XXXXXXXXXX LABORATORIES, INC.
0000 Xxxxxx Xxxx Xxxx
Xxxxxx, Xxxxx 00000
OFFER AND AGREEMENT OF SALE AND PURCHASE
February 26, 1997
TO: Each Holder of Series E Convertible Preferred Stock
This letter constitutes an offer (the "Offer") from Xxxxxxxxxx
Laboratories, Inc. (the "Company") to purchase 50% of your shares, as
adjusted pursuant to Paragraph 1 (the "Subject Shares"), of the
Company's Series E Convertible Preferred Stock (the "Preferred Stock")
for the consideration, and subject to the terms, set forth herein. If
you accept the Offer, this letter will also constitute a legally
binding agreement (this "Agreement") between the Company and you in
accordance with the terms hereof. In addition, if the holders of a
majority in interest of the Preferred Stock accept the Offer and the
purchase contemplated by the Offer is consummated, this Agreement will
constitute an amendment to each of the Registration Rights Agreements
signed in October 1996 (collectively, the "RRA") between the Company
and the holders of the Preferred Stock. More specifically, the terms
of this Agreement are as follows:
1. Agreement of Sale and Purchase. At the Closing (as herein
defined), and subject to you and the other holders of the Preferred
Stock tendering an aggregate of at least 330 shares to the Company for
purchase (which condition may be waived by the Company), the Company
will purchase from you, and you will sell to the Company, the Subject
Shares in consideration of the payments to be made by the Company to
you in the amounts, and at the times, set forth in Paragraph 2 hereof.
At or before the Closing, (i) you will deliver your certificate or
certificates for the Subject Shares, together with a duly executed
Stock Power in the form enclosed herewith, to First Granite
Securities, Inc., as agent (the "Agent"), at 0000 00xx Xxxxxx, Xxxxx
000, Xxxxxxxx, Xxx Xxxx 00000, and (ii) the Company will wire transfer
to the Agent funds in an amount equal to those payments due to you at
the Closing. The Company will purchase fractional shares of Preferred
Stock, as necessary, in connection with the Offer.
Although the Offer is for 50% of your shares of Preferred
Stock, if some holders of Preferred Stock (the "Under 50% Sellers")
are not willing to sell at least 50% of their Preferred Stock and
other holders of Preferred Stock (the "Over 50% Sellers") are willing
to sell more than 50% of their Preferred Stock, the Company may, in
its discretion, purchase all of the Preferred Stock that the Under 50%
Sellers are willing to sell and purchase from the Over 50% Sellers a
sufficient number of shares of Preferred Stock to result in the
purchase of an aggregate of 330 shares. In such case, the Company
will purchase from each of the Over 50% Sellers pro rata according to
the number of shares of Preferred Stock that each of the Over 50%
Sellers indicates a willingness to sell pursuant to the Offer.
Accordingly, please indicate in the blank below your signature line
the maximum number of shares you are willing to sell pursuant to the
Offer. The Company will, within 10 business days after the Closing,
send to you a new stock certificate for any shares (including any
fractional shares) not purchased pursuant to the Offer. If you prefer
to have the cash payments set forth in Paragraph 2 wire transferred
directly to your account rather than to the Agent, please so indicate
by completing the optional wire transfer instructions below your
signature line on this Agreement.
The closing of the sale and purchase of the Subject Shares
(the "Closing") will occur at 10:00 a.m., Eastern Standard Time, on
March 6, 1997 or on such earlier date as the Company may, in its
discretion, designate following the Agent's receipt of stock
certificates and duly executed stock powers for an aggregate of at
least 330 shares of Preferred Stock. If stock certificates and stock
powers for an aggregate of at least 330 shares of Preferred Stock are
not received by 6:00 p.m., Eastern Standard Time, on March 5, 1997,
the Offer will expire. The Company reserves the right at its
discretion to withdraw the Offer at any time prior to the Closing or
to extend the Offer beyond the above-specified time and date of
expiration.
2. Payments. The Company will make the following payments to
you in the amounts, and at the times, indicated below:
(a) Closing Consideration. At the Closing, the Company will
pay you in cash an amount equal to the sum of
(1) $11,300 for each Subject Share;
(2) a "Periodic Amount" (as defined in Section
2(d) of the RRA) for the "Computation Period"
(as defined in Section 2(d) of the RRA) from
January 9, 1997 through February 8, 1997,
inclusive, equal to the mathematical product
of (A) 1% multiplied by (B) $10,000 for each
share of Preferred Stock you owned during such
30-day period; and
(3) a Periodic Amount for the Computation Period
from February 9, 1997 through February 14,
1997, inclusive, equal to the mathematical
product of (A) 6/30 multiplied by (B) 2%
multiplied by (C) $10,000 for each share of
Preferred Stock you owned during such six-day
period.
(b) Interest. Within five business days after the
Interest Period (as defined below), the Company will
pay you, in cash, interest at the rate of 7% per
annum on $10,000 for each share of Preferred Stock
that you owned from time to time during the period
from February 15, 1997 through the earlier of May
15, 1997 or the date the Registration Statement (as
defined in Section 1(a)(iv) of the RRA) is declared
effective by the Securities and Exchange Commission
(the "Interest Period").
(c) Periodic Amount. If the Registration Statement is
not declared effective by the Securities and
Exchange Commission on or before May 15, 1997, the
Company will pay you, in cash, a Periodic Amount
pursuant to Section 2(d) of the RRA from the
Computation Date of May 16, 1997 until the
Registration Statement is declared effective by the
Securities and Exchange Commission; provided,
however, that the rate of the Periodic Amount that
shall be applicable during the Computation Period
from May 16, 1997 through June 15, 1997 shall be 1%,
and the rate of the Periodic Amount that shall be
applicable during each Computation Period beginning
on or after June 16, 1997 shall be 2%; and provided,
further, any such Periodic Amount shall be prorated
to take into account the portion of a Computation
Period during which the Registration Statement was
effective.
Except as provided in subparagraphs (a)(2) and (a)(3) of
this Paragraph 2, no Periodic Amount shall be payable if the
Registration Statement is declared effective by the Securities and
Exchange Commission on or before May 15, 1997 and, in any event, no
Periodic Amount shall accrue from February 15, 1997 through May 15,
1997, inclusive.
3. Certain Representations. The Company represents and
warrants that it is duly authorized, and has full corporate power and
authority, to execute and deliver this Agreement. You represent and
warrant to the Company that (i) you have received and read the
Confidential Disclosure Memorandum dated February 26, 1997, delivered
to you by the Company in connection with the Offer, and each of the
documents incorporated by reference therein as listed on pages 1 and 2
thereof; (ii) you are duly authorized, and have full power and
authority, to execute and deliver this Agreement; and (iii) you have,
and at the Closing the Company will receive, good and marketable title
to the Subject Shares free and clear of any liens, security interests,
pledges, voting trusts, voting agreements, stock transfer restrictions
or other encumbrances of any nature whatsoever.
4. Amendment of RRA. This Agreement constitutes an amendment
to the RRA. In the event of any inconsistency between this Agreement
and the RRA, the provisions of this Agreement shall control.
5. Miscellaneous Provision.
(a) Applicable Law. This Agreement will be governed by,
and construed in accordance with, the laws of the
State of New York.
(b) Entire Agreement; Amendment. This Agreement
constitutes the entire agreement between the Company
and you with respect to the subject matter hereof.
This Agreement may not be amended except by an
instrument in writing executed by both the Company
and you.
(c) Successors and Permitted Assigns. This Agreement
will be binding upon, and will inure to the benefit
of, the Company, its successors and assigns, and
you, your successors, assigns, heirs, devisees and
personal representatives. Neither the Company nor
you may assign this Agreement without the prior
written consent of the other party hereto.
If you wish to accept the Offer, and if this Agreement correctly
reflects your understanding with the Company, please so indicate by
signing below in the space provided and returning an original of this
Agreement to the Agent.
Sincerely yours,
XXXXXXXXXX LABORATORIES, INC.
By:
Xxxxx X. Xxxxxxxxxxx
Treasurer and Chief
Financial Officer
ACCEPTED AND AGREED:
--------------------------------- Maximum Number of Shares
Print or Type Name of Shareholder Tendered for Purchase:
of Record]
--------------------------
By: Optional Wire Transfer
------------------------------ Instructions:
[Signature of Authorized Person]
Bank:
----------------------
Name:
-------------------------
Account No.:
---------------
Title:
------------------------
ABA Routing No.:
-----------
cc: Xxxxxx Xxxxxxx, Esq.
Xxxxxxx & Prager
000 Xxxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
