EXHIBIT 10.29
WARRANT PURCHASE AGREEMENT
This Warrant Purchase Agreement (the "Agreement") is made as of January 8,
2002 by and between Hyseq, Inc., a Nevada corporation (the "Company"), and Amgen
Inc., a Delaware corporation ("Purchaser").
The Company and Purchaser hereby confirm their respective agreements as
follows:
1. AUTHORIZATION AND PURCHASE OF THE WARRANT.
1.1 Authorization of the Warrant. The Company's Board of Directors
has authorized the issuance by the Company and the sale to the Purchaser of a
warrant (the "Warrant") to purchase an aggregate of up to 1,491,544 fully paid
and nonassessable shares of Common Stock, par value $0.001 per share (the
"Common Stock"), of the Company, all as more fully described, and subject to the
conditions set forth, below and in the form of Warrant annexed hereto as Exhibit
1. The shares of Common Stock issuable upon exercise of the Warrant are herein
referred to as the "Warrant Shares;" and the Warrant and the Warrant Shares are
sometimes herein together referred to as the "Securities."
1.2 Purchase of Warrant. Subject to the terms and conditions set
forth below and in the Warrant, the Company agrees to issue to Purchaser, and
Purchaser hereby agrees to purchase from the Company, the Warrant in
consideration for the rights granted to the Company under that certain
collaboration agreement (the "Collaboration Agreement") by and between the
Company and Purchaser. A copy of the Collaboration Agreement, in the form to be
executed and delivered by each of Purchaser and the Company on the Closing Date,
is annexed hereto as Exhibit 2.
2. THE CLOSING.
Closing Date. The closing of the purchase and sale of the Warrant to
Purchaser hereunder (the "Closing") shall be held at the offices of the Company,
at 5:00 p.m., California time, on January 8, 2002, or at such other time and
place as the Company and Purchaser mutually agree upon, orally or in writing
(the "Closing Date"). On the Closing Date, the Company shall deliver to
Purchaser the Warrant registered in the name of Purchaser.
3. CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT CLOSING.
The obligations of Purchaser to the Company under this Agreement are
subject to the fulfillment, on or before the Closing, of each of the following
conditions, unless otherwise waived by Purchaser:
3.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 5 shall be true and correct on
and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing (except for
representations and warranties that speak as of a specific date, which need only
be true and correct as of such date).
1
3.2 Performance. The Company shall have performed and complied in
all material respects with all covenants, agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with
by it on or before the Closing.
3.3 Qualifications. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required to be in effect as of the Closing in connection with
the lawful issuance and sale of the Warrant pursuant to this Agreement shall be
obtained and effective as of the Closing.
3.4 Consents and Waivers. The Company shall have obtained any and
all consents and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement.
3.5 Compliance Certificate. The President of the Company shall
deliver to Purchaser at the Closing a certificate certifying that the conditions
specified in Sections 3.1 3.2, 3.3 and 3.4 have been fulfilled.
3.6 Opinion of Outside Counsel. Purchaser shall have received from
Xxxxxx Xxxxxxxx Xxxxxx & Xxxxxxx, counsel for the Company, an opinion, dated as
of the Closing, in substantially the form of Exhibit 3.6(a) and from Xxxxxxx,
Phleger & Xxxxxxxx LLP, counsel for the Company, an opinion, dated as of the
Closing, in substantially the form of Exhibit 3.6(b).
3.7 Collaboration Agreement. Purchaser and the Company shall have
executed and delivered the Collaboration Agreement.
3.8 Amendment of Securities Purchase Agreement. The Company shall
have caused the Securities Purchase Agreement, made and entered into as of
August 28, 2001, among the Company and the investors signatory thereto, to be
amended such that the term "Strategic Transaction" shall mean "a transaction or
relationship in which the Company issues shares of Common Stock or Common Stock
Equivalents to a Person which is, itself or through its subsidiaries, an
operating company in a business synergistic with the business of the Company and
in which the Company receives material benefits in addition to the investment of
or lending of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to a Person
whose primary business is investing in securities."
3.9 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser, and the Purchaser shall
have received all such counterpart originals or certified or other copies of
such documents as it may reasonably request.
4. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING.
The obligations of the Company to Purchaser under this Agreement are
subject to the fulfillment, on or before the Closing, of each of the following
conditions, unless otherwise waived by Company:
2
4.1 Representations and Warranties. The representations and
warranties of Purchaser contained in Section 6 shall be true and correct on and
as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
4.2 Performance. All covenants, agreements and conditions contained
in this Agreement to be performed by Purchaser on or prior to the Closing shall
have been performed or complied with in all material respects.
4.3 Qualifications. All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required to be in effect as of the Closing in connection with
the lawful issuance and sale of the Warrant pursuant to this Agreement shall be
obtained and effective as of the Closing.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Purchaser as follows:
5.1 Organization. The Company is duly organized and validly existing
in good standing under the laws of the jurisdiction of its organization. Each of
the Company and its Subsidiaries has requisite power and authority to own and
use its properties and to conduct its business as presently conducted and as
described in the SEC Documents (hereinafter defined) and is registered or
qualified to do business and in good standing in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect upon the Company and its Subsidiaries, considered as one
enterprise. The Company has no direct or indirect equity interest in any entity
other than Callida Genomics, Inc., N-Mer, Inc., GeneSolutions Inc. and Hyseq
Diagnostics, Inc. (the "Subsidiaries"), other than normal cash management
investments in the ordinary course of business involving interests in publicly
traded companies not exceeding one percent of any such company's outstanding
equity.
5.2 Due Authorization; Consents. The Company has all requisite
corporate power and has taken all requisite corporate action to execute and
deliver each of this Agreement, the Warrant and the Collaboration Agreement
(collectively, the "Agreements"), to sell and issue the Securities and to carry
out and perform all of its obligations hereunder and thereunder. Each of the
Agreements has been duty authorized, executed and delivered on behalf of the
Company and constitutes the valid and binding agreement of the Company,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally and (ii) as limited by equitable
principles generally. All consents, approvals and authorizations of, and
registrations, qualifications and filings with, any federal or state
governmental agency, authority or body, or any third party, required in
connection with the execution, delivery and performance of this Agreement and
the Collaboration Agreement and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the valid
issuance and sale of the Securities to be sold pursuant to this Agreement, have
been obtained and are effective as of the Closing, except for (a) such filings
required pursuant to applicable federal and state securities laws and blue sky
laws, which filings will be effected within the required statutory period, (b)
the
3
filing with the SEC (as defined below) of the registration statements as
contemplated in Section 7.4 below, and (c) the application to NASD (as defined
below) for the listing of the Warrant Shares for trading thereon in the time and
manner required thereby.
5.3 Validity of Securities. The Warrant, when sold against the
consideration therefor as provided herein and in the Collaboration Agreement,
will be validly authorized and issued, fully paid and nonassessable. The
issuance and delivery of the Warrant is not subject to preemptive or any similar
rights of the stockholders of the Company or any liens or encumbrances arising
through the Company, other than restrictions of transfer under this Agreement,
the Warrant and applicable state and federal securities laws; and when the
Warrant Shares are issued upon exercise and in accordance with the terms of the
Warrant, they will be validly issued and outstanding, fully paid and
nonassessable and free of any liens or encumbrances arising through the Company,
other than restrictions of transfer under this Agreement, the Warrant and
applicable state and federal securities laws.
5.4 SEC Documents; Financial Statements. As of their respective
filing dates, each of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000, the Company's Notice of Annual Meeting of
Stockholders and Proxy Statement filed on April 17, 2001 and the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001, June 30,
2001 and September 30, 2001, and all other documents, if any, filed by the
Company since November 14, 2001 pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act;" collectively,
the above documents shall be referred to hereinafter as the "SEC Documents"), as
filed by the Company with the Securities and Exchange Commission (the "SEC") or
incorporated by reference therein complied in all material respects to the
requirements of the Exchange Act, and the rules, regulations and instructions of
the SEC thereunder. Each of the SEC Documents, as of its respective filing date,
contained no untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances in which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents (the "Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto as in effect at the time of
filing. Except as may be indicated in the Financial Statements or the notes
thereto, the Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied and
fairly present in all material respects the consolidated financial position and
operating results of the Company and its Subsidiaries as of the dates, and for
the periods, indicated therein.
5.5 Non-Contravention. The execution and delivery of the Agreement,
the issuance and sale of the Securities to be sold by the Company under this
Agreement, the fulfillment of the terms of the Agreements and the consummation
of the transactions contemplated hereby will not (A) conflict with or constitute
a violation of, or default (with the passage of time or otherwise) under, (i)
any bond, debenture, note or other evidence of indebtedness, or under any lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company or any Subsidiary is a party
or by which it or any of its Subsidiaries or their respective properties are
bound, (ii) the charter, by-laws or other organizational documents of the
Company or any Subsidiary, or (iii) any law,
4
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or any
Subsidiary or their respective properties, or (B) result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the properties or assets of the Company or any Subsidiary
or an acceleration of indebtedness pursuant to any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence of
indebtedness or any indenture, mortgage, deed of trust or any other agreement or
instrument to which the Company or any Subsidiary is a party or by which any of
them is bound or to which any of the property or assets of the Company or any
Subsidiary is subject; except in the case of each of (A) and (B) above, such as
could not, individually or in the aggregate, reasonably be expected to have or
result in a material adverse effect upon the Company and its Subsidiaries,
considered as one enterprise.
5.6 Liabilities. Except as set forth in the SEC Documents and the
Financial Statements, the Company has no material indebtedness for borrowed
money that the Company has directly or indirectly created, incurred, assumed, or
guaranteed, or with respect to which the Company has otherwise become directly
or indirectly liable, other than (i) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice,
subsequent to September 30, 2001 and (ii) indebtedness incurred in the ordinary
course of business and not required under GAAP to be reflected in the Financial
Statements.
5.7 Capitalization. The capitalization of the Company as of January
7, 2002 is as set forth in Schedule 5.7. The Company has not issued any capital
stock since that date other than pursuant to (i) employee benefit plans
disclosed in the SEC Documents, or (ii) outstanding warrants or options
disclosed in the SEC Documents. The outstanding shares of capital stock of the
Company have been duly and validly issued and are fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws, and
were not issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. Except as a result of the purchase and
sale of the Securities and except as disclosed in Schedule 5.7 or as set forth
in or contemplated by the SEC Documents, there are no outstanding rights
(including, without limitation, preemptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for, any unissued
shares of capital stock or other equity interest in the Company or any
Subsidiary, or any contract, commitment, agreement, understanding or arrangement
of any kind to which the Company is a party or of which the Company has
knowledge and relating to the issuance or sale of any capital stock of the
Company or any Subsidiary, any such convertible or exchangeable securities or
any such rights, warrants or options. Except as contemplated by this Agreement
or the Warrant, without limiting the foregoing, no preemptive right, co-sale
right, right of first refusal, registration right, or other similar right exists
with respect to the Warrant or the issuance and sale thereof. The Company owns
the entire equity interest in each of its Subsidiaries, free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest, other
than as described in the SEC Documents. Except as disclosed in the SEC
Documents, there are no stockholders agreements, voting agreements or other
similar agreements with respect to the Common Stock to which the Company is a
party or, to the knowledge of the Company, between or among any of the Company's
stockholders.
5.8 Legal Proceedings. Except as disclosed in the SEC Documents,
there is no legal or governmental proceeding pending or, to the knowledge of the
Company, threatened to
5
which the Company or any Subsidiary is or may be a party which could, if there
were an unfavorable decision, individually or in the aggregate, have or result
in a material adverse effect upon the Company and its Subsidiaries, considered
as one enterprise. The Company has performed a docket search in Santa Xxxxx
County, California and in the Northern District of California and Li-Hsien
Rin-Xxxxxx, General Counsel for the Company, has reviewed the results of the
docket searches.
5.9 No Violations. Neither the Company nor any Subsidiary is in
violation of its charter, bylaws, or other organizational document, or in
violation of any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority applicable to the Company
or any Subsidiary (including without limitation, all foreign, federal, state and
local laws relating to taxes, environmental protection, occupational health and
safety, product quality and safety and employment and labor matters), which
violation, individually or in the aggregate, would be reasonably likely to have
a material adverse effect on the business or financial condition of the Company
and its Subsidiaries, considered as one enterprise, or is in default (and there
exists no condition that has not been waived which, with the passage of time or
otherwise, would constitute a default) in any material respect in the
performance of any bond, debenture, note or any other evidence of indebtedness
in any indenture, mortgage, deed of trust or any other material agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound or by which the properties of the Company or
any Subsidiary are bound, which would be reasonably likely to have a material
adverse effect upon the business or financial condition operating results of the
Company and its Subsidiaries, considered as one enterprise.
5.10 Governmental Permits, Etc. Each of the Company and its
Subsidiaries has all necessary franchises, licenses, certificates and other
authorizations from any foreign, federal, state or local government or
governmental agency, department, or body that are currently necessary for the
operation of the business of the Company and its Subsidiaries as currently
conducted and as described in the SEC Documents except where the failure to
currently possess could not reasonably be expected to have a material adverse
effect upon the business or financial condition operating results of the Company
and its Subsidiaries, considered as one enterprise.
5.11 Title to Properties and Assets. Except as set forth in the SEC
Documents, the Company has good and marketable title to its properties and
assets owned by it, in each case subject to no lien of any kind except for (i)
liens for taxes that are not yet due and payable, and (ii) for liens,
encumbrances and security interests that arise in the ordinary course of
business and minor defects in title, none of which, individually or in the
aggregate, materially impairs the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
material compliance with such leases, none are subject to termination, and, to
the best of the Company's knowledge, the Company holds valid leasehold interests
in such assets free of any liens, encumbrances, security interests or claims of
any party other than the lessors of such property and assets, subject to clauses
(i) and (ii) above.
5.12 [Reserved].
5.13 [Reserved].
6
5.14 No Material Adverse Change. Except as disclosed in the SEC
Documents, since September 30, 2001, there has not been (i) any material adverse
change in the financial condition or operating results of the Company and its
Subsidiaries considered as one enterprise, (ii) any material adverse event
affecting the Company or its Subsidiaries, (iii) any obligation, direct or
contingent, that is material to the Company and its Subsidiaries considered as
one enterprise, incurred by the Company or any Subsidiary, except obligations
incurred in the ordinary course of business (iv) any dividend or distribution of
any kind declared, paid or made on the capital stock of the Company or any of
its Subsidiaries, or (v) any loss or damage (whether or not insured) to the
physical property of the Company or any of its Subsidiaries which has been
sustained which has a material adverse effect on the condition (financial or
otherwise), operating results, operations or business of the Company and its
Subsidiaries considered as one enterprise.
5.15 Disclosure. No representation or warranty by the Company in
this Agreement or in any statement or certificate signed by any officer of the
Company furnished or to be furnished to the Purchaser pursuant to this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances in which
they are made, not misleading.
5.16 NASDAQ Compliance. The Company's Common Stock is listed on The
Nasdaq Stock Market, Inc. National Market (the "Nasdaq National Market"), and
the Company has taken no action that is likely to have the effect of causing the
Common Stock to be delisted from the Nasdaq National Market, nor has the Company
received any notification that the National Association of Securities Dealers,
Inc. ("NASD") is contemplating terminating such listing. The Company's Common
Stock is registered pursuant to Section 12(g) of the Exchange Act, and the
Company has taken no action that is likely to have the effect of terminating the
registration of the Common Stock under the Exchange Act, nor has the Company
received any notification that the SEC is contemplating terminating such
registration.
5.17 Listing. The Company shall comply with all requirements of the
NASD with respect to the issuance of the Warrant Shares and the listing thereof
on the Nasdaq National Market or other trading market on which the Common Stock
is listed or quoted, if applicable.
5.18 Interested Party Transactions. Except as set forth in the SEC
Documents, to the best knowledge of the Company, there are no transactions of
the type required to be disclosed pursuant to Item 404 of Regulation S-K under
the Securities Act of 1933, as amended (the "Securities Act") and the Exchange
Act.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to the Company as follows:
6.1 Investment Experience. Purchaser is, and at the time it
exercises the Warrant issued to it will be, an "accredited investor" within the
meaning of Rule 501 under the
7
Securities Act. Purchaser is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities.
Purchaser has such business and financial experience as is required to give it
the capacity to protect its own interests in connection with the purchase of the
Securities. Purchaser has had the opportunity to ask questions and receive
answers concerning the terms and conditions of its purchase of the Securities
and to obtain any additional information from the Company that is necessary to
verify the information furnished in the SEC Documents. Purchaser believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Securities.
6.2 Investment Intent. This Agreement is made with Purchaser in
reliance upon Purchaser's representation to the Company, which by Purchaser's
execution of this Agreement it hereby confirms that it is purchasing the
Securities for investment for its own account, not as a nominee or agent, only
and not with a view to, or for resale in connection with, any "distribution"
thereof within the meaning of the Securities Act and Purchaser has no present
intention of selling, granting any participation in or otherwise distributing
the same. Purchaser understands that the Securities have not been registered
under the Securities Act or registered or qualified under any state securities
law in reliance on specific exemptions therefrom, which exemptions may depend
upon, among other things, the bona fide nature of Purchaser's investment intent
as expressed herein. By executing this Agreement, Purchaser further represents
that, as of the date hereof, it does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
6.3 Organization; Due Authorization. Purchaser is duly organized and
validly existing in good standing under the laws of the jurisdiction of its
organization. Purchaser has all requisite corporate power and has taken all
requisite corporate action to execute and deliver the Agreements, to grant the
rights granted to the Company under the Collaboration Agreement and to carry out
and perform all of its obligations hereunder and thereunder. Each of the
Agreements has been duly authorized, executed and delivered on behalf of
Purchaser and constitutes the valid and binding agreement of Purchaser,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally and (ii) as limited by equitable
principles generally.
6.4 No Legal, Tax or Investment Advice. Purchaser understands that
nothing in the Agreements or any other materials presented to Purchaser in
connection with the purchase and sale of the Securities constitutes legal, tax
or investment advice. Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Securities.
7. RESTRICTIONS ON TRANSFER OF SECURITIES; REGISTRATION OF THE WARRANT
SHARES; COMPLIANCE WITH THE SECURITIES ACT.
7.1 Restrictions on Transferability. Purchaser shall not sell,
assign, pledge, transfer or otherwise dispose or encumber any of the Securities
being purchased by it hereunder,
8
except (i) pursuant to an effective registration statement under the Securities
Act, (ii) in a transaction meeting the requirements of Rule 144 promulgated
under the Securities Act ("Rule 144") or (iii) pursuant to an available
exemption from registration under the Securities Act and applicable securities
laws of any state of the United States or any other applicable jurisdiction and,
in the case of (ii) or (iii) above, if requested by the Company, upon delivery
by Purchaser of an opinion of counsel reasonably satisfactory to the Company to
the effect that the proposed transfer is exempt from registration under the
Securities Act and applicable state securities laws. Notwithstanding the
foregoing, the Company hereby consents to and agrees to register on the books of
the Company and with any transfer agent for the securities of the Company,
without any legal opinion, any transfer of Securities by Purchaser to an
Affiliate of such Purchaser that is exempt from the registration requirements
under the Securities Act, provided that the transferee certifies to the Company
that it is an "accredited investor" within the meaning of Rule 501 under the
Securities Act and that it is acquiring the Securities solely for investment
purposes. Such certification may also include any additional information as may
be required under the Securities Act and as may be reasonably requested by the
Company, to enable the Company to determine that such transfer is exempt from
the registration requirements of the Securities Act. As a condition of such
transfer, any such transferee shall agree in writing to be bound by the terms of
this Agreement and shall have the rights of Purchaser under this Agreement.
Purchaser will be required to notify any subsequent purchaser of any then
existing resale restrictions as set forth above and to comply with the
provisions of this Section 7. The Company shall not register on its securities
ledger any transfer of the Securities in violation of this Section, but shall
register on its securities ledger all transfers of the Securities in compliance
with this Section. The Company may, and may instruct any transfer agent for the
Company, to place such stop transfer orders as may be required on the transfer
books of the Company in order to ensure compliance with the provisions of this
Section. For purposes of this Agreement, an "Affiliate" of the Purchaser means a
legal entity that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with the Purchaser.
7.2 Restrictive Legends. Each certificate representing any of the
Securities (or any other securities issued in respect of the Securities upon any
stock split or stock dividend) shall (unless otherwise permitted by the
provisions hereof) be stamped or otherwise imprinted with a legend substantially
in the following form (in addition to any legend required under applicable
federal or state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES REPRESENTED
BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER HEREOF ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND OTHER RESTRICTIONS, AND THE HOLDER OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY FUTURE
HOLDER) IS BOUND BY THE TERMS OF A WARRANT PURCHASE AGREEMENT BETWEEN THE
ORIGINAL PURCHASER AND THE COMPANY (COPIES OF WHICH MAY BE OBTAINED FROM
THE COMPANY).
9
Such legend shall be removed by delivery of substitute certificates
without legend: (i) if the Securities have been sold pursuant to an effective
registration statement, or (ii) if Rule 144(k) may be utilized by the seller of
such security, or (iii) if such legend is not required under applicable
requirements of the Securities Act.
7.3 Any Subsequent Holder of the Warrant to Expressly Assume
Obligations Hereunder; Purchaser's Ability to Transfer. Purchaser hereby
covenants and agrees that from and after the date hereof, Purchaser may transfer
the Warrant only in accordance with the provisions of this Section 7 and only to
a transferee (referred to herein as a "Holder" of the Warrant) that expressly
agrees in writing with Purchaser and the Company, at the time of such transfer,
to assume all of the obligations of, have all of the rights of, and comply with
all of the provisions applicable to, Purchaser under this Agreement and Holder
under the Warrant. Purchaser shall not subdivide the Warrant or transfer less
than the entire Warrant to any entity that is not an Affiliate of Purchaser.
Notwithstanding the foregoing, in the event an entity that is not an Affiliate
of Purchaser makes a bona fide good faith offer to purchase the Warrant,
Purchaser shall notify the Company of the terms of the offer, and the Company
shall have 30 days to purchase the Warrant on the same terms and conditions as
the offer. If the Company declines to so purchase, Purchaser may consummate the
proposed transfer on such terms as set forth in the aforementioned notice.
7.4 Registration Procedures and Expenses.
(a) Demand Registration Rights.
(i) Demand by Holders. Commencing on the Closing Date, the
Holders of at least 50% of the Registrable Securities then
outstanding may make two written requests to the Company for
registration of Registrable Securities under and in accordance with
the provisions of the Securities Act of all or part of the
Registrable Securities. Each such registration requested hereinafter
shall be referred to as a "Demand Registration." Each request for a
Demand Registration shall specify the aggregate amount of
Registrable Securities to be registered and the intended methods of
disposition thereof. With respect to each Demand Registration, the
Company shall have the obligations set forth in Section 7.4(c)
below. For the purposes of this Agreement, "Registrable Securities"
shall mean the Warrant Shares and any shares of common stock which
may be issued or distributed with respect to, or in exchange for,
such Registrable Securities pursuant to a stock dividend, stock
split or other distribution, merger, consolidation, recapitalization
or reclassification or similar transaction.
(ii) Underwritten Demand Registration. If the Holders
initiating the Demand Registration request hereunder ("Initiating
Holders") intend to distribute the Registrable Securities covered by
their request by means of an underwriting, they shall so advise the
Company as part of their request made pursuant to this Section. The
underwriter will be selected the Initiating Holders and shall be
reasonably acceptable to the Company. In such event, the right of
any Holder of Registrable Securities in such registration shall be
conditioned upon such Holder's
10
participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein.
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company as required by Section
7.4(c)(xi) hereof) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Section,
if the underwriter advises the Initiating Holders and the Company in
writing that marketing factors require a limitation of the number of
shares to be underwritten, then the number of shares of Registrable
Securities to included in such underwriting shall not be reduced
unless and until all other securities, including securities included
by the Company pursuant to Section 7.4(a)(v) hereof, are first
entirely excluded from the underwriting.
(iii) Effective Registration. The Company shall be deemed to
have effected a Demand Registration if (i) the registration
statement relating to such Demand Registration is filed with the SEC
but before the SEC declares the registration statement effective, a
majority of the Holders of such Registrable Securities requests in
writing that the Company withdraw or abandon the registration
statement; provided, however, that such withdrawal is not the
result, directly or indirectly, of an act or omission of the Company
that has materially and adversely affected the value of such
registration to the participating Holders, or (ii) if the
registration statement is declared effective by the SEC and remains
effective until the earlier of (A) the date on which all of the
Registrable Securities subject to the registration statement have
been transferred, sold or otherwise disposed of pursuant thereto or
(B) one year from the effective date of such registration statement;
provided, however, that, in each case, no Demand Registration shall
be deemed to have been effected if (1) such registration statement,
after it has become effective, is the subject of any stop order,
injunction or other order or requirement of the SEC or other
governmental agency or court for any reason not primarily
attributable to the selling Holders of Registrable Securities or (2)
the conditions to closing specified in the purchase agreement or
underwriting agreement entered into in connection with such
registration are not satisfied by the Company.
(iv) Registration Statement Form. Registrations under this
Section 7.4(a) shall be on Form S-3 unless Form S-3 is not available
to the Company at the time of the request.
(v) Registration of Other Securities. Subject to the
limitations set forth in Section 7.4(a)(ii) hereof, the Company may
include shares of its Common Stock for its own account or for the
account of other shareholders of the Company having registration
rights in a registration effected pursuant to Section 7.4(a).
(vi) Legal Counsel. Subject to Section 7.4(c) hereof, in the
case of a Demand Registration pursuant to Section 7.4(a), the
Holders of a majority of the
11
Registrable Securities shall have the right to select one legal
counsel to review and oversee any offering pursuant to this Section
7.4 ("Legal Counsel"). The Company shall reasonably cooperate with
Legal Counsel in performing its obligations under this Agreement.
(b) Piggyback Registration Rights.
(i) Participation. If at any time beginning 180 days after the
Closing, the Company proposes to file or files a registration
statement under the Securities Act with respect to any offering of
securities of the same type as the Registrable Securities for its
own account (other than a registration statement on Form S-4 or Form
S-8 or any successor form thereto), or for the account of any
securityholder of the Company, then, as promptly as practicable, the
Company shall give written notice of such proposed filing to each
Holder of Registrable Securities and such notice shall offer the
Holders the opportunity to include in such registration such number
of Registrable Securities as each Holder may request (a "Piggyback
Registration"). Subject to Section 7.4(b)(iii), the Company shall
include in such registration statement all Registrable Securities
requested within 20 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be
disposed of by such Holder) to be included in the registration for
such offering pursuant to a Piggyback Registration. Each Holder
electing to participate in such registration statement shall do so
pursuant to the terms of such proposed registration and customary
custody agreements, powers of attorney, underwriting agreements or
other documents as are reasonably requested or required by the
Company and any underwriter of such offering; provided that no
Holder shall be required to represent or warrant to, or to
indemnify, any party with respect to any matters other than as to
the Holder's ownership of the Registrable Securities and with
respect to any other information provided by the Holder and required
to be included in the registration statement pursuant to the rules
and regulations of the SEC. Each Holder of Registrable Securities
shall be permitted to withdraw all or part of such Holder's
Registrable Securities from a Piggyback Registration at any time
prior to the effective date thereof.
(ii) No Effect on Demand Registrations. No registration of
Registrable Securities effected pursuant to a request under this
Section 7.4(b) shall be deemed to have been effected pursuant to
Section 7.4(a) hereof or shall relieve the Company of its obligation
to effect any registration upon request under Section 7.4(a) hereof.
(iii) Pro Rata Allocation. If the registration of which the
Company gives notice is for a registered public offering involving
an underwriting, the Company shall so advise the Holders as a part
of the written notice given pursuant to Section 7.4(b)(i). If the
underwriter determines that marketing factors require a limitation
of the number of shares to be underwritten, the number to be
included shall be allocated pro rata on the basis of the total
number of Registrable Securities and other securities sought to be
included in such registration by the
12
Company, the Holders and any other security holders to whom the
Company has granted registration rights. The Company shall advise
all Holders of Registrable Securities which would otherwise be
registered and underwritten pursuant hereto of any such limitations,
and the number of shares of Registrable Securities that may be
included in the registration. If any Holder disapproves of the terms
of any such underwriting, such Holder may elect to withdraw
therefrom by written notice to the Company and the underwriter, and
the Registrable Securities so withdrawn shall also be withdrawn from
registration.
(c) In connection with the Company's registration obligations
pursuant to Sections 7.4(a) and (b) hereof, the Company shall effect such
registration to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company will as expeditiously as possible:
(i) before filing a registration statement thereto, furnish
the Holders of the Registrable Securities covered by such
registration statement and the underwriters, if any, copies of such
registration statement proposed to be filed, and any participating
Holder or the underwriters may suggest such changes thereto and the
Company will reasonably consider including such changes;
(ii) with respect to each Demand Registration, use its
commercially reasonable efforts to prepare and file within 10 days
after the request, but in no event later than 30 days after the
request, with the SEC a registration statement to effect the
registration of such Registrable Securities under the Securities Act
and to enable the resale of the Registrable Securities through the
automated quotation system of the Nasdaq National Market (or any
other stock exchange, market or trading facility on which the shares
are traded) or in privately-negotiated transactions;
(iii) with respect to each Demand Registration, use its
commercially reasonable best efforts to cause the registration
statement to become effective within 90 days after the registration
statement is filed by the Company;
(iv) use its reasonable efforts to prepare and file with the
SEC such amendments and supplements to the registration statement
and any prospectus (as such term is defined under Section 2(a)(10)
of the Securities Act) or preliminary prospectus or any supplement
thereto (collectively, a "Prospectus") used in connection therewith
as may be reasonably necessary to keep the registration statement
current and effective for a period not exceeding, the earlier of (i)
the date on which Purchaser may sell all Registrable Securities
registered on such registration statement then held by Purchaser
without restriction by the volume limitations of Rule 144(e) of the
Securities Act, or (ii) such time as all Registrable Securities
registered on such registration statement have been sold pursuant to
the registration statement, or (iii) one year from the effective
date of the registration statement;
13
(v) furnish to Purchaser such number of copies of the
registration statement, Prospectuses and Preliminary Prospectuses in
conformity with the requirements of the Securities Act and such
other documents as Purchaser may reasonably request, in order to
facilitate the public sale or other disposition (a "Disposition") of
all or any of the Warrant Shares covered by the registration
statement by Purchaser;
(vi) file documents required of the Company for normal blue
sky clearance in states reasonably requested in writing by
Purchaser, provided, however, that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do
business or file a consent to service of process or subject itself
to taxation in any jurisdiction in which it is not now so qualified
or has not so consented;
(vii) bear all Registration Expenses in connection with the
procedures in paragraph (a) of this Section 7.1 and the registration
of the Warrant Shares pursuant to the registration statement;
"Registration Expenses" shall mean all expenses, except for Selling
Expenses, incurred by the Company in complying with the registration
provisions herein described, including, without limitation, all
registration and filing fees (including but not limited to fees
related to filings required to be made with the SEC and to listing
the Warrant Shares on the appropriate stock market or exchange);
fees and expenses of compliance with securities or blue sky laws;
printing, messenger, telephone and delivery expenses; fees and
disbursements of counsel for the Company and reasonable fees and
disbursements of counsel for the Purchaser (which fees and expenses
shall not exceed $20,000); fees and disbursements of independent
certified public accountants of the Company; fees and expenses of
other persons retained by the Company; and all registration, filing
and other fees and expenses associated with any NASD filing required
to be made in connection with the registration statement. "Selling
Expenses" shall mean all stock transfer taxes applicable to the
Warrant Shares by reason of issuance or transfer in a name other
than that in which the Warrant Shares are registered, and all
discounts, commissions, fees and expenses of underwriters, selling
brokers, dealer managers or similar industry professionals relating
to the distribution of the Warrant Shares;
(viii) advise Purchaser, promptly after it shall receive
notice or obtain knowledge of the issuance of any stop order by the
SEC delaying or suspending the effectiveness of the registration
statement or of the initiation or threat of any proceeding for that
purpose; and it will promptly use its reasonable efforts to prevent
the issuance of any stop order or to obtain its prompt withdrawal if
such stop order should be issued; and
(ix) cause all Warrant Shares covered by the registration
statement to be quoted on the NASDAQ national market or listed on
each securities exchange on which similar securities issued by the
Company are then listed.
14
(x) provide a transfer agent and registrar for the Warrant
Shares registered pursuant to the registration statement and a CUSIP
number for all such Registrable Securities, in each case not later
than the date by which such actions are required to be taken by
applicable law or by the rules of any securities exchange on which
securities issued by the Company are then listed or approved for
listing;
(xi) in the event of any underwritten public offering, enter
into agreements, including an underwriting agreement, in customary
form and consistent with then current market practice, with the
managing underwriter(s) of such offering and the Purchaser, and take
such other reasonable and appropriate action to facilitate the
disposition of the Warrant Shares;
(xii) cause the Warrant Shares covered by the registration
statement to be registered with the NASD, as may be necessary to
enable the Purchaser or any underwriter to consummate the
Disposition of such Warrant Shares;
(xiii) cooperate and assist in the performance of any due
diligence investigation by any underwriter; and
(xiv) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC.
(d) Purchaser shall furnish the Company such information regarding
Purchaser, the Warrant Shares held by Purchaser and the intended method of
disposition of such securities as shall be reasonably requested by the Company
or specifically required by the Securities Act and the rules and regulations
promulgated thereunder to effect the registration of the Warrant Shares.
7.5 Transfer of Warrant Shares After Registration; Suspension.
(a) Purchaser agrees that it will not effect any Disposition
of the Warrant Shares or its right to purchase the Warrant Shares (i) that would
constitute a sale within the meaning of the Securities Act except as
contemplated in the registration statements referred to in Section 7.4 (or
otherwise pursuant to Section 7.1) and (ii) in violation of the provisions of
Section 7.5 described below, and that it will promptly notify the Company of any
material changes in the information set forth in the registration statement
regarding Purchaser or its plan of distribution.
(b) Except in the event that paragraph (c) below applies, the
Company shall (i) if deemed necessary by the Company, prepare and file from time
to time with the SEC a post-effective amendment to the registration statements
or a supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that such registration statement will not contain 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, and so that, as
thereafter delivered to purchasers of
15
the Warrant Shares being sold thereunder, such Prospectus will not contain 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, in light of the
circumstances under which they were made, not misleading; (ii) provide Purchaser
copies of any documents filed pursuant to Section 7.5(b); and (iii) inform
Purchaser that the Company has complied with its obligations in Section 7 (or
that, if the Company has filed a post-effective amendment to the registration
statement which has not yet been declared effective, the Company will notify
Purchaser to that effect, will use its reasonable efforts to secure the
effectiveness of such post-effective amendment as promptly as possible and will
promptly notify Purchaser when the amendment has become effective).
(c) Subject to paragraph (d) below, in the event (i) of any
request by the SEC or any other federal or state governmental authority during
the period of effectiveness of a registration statement for amendments or
supplements to a registration statement or related Prospectus or for additional
information; (ii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Warrant Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; or (iv) of any happening of any event or
circumstance during the period that a registration statement is required to be
effective as a result of which, in the reasonable judgment of the Company upon
the advice of its counsel, such registration statement or the related Prospectus
contains or may contain any untrue statement of a material fact or omits or may
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading (a "Material Event"); then the
Company shall deliver a certificate in writing to Purchaser (the "Suspension
Notice") to the effect of the foregoing and, upon receipt of such Suspension
Notice, Purchaser will refrain from selling any Warrant Shares pursuant to the
registration statement (a "Suspension") until Purchaser's receipt of copies of a
supplemented or amended Prospectus prepared and filed by the Company, or until
it is advised in writing by the Company that the current Prospectus may be used,
and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such Prospectus. In the
event of any Suspension, the Company will use its reasonable efforts to cause
the use of the Prospectus so suspended to be resumed as soon as reasonably
practicable after the delivery of a Suspension Notice to Purchaser. In addition
to and without limiting any other remedies (including, without limitation, at
law or at equity) available to Purchaser, Purchaser shall be entitled to
specific performance in the event that the Company fails to comply with the
provisions of this Section 7.5(c).
(d) Notwithstanding the foregoing paragraphs of this Section
7.5, Purchaser shall not be prohibited from selling Warrant Shares under a
registration statement as a result of Suspensions based on Section 7.4(c)(iv)
above on more than two occasions of not more than 30 days each in any twelve
month period.
(e) Provided that a Suspension is not then in effect Purchaser
may sell Warrant Shares under the related registration statement, provided that
it arranges for delivery of a current Prospectus to the transferee of such
Warrant Shares. Upon receipt of a reasonable request
16
therefor, the Company agrees to provide a reasonable number of current
Prospectuses to Purchaser and to supply copies to any other parties reasonably
requiring such Prospectuses.
(f) Purchaser shall not sell Warrant Shares, either under the
a registration statement or otherwise, until after a 31 day period from the date
of exercise of the Warrant Shares to be sold. In addition, Purchaser shall not
sell, either under a registration statement or otherwise, during any ninety (90)
day period, an amount of Warrant Shares that exceeds one percent (1%) of the
amount of the Company common stock outstanding according to the most recent
Company SEC Document, without prior written notification to the Company.
7.6 Indemnification. For the purpose of this Section 7.6:
(a) the term "Selling Stockholder" shall include Purchaser and
any Affiliate of Purchaser, and their respective permitted transferees and
assigns;
(b) the term "registration statement" shall include any final
Prospectus, exhibit, supplement or amendment included in or relating to a
registration statement referred to in Section 7.4; 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 related 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.
(i) The Company agrees to indemnify and hold harmless the
Selling Stockholder from and against any losses, claims, damages or
liabilities to which the 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 upon (i) any untrue statement of
a material fact contained in the related registration statement or
(ii) any failure by the Company to fulfill any undertaking included
in the registration statement, and the Company will reimburse the
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, an untrue statement made in such Registration Statement in
reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Selling Stockholder
specifically for use in preparation of the Registration Statement or
the failure of the Selling Stockholder to comply in all material
respects with its covenants and agreements contained in Section 7
hereof respecting sale of the Warrant Shares or any statement or
omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Selling Stockholder prior to
the pertinent sale or sales by the Selling Stockholder.
17
(ii) The Selling Stockholder agrees 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 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
untrue statement of a material fact contained in the Registration
Statement or any Prospectus if such untrue statement was made in
reliance upon and in conformity with written information furnished
by or on behalf of the Selling Stockholder specifically for use in
preparation of the Registration Statement or any Prospectus,
provided, however, that Selling Stockholder need not indemnify any
of the aforementioned indemnitees for such losses, claims, damages
or liabilities arising from any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus if the
subsequent Prospectus was furnished to the person or entity
asserting the loss, claim, damage or liability prior to the
pertinent transaction or transactions. The Selling Stockholder will
reimburse the Company (or such officer, director or controlling
person), as the case may be, for any legal or other expenses
reasonably incurred in investigating, defending or preparing to
defend any such indemnifiable action, proceeding or claim; provided
that the Selling Stockholder's obligation to indemnify the Company
shall be limited to the net amount received by the Selling
Stockholder from the sale of the Warrant Shares.
(iii) 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 7.6, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement
of such action, but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any
indemnified party under this Section 7.6 (except to the extent that
such omission materially and adversely affects the indemnifying
party's ability to defend such action) or from any liability
otherwise than under this Section 7.6. Subject to the provisions
hereinafter stated, in case any such action shall be brought against
an indemnified person, the indemnifying person shall be entitled to
participate therein, and, to the extent that it shall elect by
written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, shall be
entitled to assume 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 or
shall exist a conflict of interest that would make it inappropriate,
in the opinion of counsel to the indemnified person, for the same
counsel to represent both the indemnified person
18
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, however, that
no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel (together with
appropriate local counsel) for all indemnified parties. In no event
shall any indemnifying person be liable in respect of any amounts
paid in settlement of any action unless the indemnifying person
shall have approved the terms of such settlement; provided that such
consent shall not be unreasonably withheld. No indemnifying person
shall, without the prior written consent of the indemnified person,
effect any settlement of any pending or threatened proceeding in
respect of which any indemnified person is or could have been a
party and indemnification could have been sought hereunder by such
indemnified person, unless such settlement includes an unconditional
release of such indemnified person from all liability on claims that
are the subject matter of such proceeding.
(iv) If the indemnification provided for in this Section 7.6
is unavailable to or insufficient to hold harmless an indemnified
party under subsection (i) or (ii) above in respect of any losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and the
Selling Stockholder on the other in connection with the statements
or omissions or other matters which resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as
any other relevant equitable considerations. The relative fault
shall be determined by reference to, among other things, in the case
of an untrue statement, whether the untrue statement relates to
information supplied by the Company on the one hand or the Selling
Stockholder on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such untrue statement. The Company and the Selling
Stockholder agree that it would not be just and equitable if
contribution pursuant to this subsection (iv) were determined by pro
rata allocation (even if Selling Stockholder were treated as one
entity for such purpose) or by any other method of allocation which
does not take into account the equitable considerations referred to
above in this subsection (iv). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in
this subsection (iv) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (iv), Selling
Stockholder shall not be required to contribute any amount in excess
of the amount by which the net amount received by Selling
Stockholder from the sale of the Warrant Shares to which such loss
relates exceeds the amount of any damages which Selling Stockholder
has otherwise been required to pay by reason of such untrue
statement. No person
19
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. Selling Stockholder's obligations in this
subsection to contribute are several in proportion to their sales of
Warrant Shares to which such loss relates and not joint.
(v) The parties to this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel
during the negotiations regarding the provisions hereof including,
without limitation, the provisions of this Section 7.6, and are
fully informed regarding said provisions. They further acknowledge
that the provisions of this Section 7.6 fairly allocate the risks in
light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in
the Registration Statement as required by the Securities Act and the
Exchange Act.
7.7 Termination of Conditions and Obligations. The conditions
precedent imposed by this Section 7 upon the transferability of the Warrant
Shares shall cease and terminate as to any particular number of the Warrant
Shares (i) when such Warrant Shares 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 covering
such Warrant Shares, (ii) when such Warrant Shares are sold pursuant to Rule 144
or (iii) at such time as an opinion of counsel reasonably 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 or a certification is
provided pursuant to Section 7.1. The obligations of the Company under Section
7.4 shall terminate upon the earlier of (i) the date on which the Selling
Stockholder may sell all Warrant Shares then held by the Selling Stockholder
without restriction by the volume limitations of Rule 144(e) of the Securities
Act, or (ii) such time as all Warrant Shares acquired on exercise of the Warrant
have been sold pursuant to a registration statement, or (iii) two years from the
effective date of the Registration Statement.
8. COMPANY REPORTS FILED UNDER THE EXCHANGE ACT.
With a view to making available to Purchaser the benefits of Rule
144 and other rules or regulations of the SEC that may permit the Purchaser to
sell the Warrant Shares without registration, as long as the Purchaser owns any
Securities, the Company covenants and agrees to (a) comply with all of the
reporting requirements of the Exchange Act applicable to it and shall comply
with all other public information reporting requirements of the SEC that are
conditions to the availability of Rule 144 for the sale of the Warrant Shares
and (b) furnish to Purchaser, upon reasonable request, a written statement by
the Company that it has complied with the reporting requirements of Rule 144,
the Securities Act and the Exchange Act, and such other information as may be
reasonably requested in order to avail the Purchaser of any rule or regulation
of the SEC that permits the selling of any such Securities without registration.
20
9. STANDSTILL.
During the seven-year period commencing on the date hereof, without
the written consent of the Company, Purchaser shall not directly or indirectly
acquire more than 10% of the Company's then outstanding capital stock, other
than pursuant to the issuance by the Company of the Warrant Shares.
Notwithstanding the foregoing, if any person or group (for the purposes of this
Section 9, "person" and "group" shall have the respective meanings ascribed to
such terms pursuant to Regulation 13D adopted by the SEC under the Exchange Act,
as in effect on the date hereof), directly or indirectly acquires more than 10%
of the Company's then outstanding capital stock, Purchaser may acquire up to the
same percentage acquired by such person or group; provided, however, Purchaser
is not and does not become a member of such group. If any person or group,
directly or indirectly, makes an offer to tender or exchange for the Company's
capital stock, Purchaser shall be relieved of its obligations hereunder;
provided, however, that Purchaser shall not be so relieved if Purchaser
solicits, encourages or participates in any such offer to tender or exchange.
Nothing herein shall prohibit Purchaser from making any proposal to the
Company's Board of Directors.
10. MISCELLANEOUS.
10.1 Waivers and Amendments. The terms of this Agreement may be
waived or amended only with the written consent of the Company and Purchaser.
10.2 Governing Law. This Agreement and the Warrant shall each be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of California without regard to conflict
of laws.
10.3 Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Company or
Purchaser and the Closing.
10.4 Successors and Assigns. The provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors
and administrators of the parties hereto (specifically including any person that
becomes a Holder of the Warrant through transfer thereof from the Purchaser). In
the event of any merger, consolidation or acquisition involving the Company in
which the Company is not the surviving entity, the Company's obligations
hereunder, including the continued registration of the Warrant Shares pursuant
to Section 7 hereof, and under the Warrant shall be expressly or by operation of
law assumed by the surviving entity.
10.5 Entire Agreement. The Agreements constitute the full and entire
understanding and agreement between the parties with regard to the subject
hereof; provided, however, that nothing in the Agreements shall be deemed to
terminate or supersede the provisions of any confidentiality and disclosure
agreements executed by the parties hereto prior to the date hereof, which
agreements shall continue in full force and effect until terminated in
accordance with their respective terms.
21
10.6 Notices, etc. All notices and other communications required or
permitted hereunder shall be effective upon receipt and shall be in writing and
may be delivered in person, by facsimile, overnight delivery service or U.S.
mail, in which event it may be mailed by first-class, certified or registered,
postage prepaid, addressed:
if to Purchaser, at
Amgen Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000-0000
Attention: Corporate Secretary
Fax: (000) 000-0000
with a copy to
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxx
Fax: (000) 000-0000
or
if to the Company, at
Hyseq, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President
Fax: (000) 000-0000
with a copy to
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
or in any case at such other address as Purchaser or the Company shall have
furnished to the other in writing.
10.7 Severability of this Agreement. If any provision of this
Agreement shall be judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
22
10.8 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to Company or to the Purchaser, upon any breach
or default of any party hereto under this Agreement, shall impair any such
right, power or remedy of Company or the Purchaser nor shall it be construed to
be a waiver of any such breach or default, or an acquiescence therein, or of any
similar breach of default thereafter occurring; nor shall any waiver of any
other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of Company or the
Purchaser of any breach of default under this Agreement or any waiver on the
part of Company or the Purchaser of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, or by law or otherwise afforded to Company or the Purchaser shall be
cumulative and not alternative.
10.9 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference and shall not,
by themselves, determine the construction of this Agreement.
10.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
10.11 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchaser and the Company will be entitled to specific performance under this
Agreement and the Warrant. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
10.12 Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to its costs and expenses and any other
available remedy.
[signature page follows]
23
IN WITNESS WHEREOF, the parties hereto have caused their respective
duly authorized representatives to execute this Agreement as of the date and
year first above written.
HYSEQ, INC. AMGEN INC.
D.B.A. HYSEQ PHARMACEUTICALS
---------------------------------------- ----------------------------------------
By By
-------------------------------------- --------------------------------------
Title Title
----------------------------------- -----------------------------------
[Signature Page to Warrant Purchase Agreement]
24
