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EXIHIBIT 10.4
PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 8th day of October, 1999,
between Cell Pathways, Inc. (the "Company"), a corporation organized under the
laws of the State of Delaware, with its principal offices at 000 Xxxxxxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000 and each purchaser whose name is set forth on
the signature page hereof (each a "Purchaser" and collectively, the
"Purchasers").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company and each Purchaser, intending to be legally bound, agree
as follows:
SECTION 1. Authorization of Sale of the Units. Subject to the
terms and conditions of this Agreement, the Company has authorized the sale of
up to 200,000 units (the "Units"), each consisting of one share of common stock
("Common Stock"), par value $.01 per share (each a "Share," and together the
"Shares"), of the Company and one warrant (each a "Warrant," and together the
"Warrants") to purchase one share of Common Stock (the "Warrant Shares"). The
terms of the Warrants shall be as set forth in the form of Warrant attached
hereto as Exhibit A. The Shares, Warrant Shares and Warrants are referred to
herein as the "Securities."
SECTION 2. Agreement to Sell and Purchase the Units. At the
Closing (as defined in Section 3), the Company will sell to each Purchaser, and
such Purchaser will buy from the Company, upon the terms and conditions
hereinafter set forth, the number of Units shown, and at the purchase price
shown, opposite such Purchaser's name on Schedule A hereto. The Shares and
Warrants constituting the Units shall become immediately separable and
transferable upon the Closing. The Company may simultaneously enter into a
similar form of this purchase agreement with certain other investors (the "Other
Purchasers") and complete sales of the Units to them, although it is understood
that there is no minimum number of Units that are required to be sold by the
Company. (The Purchaser and the Other Purchasers, if any, are hereinafter
sometimes collectively referred to as the "Purchasers," and this Agreement and
the agreements executed by the Other Purchasers are hereinafter sometimes
collectively referred to as the "Agreements.")
SECTION 3. Delivery of the Units at the Closing. The
completion of the purchase and sale of the Units (the "Closing") shall occur on
October 13, 1999 or such other time as may be agreed upon by the Company and
each Purchaser (the "Closing Date"). At the Closing, the Company shall deliver
to each Purchaser one or more stock certificates for the Shares and one or more
Warrants registered in the name of each Purchaser, or in such name(s) as
designated by each Purchaser, based on the number of Units set forth in Section
2 above. The name(s) in which the stock certificates for the Shares and the
Warrants are to be registered are set forth in the Stock Certificate and Warrant
Questionnaire attached hereto as part of Appendix I. The Company's obligation to
complete the purchase and sale of the Units and deliver such stock
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certificate(s) and Warrants to each Purchaser at the Closing shall be subject to
the following conditions, any one or more of which may be waived by the Company
in its sole discretion: (i) receipt by the Company of immediately available
funds in the full amount of the purchase price for the Units being purchased
hereunder; (ii) completion of the purchases and sales under the Agreements with
any Other Purchasers; and (iii) the accuracy of the representations and
warranties made by the Purchasers and the fulfillment of those undertakings of
the Purchasers to be fulfilled prior to the Closing; provided, however, that in
the event that condition (ii) or, with respect to Other Purchasers, condition
(iii) is not met, each Purchaser shall have the right, but not the obligation,
to purchase the Units which such Other Purchaser (the "Defaulting Purchaser")
should have purchased on the same terms, and if Other Purchasers want to
exercise this right, on a pro rata basis (based on the number of Units purchased
hereunder and under the other purchase agreements) with any Other Purchasers
exercising the right, and if the Purchaser and/or Other Purchasers exercise this
right, the condition shall be deemed to have been met. Each Purchaser's
obligation to accept delivery of such stock certificate(s) and Warrants and to
pay for the Units evidenced thereby shall be subject to the accuracy in all
material respects of the representations and warranties made by the Company in
the Purchase Agreement and the fulfillment in all material respects of those
undertakings of the Company to be fulfilled prior to Closing.
SECTION 4. Representations, Warranties and Covenants of the
Company. The Company hereby represents and warrants to, and covenants with, each
Purchaser as follows:
4.1. Organization and Qualification. The Company is a
corporation duly organized and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to conduct its
business as currently conducted. The Company is qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
Company conducts business, except where the failure to do so would not have a
material adverse effect on the business, condition (financial or otherwise) or
results of operations of the Company.
4.2. Authorized and Issued Capital Stock. (a) As of September
30, 1999, the authorized capital stock of the Company consists of (i) 70,000,000
shares of Common Stock, of which 24,550,894 shares were issued and outstanding,
and (ii) 5,000,000 shares of preferred stock, $.01 par value per share, of which
no shares are issued and outstanding. The shares of Common Stock have certain
rights pursuant to the terms of a Rights Agreement, dated as of December 3,
1998, between the Company and Registrar and Transfer Company, as rights agent.
All of the outstanding shares of Common Stock were validly issued and are fully
paid and non-assessable shares.
(b) The Company has registered its Common Stock pursuant to
Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the "Exchange
Act"), and is in full compliance with all
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reporting requirements of the Exchange Act, and such Common Stock is currently
listed or quoted on the Nasdaq National Market.
4.3. Due Execution, Delivery and Performance of the
Agreements. The execution, delivery and performance of the Agreements by the
Company (i) have been duly authorized by all requisite corporate action by the
Company, and (ii) will not violate any law or the Certificate of Incorporation
(the "Certificate of Incorporation") or the Bylaws (the "Bylaws") of the
Company, or any provision of any material indenture, mortgage, agreement,
contract or other material instrument to which the Company is a party or by
which the Company or any of its properties or assets is bound as of the date
hereof, or result in a breach of or constitute (upon notice or lapse of time or
both) a default under any such material indenture, mortgage, agreement, contract
or other material instrument or result in the creation or imposition of any
lien, security interest, mortgage, pledge, charge or other encumbrance, of any
material nature whatsoever, upon any properties or assets of the Company. The
Company has no material subsidiaries, except Cell Pathways Pharmaceuticals, Inc.
Upon their execution and delivery, and assuming the valid execution thereof by
the respective Purchasers, the Agreements will constitute valid and binding
obligations of the Company, enforceable in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification and
contribution agreements of the Company in Section 7.4 hereof may be legally
unenforceable.
4.4. Issuance, Sale and Delivery of the Shares and Warrant
Shares. When issued and paid for, the Shares to be sold hereunder by the Company
and the Warrant Shares to be acquired upon exercise of the Warrants will be
validly issued and outstanding, fully paid and non-assessable shares of Common
Stock. Neither the sale of the Shares and Warrants pursuant to this Agreement,
nor the Company's performance of its obligations under, this Agreement and the
Warrants shall (i) result in the creation or imposition of any liens, charges,
claims or other encumbrances upon the Shares, the Warrant Shares or any of the
assets of the Company, or (ii) entitle the holders of the outstanding Common
Stock to preemptive or other rights to subscribe to or acquire Common Stock or
other securities of the Company.
4.5. Exemption from Registration. Assuming the accuracy of
each Purchaser's representations and warranties set forth in Section 5 hereof,
the offer, issuance and sale of the Units pursuant to this Agreement are and
will be exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (together with the rules and regulations
promulgated thereunder, the "Securities Act").
4.6. Additional Information. The Company represents and
warrants that the information contained in the following documents, copies of
which have been furnished to each
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Purchaser, was true and correct in all material respects and did not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements contained therein in light of the circumstances under
which they were made not misleading, in each case as of their respective dates
(the "SEC Documents"):
(i) the Company's 1998 annual report to stockholders;
(ii) the Company's annual report on Form 10-K for the
fiscal year ended December 31, 1998 (without
exhibits);
(iii) the Company's quarterly reports on Form 10-Q for the
three-month periods ended March 31, 1999 and June 30,
1999;
(iv) the notice of annual meeting of stockholders and
proxy statement for the Company's 1999 annual meeting
of stockholders held June 22, 1999; and
(v) all other documents, if any, filed by the Company
with the Securities and Exchange Commission (the
"Commission") since June 30, 1999 pursuant to the
reporting requirements of the Exchange Act.
4.7. No Material Change. As of the date hereof, there has been
no material adverse change in the business, condition (financial or otherwise)
or results of operations of the Company since June 30, 1999, it being understood
that the Company has not achieved revenues and that the continued expenditure of
resources in the Company's continuing operations does not constitute a material
adverse change within the meaning of this paragraph. Without limitation of the
foregoing, each Purchaser also acknowledges being advised by the Company that
(i) the treatment portion of the Phase II/III trial of exisulind in the
prevention of prostate cancer recurrence (the primary endpoint of which relates
to PSA levels) has been completed and data analysis at the Company will begin
shortly, (ii) until such analysis is completed it is impossible for the Company
to understand fully the outcome of the trial, and (iii) the results of such
clinical trial, when released, along with other clinical results and scientific
developments, could materially impact the market price of the Company's shares.
4.8. Legal Opinion. Prior to and as a condition to the
Closing, Xxxxxxx X. Xxxx, Esq., General Counsel to the Company, will deliver a
legal opinion to the Purchasers as to the valid issuance of the Shares and the
Warrant Shares, a draft of which has been provided to the Purchasers prior to
the date hereof.
4.9. Listing of Common Stock. The Company shall cause the
Shares and the Warrant Shares to be listed on the Nasdaq National Market and
maintain the listing of the Shares and the Warrant Shares on each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed.
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SECTION 5. Representations, Warranties and Covenants
of the Purchasers.
(a) Each Purchaser acknowledges that the Shares and Warrants
have not been, and that the Warrant Shares will not be, registered under the
Securities Act or any state securities law and may not be offered, sold, pledged
or otherwise transferred (i) in the absence of such registration, (ii) unless
the Company receives an opinion of counsel reasonably acceptable to it that such
offer, sale, pledge or transfer is exempt from any registration and prospectus
delivery requirements of the Securities Act and any applicable state securities
laws or (iii) unless the Shares or Warrant Shares are sold pursuant to Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act")
("Rule 144") in accordance with the terms of such rule. Except as otherwise
permitted by Section 7.3, each certificate for the Shares issued at the Closing
and the Warrant Shares, or upon direct or indirect transfer of or in
substitution thereof, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
The Shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under any applicable state securities laws and may not be
offered, sold, pledged or transferred in the absence of such
registration unless the Company receives an opinion of
counsel, in form, substance and scope reasonably acceptable to
the Company, that such offer, sale, pledge or transfer is
exempt from any registration and prospectus delivery
requirements of the Securities Act and such applicable state
securities laws.
Each Purchaser acknowledges and agrees that the Warrants will contain a similar
legend, as set forth on the top of the form of Warrant attached as Exhibit A
hereto.
(b) Each Purchaser represents and warrants, as of the date
hereof and as of the Closing Date, to, and covenants with, the Company that: (i)
the Purchaser, taking into account the personnel and resources it can
practically bring to bear on the purchase of the Units contemplated hereby, is
knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to investments in equity securities presenting an
investment decision like that involved in the purchase of the Units, including
investments in equity securities issued by development-state biotechnology
companies; (ii) the Purchaser or its counsel, accountants or other investment
advisers have requested, received, reviewed and considered all information
deemed relevant by them in making an informed decision to purchase the Units,
(iii) the Purchaser is acquiring the Units in the ordinary course of its
business and for its own account for investment only and with no present
intention of distributing any of the Securities, nor is there any arrangement or
understanding with any other persons regarding the distribution of the
Securities; provided however, that such representation and warranty will not
limit the Purchaser's right to sell Shares and the Warrant Shares pursuant to
the Registration Statement or pursuant to an exemption from the Securities Act;
(iv) the Purchaser will not, directly or indirectly, offer, sell (including sell
short), pledge, transfer or otherwise dispose of (or
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solicit any offers to buy, purchase or otherwise acquire or take a pledge of)
any of the Shares and Warrant Shares except in compliance with the Securities
Act, and the rules and regulations promulgated thereunder; (v) the Purchaser has
completed or caused to be completed the Registration Statement Questionnaire and
the Stock Certificate and Warrant Questionnaire, both attached hereto as
Appendix I, for use in preparation of the Registration Statement and the answers
thereto are true, correct and complete in all material respects as of the date
hereof and will be true, correct and complete in all material respects as of the
effective date of the Registration Statement; (vi) the Purchaser has, in
connection with its decision to purchase the Units, relied solely upon the SEC
Documents and the representations and warranties contained herein, as well as
any investigation completed by the Purchaser or its counsel, accountants or
other investment advisers; and (vii) the Purchaser is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act.
(c) Each Purchaser agrees not to make any sale of the Shares
or the Warrant Shares under the Registration Statement without effectively
causing the prospectus delivery requirement under the Securities Act to be
satisfied, and each Purchaser acknowledges and agrees that such Shares and the
Warrant Shares are not transferable on the books of the Company unless the
certificate submitted to the transfer agent evidencing the Shares or the Warrant
Shares is accompanied by a separate officer's certificate: (i) in the form of
Appendix II hereto, (ii) executed by an officer of, or other authorized person
designated by, the Purchaser, and (iii) to the effect that (A) such Shares or
Warrant Shares have been sold pursuant to and in accordance with the
Registration Statement and (B) the requirement of delivering a current
prospectus has been satisfied, unless exempt from registration and prospectus
delivery requirements. Each Purchaser acknowledges that there may occasionally
be times when the Company must suspend the use of the prospectus forming a part
of the Registration Statement until such time as an amendment to the
Registration Statement has been filed by the Company and declared effective by
the Commission, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. Each Purchaser agrees
that it will not sell any Securities during the period commencing at the time at
which the Company gives the Purchaser notice of the suspension of the use of
said prospectus and ending at the time the Company gives the Purchaser notice
that the Purchaser may thereafter effect sales pursuant to said prospectus. The
Company shall only be able to suspend the use of said prospectus for periods
aggregating no more than sixty business days in any twelve month period. Each
Purchaser further agrees to notify promptly the Company of the sale of all of
such Purchaser's Securities, and to notify promptly the Company in writing of
any material changes in the information set forth in the Registration Statement
relating to such Purchaser or its plan of distribution, or of any supplemental
information required to be included in the Registration Statement relating to
its plan of distribution.
(d) Each Purchaser further represents and warrants, as of the
date hereof and as of the Closing Date, to, and covenants with, the Company
that: (i) the Purchaser has full right, power, authority and capacity to enter
into this Agreement and to consummate the transactions
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contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except as the indemnification and
contribution agreements of the Purchaser in Section 7.4 hereof may be legally
unenforceable.
(e) In consideration for the Company agreeing to its
obligations set forth in Section 7 below in respect of Registrable Securities,
each Purchaser agrees, in connection with any firm commitment underwritten
offering of the Company's Common Stock that, upon the request of the managing
underwriters of such offering, not to sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any shares of Common
Stock beneficially owned by it without the prior written consent of such
managing underwriters during the period of time beginning ten days prior to the
date when such managing underwriters advise the Company that they expect to
initiate such public offering and ending at a date not to exceed ninety days
from the commencement of such public offering. Notwithstanding the foregoing,
(i) this obligation shall not apply to the Purchaser unless each of the
Company's directors and officers enter into a similar agreement, and the
Purchaser at such time beneficially owns in excess of 2% of the Company's then
outstanding shares of Common Stock.
SECTION 6. Survival of Representations, Warranties and
Agreements. Notwithstanding any investigation made by any party to this
Agreement, all covenants, agreements, representations and warranties made by the
Company and the Purchaser herein shall survive the execution of this Agreement,
the delivery to the Purchaser of the Units being purchased and the payment
therefor.
SECTION 7. Registration of Shares and Warrant Shares for
Resale
7.1. Registration Procedures and Expenses.
(a) The Company shall as soon as practicable after November 3,
1999, but in no event later than December 31, 1999, prepare and file with the
Commission a registration statement on Form S-3 (or if such form is unavailable
to the Company, on such other form deemed appropriate for the registration of
the Common Stock by the Commission) (the "Registration Statement") to register
the Shares and Warrant Shares ("Registrable Securities") for resale by the
Purchasers in non-underwritten, market transactions, and shall use its best
efforts to cause the Registration Statement to become effective as soon as
practicable thereafter. The Company shall, within three business days before
filing such Registration Statement, provide a draft to each Purchaser and its
counsel and its agent for review and comment;
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(b) The Company shall promptly prepare and file with the
Commission such amendments and supplements to the Registration Statement and the
prospectus used in connection therewith as may be necessary to keep such the
Registration Statement effective until the first to occur of (i) such date when
either all of the Registrable Securities have been sold pursuant thereto or, by
reason of Rule 144(k) of the Commission under the Securities Act or any other
rule of similar effect, the Registrable Securities are no longer required to be
registered for the resale thereof by the Purchasers in ordinary market
transactions without imposition of any volume limitations, or (ii) the second
anniversary of the expiration of the Warrants (the "Registration Period");
(c) The Company shall promptly furnish to each Purchaser and
its agent such number of copies of prospectuses and preliminary prospectuses in
conformity with the requirements of the Securities Act as such Purchaser or its
agent may reasonably request, in order to facilitate the public sale or other
disposition of all or any of the Registrable Securities by such Purchaser;
(d) The Company shall promptly file documents required of the
Company for any required blue sky clearance for the Registrable Securities in
such states specified in writing by each Purchaser or its agent; provided,
however, that the Company shall not be required to (i) qualify to do business or
consent to service of process in any jurisdiction in which it is not now so
qualified or has not so consented, (ii) subject itself to general taxation in
any such jurisdiction, (iii) provide any undertakings that cause the Company
undue burden or expense or (iv) make any change in its charter or bylaws;
(e) The Company shall promptly inform each Purchaser and its
agent when any stop order has been issued with respect to the Registration
Statement and use its best efforts to promptly cause such stop order to be
withdrawn;
(f) The Company shall notify each Purchaser whose shares are
registered on a Registration Statement and its agent at any time when a
prospectus relating to any Registrable Securities covered by such Registration
Statement or a Company Registration Statement is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and promptly file such
amendments and supplements as may be necessary so that, as thereafter delivered
to such Purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and use its best efforts
to cause each such amendment and supplement to become effective;
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(g) The Company shall bear all expenses in connection with the
procedures in paragraph (a) through (f) in this Section 7.1 and the registration
of the Shares pursuant to the Registration Statement, other than fees and
expenses, if any, of counsel or other advisers to the Purchaser or the Other
Purchasers and any expenses relating to the sale of the Registrable Securities
by the Purchasers (including without limitation, broker's commissions, discounts
or fees of any nature and transfer taxes or charges of any nature); and
(h) The Company understands that each Purchaser disclaims
being an underwriter, but a Purchaser being deemed an underwriter shall not
relieve the Company of any obligations it has hereunder. A questionnaire related
to the Registration Statement to be completed by each Purchaser is attached as
Appendix I to this Agreement.
7.2. Transfer of Registrable Securities. Each Purchaser agrees
that it will not effect any disposition of Registrable Securities except as
contemplated in the Registration Statement or as otherwise in compliance with
applicable securities laws, and that it will promptly notify the Company of any
material changes in the information set forth in the Registration Statement
regarding the Purchaser or its plan of distribution. Without limitation, each
Purchaser understands that (i) it may not use Registrable Securities to cover a
short position in shares of the Company's Common Stock created prior to the
effective date of the Registration Statement, and (ii) it must deliver a
prospectus in connection with any short sale of the Registrable Securities
unless it is exempt from such requirement.
7.3. Indemnification. For the purpose of this Section 7.3:
(a) the term "Selling Stockholder" shall include the
Purchaser, its officers, directors, agent and/or trustees and any affiliate or
controlling person of such Purchaser or any permitted assign hereunder;
(b) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to the
Registration Statement referred to in Section 7.1; and
(c) the term "untrue statement" shall include any untrue
statement or alleged untrue statement, or any omission or alleged omission to
state in the Registration Statement a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
The Company agrees to indemnify and hold harmless each Selling
Stockholder from and against any losses, claims, damages or liabilities to which
such Selling Stockholder may become subject (under the Securities Act or
otherwise) insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based
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upon, any breach of the representations set forth in Section 4 hereof by the
Company, or any untrue statement of a material fact contained in the
Registration Statement, or arise out of any failure by the Company to fulfill
any agreement, covenant or undertaking contained in this Agreement or included
in the Registration Statement, and the Company will reimburse such Selling
Stockholder for any reasonable legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim; provided, however, that the Company shall not be liable in any such case
to the extent that such loss, claim, damage or liability arises out of, or is
based upon, (i) an untrue statement made in the Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Selling Stockholder specifically for use in the
Registration Statement (which shall be deemed to include the information set
forth in the Registration Statement Questionnaire and in the plan of
distribution section of the prospectus), (ii) the failure of such Selling
Stockholder to comply with the covenants and agreements contained herein
respecting transfer or sale of Registrable Securities, or (iii) any statement or
omission in any Prospectus that is corrected in any subsequent Prospectus that
was delivered to the Purchaser sufficiently prior to the pertinent sale or sales
by the Purchaser. The Company shall also not be liable for amounts paid in
settlement of any loss, claim, damage or liability if such settlement if
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld.
Each Purchaser agrees, severally and not jointly, to indemnify
and hold harmless the Company (and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, each officer of the
Company who signs the Registration Statement and each director of the Company)
from and against any losses, claims, damages or liabilities to which the Company
(or any such officer, director or controlling person) may become subject (under
the Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, any breach of the representations set forth in Section 5 hereof by
such Purchaser, or any failure by such Purchaser to comply with the covenants
and agreements contained herein regarding the transfer or sale of Registrable
Securities, or any untrue statement of a material fact contained in the
Registration Statement if such untrue statement was made in reliance upon and in
conformity with written information furnished by or on behalf of the Purchaser
specifically for use in the Registration Statement. Each Purchaser will
reimburse, severally and not jointly, the Company (or such officer, director or
controlling person), as the case may be, for any legal or other documented
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim. Each Purchaser agrees that the information
regarding the Purchaser or its officers, directors and affiliates and their
intended plan of distribution of the Shares set forth in the Registration
Statement questionnaire, the form of which is attached as Appendix 1, or
included from time to time in the Registration Statement (including without
limitation the plan of distribution section of the Registration Statement) shall
be deemed to be written information furnished to the Company by or on behalf of
the Purchaser specifically for use in the Registration
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Statement. The foregoing indemnification shall be limited in amount as to each
Purchaser to the Purchase Price paid by such Purchaser hereunder.
Promptly after receipt by any indemnified person of a notice
of a claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 7.3, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action; provided, however, that any failure by an
indemnified person to notify an indemnifying person shall not relieve the
indemnifying person from its obligations hereunder except to the extent that the
indemnifying person is materially prejudiced thereby. Subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and such indemnifying person shall have been notified
thereof, such indemnifying person shall be entitled to participate therein, and,
to the extent it shall wish, to assume and control the defense thereof, with
counsel reasonably satisfactory to such indemnified person. After notice from
the indemnifying person to such indemnified person of its election to assume the
defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof; provided, however,
that if there exists a conflict of interest that would make it inappropriate, in
the opinion of counsel to the indemnifying person, for the same counsel to
represent both the indemnified person and such indemnifying person or any
affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person; provided
further, however, that no indemnifying person shall be responsible for the fees
and expenses of more than one separate counsel for all indemnified parties
hereunder and under the other Agreements.
If the indemnification provided for in this Section 7.3 from
the indemnifying person would be applicable by its terms but is otherwise
unavailable, as determined by a court of applicable jurisdiction, to an
indemnified person hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then the indemnifying person, in
lieu of indemnifying such indemnified person, shall contribute to the amount
paid or payable by such indemnified person as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to reflect
the relative fault of the indemnifying person and indemnified persons in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying person and indemnified persons shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact, has been
made by, or relates to information supplied by, such indemnifying person or
indemnified persons, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the
limitations set forth in this Section 7.3, any reasonable legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
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The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.3 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 7.3, no Purchaser
shall be required to contribute any amount in excess of the dollar amount of the
proceeds received by such Purchaser upon the sale of the Registrable Securities,
giving rise to such contribution obligation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
7.4. Termination of Conditions and Obligations. The conditions
imposed by Section 5 or this Section 7 upon the transferability of Registrable
Securities shall cease and terminate as to any particular number of Registrable
Securities when such Registrable Securities shall have been effectively
registered under the Securities Act and sold or otherwise disposed of in
accordance with the intended method of disposition set forth in the Registration
Statement, or at such time as an opinion of counsel satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Securities Act.
7.5. Continued Availability of Information. So long as the
Registration Statement is effective covering the resale of Registrable
Securities owned by the Purchaser, the Company will furnish to the Purchaser:
(a) as soon as practicable after available (but in the case of
the Company's Annual Report to Stockholders, within 120 days after the end of
each fiscal year of the Company), one copy of (i) its Annual Report to
Stockholders (which Annual Report shall contain financial statements audited in
accordance with generally accepted accounting principles by a firm of certified
public accountants), (ii) if not included in substance in the Annual Report to
Stockholders, its Annual Report on Form 10-K, (iii) any quarterly reports to
stockholders, and if not included in substance in its quarterly reports to
stockholders, its quarterly reports on Form 10-Q, and (iv) a full copy of the
Registration Statement (the foregoing, in each case, excluding exhibits);
(b) upon the reasonable request of a Purchaser or its agent,
all exhibits excluded by the parenthetical to subparagraph (a)(iv) of this
Section 7.5 and all other information that is made available to shareholders;
and
(c) upon the reasonable request of a Purchaser or its agent,
an adequate number of copies of the prospectuses to supply to any other party
requiring such prospectuses;
and the Company, upon the reasonable request of a Purchaser or its agent, will
meet with the Purchaser or a representative thereof at the Company's
headquarters to discuss all information
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13
relevant for disclosure in the Registration Statement and will otherwise
cooperate with any Purchaser conducting an investigation for the purpose of
reducing or eliminating such Purchaser's exposure to liability under the
Securities Act, including the reasonable production at the Company's
headquarters of non-confidential information (and, upon execution of a
confidentiality agreement satisfactory to the Company, confidential
information).
7.6. Reports under Exchange Act. With a view to making
available to the Purchasers the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission that may at
any time permit a Purchaser to sell Registrable Securities to the public without
registration, and with a view to making it possible to register the Registrable
Securities pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep available public information, as understood
and defined in Rule 144, at all times;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange act; and
(c) furnish to a Purchaser owning any Registrable Securities
or its agent upon reasonable request (i) a written statement by the Company that
is has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange act, or that it qualifies as a registrant whose Registrable
Securities may be resold pursuant to Form S-3 (at any time after it so
qualified, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably required in availing any Purchaser
of Registrable Securities of any rule or regulation of the Commission which
permits the selling of any such Registrable Securities without registration or
pursuant to such form.
SECTION 8. Broker's Fees. Each of the parties hereto hereby
represents that, on the basis of any actions and agreements by it, there are no
brokers or finders entitled to compensation in connection with the sale of the
Shares to the Purchaser, except for the Company's obligations to Xxxxxx
Xxxxxxxxxx Xxxxx Inc. which has acted as adviser to the Company.
SECTION 9. Expenses. At the Closing, each party hereto shall
bear its own expenses.
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SECTION 10. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be sent by a nationally
recognized overnight express courier postage prepaid, and shall be deemed given
one day after being so sent and shall be delivered as addressed as follows:
(a) if to the Company, to:
Cell Pathways, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx
President and Chief Executive Officer
with copies so mailed to:
Xxxxxxx X. Xxxx, Esq.
Senior Vice President, General Counsel and Secretary
Cell Pathways, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
and to
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxx, Esq.
or to such other person at such other place as the
Company shall designate to the Purchaser in writing;
and
(b) if to the Purchaser, at the address set forth on Schedule
A hereto, or at such other address or addresses as may have been furnished to
the Company in writing,
SECTION 11. Entire Agreement; Changes. This Agreement sets
forth the entire agreement of the parties and may not be modified or amended
except pursuant to an instrument in writing signed by the Company and the
Purchaser.
SECTION 12. Headings. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
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15
SECTION 13. Severability. In case any provision contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT
GIVING EFFECT TO CONFLICTS OF LAWS.
SECTION 15. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.
SECTION 16. Assignment. The Purchaser (or any permitted
assignee) may assign its rights under Section 7 of this Agreement to any
subsequent holder of any or all of the Units who has purchased at least 50,000
Shares or Warrants to purchase at least 50,000 Shares from such Purchaser (or
permitted assignee), provided that the Company shall have the right to require
any such holder of any or all of the Shares to execute a counterpart of this
Agreement and agree to be bound by the provisions of this Agreement as a
condition to such holder's claim to any rights hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
CELL PATHWAYS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------------
Name:Xxxxxx X. Xxxxxxxxxx
Title:President and Chief Executive Officer
XXXXXXX BOULEVARD VENTURES, L.P.
By: Xxxxxxx Capital Management Ltd.,
its General Partner
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: Xxxx Xxxxxx
Title: President
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SCHEDULE A
NUMBER OF UNITS PRICE AGGREGATE
NAME AND ADDRESS OF PURCHASER TO BE PURCHASED PER UNIT PURCHASE PRICE
Xxxxxxx Boulevard Ventures, L.P. 200,000 Units, consisting of $9.00 $1,800,000.00
Address: 00 Xxxx Xxxxxxx Xxxx. 200,000 Shares and Warrants to
Xxxxxxx, XX 00000 purchase 200,000 Warrant Shares
Telephone: 000-000-0000
Fax: 000-000-0000
Email: xxxx@xxxxxxxx.xxx
18
Appendix I
(one of two)
CELL PATHWAYS, INC.
STOCK CERTIFICATE AND WARRANT QUESTIONNAIRE
Please provide us with the following information:
1. The exact name that your Shares and Warrants (both must be in the same
name) are to be registered. This is the name that will appear on your
stock certificate(s) and Warrants. You may use a nominee name if
appropriate: ----------------------
2. The relationship between the Purchaser of the Units and the registered
holder listed in response to item 1 above: ----------------------
3. The mailing address of the registered holder listed in response to
item 1 above: ----------------------
----------------------
4. The social security number or tax identification number of the
registered holder listed in response to item 1 above: ----------------------
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Appendix I
(two of two)
CELL PATHWAYS, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration
Statement, please provide us with the following information:
1. Pursuant to the "Selling Stockholder" section of the
Registration Statement, please state your or your organization's name exactly as
it should appear in the Registration Statement:
2. Please provide the number of shares of Common Stock that
you or your organization will own beneficially or of record immediately after
Closing, including those Shares purchased by you or your organization pursuant
to this Purchase Agreement and those shares purchased by you or your
organization through other transactions (indicating whether you have sole or
shared voting or dispositive power over such securities as determined under
applicable rules of the Securities and Exchange Commission):
VOTING POWER DISPOSITIVE POWER
Sole Shared Sole Shared
__________ __________ __________ __________ Common Stock beneficially owned prior to the
date hereof
__________ __________ __________ __________ Shares being purchased from the Company
__________ __________ __________ __________ Warrant Shares, issuable upon exercise of the Warrants being
purchased from the Company
__________ __________ __________ __________ Common Stock issuable upon exercise of other options or warrants
that you may own, to the extent such shares of Common Stock are
deemed to be beneficially owned
TOTAL: ________________ shares of Common Stock beneficially owned
3. Have you or your organization had any position, office or
other material relationship within the past three years with the Company or its
affiliates other than as disclosed in the Company's proxy statement for its 1999
annual meeting of stockholders, or with Xxxxxx Xxxxxxxxxx Xxxxx Inc.?
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_____ Yes _____ No
If yes, please indicate the nature of any such relationships below:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
4. Attached is a draft of the proposed "plan of distribution"
section of the Registration Statement. Please confirm that the draft is a
correct and complete statement of your intended plan of distribution.
_____ Yes _____ No
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PLAN OF DISTRIBUTION
The Shares being offered by the Selling Shareholder or its
respective pledgees, donees, transferees or other successors in interest, will
be sold in one or more transactions (which may involve block transactions) on
the Nasdaq National Market or on such other market on which the Common Stock may
from time to time be trading, in privately negotiated transactions, through the
writing of options on the Shares, short sales or any combination thereof. The
sale price to the public may be the market price prevailing at the time of sale,
a price related to such prevailing market price or such other price as the
Selling Shareholder determines from time to time. The Shares may also be sold
pursuant to Rule 144. The Selling Shareholder shall have the sole and absolute
discretion not to accept any purchase offer or make any sale of Shares if they
deem the purchase price to be unsatisfactory at any particular time.
The Selling Shareholder or its respective pledgees, donees,
transferee or other successors in interest, may also sell the Shares directly to
market makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. Brokers acting as agents for the Selling
Shareholder will receive usual and customary commissions for brokerage
transactions, and market makers and block purchasers purchasing the Shares will
do so for their own account and at their own risk. It is possible that the
Selling Shareholder will attempt to sell shares of Common Stock in block
transactions to market makers or other purchasers at a price per share which may
be below the then market price. There can be no assurance with all or any of the
Shares offered hereby will be issued to, or sold by , the Selling Shareholder.
The Selling Shareholder and any brokers, dealers or agents, upon effecting the
sale of any of the Shares offered hereby, may be deemed "underwriters" as that
term is defined under the Securities Act or the Exchange Act, or the rules and
regulations thereunder.
The Selling Shareholder, alternatively, may sell all or any
part of the Shares offered hereby through an underwriter. The Selling
Shareholder has not entered into any agreement with a prospective underwriter
and there is no assurance that any such agreement will be entered into. If the
Selling Shareholder enters into such an agreement or agreements, the relevant
details will be set forth in a supplement or revisions to this Prospectus.
Upon the Company being notified by the Selling Shareholder
that any material arrangement has been entered into with a broker or dealer for
the sale of Shares through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplemented Prospectus will be filed, if required, pursuant to Rule 424(c)
under the Securities Act, disclosing (a) the name of each such broker-dealer,
(b) the number of Shares involved, (c) the price at which such Shares were sold,
(d) the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (e) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this Prospectus, as supplemented, and (f) other facts material to
the transaction.
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The Selling Shareholder and any other persons participating in
the sale or distribution of the Shares will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, which provisions
may limit the timing of purchases and sales of any of the Shares by the Selling
Shareholder or any other such person. The foregoing may affect the marketability
of the Shares.
The Company has agreed to indemnify the Selling Shareholder,
or its transferees or assignees, against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments the Selling
Shareholder or its respective pledgees, donees, transferees or other successors
in interest, may be required to make in respect thereof.
The Company is bearing all costs relating to the registration
of the Shares (other than fees and expenses, if any, of counsel or other
advisers to the Selling Shareholder). Any commissions, discounts or other fees
payable to broker-dealers in connection with any sale of the Shares will be
borne by the Selling Shareholder.
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APPENDIX II
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, [AN OFFICER OF, OR OTHER PERSON DULY AUTHORIZED BY]
---------------------------------------------- [FILL IN OFFICIAL NAME OF
INDIVIDUAL OR INSTITUTION] hereby certifies that he/she [said institution] is
the Purchaser of the shares evidenced by the attached certificate, and as such,
sold such shares on ----- [DATE] pursuant to and in accordance with registration
statement number----------------------[FILL IN THE NUMBER OF OR OTHERWISE
IDENTIFY REGISTRATION STATEMENT] and the requirement of delivering a current
prospectus by the Company has been complied with in connection with such sale.
Print or Type:
Name of Purchaser
(individual or
institution): --------------------------
Name of individual
representing
Purchaser (if an --------------------------
institution)
Title of individual
representing
Purchaser (if an
institution): --------------------------
Signature by:
Individual purchaser
or individual repre-
senting purchaser: --------------------------
