Exhibit 99.1
PREFERRED SHARE AND WARRANT PURCHASE AGREEMENT
BY AND AMONG
PHARMAKINETICS LABORATORIES, INC.,
CAI ADVISORS & CO.
AND
ASTER (bullet) CEPHAC S.A.
DECEMBER 4, 1997
TABLE OF CONTENTS
Page
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Section 1 PURCHASE AND SALE OF SHARES AND WARRANTS.............................1
1.1 Purchase and Sale of Shares and Warrants.............................1
1.2 Purchase Price.......................................................2
1.3 Delivery of Certificates and Payment.................................2
1.4 The Closing..........................................................2
Section 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................2
2.1 Organization and Standing of the Company.............................2
2.2 Corporate Action.....................................................2
2.3 Compliance with Certain Instruments..................................3
2.4 Validity of Shares and Conversion Shares.............................3
2.5 Capitalization; Status of Capital Stock..............................3
2.6 Governmental Approvals...............................................4
2.7 Securities Laws......................................................4
2.8 Financial Information................................................4
2.9 Litigation...........................................................4
2.10 Compliance with Law..................................................4
2.11 Good Laboratory and Clinical Practices...............................5
2.12 Licenses and Permits.................................................5
2.13 Certain Agreements of Officers and Employees.........................5
2.14 Transactions with Affiliates.........................................6
2.15 Assumptions or Guaranties of Indebtedness............................6
2.16 Investments..........................................................6
2.17 Title to Assets......................................................6
2.18 Material Contracts...................................................7
2.19 ERISA................................................................8
2.20 Insurance............................................................8
2.21 Registration Rights..................................................8
2.22 Absence of Certain Developments......................................8
2.23 Books and Records....................................................9
2.24 Disclosure...........................................................9
2.25 Brokers or Finders..................................................10
Section 3 REPRESENTATIONS AND WARRANTIES OF PURCHASERS........................10
3.1 Investment Representations..........................................10
3.2 Access to Information...............................................10
3.3 Sophistication and Knowledge........................................10
3.4 Power...............................................................10
Section 4 COVENANTS...........................................................11
4.1 Use of Proceeds.....................................................11
4.2 Best Efforts Cooperation............................................11
4.3 General Covenants...................................................11
4.4 Public Announcements................................................12
4.5 Confidentiality.....................................................12
4.6. Charter Amendments..................................................12
4.7 Sales and Use Taxes.................................................12
4.8 Validity of Warrants................................................12
Section 5 CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATIONS TO
PURCHASE THE SHARES AND THE WARRANTS................................13
5.1 Representations and Warranties......................................13
5.2 Technology Sharing Agreement........................................13
5.3 Registration Rights Agreement.......................................13
5.4 Articles Supplementary..............................................13
5.5 Documentation at Closing............................................13
5.6 No Actions or Proceedings...........................................13
5.7 Business Combination Act Opt-out....................................14
Section 6 CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS TO SELL THE
SHARES AND THE WARRANTS.............................................14
6.1 Representations and Warranties......................................14
6.2 Technology Sharing Agreement........................................14
6.3 Documentation at Closing............................................14
6.4 No Actions or Proceedings...........................................14
Section 7 CONTINGENT WARRANTS.................................................14
7.1 Contingent Warrants.................................................14
7.2 Opinion of Counsel..................................................15
7.3 Cancellation of Warrants............................................15
Section 8 MISCELLANEOUS.......................................................15
8.1 Survival of Representations and Warranties..........................15
8.2 Expenses............................................................15
8.3 Notices.............................................................15
8.4 Modification or Waiver..............................................16
8.5 Binding Effect and Assignment.......................................17
8.6 Governing Law.......................................................17
8.7 Section Headings....................................................17
8.8 Further Assurances..................................................17
8.9 Entire Agreement....................................................17
8.10 No Third Party Beneficiaries........................................17
8.11 Counterparts........................................................17
8.12 Severability........................................................17
8.13 Termination.........................................................18
SCHEDULES
Schedule 1.1A Purchasers
Schedule 1.1B Description and Designation of Class A Convertible Preferred
Stock
Schedule 1.1C Form of Warrants
Schedule 2.3 Compliance with Certain Instruments
Schedule 2.5 Agreements Concerning Capital Stock
Schedule 2.9 Litigation
Schedule 2.10 Hazardous Materials
Schedule 2.12 Permits
Schedule 2.13 Agreements with Officers and Employees
Schedule 2.14 Transactions with Affiliates
Schedule 2.16 Investments
Schedule 2.17 Title to Assets
Schedule 2.18 Material Contracts
Schedule 2.19 ERISA
Schedule 2.22 Certain Developments
Schedule 5.2 Form of Technology Sharing Agreement
Schedule 5.3 Form of Registration Rights Agreement
Schedule 5.5(a) Form of Opinion of Ober, Kaler, Xxxxxx & Xxxxxxx
PREFERRED SHARE AND WARRANT PURCHASE AGREEMENT
THIS PREFERRED SHARE AND WARRANT PURCHASE AGREEMENT is made and entered
into on this 4th day of DECEMBER 1997, by and among PHARMAKINETICS LABORATORIES,
INC. a corporation organized under the laws of the state of Maryland (the
"Company"), CAI ADVISORS & CO., a partnership organized under the laws of
Quebec, Canada ("CAI"), and ASTER (bullet) CEPHAC S.A., a company organized
under the laws of France ("Aster") (CAI and Aster, each referred to herein as a
"Purchaser" and together as the "Purchasers").
RECITALS
A. The Company desires to issue and sell to the Purchasers, and the
Purchasers desire to purchase from the Company, an aggregate of 833,300 shares
(the "Shares") of the Company's authorized but unissued shares of Class A
Convertible Preferred Stock (the "Preferred Stock"), initially convertible into
8,333,000 shares of the Company's Common Stock, par value $.001 per share (the
"Common Stock").
B. The Company desires to issue and sell to the Purchasers, and the
Purchasers desire to purchase from the Company, warrants to purchase an
aggregate of 6,250,000 shares of the Company's Common Stock at an exercise price
of $1.20 per share and with a term of three years (the "Warrants").
NOW, THEREFORE, in consideration of the representations, warranties,
conditions, and agreements hereinafter set forth, the parties hereto agree as
follows:
SECTION 1 PURCHASE AND SALE OF SHARES AND WARRANTS.
1.1 Purchase and Sale of Shares and Warrants. The Company agrees to
issue and sell to the Purchasers at the Closing (as hereinafter defined) and the
Purchasers agree to purchase, severally but not jointly, the Shares and the
Warrants, in the quantities set forth opposite each Purchaser's name in Schedule
1.1A. The terms of the Shares and the form of the Warrants are set forth in
Schedules 1.1B and 1.1C, respectively. The Company shall not be obligated to
issue and sell any of the Shares and the Warrants unless all of the Shares and
Warrants are purchased.
The Purchasers may assign their rights to purchase all or a portion of
the Shares and Warrants to one or more Affiliates (as defined below) or
unaffiliated third parties; provided, however, that any such assignees shall be
accredited investors as defined in Regulation D under the Securities Act of
1933, as amended (the "Securities Act"), and shall make representations to the
Company identical to the representations made by the Purchasers in Section 3;
and provided, further, that the Purchasers must obtain the written consent of
the Company prior to assigning their rights to any unaffiliated third parties,
which consent shall not be unreasonably withheld. Prior to any assignment
hereunder, the Purchasers shall identify and provide such information regarding
each assignee as the Company may reasonably request for purposes of confirming
that the assignee is an accredited investor and of complying with applicable
federal and state securities laws. For purposes of this Section 1.1,
"Affiliates" means any person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with
either Purchaser, or any person that is a partner of either
Purchaser in any general or limited partnership.
1.2 Purchase Price. The aggregate purchase price for the Shares and the
Warrants shall be $5,000,000 (the "Aggregate Purchase Price") payable in cash,
of which $4,937,500 shall be allocated as the purchase price for the Shares and
$62,500 shall be allocated as the purchase price for the Warrants.
1.3 Delivery of Certificates and Payment. At the Closing (as
hereinafter defined), the Company shall issue and deliver to the Purchasers
certificates representing the Shares and Warrants, and the Purchasers shall pay
the Aggregate Purchase Price by means of a wire transfer of funds to the account
of the Company.
1.4 The Closing. The closing of the purchase and sale of the Shares and
the Warrants shall take place by telephone conference call on December 19, 1997,
or by such other means or such other date as the Purchasers and the Company may
unanimously agree (the "Closing").
SECTION 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Purchaser as of the
Closing as follows:
2.1 Organization and Standing of the Company. The Company is a duly
organized and validly existing corporation in good standing under the laws of
the State of Maryland and is duly qualified and in good standing as a foreign
corporation authorized to do business in all jurisdictions wherein the character
of the property owned or leased or the nature of the activities conducted by it
makes such qualification necessary, except where the failure to be so qualified
would not have a material adverse effect on the business, operations or
financial condition of the Company. The Company has no subsidiaries with active
business operations.
2.2 Corporate Action. This Agreement, the Technology Sharing Agreement
set forth as Schedule 5.2, and the Registration Rights Agreement set forth as
Schedule 5.3 (the Technology Sharing Agreement and the Registration Rights
Agreement, along with the Warrants, being collectively herein referred to as the
"Ancillary Agreements"), and all of the transactions contemplated hereby and
thereby have been duly authorized by all required corporate action, and as of
the Closing will be duly executed and delivered, and each will constitute the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms. As of the date hereof, the
Company has not obtained the stockholder approval required to increase the
number of shares of Common Stock that the Company is authorized to issue in
order to reserve a sufficient number of shares of Common Stock to cover the
shares of Common Stock issuable upon exercise of the Warrants.
2.3 Compliance with Certain Instruments. Except as listed on Schedule
2.3, the Company is in compliance in all material respects with the terms and
provisions of its Charter and Bylaws, each as amended and/or restated to date,
and all mortgages, indentures, leases, agreements, judgments, decrees, orders
and other instruments by which it is bound or to which it or any of its
properties or assets are subject. Neither the execution, delivery and
performance of this Agreement or the Ancillary Agreements nor the consummation
of any transaction contemplated hereby or thereby
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has constituted, or with the passage of time or giving of notice will
constitute, a material default or violation of or conflict with any term or
provision of any of the foregoing documents, instruments, laws, statutes, rules
or regulations.
2.4 Validity of Shares and Conversion Shares. The Shares and the Common
Stock issuable upon conversion of the Shares and exercise of the Warrants and
the Contingent Warrants (as defined in Section 7.1) (such shares of Common
Stock, collectively, the "Conversion Shares") when issued, sold and delivered in
accordance with the terms of this Agreement will be validly issued, fully paid
and nonassessable with no personal liability attaching to the ownership thereof
and will be free and clear of all liens, charges, restrictions, claims and
encumbrances imposed by or through the Company, except as set forth in
applicable state and federal securities laws. The Company has reserved for
issuance a number of shares sufficient to enable the Purchasers to convert the
Shares and to exercise the Contingent Warrants.
2.5 Capitalization; Status of Capital Stock. As of November 30, 1997,
the authorized capital stock of the Company consisted of (i) 25,000,000 shares
of Common Stock, par value $.001 per share, and (ii) 1,500,000 shares of
Preferred Stock, without par value, of which 12,195,819 shares of Common Stock
were issued and outstanding and 1,670,425 shares reserved for issuance (not
including shares reserved for issuance in connection with the transactions
contemplated hereby) and no shares of Preferred Stock were issued or
outstanding. All the outstanding shares of capital stock of the Company have
been duly authorized, and are validly issued, fully paid and non-assessable.
With the exception of the Shares, the Warrants, the Contingent
Warrants, options to purchase 1,385,825 shares of Common Stock granted to
directors, officers and other employees of the Company, options to purchase
284,600 shares of Common Stock granted to the former Chief Executive Officer of
the Company and certain consultants of the Company, and options to purchase
1,591,200 shares of Common Stock authorized but not granted under the Company's
stock option plans, no options, warrants, subscriptions or rights of any nature
to acquire from the Company, or commitments of the Company to issue, or
securities convertible into, shares of capital stock or other securities are
authorized, issued or outstanding. None of the Company's outstanding securities
or authorized capital stock are subject to any rights of redemption, repurchase,
rights of first refusal, preemptive rights or other similar rights, whether
contractual, statutory or otherwise, for the benefit of the Company, any
stockholder, or any other person. To the Company's knowledge, and except as
contemplated by this Agreement and as set forth in Schedule 2.5, there are no
agreements, understandings, trusts or collaborative arrangements or
understandings concerning the voting or transfer of the capital stock of the
Company. The offer and sale of all capital stock and other securities of the
Company issued prior to the Closing complied with or were exempt from all
applicable federal and state securities laws and no stockholder has a right of
rescission or damages with respect thereto.
2.6 Governmental Approvals. Except for the filing of (i) the Articles
Supplementary (as defined in Section 5.4), (ii) a charter amendment providing
for an increase in the number of authorized shares of Common Stock, (iii) the
approval of the Maryland Industrial Development Financing Authority, which
approval has been granted, and (iv) any notice that may be required under
applicable state and/or federal securities laws (which, if required, shall be
filed on or before the Closing), no authorization, consent, approval, license,
qualification, exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or
3
foreign, is or will be necessary in connection with (i) the execution and
delivery by the Company of this Agreement or the Ancillary Agreements, (ii) the
offer, issuance, sale, execution or delivery of the Shares, the Warrants and the
Contingent Warrants, (iii) the issuance, sale, execution or delivery of the
Conversion Shares, or (iv) the performance by the Company of its obligations
under this Agreement or the Ancillary Agreements.
2.7 Securities Laws. The Company has complied with all applicable
federal and state securities laws, including the Securities Act, in connection
with the offer, issuance and sale of the Shares, the Warrants, and the
Contingent Warrants.
2.8 Financial Information. The financial statements of the Company
included in the Company's 10-K for the year ended June 30, 1997 and 10-Q for the
three months ended September 30, 1997 (the "Financial Statements") present
fairly the financial position and results of operations of the Company as of the
dates and for the periods indicated therein and have been prepared in accordance
with generally accepted accounting principles consistently applied. Except as
set forth or reserved against in the Financial Statements, the Company did not
have as of the date of the Financial Statements any material liability or
obligation of any nature, whether accrued, absolute, contingent, or otherwise
and whether due or to become due.
2.9 Litigation. Except as disclosed in Schedule 2.9, neither the
Company nor any director or officer of the Company is subject to any order,
writ, injunction or decree, of any court, commission, board or other government
agency. Except as set forth in Schedule 2.9, there are no actions, suits,
investigations or proceedings pending or threatened (nor does the Company have
any knowledge of any basis therefor) that could reasonably be expected to
result, either in any case or in the aggregate, in a material adverse change in
the business, operations, affairs or financial condition of the Company or in
any of its properties or assets, or which could reasonably be expected to call
into question the validity of this Agreement, the Ancillary Agreements, or any
action contemplated hereby or thereby.
2.10 Compliance with Law. The Company is in compliance in all material
respects with all applicable federal, state, local and foreign laws, statutes,
rules and regulations, orders, judgments, injunctions, decrees, and similar
instruments, including those relating to the environment or occupational safety
and health. The Company has no knowledge of any pending legislation, rules or
regulations that would be likely to have a material adverse effect on the
Company's business or results of operations. The Company has not caused,
suffered or permitted any hazardous materials, oil or other petroleum products
to be generated, stored, handled, disposed or, released, spilled or discharged
at, on, from or onto the Company's premises, except as disclosed on Schedule
2.10.
2.11 Good Laboratory and Clinical Practices. The Company is in
compliance in all material respects with all "good laboratory practices" and
with all "good clinical practices," to the extent such practices are applicable
to the Company's operations, in accordance with the provisions of Title 21 of
the Code of Federal Regulations, and the Company is not the object of any notice
of insufficiency or of deficiency or of any notice of material corrective action
to be taken, from any applicable federal or state governmental agency or
regulatory body, including the U.S. Food and Drug Administration.
2.12 Licenses and Permits. The Company has all local, state, federal
and foreign licenses, permits, registrations, certificates, accreditations and
approvals (collectively, the "Permits") necessary
4
for the Company to operate and conduct its business as presently conducted, and
there do not exist any waivers or exemptions relating thereto. The Company is in
compliance in all material respects with, and there exist no grounds for
revocation, suspension or limitation of any of, the Permits. No notices have
been received by the Company with respect to any threatened, pending, or
possible revocation, termination, suspension or limitation of the Permits. To
the Company's knowledge, each employee of the Company has all Permits required
to perform such employee's designated functions and duties for the Company in
connection with conducting the business of the Company as presently conducted,
and, to the Company's knowledge, there exist no waivers or exemptions relating
thereto. To the Company's knowledge, there is no default under, nor does there
exist any grounds for revocation, suspension or limitation of, any such Permits.
The Permits are listed on Schedule 2.12.
2.13 Certain Agreements of Officers and Employees.
Neither the Company nor, to the Company's knowledge, any officer,
employee, agent, representative or consultant of the Company is in violation of
any term of any employment or consulting contract, confidential or proprietary
information agreement, noncompetition agreement, nonsolicitation agreement, or
any similar contract or agreement or any restrictive covenant relating to the
right of any such person to be employed or engaged by the Company, whether the
Company is party to such agreement or not. All of such agreements, and all
severance and similar agreements, to which the Company is a party are listed on
Schedule 2.13 and copies have been provided or made available to the Purchasers
or their representatives.
No officer, consultant or employee of the Company whose termination,
either individually or in the aggregate, could have a material adverse effect on
the Company, has been terminated or has terminated his or her employment with
the Company since January 1, 1997, and no such officer, consultant or employee
of the Company has, to the Company's knowledge, the intention of terminating
such person's employment or engagement with the Company.
Schedule 2.13 sets forth each officer, employee, consultant and
contractor of the Company whose involvement, either individually or in
conjunction with others, in the design or development of property or information
proprietary to the Company, in the past two years has been, or in the future is
expected to be, material to the operations and prospects of the Company.
2.14 Transactions with Affiliates. Except as set forth in Schedule 2.13
or Schedule 2.14, there are no loans, leases, royalty agreements, guarantee
agreements or other agreements between (i) the Company or any of its customers
or suppliers and (ii) any officer, employee, consultant or director of the
Company or any person owning five percent or more of the capital stock of the
Company or, to the Company's knowledge, any member of the immediate family of
such officer, employee, consultant, director or stockholder or any corporation
or other entity controlled by such officer, employee, consultant, director or
stockholder, or a member of the immediate family of such officer, employee,
consultant, director or stockholder, and, except as set forth on Schedule 2.14,
since June 30, 1997, the Company has not repaid any principal amount of any
loans from any such person.
2.15 Assumptions or Guaranties of Indebtedness. The Company has not
assumed, guaranteed, endorsed or otherwise become directly, indirectly or
contingently liable for any indebtedness of any other person.
5
2.16 Investments. Except as set forth in Schedule 2.16, the Company has
not made any loans or advances to any person that are outstanding on the date of
this Agreement in excess of $50,000 in the aggregate, nor is it committed or
obligated to make any such loan or advance, nor does the Company own any equity
securities, assets comprising the business of, obligations of, or any interest
in, any person.
2.17 Title to Assets. The Company has a ninety-nine percent interest in
a limited partnership that has good and marketable title in fee to the real
property on which the Company's principal executive offices are located and the
Company enjoys peaceful and undisturbed possession of its real and personal
property under all leases under which it is operating. The limited partnership
agreement relating to such interest and all of such leases are valid and in full
force and effect, and the Company is in material compliance with such limited
partnership agreement and all such leases, which are set forth on Schedule 2.17.
The Company has good and merchantable title to all of its other assets. All of
such assets are free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except those set forth in Schedule 2.17.
The Company has taken reasonable measures to protect and preserve the
security and confidentiality of its analytical methods, trade secrets and other
confidential information (the "Proprietary Information"). All employees and
consultants of the Company involved in the design, review, evaluation or
development of Proprietary Information have executed valid nondisclosure
agreements. None of the Proprietary Information, to the Company's knowledge, has
been used, divulged or appropriated for the benefit of any person or otherwise
to the detriment of the Company. To the Company's knowledge, no employee or
consultant of the Company has used the intellectual property, proprietary
property or information, trade secrets or other confidential information of any
other person in the course of their work for the Company, and the conduct of the
Company's business as currently operated and as proposed to be operated does not
and will not conflict with or infringe upon such property, information or trade
secrets. Except pursuant to the terms of any licenses or other agreements set
forth in Schedule 2.18, the Company has no obligation to compensate any person
to use, license or sell any such property, information or trade secrets and the
Company has not granted any person any license or other right to the Proprietary
Information, whether requiring payment of royalties or not.
2.18 Material Contracts. Except as set forth in Schedule 2.18 or
Schedules 2.13, 2.14, 2.15 or 2.16, the Company is not a party to any contract,
agreement, instrument, commitment, obligation, plan or arrangement (i) that
would be required to be disclosed in or filed as an exhibit to a Registration
Statement on Form S-1 filed with the Securities and Exchange Commission, or (ii)
with any customer or supplier providing for payments in excess of $50,000 (all
such contracts, agreements, instruments, commitments, obligations, plans and
arrangements collectively being referred to herein as "Contracts"). The Company
has made available to the Purchasers or their representatives true, correct and
complete copies of all written Contracts. Schedule 2.18 contains a list of all
written Contracts and an accurate and complete description of all Contracts that
are not in writing.
Except as set forth in Schedule 2.18, all of the Contracts are in full
force and effect, the Company and each other party to each of the Contracts has
performed all the obligations required to be performed by it to date, and there
is not under any of the Contracts any existing default, or any failure of the
Company to perform, which failure, with notice or lapse of time or both, would
constitute such a default. The Company has no present expectation or intention
of not fully performing all its
6
obligations under each of the Contracts and has no knowledge of any breach or
anticipated breach by any other party to any of the Contracts. Except as set
forth in Schedule 2.18, none of the Contracts has been terminated or notice of
termination given with respect thereto, no notice has been given by an party
thereto of any alleged default thereunder by any party thereto, and the Company
is aware of no intention or right of any party to any Contract to declare a
default by another party to any Contract. There exists no actual or threatened
termination, cancellation, or limitation of the business relationship of the
Company with any party to any Contract. Except as set forth in Schedule 2.18, no
customer of the Company has notified the Company that it intends to terminate or
change its business relationship with the Company following the consummation of
the transactions contemplated hereby.
As of the dates of the Company's Financial Statements, the Company did
not have any material liability or commitment, contingent or otherwise, arising
out of any Contract and not adequately reflected in or reserved against in the
Financial Statements. Except as set forth on Schedule 2.18, none of the
Contracts contain noncompetition, exclusivity or other provisions that in any
manner restrict or in the future could restrict the Company's operations. The
Company has not recorded on its Financial Statements for any period revenue
attributable to services to be provided under any Contract that had not been
performed by the Company during such period. As of October 3, 1997, the Company
had been engaged to perform approximately $6.479 million of services for which
revenue had not been recorded on the Financial Statements, which is consistent
with the Company's experience during the last three fiscal years. The Company
has not incurred material losses in connection with any Contract that have not
been recorded on the Company's Financial Statements, other than as set forth on
Schedule 2.18.
2.19 ERISA. Except as set forth on Schedule 2.19, the Company makes no
contributions to, and has no present intention to make contributions to, any
employee pension benefit plans for its employees which are subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The
Company has never contributed to or been required to contribute to any
multi-employer plan which is subject to ERISA.
2.20 Insurance. The Company carries insurance covering its properties
and business adequate and customary for the type and scope of the properties,
assets and business, and similar to companies of comparable size and condition
similarly situated in the same industry in which the Company operates, but in
any event in amounts sufficient to prevent the Company from becoming a coinsurer
or self-insurer, with provision for reasonable deductible amounts.
2.21 Registration Rights. Except for the rights granted to the
Purchasers pursuant to the Registration Rights Agreement, no person has demand
or other rights to cause the Company to file any registration statement under
the Securities Act relating to any securities of the Company or any right to
participate in any such registration statement.
2.22 Absence of Certain Developments. Except as provided in Schedule
2.22 attached hereto, since September 30, 1997, there has been no material
adverse change in the business, assets, operations, affairs, prospects or
financial condition of the Company, and the Company has not:
(a) entered into any transaction, agreement or commitment
other than in the ordinary course of business;
7
(b) entered into or agreed to enter into any transaction,
agreement or commitment or suffered the occurrence of any event or events that
has interfered or is reasonably likely to interfere with the usual operations of
the business or that, singly or in the aggregate, has or is reasonably likely to
have a material adverse effect on the Company's business or results of
operations;
(c) issued, repurchased or redeemed or agreed to issue,
purchase or redeem any stock, bonds or other corporate securities or any rights,
options or warrants with respect thereto, or paid any dividends on any shares of
the Company's capital stock;
(d) borrowed any amount or incurred or become subject to any
liabilities (absolute or contingent) except current liabilities in the ordinary
course of business comparable in nature and amount to current liabilities
incurred in the ordinary course of business during the comparable portion of its
prior fiscal year, as adjusted to reflect the current nature and volume of the
Company's business, or discharged or satisfied any lien or encumbrance or paid
any obligation or liability (absolute or contingent), other than current
liabilities paid in the ordinary course of business;
(e) mortgaged or pledged any of its assets, tangible or
intangible, or subjected them to any liens, charge or other encumbrance, except
liens for current property taxes not yet due and payable;
(f) sold, assigned or transferred any assets, except in the
ordinary course of business;
(g) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;
(h) made capital expenditures or commitments therefor that
aggregate in excess of $50,000; or
(i) incurred any material liability, obligation or commitment,
contingent or otherwise, including those arising out of any Contract, or
incurred any material losses in connection with any Contract.
2.23 Books and Records. The books of account, order books, records and
documents of the Company accurately and completely reflect all material
information relating to the business of the Company, the location and collection
of its assets, and the nature of all transactions giving rise to the obligations
or accounts receivable of the Company.
2.24 Disclosure. Neither this Agreement, the Financial Statements nor
any other agreement, document, or certificate furnished to any of the Purchasers
or their counsel by or on behalf of the Company in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
made or contained herein or therein, in light of the circumstances in which
made, not misleading. This section does not relate or refer to any predictions,
projections, forecasts or estimates of future operations provided by or on
behalf of the Company, except that all such predictions, projections, forecasts
and estimates provided by the Company to the Purchasers were prepared in good
faith. There is no fact
8
known to the Company that has not been disclosed herein or in writing to the
Purchasers and that materially adversely affects, or that the Company believes
is reasonably likely in the future to materially adversely affect, the business,
operations, properties, assets or condition, financial or otherwise, of the
Company.
2.25 Brokers or Finders. Except for Pennsylvania Merchant Group Ltd.,
which shall receive a fee of $ 227,500 paid by the Company, no person has or
will have, as a result of the transactions contemplated by this Agreement, any
right, interest or claim against or upon the Company for any commission, fee or
other compensation as a finder or broker because of any action by the Company or
its agents.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF PURCHASERS.
Each of the Purchasers hereby represents and warrants, severally but
not jointly, to the Company as follows:
3.1 Investment Representations. Each Purchaser intends to acquire the
Shares, the Warrants, the Contingent Warrants, and the Conversion Shares for its
own account. The Shares, the Warrants, the Contingent Warrants, and the
Conversion Shares are being acquired by it for investment and not with a view to
distribution or resale thereof. Each Purchaser understands and agrees that,
until registered under the Securities Act or transferred pursuant to Rule 144
under the Securities Act, all certificates representing the Shares, the
Warrants, any Contingent Warrants and the Conversion Shares shall bear a legend
reading substantially as follows:
The securities represented by this certificate have not been registered
under the Securities Act of 1933 or applicable state securities laws.
These securities may not be offered for sale, sold, delivered after
sale, transferred, pledged or hypothecated in the absence of an
effective registration statement covering such securities under the Act
and any applicable state securities laws, or the availability of an
exemption from registration thereunder.
3.2 Access to Information. Purchasers or their representatives have had
the opportunity to ask questions of and receive answers from management of the
Company concerning the Company's business, assets, financial condition, results
of operations, and liabilities.
3.3 Sophistication and Knowledge. Each Purchaser is an accredited
investor as defined in Regulation D under the Securities Act. Purchasers or
their representatives have the requisite knowledge and experience in financial
and business matters to render them fully capable of evaluating the merits and
risks of the purchase of the Shares and the Warrants. Each Purchaser can bear
the economic risks of its investment and can afford a complete loss of its
investment.
3.4 Power. Each Purchaser has full power and authority to make the
foregoing representations and to enter into and to perform this Agreement and
the Ancillary Agreements in accordance with their terms. CAI is a duly organized
and validly existing partnership in good standing under the laws of Quebec,
Canada. Aster is a duly organized and validly existing corporation in good
standing under the laws of France. Each Purchaser has obtained each required
authorization, consent,
9
approval, license, qualification, exemption of or filing or registration with
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, necessary in connection with (i) the
execution and delivery by such Purchaser of this Agreement or the Ancillary
Agreements, (ii) its purchase of the Shares, the Warrants and the Contingent
Warrants, and (iii) its performance of its obligations under this Agreement or
the Ancillary Agreements.
Each Purchaser hereby acknowledges that the Company is relying on the
representations and warranties made by such Purchaser in this Section 3 in
connection with the Company's representation herein that it has complied with
all applicable federal and state securities laws, including the Securities Act,
in connection with the offer, issuance and sale of the Shares, the Warrants, and
the Contingent Warrants.
SECTION 4 COVENANTS.
4.1 Use of Proceeds. The Company shall use the proceeds from the sale
of the Shares and the Warrants to acquire instruments and software identified by
management and approved by the Board of Directors, to fund the Company's
expansion, and for working capital and general corporate purposes, including
acquisitions.
4.2 Best Efforts Cooperation. Until the Closing, the Company and
Purchasers shall use their best efforts in good faith to perform and fulfill all
conditions and obligations to be fulfilled or performed by them hereunder, to
the end that the transactions contemplated hereby will be fully and timely
consummated.
4.3 General Covenants. The Company and Purchasers agree:
(a) if any event should occur, either within or without the control of
any party, that would prevent fulfillment of the conditions to the obligations
of any party hereto to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements, to use its or their reasonable efforts to
cure the same as expeditiously as possible;
(b) to cooperate fully with each other in preparing, filing,
prosecuting, and taking any other actions that may be reasonable and necessary
to obtain the consent of any governmental instrumentality, or any third party to
accomplish the transactions contemplated by this Agreement and the Ancillary
Agreements;
(c) to deliver such other instruments, certificates, consents,
endorsements, assignments, assumptions, and other documents or instruments, in
form reasonably acceptable to the parties and their counsel, as may be
reasonably necessary to carry out and/or to comply with the terms of this
Agreement and the Ancillary Agreements and the transactions contemplated herein
and therein; and
(d) to confer on a regular basis with each other, report on material
operational matters and promptly advise each other orally and in writing of any
change or event having, or which, insofar as can reasonably be foreseen, could
have a material adverse effect on the business or operations of the Company or
which would cause or constitute a material breach of any of the representations,
warranties or covenants of any party contained herein.
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4.4 Public Announcements. No public announcements shall be made by
either party without prior consent of the other with respect to this Agreement
or the transactions contemplated hereby, which consent shall not be unreasonably
withheld.
4.5 Confidentiality. CAI and their representatives shall keep
confidential all confidential information of the Company consistent with the
terms of the confidentiality agreement dated November 10, 1997 between CAI and
the Company, and Aster and their representatives shall keep confidential all
confidential information of the Company consistent with the terms of the
confidentiality agreement dated November 6, 1997 between Aster and the Company.
Any party to whom the Purchasers may assign their rights to purchase all or a
portion of the Shares and Warrants pursuant to Section 1.1 shall be required to
enter into a similar confidentiality agreement with the Company.
4.6. Charter Amendments. The Company shall use its best efforts to
obtain prior to April 30, 1998 the approval of its stockholders to amend the
Company's Charter (i) to increase the number of shares of Common Stock that the
Company is authorized to issue to a number at least sufficient to allow
Purchasers to acquire the number of shares of Common Stock to which Purchasers
would be entitled upon exercise of the Warrants, and (ii) to provide that prior
to the declaration by the Corporation of any dividend on any class of the
capital stock of the Corporation, such dividend shall have been approved by a
vote of those members of the Board of Directors elected exclusively by the
holders of the Company's Class A Convertible Preferred Stock. The Purchasers
each agree that the Shares shall be voted in favor of such Charter amendments.
Upon the approval of such a charter amendment, the Company shall deliver to each
Purchaser an opinion of counsel concerning the validity and effectiveness of the
charter amendment and otherwise substantially in the same form as the opinion
provided pursuant to Section 5.5(a).
4.7 Sales and Use Taxes. The Company shall pay any sales and use taxes
that may be imposed or due in connection with the consummation of any of the
transactions contemplated by this Agreement.
4.8 Validity of Warrants. The Company hereby covenants that it shall
not at any time assert any claim, and that it shall promptly indemnify and hold
harmless the Purchasers against any losses, damages or expenses (including legal
expenses) that any Purchaser may incur or suffer in connection with the
assertion by any third party of any claim, that the Warrants have not been
authorized by all required corporate action, have not been duly executed and
delivered, or are not legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms. In the event any
such claim is asserted by any party, each Purchaser shall have the option of
electing to accept, and the Company shall issue, the Contingent Warrants pro
rata based upon the number of shares underlying Warrants held by such Purchaser.
This election shall be in addition to and not in lieu of any rights such
Purchaser may have at law or in equity as the result of a breach of this Section
4.8.
SECTION 5 CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATIONS TO PURCHASE
THE SHARES AND THE WARRANTS.
The obligations of each Purchaser to purchase the Shares and the
Warrants are subject to the satisfaction, or waiver by the Purchasers, of the
following conditions, at or prior to the Closing:
11
5.1 Representations and Warranties. Each of the representations and
warranties of the Company set forth in Section 2 hereof shall be true, accurate
and correct on the date of the Closing.
5.2 Technology Sharing Agreement. Aster and the Company shall have
entered into a Technology Sharing Agreement substantially in the form of
Schedule 5.2.
5.3 Registration Rights Agreement. The Purchasers and the Company shall
have entered into a Registration Rights Agreement substantially in the form of
Schedule 5.3.
5.4 Articles Supplementary. The Company shall have duly filed with the
Maryland State Department of Assessments and Taxation ("Department") articles
supplementary including the terms of the Shares set forth in Schedule 1.1B (the
"Articles Supplementary") and the Articles Supplementary will have been accepted
by the Department and will be effective.
5.5 Documentation at Closing. The Purchasers shall have received prior
to or at the Closing each of the following documents:
(a) The opinion of Ober, Kaler, Xxxxxx & Xxxxxxx, counsel for the
Company, in form and substance reasonably satisfactory to counsel for the
Purchasers, covering the matters set forth in Schedule 5.5(a).
(b) A certificate of the President and the Chief Financial Officer of
the Company stating that the representations and warranties of the Company
contained in Section 2 hereof and otherwise made by the Company in writing in
connection with the transactions contemplated hereby are true and correct as of
the Closing and that all conditions required to be performed prior to or at the
Closing have been performed or waived.
(c) Any consents or waivers of governmental entities or third parties
required to be obtained at or prior to the Closing to execute and deliver this
Agreement and the Ancillary Agreements and to carry out the transactions
contemplated hereby and thereby.
5.6 No Actions or Proceedings. There shall not be any action or
proceeding by or before any court or other governmental body that shall seek to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement.
5.7 Business Combination Act Opt-out. The Board of Directors of the
Company shall have adopted a resolution under Section 3-603(c)(1)(ii) of the
Maryland General Corporation Law ("MGCL") pursuant to which the Company shall
have opted out of the requirements of Section 3-602 of the MGCL with respect to
any business combination (as defined in the MGCL) involving either of the
Purchasers or their permitted assignees under Section 1.1 of this Agreement.
SECTION 6 CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS TO SELL THE
SHARES AND THE WARRANTS.
The obligations of the Company to sell the Shares and the Warrants are
subject to the satisfaction, or waiver by the Company, of the following
conditions, at or prior to the Closing:
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6.1 Representations and Warranties. Each of the representations and
warranties of each of the Purchasers set forth in Section 3 hereof shall be
true, accurate and correct on the date of the Closing.
6.2 Technology Sharing Agreement. Aster and the Company shall have
entered into a Technology Sharing Agreement substantially in the form of
Schedule 5.2.
6.3 Documentation at Closing. The Company shall have received prior to
or at the Closing a certificate of authorized officers of each Purchaser stating
that the representations and warranties of such Purchaser contained in Section 3
hereof and otherwise made by such Purchaser in writing in connection with the
transactions contemplated hereby are true and correct as of the Closing and that
all conditions required to be performed prior to or at the Closing have been
performed or waived.
6.4 No Actions or Proceedings. There shall not be any action or
proceeding by or before any court or other governmental body that shall seek to
restrain, prohibit, or invalidate the transactions contemplated by this
Agreement.
SECTION 7 CONTINGENT WARRANTS.
7.1 Contingent Warrants. In the event that (i) the Company shall not by
April 30, 1998 have filed an amended charter with the Secretary of State of
Maryland increasing the number of shares of the Company's Common Stock that it
is authorized to issue by at least 10 million shares and reserved such shares
for issuance upon exercise of the Warrants, or (ii) the Company shall have
failed to consummate the sale of the Shares or the Warrants by December 31, 1997
(or such later date as may be unanimously agreed by the parties hereto) for any
reason other than a breach or default of this Agreement by the Purchasers,
including a failure to pay the Aggregate Purchase Price, or the failure by the
Purchasers to satisfy a condition set forth in Section 6 hereof, then, in either
such event, the Company shall, for no additional consideration, issue to the
Purchasers warrants to purchase an aggregate of 2,750,000 shares of the Common
Stock of the Company at an exercise price of $0.60 per share and otherwise
having terms substantially identical to the terms of the Warrants (the
"Contingent Warrants"). The Contingent Warrants shall be issued to the
Purchasers pro rata based upon the number of Shares held by each Purchaser or
the number of Shares that each Purchaser would have acquired but for the failure
of the Company to consummate the transactions contemplated by this Agreement, as
the case may be.
7.2 Opinion of Counsel. Simultaneously with the issuance of Contingent
Warrants, the Company will deliver to each Purchaser an opinion of counsel in
form and substance reasonably satisfactory to such Purchaser concerning the
validity of the Contingent Warrants and otherwise substantially in the same form
as the opinion provided pursuant to Section 5.5 (a).
7.3 Cancellation of Warrants. Each Purchaser shall deliver the Warrants
to the Company for cancellation promptly upon receipt of Contingent Warrants
issued as a result of failure of the Company to amend its charter as set forth
in Section 7.1.
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SECTION 8 MISCELLANEOUS.
8.1 Survival of Representations and Warranties. Every representation
and warranty of each of the parties set forth in this Agreement and all of the
rights and remedies of the other parties related to misrepresentations and
inaccuracies related thereto shall survive, and not be deemed waived by, the
Closing, and shall be effective regardless of any investigation that may have
been made at any time by or on behalf of any party or its directors, officers,
employees, or agents.
8.2 Expenses. The parties shall pay their respective expenses
(including the fees, disbursements, and expenses of their respective attorneys
and accountants) in connection with the negotiation and preparation of this
Agreement and the consummation of the transactions contemplated hereby.
8.3 Notices. Each party hereto shall promptly give written notice to
the other parties upon becoming aware of the occurrence of, or any impending or
threatened occurrence of, any event that would cause or constitute a breach of
any of its representations, warranties, or covenants contained in this
Agreement, and such party shall use its best efforts to prevent or promptly
remedy the same. Any notice or other communication required or which may be
given hereunder shall be in writing and shall be deemed to have been duly given
on the date delivered if delivered personally or sent by facsimile to the
persons identified below, one business day following deposit with a reputable
overnight courier, or three business days after deposit in the U.S. mail if
mailed by certified or registered mail, return receipt requested, addressed as
follows:
If to the Company, to:
PharmaKinetics Laboratories, Inc.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Ober, Kaler, Xxxxxx & Xxxxxxx
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esquire
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to either Purchaser, to:
CAI Advisors & Co.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxx Xxxxx & Xxxxxx PC
000 Xxx Xxxxxxxxx Xxx., X.X.
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change its address to which notices or other communications are to
be sent by giving written notice of any such change in the manner provided
herein for giving notice.
8.4 Modification or Waiver. This Agreement may be amended, modified, or
superseded at any time by a written instrument executed by the Company and each
Purchaser, and any of the terms, covenants, representations, warranties, or
conditions hereof may be waived by the party intended to be benefited hereby. No
waiver of any nature, in any one or more instances, shall be deemed to be or
construed as a further or continued waiver of any condition or any breach of any
other term, representation, or warranty in this Agreement.
8.5 Binding Effect and Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
8.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the state of Maryland.
8.7 Section Headings. The Section headings contained in this Agreement
are inserted for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.
8.8 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper, or advisable under applicable laws and regulations to
consummate the purchase and sale of the Shares and Warrants in accordance with
the terms of this Agreement. In case at any time any further action is necessary
or desirable to carry out the purposes of this Agreement, the appropriate
officers of each party to this Agreement are hereby directed and authorized to
use their best efforts to effectuate all such action.
15
8.9 Entire Agreement. This Agreement and the Ancillary Agreements
embody the entire agreement and understanding between the parties hereto
relating to the subject matter hereof and supersede any prior letters of intent,
agreements, and understandings relating to the subject matter hereof, other than
confidentiality agreements executed by the parties.
8.10 No Third Party Beneficiaries. Nothing expressed or referred to in
this Agreement is intended or shall be construed to give any person other than
the parties to this Agreement or their respective successors or permitted
assigns any legal or equitable right, remedy, or claim under or in respect of
this Agreement or any provision contained herein, it being the intention of the
parties to this Agreement that this Agreement shall be for the sole and
exclusive benefit of such parties or such successors and assigns and not for the
benefit of any other person.
8.11 Counterparts. Separate copies of this Agreement may be signed by
the parties hereto, with the same effect as though all of the parties had signed
one copy of this Agreement.
8.12 Severability. If any provision of this Agreement shall be held
invalid under any applicable law, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision and, to this end, the provisions hereof are severable.
8.13 Termination. In the event that the Company shall have failed to
consummate the sale of the Shares and the Warrants by December 31, 1997 (or such
later date as may be unanimously agreed by the parties hereto), and the Company
has, as a result, duly issued the Contingent Warrants, then the obligations of
both parties hereunder shall terminate. In the event that the Purchasers shall
have determined not to purchase the Shares and the Warrants and shall have
provided written notice to that effect to the Company, then the obligations of
the Company hereunder shall terminate.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first above written.
PHARMAKINETICS LABORATORIES, INC.
By: /s/ Xxxxx X. Xxxxxx
__________________________________
Xxxxx X. Xxxxxx
President
CAI ADVISORS & CO.
By: /s/ Xxxxxx X. Xxxxxxx
__________________________________
Xxxxxx X. Xxxxxxx
Partner
ASTER-CEPHAC
By: /s/ Xxxx X. Xxxxxxxxx
__________________________________
Xxxx X. Xxxxxxxxx
Chief Executive and President
17
