Private Offering. Neither the Company nor ▇▇▇▇▇▇ Brothers Inc. (the
only Person authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering of the Subject Securities or any
similar Security) has offered any of the shares of Series B Preferred Stock, the
Put Right Certificates or the Warrants or any similar Security for sale to, or
solicited offers to buy any thereof from, or otherwise approached or negotiated
with
D-5
respect thereto with, any prospective purchaser, other than the Purchasers and
75 other institutional investors, each of whom is an "accredited investor"
within the meaning of that term as defined in Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), and was offered a
portion of the shares of Series B Preferred Stock, the Put Right Certificates
and the Warrants at private sale for investment. The Company agrees that neither
the Company nor anyone acting on its behalf will offer the Series B Preferred
Stock, the Put Right Certificates or the Warrants or any part of either thereof
or any similar Securities for issue or sale to, or solicit any offer to acquire
any of the same from, anyone so as to bring the issuance and sale of the Series
B Preferred Stock, the Put Right Certificates and the Warrants within the
provisions of Section 5 of the Securities Act.
19. Use of Proceeds. The Company will apply all of the proceeds from
the sale of the Subject Securities on the Closing Date to redeem in full the
Company's 6-1/2% convertible subordinated debentures held by ▇▇▇▇▇▇, to pay
certain fees and expenses incurred in connection with the issue and sale of the
Subject Securities and for other corporate purposes, and such proceeds will not
be used for the purchase of securities in violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulation issued pursuant
thereto, including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System, 12 CFR, Chapter 11.
20. Restrictions on Distributions. Other than (a) the Credit Agreement
dated June 30, 1999 between the Company and ▇▇▇▇▇▇ Healthcare Corporation (the
"▇▇▇▇▇▇ Credit Agreement") and (b) the Series A Preferred Stock, the Company is
not a party to or bound by any contract, indenture, agreement, instrument, order
of any court, or governmental agency (except the Delaware General Corporation
Law) rule or regulation, or any note, debenture, bond, or other security, which
contains provisions expressly limiting or restricting payments by the Company on
or in respect of shares of its capital stock of any class, including, without
limitation, the Company's right and obligation to declare and pay the regular
dividends on the Series B Preferred Stock pursuant to the provisions of the
Certificate of Incorporation and the Certificate of Designation. The Company has
obtained the written consent of ▇▇▇▇▇▇ Healthcare Corporation under the Baxter
Credit Agreement and the Series A Preferred Stock to the payment of the regular
dividends on the Series B Preferred Stock.
21. ERISA. The consummation of the transactions contemplated in the
Securities Agreement and compliance by the Company with the provisions thereof
and of the other Operative Documents will not involve any prohibited transaction
within the meaning of ERISA or Section 4975 of the Code. Each Plan complies in
all material respects with all applicable statutes and governmental rules and
regulations, and (a) no Reportable Event has occurred and is continuing with
respect to any Plan, (b) neither the Company nor any ERISA Affiliate has
withdrawn from any Plan or Multiemployer Plan or instituted steps to do so, and
(c) no steps have been instituted to terminate any Plan. No condition exists or
event or transaction has occurred in connection with any Plan which could
reasonably be expected to result in the incurrence by the Company or any ERISA
Affiliate of any material liability, fine or penalty. No Plan maintained by the
Company or any ERISA Affiliate, nor any trust created thereunder, has incurred
any "accumulated funding deficiency" as defined in Section 302 of ERISA nor does
the present value of all benefits vested under all Plans exceed, as of the last
annual valuation date,
D-6
the value of the assets of the Plans allocable to such vested benefits. Neither
the Company nor any ERISA Affiliate has any contingent liability with respect to
any post-retirement "welfare benefit plan" (as such term is defined in ERISA)
except as has been disclosed to the Purchaser.
22. Compliance with Law. (a) Neither the Company nor any Subsidiary (i)
is in violation of any law, ordinance, franchise, governmental rule or
regulation to which it is subject; or (ii) has failed to obtain any License
necessary to the ownership of its property or to the conduct of its business,
which violation or failure to obtain could reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any Subsidiary is in default
with respect to any order of any court or governmental authority or arbitration
board or tribunal which default could reasonably be expected to have a Material
Adverse Effect.
(b) Without limiting the provisions of clause (a) of this paragraph 22,
the Company is in compliance with all applicable Environmental Laws, the failure
to comply with which could reasonably be expected to have a Material Adverse
Effect.
23. Investment Company Act. Neither the Company nor any of its
Subsidiaries is, and neither of them is directly or indirectly controlled by, or
acting on behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
24. Absence of Foreign or Enemy Status. Neither the Company nor any of its
Subsidiaries, is, by reason of being a "national" of a "designated foreign
country" or a "specially designated national" within the meaning of the
Regulations of the Office of Foreign Assets Control, United States Treasury
Department (31 C.F.R., Subtitle B, Chapter V), or subject to any restriction or
prohibition under, or is in violation of, any federal statute or Presidential
Executive Order, or any rules or regulations of any department, agency or
administrative body promulgated under any such statute or Order, concerning
trade or other relations with any foreign country or any citizen or national
thereof or the ownership or operation of any property. Neither the sale of the
Subject Securities by the Company hereunder nor its intended use of the proceeds
thereof violates the Trading with the Enemy Act, as amended, or any of the
foregoing foreign asset control regulations enabling legislation or executive
orders relating thereto.
25. Put Agreement with ▇▇▇▇▇▇. The Put Agreement dated as of November
24, 1999 between the Company and ▇▇▇▇▇▇ is in full force and effect, all
conditions precedent required by ▇▇▇▇▇▇ to the issuance of the Put Right
Certificates as provided in the Put Agreement have been satisfied without waiver
and no default under the Put Agreement has occurred.
D-7
In Witness Whereof, this Certificate is executed and delivered this
______ day of _______________, ____.
Nexell Therapeutics Inc.
By /s/
------------------------------
Its ______________________________
D-8