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EXHIBIT 10.36
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is made and entered
into as of December 23, 1996 by and between La Jolla Pharmaceutical Company, a
Delaware corporation (the "COMPANY"), and Xxxxxx Laboratories, an Illinois
corporation (the "PURCHASER").
A. The Company and the Purchaser are parties to that
certain License and Supply Agreement of even date herewith (the "LICENSE
AGREEMENT") pursuant to which the Company and the Purchaser will cooperate in
the development and marketing of LJP 394, the Company's drug candidate for
lupus erythematosus.
B. The purchase by the Purchaser of capital stock from
the Company as described herein is an essential inducement to the Company to
enter into the License Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants hereinafter set forth, the Company and the Purchaser
hereby agree as follows:
1. DEFINITIONS. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth below:
"ADDITIONAL INVESTMENT RIGHT" has the meaning set forth in
Section 2(b)(i).
"ADDITIONAL SHARES" has the meaning set forth in Section
2(b)(i).
"AFFILIATE" of a party means any person or entity controlling,
controlled by, or under common control with such party, whether directly or
indirectly through one or more intermediaries. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of
such person, whether through the ownership of voting securities, by agreement
or otherwise.
"BENEFICIAL OWNERSHIP" shall have the meaning provided in
Rule 13d-3 under the Exchange Act.
"BOARD" means the board of directors of the Company.
"BUSINESS DAY" means any day other than a Saturday, Sunday, or
other day on which commercial banking institutions in California or Illinois
are authorized or obligated by law to be closed.
"COMMON STOCK" means the Company's common stock, par value
$.01 per share.
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"EQUITY SECURITY" means any Voting Stock and any options,
warrants, convertible securities, or other rights to acquire Voting Stock, but
excluding any rights issued by the Company under any stockholder rights plan
that may be implemented by the Company and securities issuable upon exercise of
such rights.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" of the Common Stock as of any date of
determination means the arithmetic mean of the reported last sale price of the
Common Stock regular way on each of the 20 trading days immediately preceding
such date of determination or, if no such sale takes place on any of such days,
the average of the reported closing bid and asked prices regular way, in each
case on the principal national securities exchange on which the Common Stock is
listed or admitted to trading, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, the closing sales
prices, or, if there are no closing sales prices on any such days, the average
of the closing bid and asked prices, in the Nasdaq Stock Market or other
over-the-counter market as reported by the National Association of Securities
Dealers Automated Quotation System, or, if not so reported, the fair market
value of the Common Stock as estimated by a nationally recognized investment
banking firm selected by Purchaser and acceptable to the Company in the
exercise of its reasonable discretion, which estimate shall be prepared at the
expense of the Company.
"GOVERNMENTAL AUTHORITY" means any governmental,
quasi-governmental, judicial, or regulatory agency or entity or subdivision
thereof with jurisdiction over the Company or the Purchaser or any of their
subsidiaries or any of the transactions contemplated by this Agreement.
"INITIAL SHARES" has the meaning set forth in Section 2(a).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
the business, assets, results of operations, properties, or financial or
operating condition of the Company, or the ability of the Company to perform
its obligations under this Agreement or the License Agreement or consummate the
transactions contemplated hereby.
"PURCHASER INTEREST" means, as of any date, the percentage of
the Total Voting Power Beneficially Owned by the Purchaser on such date.
"REGISTRATION STATEMENT" means the Company's registration
statement on Form S-3, Registration No. 333-04943, including all exhibits
thereto and the final prospectus included therein.
"SEC" means the Securities and Exchange Commission.
"SEC REPORTS" means the Company's Annual Report on Form 10-K
for the year ended December 31, 1995 and quarterly reports on Form 10-Q for the
quarters ended March 31, 1996, June 30, 1996 and September 30, 1996, each as
filed with the SEC and including all exhibits thereto.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" means the Initial Shares and any and all Additional
Shares purchased pursuant to this Agreement.
"STANDSTILL PERIOD" means the period beginning on the date of
this Agreement and ending on the third anniversary of the date of this
Agreement.
"TOTAL VOTING POWER" means, at any date, the total number of
votes that may be cast in the election of directors of the Company at any
meeting of stockholders of the Company held on such date assuming all shares of
Voting Stock were present and voted at such meeting, other than votes that may
be cast only by one class or series of stock (other than Common Stock) or upon
the happening of a contingency.
"VOTING STOCK" means Common Stock and all other securities of
the Company, if any, entitled to vote generally in the election of the Board.
2. SALE AND PURCHASE OF STOCK.
(a) Initial Purchase.
(i) Subject to Section 2(d), the Company shall sell
and issue to the Purchaser, and the Purchaser shall purchase from the Company,
One Million Fifty (1,000,050) shares of Common Stock (the "INITIAL SHARES") for
an aggregate purchase price of Four Million Dollars ($4,000,000) (the "INITIAL
PURCHASE PRICE"). The closing of the issuance and sale to the Purchaser of the
Initial Shares (the "INITIAL CLOSING") shall occur at the Company's
headquarters, or such other place as the parties may mutually agree, five
Business Days after the execution and delivery of this Agreement by the
Purchaser and the Company, or, if all of the conditions set forth in Section
2(d) have not been satisfied or waived as of that date, on the first Business
Day thereafter that all of the conditions set forth in Section 2(d) have been
satisfied or waived (the "INITIAL CLOSING DATE"). At the Initial Closing, the
Purchaser shall deliver the Initial Purchase Price to the Company by wire
transfer to the account specified on Schedule 1, and in exchange therefor the
Company shall issue the Initial Shares to the Purchaser and deliver to the
Purchaser's representative present at the Initial Closing or mail to the
Purchaser, at the Purchaser's discretion, a valid stock certificate registered
in the name of the Purchaser representing the Initial Shares. If the Purchaser
elects to have the stock certificate mailed, the Company shall telecopy to the
Purchaser a copy of such certificate concurrently with the Purchaser's delivery
of the Initial Purchase Price.
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(b) Additional Purchases.
(i) Subject to the limitations set forth in Section
2(b)(ii), the Company shall have the right (the "ADDITIONAL INVESTMENT RIGHT")
to require the Purchaser to purchase additional shares of Common Stock
("ADDITIONAL SHARES") during the 1997 and 1998 calendar years (the "EXERCISE
PERIOD"). The Company, acting in its sole discretion, may exercise the
Additional Investment Right at any time and from time to time during the
Exercise Period by delivering a written notice (an "EXERCISE NOTICE") to the
Purchaser stating the total consideration to be paid by the Purchaser for the
Additional Shares being sold pursuant to such exercise of the Additional
Investment Right (an "ADDITIONAL PURCHASE PRICE") and the date (which shall be
a Business Day not fewer than five Business Days or more than ten Business Days
after the Purchaser's receipt of the Exercise Notice) on which the purchase and
sale of the Additional Shares subject to that notice is expected to take place.
Each closing of the issuance and sale to the Purchaser of Additional Shares
(each an "ADDITIONAL CLOSING") shall occur at the Company's headquarters, or
such other place as the parties may mutually agree, on the date specified in
the applicable Exercise Notice, or, if all of the conditions set forth in
Section 2(e) have not been satisfied or waived as of that date, on the first
Business Day thereafter that all of the conditions set forth in Section 2(e)
have been satisfied or waived (each an "ADDITIONAL CLOSING DATE"). At each
Additional Closing, the Purchaser shall deliver the Additional Purchase Price
specified in the applicable Exercise Notice to the Company by wire transfer to
the account specified in Schedule 1, and in exchange therefor the Company shall
issue to the Company that number of Additional Shares as is determined by
dividing the Additional Exercise Price delivered by the Fair Market Value of
the Common Stock on such Additional Closing Date, and deliver to the
Purchaser's representative present at the Additional Closing or mail to the
Purchaser, at the Purchaser's discretion, a valid stock certificate registered
in the name of the Purchaser representing such Additional Shares. If the
Purchaser elects to have the stock certificate mailed, the Company shall
telecopy to the Purchaser a copy of such certificate concurrently with the
Purchaser's delivery of the Additional Purchase Price.
(ii) Notwithstanding anything herein to the
contrary, each exercise of the Additional Investment Right is subject to the
following limitations:
(A) The Purchaser shall not be obligated to
pay more than Four Million Dollars ($4,000,000) in aggregate Additional
Purchase Price in any calendar year, except as set forth in Section 2(b)(ii)(C)
and except that if any Exercise Notice delivered after October 1, 1997 and
before January 1, 1998 does not result in payment by Abbott of the Additional
Purchase Price specified therein because the condition to Xxxxxx'x purchase
obligation set forth in Section 2(e)(i)(E) is not satisfied or waived, then the
amount of such unpaid Additional Purchase Price (the "UNPAID PRICE") shall be
added to the maximum aggregate Additional Purchase Price that the Purchaser may
(subject to satisfaction of the applicable conditions herein, including the
condition in Section 2(e)(i)(E)) be obligated to pay in the calendar year of
1998, but only if the Company delivers before March 31, 1998 an Exercise Notice
or Exercise Notices specifying, in the aggregate, an Additional Purchase Price
at least equal to the Unpaid Price.
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(B) In any calendar year that the Company
exercises the Additional Investment Right, the aggregate Additional Purchase
Price specified in any Exercise Notice delivered in that year must be at least
Two Million Dollars ($2,000,000).
(C) In no event shall the Purchaser be
required to purchase pursuant to this Section 2(b) a number of Shares that,
together with the Shares then owned by the Purchaser, would exceed 19% of the
then outstanding shares of Common Stock of the Company (giving effect to the
issuance to Purchaser), and the number of Additional Shares to be purchased on
any Additional Closing Date shall, at the Purchaser's option, be reduced by
such excess number of shares, provided that the Fair Market Value of the Shares
not sold to the Purchaser in 1997 as a result of any such reduction shall be
added to the maximum aggregate Additional Purchase Price that the Purchaser may
(subject to satisfaction of the applicable conditions herein, including the
condition in Section 2(b)(ii)(C)) be obligated to pay in 1998.
(c) Company Discretion. The Purchaser acknowledges that
exercise of the Additional Investment Right is within the Company's sole
discretion, and that the Purchaser may be required to purchase Additional
Shares at times when the Fair Market Value thereof is relatively high. The
Purchaser has no right to purchase Additional Shares at any particular price
other than as set forth in Section 2(e)(i)(E).
(d) Conditions to the Purchase and Sale of the Initial
Shares.
(i) Conditions to the Purchaser's Obligation.
The obligation of the Purchaser to purchase and pay for the Initial Shares
shall be subject to the satisfaction (or waiver in writing by the Purchaser) on
or prior to the Initial Closing Date of the following conditions.
(A) The representations and warranties
contained in Section 3 shall be true and correct in all material respects as of
the Initial Closing Date, and the covenants and agreements contained herein to
be performed by the Company on or prior to the Initial Closing Date shall have
been performed in all material respects on or prior to the Initial Closing
Date.
(B) The Company shall have entered into,
or be entering into concurrently herewith, the License Agreement.
(C) The Company shall have delivered to
the Purchaser the following documents:
(1) a certificate signed by the
Company's Chief Executive Officer, dated the Initial Closing Date, certifying
that the conditions specified in Section 2(d)(i)(A) have been satisfied;
(2) certified copies of resolutions
duly adopted by the Company's Board of Directors authorizing the execution,
delivery and performance of this
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Agreement, the License Agreement, and the other transactions contemplated
hereby and thereby;
(3) certified copies of the
Certificate of Incorporation and By-laws of the Company, each as in effect on
the Initial Closing Date;
(4) copies of any third party and
governmental consents, approvals and filings required in connection with the
consummation of the transactions contemplated hereby.
(D) The purchase of the Initial Shares
by the Purchaser hereunder, and the performance of the transactions
contemplated hereby and by the License Agreement, shall not be prohibited by
any applicable law, administrative or governmental rule or regulation or order
of a court of competent jurisdiction; and no action, suit or proceeding shall
exist or be threatened that would prevent, restrain or condition in any
material respect the consummation of the transactions contemplated hereby or by
the License Agreement.
(E) All material consents and approvals
of, or filings with, any third party or Governmental Authority required in
connection with the execution and delivery of this Agreement and the License
Agreement and the consummation of the transactions contemplated hereby and
thereby shall have been obtained.
(ii) Conditions to the Company's Obligation. The
obligation of the Company to issue and sell the Initial Shares shall be subject
to the satisfaction (or waiver in writing by the Company) on or prior to the
Initial Closing Date of the following conditions:
(A) The representations and warranties
contained in Section 4 shall be true and correct in all material respects as of
the Initial Closing Date, and the covenants and agreements contained herein to
be performed by the Purchaser on or prior to the Initial Closing Date shall
have been performed in all material respects on or prior to the Initial Closing
Date.
(B) The issuance and sale of the Initial
Shares by the Company hereunder, and the performance of the transactions
contemplated hereby and by the License Agreement, shall not be prohibited by
any applicable law, administrative or governmental rule or regulation or order
of a court of competent jurisdiction; and no action, suit or proceeding shall
exist or be threatened that would prevent, restrain or condition in any
material respect the consummation of the transactions contemplated hereby or by
the License Agreement.
(C) All material consents and approvals
of, or filings with, any third party or Governmental Authority required in
connection with the execution and delivery of this Agreement and the License
Agreement and the consummation of the transactions contemplated hereby and
thereby shall have been obtained
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(D) The Purchaser shall have entered
into, or be entering into concurrently herewith, the License Agreement.
(e) Conditions to the Purchase and Sale of the Additional
Shares.
(i) Conditions to the Purchaser's Obligation.
The obligation of the Purchaser to purchase and pay for the Additional Shares
shall be subject to the satisfaction (or waiver in writing by the Purchaser) on
or prior to the applicable Additional Closing Date of the following conditions:
(A) The purchase of the Additional
Shares by the Purchaser hereunder shall not be prohibited by any applicable
law, administrative or governmental rule or regulation or order of a court of
competent jurisdiction; and no action, suit or proceeding shall exist or be
threatened that would prevent, restrain or condition in any material respect
the consummation of such purchase.
(B) All material consents and approvals
of, or filings with, any third party or Governmental Authority required in
connection with the purchase of the Additional Shares shall have been obtained.
(C) On and prior to the Additional
Closing Date, the License Agreement shall remain in full force and effect and
no notice of termination of the License Agreement shall have been delivered by
the Purchaser or the Company (and not cured or withdrawn) in accordance with
the terms of the License Agreement.
(D) The Company shall have delivered to
the Purchaser a certificate signed by each of the Company's President and Chief
Financial Officer, dated the date of the Exercise Notice, certifying, as of the
date of the Exercise Notice, that each such officer knows of no event,
condition or pending announcement that (1) has not been publicly disclosed, (2)
is specifically applicable to the Company (as opposed to events, conditions or
announcements likely to affect generally the market or companies similar to the
Company), and (3) would reasonably be expected to have a material adverse
effect on the Fair Market Value of the Common Stock.
(E) The Fair Market Value of the Common
Stock as of the applicable Additional Closing Date shall be at least $2.00 per
share, provided that this condition shall not be applicable if the fact that
the Fair Market Value of the Common Stock is less than $2.00 per share is
attributable to (1) factors having an adverse effect on the public securities
markets generally, (2) factors having an adverse effect on biotechnology or
pharmaceutical stocks generally or stocks of biotechnology companies similar to
the Company in terms of market capitalization, product mix or development stage
or pipeline, or financial condition, or (3) any action or inaction of the
Purchaser or any transaction between the Purchaser and any third party.
(ii) Conditions to the Company's Obligation. The
obligation of the Company to issue and sell the Additional Shares shall be
subject to the satisfaction (or waiver
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in writing by the Company) on or prior to the applicable Additional Closing
Date of the following conditions:
(A) The representations and warranties
contained in Section 4 shall be true and correct in all material respects as of
the Additional Closing Date, and the covenants and agreements contained herein
to be performed by the Purchaser on or prior to the Additional Closing Date
shall have been performed in all material aspects on or prior to the Additional
Closing Date.
(B) The issuance and sale of the
Additional Shares by the Company hereunder shall not be prohibited by any
applicable law, administrative or governmental rule or regulation or order of a
court of competent jurisdiction; and no action, suit or proceeding shall exist
or be threatened that would prevent, restrain or condition in any material
respect the consummation of such issuance and sale.
(C) All material consents and approvals
of, or filings with, any third party or Governmental Authority required in
connection with the issuance and sale of the Additional Shares shall have been
obtained.
(D) On and prior to the Additional
Closing Date, the License Agreement shall remain in full force and effect and
no notice of termination of the License Agreement shall have been delivered by
the Purchaser or the Company (and not cured or withdrawn) in accordance with
the terms of the License Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Purchaser as follows:
(a) Organization and Standing: Articles and Bylaws. The
Company (i) is a corporation duly incorporated, validly existing, and in good
standing under the laws of Delaware, (ii) is qualified, licensed or
domesticated as a foreign corporation in all jurisdictions where such
qualification, license or domestication is required to own and operate its
properties and conduct its business in the manner and at the places presently
conducted; (iii) holds all franchises, grants, licenses, certificates, permits,
consents and orders, all of which are valid and in full force and effect, from
all state, federal and other domestic and foreign regulatory authorities
necessary to own and operate its properties and to conduct its business in the
manner and at the places presently conducted; and (iv) has full corporate power
and authority to own, lease and operate its properties and assets and to carry
on its business as presently conducted and as proposed to be conducted, except
where the failure to be so qualified, licensed or domesticated, or to hold such
franchises, grants, licenses, certificates, permits, consents and orders or to
have such power and authority would not reasonably be expected to have a
Material Adverse Effect.
(b) Authorization. The Board has approved this Agreement and
the License Agreement and the transactions contemplated hereby and thereby, and
the Company has all requisite corporate power and authority to execute, enter
into and carry out the terms and conditions of this Agreement and the License
Agreement and to perform its obligations
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hereunder and thereunder. This Agreement and the License Agreement have been
duly executed and delivered by the Company and (assuming this Agreement and the
License Agreement, as the case may be, constitute legal, valid, and binding
obligations of the Purchaser) constitute legal, valid and binding obligations
of the Company, enforceable in accordance with their respective terms, except
that the enforceability of this Agreement and the License Agreement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and
except that the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(c) Capital Stock. The authorized, issued and outstanding
capital stock of the Company consists solely of 32,000,000 shares of Common
Stock and 8,000,000 shares of undesignated preferred stock, par value $0.01 per
share, of which approximately 16,262,491 shares of Common Stock and no shares
of preferred stock were issued and outstanding as of the date hereof. In
addition, approximately 4,022,476 shares of Common Stock were reserved for
issuance upon exercise of options and warrants outstanding as of the date
hereof. All of the issued and outstanding securities of the Company have been
duly authorized and validly issued, are fully paid and nonassessable, and were
issued in compliance with all applicable state and federal laws regulating the
offer, sale or issuance of securities (assuming, in the case of issuances not
effected pursuant to an effective registration statement under the Securities
Act, compliance with all such laws by the persons to whom such securities were
issued or sold and by any transferee of such persons). No person or entity has
or will have any right of first refusal or any preemptive rights in connection
with the issuance of the Shares. The Shares have been duly authorized and,
when delivered pursuant to this Agreement will be duly and validly issued and
outstanding, fully paid and nonassessable, and free of any liens or
restrictions (unless created by the Purchaser or any of its Affiliates), other
than restrictions under applicable securities laws. Since the date of the
final prospectus included in the Registration Statement, the Company has not
granted any (i) shares of capital stock or Voting Stock of the Company, or (ii)
securities of the Company convertible into or exchangeable for shares of
capital stock or Voting Stock of the Company, other than options issued
pursuant to the Company's 1994 Stock Incentive Plan with exercise prices equal
to the fair market value of the Common Stock on the date of grant, and shares
of Common Stock issued pursuant to the exercise of outstanding warrants or
options. The Company does not own shares of capital stock or other equity
interests in any other entity. There are no outstanding obligations of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any securities.
(d) No Violation. Neither the execution and delivery of this
Agreement and the License Agreement nor the consummation and performance of the
transactions contemplated hereby and thereby will (i) conflict with or result
in a breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any lien, claim or encumbrance
upon the Company's capital stock or assets pursuant to, (iv) give any third
party the right to accelerate any obligation under, (v) result in a violation
of, or (vi) require any authorization, consent, approval, exemption or other
action by or notice to any Governmental Authority pursuant to, the Certificate
of Incorporation or By-Laws of the
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Company, or any law, statute, rule or regulation to which the Company or any of
its properties or assets are subject, or any agreement, instrument, order,
judgment or decree to which the Company or any of its properties or assets are
subject except where the event or circumstance described above would not have a
Material Adverse Effect.
(e) Reports and Financial Statements. The Company has
furnished the Purchaser with copies of its Certificate of Incorporation, as
amended to date, its Bylaws, as currently in effect, the Registration
Statement, and the SEC Reports. The documents so furnished are true, correct
and complete copies of the original documents. The Registration Statement and
the SEC Reports, when filed with the Securities and Exchange Commission,
complied in all material respects with all applicable federal securities laws
and regulations. None of the SEC Reports or the Registration Statement,
including, without limitation, any financial statements or schedules included
or incorporated by reference therein, contained when filed any untrue statement
of a material fact, or omitted when filed to state a material fact required to
be stated or incorporated by reference therein or necessary in order to make
the statements therein, in light of the circumstances under which made, not
misleading. The audited financial statements of the Company included in the
Registration Statement and the SEC Reports and the unaudited financial
statements of the Company included in its quarterly reports on Form 10-Q for
the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996 fairly
present, in conformity with generally accepted accounting principles applied on
a consistent basis (except as may be indicated in the notes thereto), the
financial position of the Company as of the dates thereof and the results of
operations and changes in financial position of the Company for the periods
then ended (subject, in the case of unaudited financial statements, to normal
year-end audit adjustments). Except as set forth in the financial statements
(and the footnotes thereto) included in the SEC Reports, there are no material
liabilities, debts, claims or obligations, whether accrued, absolute,
contingent or otherwise, of or affecting the Company or any of its properties
or assets.
(f) Absence of Changes. Since September 30, 1996, (i) the
Company has not entered into any transaction that was not in the ordinary
course of its business; and (ii) there has been no Material Adverse Effect.
(g) Litigation. There is no litigation, claim, action,
proceeding or investigation pending against the Company or, to the knowledge of
the Company, any basis therefor or threat thereof.
(h) Tax Matters. The Company has (i) timely filed all tax
returns that are required to have been filed by it with all appropriate
federal, state, county and local governmental agencies (and all such returns
are true and correct in all material respects) and (ii) timely paid all taxes
owed by it or which it is obligated to withhold from amounts owing to any
employee (including, but not limited to, social security taxes), creditor or
third party.
(i) Offering. Subject to the accuracy of the Purchaser's
representations in Section 4, the offer, issuance and sale of the Shares
constitute transactions exempt from the registration and prospectus delivery
requirements of Section 5 of the Securities Act and the
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Company has obtained (or is exempt from the requirement to obtain) all
qualifications, permits, and other consents required by all applicable U.S.
state laws governing the offer, sale or issuance of securities.
(j) Compliance with Laws. The Company is not in violation of
any applicable law or any regulation or requirement (including, but not limited
to, any law, regulation or requirement governing the quality of the
environment), the violation of which might have a Material Adverse Effect, and
the Company has not received notice of any such violation.
(k) Environmental Matters. The Company has obtained all
Environmental Permits and is in compliance with all Environmental Laws and
Environmental Permits, except where failure to have obtained such permits or to
have so complied would not result in any Material Adverse Effect. There is no
civil, criminal or administrative claim, suit, proceeding or investigation
pending or, to the best knowledge of the Company, threatened against the
Company relating in any way to any Environmental Laws or Environmental Permits
and the Company knows of no fact or circumstance (including, without
limitation, any notice of potential liability) that would give rise to any such
claim, suit, proceeding or investigation.
"Environmental Laws" mean all laws applicable to the Company
relating to pollution or protection of the environment or human safety
including, without limitation, laws relating to emissions, discharges, releases
of pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes or otherwise regulated substances or wastes into the
environment (including, without limitation, ambient air, surface water, ground
water or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic, hazardous or other
regulated substances or wastes.
"Environmental Permits" mean all permits, licenses and
authorizations required for the operation of the business of the Company under
applicable Environmental Laws.
(l) Patents, Copyrights and Trademarks. To the Company's
knowledge after due investigation, (i) the Company owns or is licensed under
all patents, patent applications, licenses, trademarks, trade names, brand
names, inventions and copyrights necessary for the operation of its business as
now conducted and as proposed to be conducted, with no infringement of or
conflict with the rights of others, except where the failure so to own or be
licensed would not have a Material Adverse Effect; and (ii) there have been no
claims made against the Company for the assertion of the invalidity, abuse,
misuse or unenforceability of any of its patent, trademark, copyright, trade
secret or other proprietary rights and to the Company's knowledge there are no
grounds for the same.
(m) Disclosure. This Agreement does not contain any untrue
statement of any material fact or omit to state a material fact necessary in
order to make the statements contained herein, in light of the circumstances
under which they were made, not misleading.
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4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser represents and warrants to the Company and its officers, directors
and agents as follows:
(a) Organization, Good Standing, and Qualification. The
Purchaser is a corporation duly incorporated, validly existing, and in good
standing under the laws of Illinois, and has all necessary power and authority
under applicable law to own its property and to conduct its business as now
owned and conducted.
(b) Authority. The Purchaser has all requisite corporate
power and authority to execute, enter into and carry out the terms and
conditions of this Agreement and the License Agreement, and to perform its
obligations hereunder and thereunder. This Agreement and the License Agreement
have been duly executed and delivered by the Purchaser and (assuming this
Agreement and the License Agreement, as the case may be, constitute the legal,
valid, and binding obligations of the Company) constitute the legal, valid and
binding obligations of the Purchaser, enforceable in accordance with their
respective terms, except that the enforceability of this Agreement and the
License Agreement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and except that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
(c) No Violation. Neither the execution and delivery of this
Agreement and the License Agreement nor the consummation of the transactions
contemplated hereby and thereby will conflict with or result in the material
breach of any term or provision of, or constitute a default under, any charter
provision, bylaw, material contract, order, law or regulation to which the
Purchaser or any of its Affiliates is a party or by which the Purchaser or any
of its Affiliates or any of their respective material assets or properties is
in any way bound or obligated.
(d) Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any Governmental Authority having jurisdiction over the business
of the Purchaser or any of its Affiliates is required in connection with the
transactions contemplated by this Agreement or the License Agreement, except
where failure to obtain such would not have a Material Adverse Effect.
(e) Brokers. No finder, broker, agent, financial advisor, or
other intermediary has acted on behalf of the Purchaser or any of its
Affiliates in connection with any of the transactions contemplated by this
Agreement or the License Agreement or is entitled to any payment in connection
herewith or therewith.
(f) Ownership of Voting Stock. Neither the Purchaser nor any
person with whom the Purchaser is acting as a partnership, limited partnership,
syndicate or other group (within the meaning of Section 13(d)(3) of the
Exchange Act) for the purpose of acquiring, holding or disposing of securities
issued by the Company Beneficially Owns (directly or indirectly) any Common
Stock as of the date of this Agreement other than the Shares being purchased by
the Purchaser hereunder.
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(g) Securities Matters.
(i) The Purchaser acknowledges that an investment in
the Company involves an extremely high degree of risk and that the Purchaser
may lose its entire investment in the Shares.
(ii) The Purchaser is acquiring the Shares without
having been furnished any offering literature or prospectus specifically
prepared in connection with the offer and sale of the Shares pursuant hereto.
The Purchaser has received the SEC Reports and the Registration Statement and
all additional information requested from the Company and acknowledges that the
Company has made available to it or its advisors the opportunity to obtain
additional information to evaluate the merits and risks of the purchase of the
Shares. The Purchaser has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management and to
conduct such investigations and inquiries as the Purchaser deems appropriate
for purposes of investment in the Shares pursuant to this Agreement. The
Purchaser has read and understands the SEC Reports and the prospectus contained
in the Registration Statement, including without limitation the "Risk Factors"
section thereof, and acknowledges that the disclosures included therein
constitute risks to the Purchaser in connection with the purchase of the
Shares. The Purchaser has also read and understands the section of the
prospectus contained in the Registration Statement entitled "Description of the
Company's Securities" and understands the Company's capital structure and the
substantial dilution to the Purchaser's interest in the Company that can occur
upon the exercise of warrants and stock options. Without limiting the
foregoing, the Purchaser acknowledges its understanding that (A) the Company
will need substantial additional capital, which may be raised through sale of
additional securities, thereby further diluting the Purchaser's interest in the
Company, (B) the Company's drug candidate for the treatment of lupus
erythematosus, LJP 394, may not prove effective in producing a sustained
reduction of antibodies to double-stranded DNA and may not provide a meaningful
clinical benefit, and (C) the Company's other drug candidates are at earlier
stages of development and involve comparable risks.
(iii) The Purchaser understands that (A) the Shares are
neither registered under the Securities Act nor under the securities laws of
any state or foreign country, (B) the certificates evidencing the Shares will
bear a legend to the effect set forth in Section 5(b) (relating to restrictions
on transfer), and (C) appropriate stop transfer instructions against the Shares
will be placed with the Company's transfer agent.
(iv) The Purchaser has expertise in evaluating and
investing in companies like the Company and is able to assess the relative
merits and risks of an investment in the Company and to sustain a total loss on
such investment.
(v) The Purchaser understands that, in addition to the
contractual restrictions on transfer set forth in this Agreement, the Shares
cannot be offered, sold or transferred unless the Shares are registered under
the Securities Act or an exemption from the registration requirements of the
Securities Act is available, or such registration requirements
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are inapplicable, as reflected in an opinion of counsel to the Purchaser in
form and substance reasonably satisfactory to the Company, in which case the
Company agrees to cooperate reasonably with the Purchaser, including but not
limited to, executing, acknowledging or delivering any documents which in the
opinion of the Purchaser or its counsel may be reasonably necessary,
appropriate or desirable in order to render such an opinion.
(vi) The Purchaser is purchasing the Shares for its own
account, for investment, not as a nominee or agent, and not with a view to
their sale or distribution.
5. COVENANTS.
(a) SEC Reports and Other Information. As soon as available
(but in any event within five days after filing with the SEC or release), the
Company shall deliver to the Purchaser copies of (i) all registration
statements and all special or periodic reports relating to the Company that the
Company files with the SEC or with any regional or national securities exchange
or quotation system and (ii) all press releases.
(b) Restrictions on Transfer.
(i) During the Standstill Period, the Purchaser shall
not offer, sell or transfer any Shares or any interest therein except as
follows (provided that all such sales or transfers made during the Standstill
Period, other than pursuant to Section 5(b)(i)(B) or (D), shall be subject to
the Company's right of first refusal set forth in Section 5(c)):
(A) to any person, entity or group approved in
writing by the Company;
(B) to any Affiliate of the Purchaser, if such
Affiliate agrees in writing to hold such Shares subject to all the provisions
of this Agreement and agrees to transfer such Shares to the Purchaser if it
ceases to be an Affiliate of the Purchaser;
(C) in response to an offer to purchase or
exchange for cash or other consideration any Voting Stock that is made by or on
behalf of the Company or by another person or group not opposed by the Board
within the time the Board is required, pursuant to applicable rules under the
Exchange Act, to advise the Company's stockholders of the Board's position on
such offer;
(D) pursuant to a bona fide pledge of such Shares
to an institutional lender to secure a loan, guaranty or other financial
support, provided that such lender agrees in writing to hold such Shares
subject to all provisions of this Agreement; or
(E) in the event of a merger or consolidation of
the Company in which the holders of Voting Stock prior to the merger or
consolidation cease to hold at least a majority of the Voting Stock of the
surviving entity, or pursuant to a plan of liquidation of the Company.
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(ii) After the Standstill Period and before the fifth
anniversary of the date of this Agreement, the Purchaser shall not, directly or
indirectly, sell or transfer any Shares except as allowed during the Standstill
Period and as follows (provided that all such sales or transfers shall be
subject to the Company's right of first refusal set forth in Section 5(c)):
(A) pursuant to a bona fide public offering
registered under the Securities Act, including an offering made through an
underwriter or broker that takes the Shares for its own account with a view to
the public distribution thereof, if the Purchaser takes and requires the
underwriter or broker to take reasonable precautions to insure that such
offering will not result in a sale of Beneficial Ownership of Voting Stock with
aggregate voting power of five percent (5%) or more of the Total Voting Power
then in effect to any single person or group;
(B) into the public market pursuant to SEC Rule
144 under the Securities Act, if the Purchaser takes reasonable precautions to
insure that such offering will not result in a sale by it or any underwriter,
broker, or other person or entity acting on its behalf of Beneficial Ownership
of Voting Stock with aggregate voting power of five percent (5%) or more of the
Total Voting Power then in effect to any single person or group; or
(C) in transactions not otherwise described
herein if such transactions do not result, to Purchaser's knowledge, in any
single person or group having Beneficial Ownership of Voting Stock with
aggregate voting power of five percent (5%) or more of the Total Voting Power
then in effect or increasing its Beneficial Ownership of Voting Stock by such
amount.
(iii) No transfer by the Purchaser of any Shares that is
otherwise permissible hereunder shall be made unless (A) the Shares are
registered under the Securities Act, (B) such transfer complies with the
provisions of Rule 144 under the Securities Act or (C) an exemption from the
registration requirements of the Securities Act is available and the Purchaser
has provided to the Company (at the Purchaser's expense) an opinion of counsel
to the Purchaser in form and substance reasonably satisfactory to the Company
that such an exemption is available. The certificate or certificates
evidencing the Shares will bear the restrictive legend set forth below. The
legend imprinted on the certificates shall be removed and the Company shall
issue a new certificate without such legend to the holder of such security if
such security is registered under the Securities Act, the conditions for a
permissible sale or transfer under Rule 144 have been complied with or in the
opinion of counsel to the Purchaser reasonably satisfactory to the Company such
legend is no longer required under the Securities Act.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND THE
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO CERTAIN CONDITIONS SPECIFIED IN THE STOCK PURCHASE AGREEMENT, DATED
AS OF DECEMBER 23, 1996, BETWEEN THE ISSUER (THE
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"COMPANY") AND XXXXXX LABORATORIES, AND THE COMPANY RESERVES THE RIGHT
TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE
BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH
CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON
WRITTEN REQUEST AND WITHOUT CHARGE.
(iv) The Company may give stop transfer and other
instructions to its transfer agent to effect the provisions of this Section
5(b).
(c) Company Right of First Refusal. If the Purchaser proposes to
transfer any Shares at any time and from time to time before the fifth
anniversary of the date of this Agreement, the Purchaser shall first give the
Company written notice of its intention, describing the price and general terms
of the proposed transfer and the identity of the proposed transferee, if known.
The Company or its designee shall have fifteen (15) Business Days from the date
of receipt of any such notice to agree to purchase all of the Shares proposed
to be transferred for the price per Share and upon the general terms specified
in the notice by giving written notice to the Purchaser. If the Purchaser
proposes any transfer of Shares for consideration other than cash, the Company
may exercise its right of first refusal and purchase such Shares for cash in an
amount equal to the fair market value of the proposed non-cash consideration.
If the Company does not exercise its right of first refusal, the Purchaser may
transfer any Shares not purchased by the Company at the price and upon the
general terms described in the notice provided to the Company, provided that if
the Purchaser has not transferred such Shares within 120 days after the Company
received notice of the Purchaser's intention to transfer Shares, or entered
into a binding agreement within such 120-day period to transfer such Shares and
transferred such Shares within 120 days of entering into such agreement, the
Purchaser shall not thereafter transfer any Shares without first offering such
Shares to the Company in the manner provided above.
(d) Proxy Solicitations. Prior to the end of the Standstill
Period, neither the Purchaser nor its Affiliates shall, directly or indirectly,
(i) solicit, initiate or participate in any "solicitation" of "proxies" or
become a "participant" in any "election contest" (as such terms are defined or
used in Regulation 14A under the Exchange Act); call, or in any way participate
in a call for, any special meeting of stockholders of the Company (or take any
action with respect to acting by written consent of the Company's
stockholders); request, or take any action to obtain or retain any list of
holders of any securities of the Company; or initiate or propose any
stockholder proposal or participate in the making of, or solicit stockholders
for the approval of, one or more stockholder proposals; (ii) deposit any Voting
Stock in a voting trust or subject them to any voting agreement or
arrangements; (iii) form, join or in any way participate in a "group" (within
the meaning of Section 13(d)(3) of Exchange Act) with respect to any Voting
Stock (or any securities the ownership of which would make the owner thereof a
Beneficial Owner of Voting Stock); (iv) otherwise act to control or influence
the Company or its management, Board, policies or affairs in a manner not
specifically contemplated by this Agreement or the License Agreement,
including, without limitation, (A) soliciting or
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proposing (other than on a non-public basis directly to the Company) to effect
or negotiate any form of business combination, restructuring, recapitalization
or other extraordinary transaction involving, or any change in control of, the
Company, its Affiliates or any of their respective securities or assets, or (B)
seeking Board representation or the removal of any of the Company's directors
or a change in the composition or size of the Board; (v) disclose (other than
non-public disclosure to the Company) any intent, purpose, plan or proposal
with respect to this Agreement, the Company or its Affiliates or the Board,
management, policies, affairs, securities or assets of the Company or its
Affiliates that is inconsistent with this Agreement, including any intent,
purpose, plan or proposal that is conditioned on, or would require the Company
or any of its Affiliates to make any public disclosure relating to, any such
intent, purpose, plan, proposal or condition; or (vi) assist, advise, encourage
or act in concert with any person with respect to, or seek to do, any of the
foregoing. Notwithstanding anything in the foregoing to the contrary, however,
nothing in this Section 5(d) shall prohibit the Purchaser from engaging in any
of the activities set forth in Section 5(d) in response and opposition to
activities of the kind described in Section 5(d) initiated by any third party,
provided that Purchaser shall not engage in any of the activities described in
this Section 5(d) beyond the time such third party ceases such activities.
(e) Covenants to Bind Purchasers. Until the fifth
anniversary of the date of this Agreement, the Purchaser shall cause any
acquiror or acquirors (including without limitation Affiliates) to whom or
which the Purchaser transfers any Shares in any transaction or series of
related transactions not made through The Nasdaq National Market (or such stock
exchange as may be the primary exchange upon which the Company's common stock
may trade from time to time) of any interest in Voting Stock with aggregate
voting power of three percent (3%) or more of the Total Voting Power then in
effect to agree to be bound by subsections (b), (c), and (d) of this Section 5,
and the legend required by Section 5(b)(iii) shall not be removed from such
shares.
(f) Nasdaq Listing. The Company shall use its best efforts
to keep effective the registration of the Common Stock under the Exchange Act
with the SEC and maintain the listing or inclusion for quotation on the Nasdaq
Stock Market of the Common Stock, and shall use its best efforts to file timely
such information, documents and reports as the SEC or such other Governmental
Authority may require or prescribe that the Company file in connection
therewith. The Company will, at the request of the Purchaser or any of its
Affiliates, advise in writing as to whether all reports required to be filed
under the Exchange Act have been timely filed, and will file any other
information which may be reasonably required in order to comply with Rule 144
under the Securities Act, or any other comparable rule or Securities Act
exemption, as then in effect.
(g) Public Announcements. Neither the Purchaser nor the
Company shall issue any press release or other public statement with respect to
the transactions contemplated by this Agreement without the prior written
consent of the other, except as may be required by applicable law or by
obligations pursuant to any listing agreement with a securities exchange or
quotation system upon which the Purchaser's or the Company's securities are
traded, provided that if either party believes that any press release or other
public statement is so
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required, such party shall promptly notify and consult with the other party
with respect thereto. Without limitation of the foregoing, the Company shall
not publicly announce any exercise of the Additional Investment Right until
after the Additional Closing of the purchase and sale of the Additional Shares
for which the Additional Investment Right was exercised.
(h) Purchaser Right of First Refusal. If the Company
proposes to issue or sell, at any time and from time to time before the fifth
anniversary of the date of this Agreement, to any Designated Investor (as
defined below), shares of Common Stock with aggregate voting power of 5% or
more of the Total Voting Power (giving effect to such issuance or sale to such
Designated Investor), the Company shall first give the Purchaser written notice
of its intention, describing the price per share and general terms of the
proposed transfer and the identity of the proposed transferee. The Purchaser
or its designee shall have 15 Business Days from the date of receipt of any
such notice to agree to purchase all of the shares of Common Stock proposed to
be issued or sold for the price per share and upon the general terms specified
in the notice by giving written notice to the Company. If the Company proposes
any issuance or sale of shares of Common Stock for consideration other than
cash, the Purchaser may exercise its right of first refusal and purchase such
shares for cash in an amount equal to the fair market value of the proposed
non-cash consideration. If the Purchaser does not exercise its right of first
refusal, the Company may issue and sell the shares of Common Stock not
purchased by the Purchaser at the price and upon the general terms described in
the notice provided to the Purchaser, provided that if the Company has not
transferred such shares within 120 days after the Purchaser received notice of
the Company's intention to sell shares, or entered into a binding agreement
within such 120-day period to issue and sell such shares and issued and sold
such shares within 120 days after entering into such agreement, the Company
shall not thereafter issue and sell any shares without first offering such
shares to the Purchaser in the manner provided above. For purposes hereof,
"DESIGNATED INVESTOR" means a pharmaceutical manufacturing or distribution
company with operations in the field of care covering products specifically
used to treat end-stage renal dialysis patients and patients with impaired
renal function, such as polycystic disease, anemia, acute renal failure or
glomerulonephritis, but not including renal transplantation ("RENAL CARE").
Notwithstanding the foregoing, however, the Purchaser's rights under this
Section 5(h) shall not apply in the case of a sale of stock by the Company as
part of a collaborative relationship involving research, development,
manufacturing or marketing activities (a "PROPOSED COLLABORATION") unless the
primary focus of the Proposed Collaboration is Renal Care, in which case the
Purchaser's rights under this Section 5(h) will apply only if the Purchaser,
through exercise of its right of first negotiation under Section 2.5 or Section
2.6 of the License Agreement, enters into a collaborative agreement with the
Company with respect to the Proposed Collaboration, in which case the Purchaser
shall have the right pursuant to this Section 5(h) to purchase any stock
proposed to be sold as part of that Proposed Collaboration.
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6. REGISTRATION RIGHTS.
(a) Demand Registration Rights.
(i) Demand; Obligations of the Company. At any
time and from time to time after the third anniversary of the date of this
Agreement, the Purchaser may request registration of all or any part of the
Registrable Securities (a "DEMAND REGISTRATION"), and the Company will use its
reasonable best efforts to effect the registration of such Registrable
Securities under the Securities Act (including, if so requested by the
Purchaser, Rule 415 thereunder), all in accordance with the following
provisions. "REGISTRABLE SECURITIES" shall mean those shares of the Company's
Common Stock acquired or acquirable by the Purchaser pursuant to this
Agreement, any additional shares of Common Stock or other securities which
subsequently may be issued with respect to such stock as a result of a stock
split or dividend or any sale, transfer, assignment or other transaction
involving such Common Stock or securities and any securities into which such
Common Stock or securities may thereafter be exchanged or converted as a result
of merger, consolidation, recapitalization or otherwise.
(ii) Company's Ability to Postpone. The Company
shall have the ability to postpone the filing of a registration statement under
this Section 6(a) for a reasonable period of time (not exceeding 60 days) if
the Company furnishes the Purchaser with a certificate signed by the President
of the Company stating that the Company's board of directors has determined in
good faith that effecting the registration at such time would adversely affect
a material financing, acquisition, disposition of assets of stock, merger or
other comparable transaction or would require the Company to make public
disclosure of information the public disclosure of which could have a Material
Adverse Effect.
(iii) Number of Demand Registrations. If no
Additional Shares have been issued, the Purchaser shall be entitled to an
aggregate of two Demand Registrations. If any Additional Shares have been
issued, the Purchaser shall be entitled to an aggregate of three Demand
Registrations.
(b) Demand Registration Procedures. If and whenever the
Company is required under Section 6(a) to use its reasonable best efforts to
effect the registration of any of the Registrable Securities under the
Securities Act, the Company will (except as otherwise provided in this
Agreement), as expeditiously as practicable:
(i) prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its reasonable
best efforts to cause such registration statement to become effective and
remain effective for the lesser of nine months or as long as shall be necessary
to complete the distribution of the Registrable Securities so registered;
(ii) prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the lesser of nine months or as long
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as shall be necessary to complete the distribution of the Registrable
Securities so registered and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all Registrable Securities
covered by such registration statement whenever the Purchaser shall desire to
sell or otherwise dispose of the same;
(iii) furnish to the Purchaser such numbers of
copies of a prospectus, including a preliminary prospectus and any amendment or
supplement to any prospectus, in conformity with the requirements of the
Securities Act, and such other documents, as the Purchaser may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities owned by the Purchaser;
(iv) use its reasonable best efforts to register
and qualify the Registrable Securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as the
Purchaser shall reasonably request, and do any and all other acts and things
reasonably requested by the Purchaser to assist such holder to consummate the
public sale or other disposition in such jurisdictions of the Registrable
Securities, except that the Company shall not for any such purpose be required
to qualify to do business as a foreign corporation in any jurisdiction wherein
it is not so qualified or to file therein any general consent to service of
process;
(v) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, beginning with the
first fiscal quarter beginning after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder with respect to the offer
and sale of the Registrable Securities;
(vi) use its reasonable best efforts to list such
Registrable Securities on any securities exchange (or obtain approval for
trading on the Nasdaq Stock Market) on which any securities of the same class
of the Company are then listed (or approved for listing), if the listing (or
approval for listing) of such Registrable Securities is then permitted under
the rules of such exchange (or the Nasdaq Stock Market);
(vii) if so requested by the Purchaser in
connection with an underwritten offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter or underwriters, including, without limitation, to
enter into customary representations, warranties, covenants and indemnification
and contribution provisions and deliver an opinion of counsel to the Company
and a "comfort letter" from the independent public accountants to the Company
in the usual and customary form respecting such underwritten offering;
(viii) notify the Purchaser promptly (i) when a
prospectus or any prospectus supplement or post-effective amendment with
respect to the registration of such Registrable Securities, or any report
incorporated by reference therein, has been filed, (ii) of any request by the
SEC for an amendment or supplement to a registration statement or the
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prospectus used in connection therewith with respect to the Registrable
Securities, or any report incorporated by reference therein, (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of a
registration statement relating to the Registrable Securities or the initiation
of any proceedings for that purpose, and (iv) of the receipt by the Company of
any notification with respect to the suspension of the qualification of any of
the Registrable Securities covered by such registration statement for sale in
any jurisdiction or the initiation or threatening of any proceeding for that
purpose;
(ix) in the event of the issuance of a stop order
suspending the effectiveness of a registration statement with respect to the
Registrable Securities or the suspension of the qualification of any of the
Registrable Securities covered by such registration statement for sale in any
jurisdiction, use its reasonable best efforts to obtain the withdrawal of such
stop order or the lifting of such suspension at the earliest possible moment;
and
(x) notify the Purchaser, at any time when a
prospectus relating to the Registrable Securities covered by such registration
statement is required to be delivered under the Securities Act, of the
happening of any event of which it has knowledge as a result of which the
prospectus included in such registration statement, as then in effect, contains
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing and promptly prepare
and furnish to the Purchaser (and the underwriters, if any) a reasonable number
of copies of a supplement to or an amendment of the prospectus as may be
necessary so that, as thereafter delivered to the purchasers of the Registrable
Securities, the prospectus shall 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 in the light of the
circumstances then existing.
(c) Incidental Registration Rights.
(i) If the Company proposes to register any of
its securities under the Securities Act (other than on Form X-0, Xxxx X-0 or
any successor forms thereto), whether in connection with a primary or secondary
offering (a "PROPOSED OFFERING"), the Company shall give written notice to the
Purchaser at least 30 days prior to the initial filing of the registration
statement with the SEC pertaining to such Proposed Offering informing the
Purchaser of its intent to file such registration statement and of the
Purchaser's rights under this Section 6(c). Upon the written request of the
Purchaser made within 15 days after any such notice is received by the
Purchaser (which request shall specify the Registrable Securities intended to
be disposed of by the Purchaser), the Company shall use its reasonable best
efforts to effect the registration (an "INCIDENTAL REGISTRATION") under the
Securities Act of all the Registrable Securities which the Company has been so
requested to register by the Purchaser. The registration rights granted
pursuant to this Section 6(c) shall be in addition to the registration rights
granted pursuant to the other provisions of this Agreement. The Company
further agrees, if necessary, to supplement or amend the Incidental
Registration statement, if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Incidental
Registration statement or by the Securities Act or by any other
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rules and regulations thereunder for registration. The Purchaser shall be
permitted to withdraw all of the Registrable Securities from an Incidental
Registration statement at any time prior to the effective date of the
Incidental Registration statement; provided, however, that any withdrawal shall
be irrevocable with respect to such Incidental Registration statement. Any
request by the Purchaser to include Registrable Securities pursuant to this
Section 6(c) shall not be deemed a Demand Registration.
(ii) If the managing underwriter or underwriters
of a Proposed Offering delivers a written opinion to the Purchaser that the
success of the Proposed Offering would be materially and adversely affected by
inclusion of any or all of the Registrable Securities requested to be included,
then the amount of Registrable Securities included in the Incidental
Registration may in the Company's discretion be reduced to the extent
(including reduction to zero) recommended by such underwriter or underwriters.
Notwithstanding the foregoing, however, if securities are being offered for
the account of persons other than the Company or the Purchaser, then, with
respect to the Registrable Securities to be offered for the account of the
Purchaser, the proportion by which the amount of such Registrable Securities
intended to be offered by the Purchaser is reduced shall not exceed the
proportion by which the amount of such class of securities intended to be
offered by such other persons is reduced.
(iii) If at any time after giving written notice of
its intent to register any securities and prior to the effective date of the
Incidental Registration statement filed in connection with such registration,
the Company shall determine for any reason not to register any such securities
or to delay registration of all such securities, the Company may, at its
election, give written notice of such determination to the Purchaser and,
thereupon, (A) in the case of a determination not to register, the Company
shall be relieved of its obligation to register any Registrable Securities in
connection with such registration, and (B) in the case of a determination to
delay registering, the Company shall be permitted to delay registering any
Registrable Securities for the same period as the delay in registering such
other securities.
(d) Expenses.
(i) All expenses incurred in a Demand
Registration or an Incidental Registration (or any attempted Demand
Registration or Incidental Registration which does not become effective) of
Registrable Securities under this Agreement shall be paid by the Company,
except as set forth in Section 6(d)(iii).
(ii) The expenses to be paid in connection with a
registration under Sections 6(a), 6(b) and 6(c) shall include all out-of-pocket
expenses, including, without limitation, printing and photocopying expenses,
fees and disbursements of counsel for the Company, accountants' fees and
expenses, including expenses of any special audits to which the Company shall
agree or which shall be necessary to comply with governmental requirements in
connection with any such registration, as applicable, all registration and
filing fees under federal and state securities laws, fees and expenses
(including fees and disbursements of counsel for the Company) of complying with
the securities or blue sky laws
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of any jurisdictions and listing or qualification fees or other expenses
(including fees and disbursements of counsel for the Company) of complying with
the listing, qualification or other rules of any national securities exchange
or any other self regulatory organization.
(iii) Notwithstanding the foregoing provisions of
this Section 6(d), the Purchaser shall pay fees and disbursements of its own
counsel and all underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of securities by the Purchaser
pursuant to a Demand Registration or an Incidental Registration.
(e) Indemnification. If any Registrable Securities are
included in a registration statement pursuant to a request under this Section
6:
(i) Indemnity by Company. Without limitation of
any other indemnity provided to the Purchaser, to the extent permitted by law,
the Company shall indemnify and hold harmless the Purchaser, the officers and
directors of the Purchaser, each underwriter (as defined in the Securities Act)
for the Purchaser, and each person, if any, who controls (within the meaning of
the Securities Act or Exchange Act) the Purchaser or any such underwriter,
against any losses, claims, damages, liabilities and expenses (joint or
several) to which they may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, liabilities and expenses (or actions in respect thereof) arise out of
or are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (A) any untrue statement or alleged untrue
statement of a material fact contained in such registration statements
(including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto); (B) the omission or alleged omission to
state therein 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; or (C) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state blue sky or
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state blue sky or securities law, and the company shall
reimburse the Purchaser, each officer or director of the Purchaser, each such
underwriter for the Purchaser, and each person, if any, who controls (within
the meaning of the Securities Act or Exchange Act) the Purchaser or any such
underwriter for any expenses incurred by them (including reasonable fees and
disbursements of counsel) in connection with investigating or defending any
such loss, claim, damage, liability, expense or action; provided, however, that
the Company shall not be liable to the Purchaser, the officers or directors of
the Purchaser, any such underwriter for the Purchaser, or any person who
controls (within the meaning of the Securities Act or Exchange Act) the
Purchaser or any such underwriter, in any such case for any such loss, claim,
damage, liability, expense or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by the Purchaser, any officer or director of the Purchaser, any
underwriter for the Purchaser or any controlling person of the Purchaser or any
such underwriter.
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(ii) Indemnity by the Purchaser. In connection
with any registration statement, as applicable, in which the Purchaser is
participating, the Purchaser shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with any
such registration statement or prospectus, and, to the extent permitted by law,
shall indemnify the Company, its directors and officers and each person, if
any, who controls the Company (within the meaning of the Securities Act or
Exchange Act) against any losses, claims, damages, liabilities and expenses
resulting from any Violation, but only to the extent that such Violation is
contained in or results from any information so furnished in writing by the
Purchaser.
(iii) Notice; Right to Defend. Promptly after
receipt by an indemnified party under this Section 6(e) of notice of the
commencement of any action (including any governmental action), such
indemnified party shall, if a claim in respect thereof is to be made against
any indemnifying party under this Section 6(e), deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, if the indemnifying party agrees
in writing that it will be responsible for any costs, expenses, judgments,
damages and losses incurred by the indemnified party with respect to such
claim, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the indemnifying party,
if the indemnified party reasonably believes that representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 6(e) only if and to the extent that such failure is prejudicial to its
ability to defend such action, and the omission so to deliver written notice to
the indemnifying party shall not relieve it of any liability that it may have
to any indemnified party other than under this Section 6(e).
(iv) Contribution. If the indemnification
provided for in this Section 6(e) is held by a court of competent jurisdiction
to be unavailable to an indemnified party with respect to any loss, liability,
claim, damage or expense referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other hand in connection with the statements or
omissions or Violations which resulted in such loss, liability, claim, damage
or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the indemnifying party
or by the indemnified party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission.
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Notwithstanding the foregoing, the amount the Purchaser shall be obligated to
contribute pursuant to this Section 6(e)(iv) shall be limited to an amount
equal to the proceeds to the Purchaser of the Common Stock sold pursuant to the
registration statement, which gives rise to such obligation to contribute (less
the aggregate amount of any damages which the Purchaser has otherwise been
required to pay in respect of such loss, claim, damage, liability or action or
any substantially similar loss, claim, damage, liability or action arising from
the sale of such Common Stock).
(v) Survival of Indemnity. The indemnification
provided by this Section 6(e) shall be a continuing right to indemnification
and shall survive the registration and sale of any securities by any person
entitled to indemnification hereunder and the expiration or termination of this
Agreement.
(f) Rule 144. In order to permit the Purchaser to sell
the Common Stock it holds, if it so desires, from time to time pursuant to Rule
144 promulgated by the SEC or any successor to such rule or any other rule or
regulation of the SEC that may at any time permit the Purchaser to sell its
Common Stock to the public without registration (the "RESALE RULES"), the
Company shall:
(i) comply with all rules and regulations of the SEC applicable in
connection with use of the Resale Rules;
(ii) make and keep adequate and current public
information available (within the meaning of the Resale Rules) at all times;
(iii) file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act;
(iv) furnish to the Purchaser so long as it owns
any Common Stock, forthwith upon request, (A) a written statement by the
Company that it has complied with the reporting requirements of the Resale
Rules, the Securities Act and the Exchange Act, (B) a copy of the most recent
annual or quarterly report of the Company and any other reports and documents
so filed by the Company, and (C) such other information as may be reasonably
requested in availing the Purchaser of any rule or regulation of the SEC which
permits the selling of any such Common Stock without registration; and
(v) take any action (including cooperating with
the Purchaser to cause the transfer agent to remove any restrictive legend on
certificates evidencing shares of Common Stock) as shall be reasonably
requested by the Purchaser or which shall otherwise facilitate the sale of
Common Stock from time to time by the Purchaser pursuant to the Resale Rules.
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7. TERMINATION.
(a) Termination Events. The Purchaser or the Company may
terminate this Agreement without liability:
(i) to the extent that performance thereof is
prohibited, enjoined or otherwise materially restrained by any final,
non-appealable judgment, ruling, order or decree of any Governmental Authority,
provided that the party seeking to terminate its obligations hereunder pursuant
to this Section 7(a)(i) shall have used its best efforts to avoid and remove
such prohibition, injunction, or restraint; or
(ii) if the terminating party shall not have
committed a material uncured breach of any of its representations, warranties
or covenants hereunder and the other party shall have breached any of its
representations, warranties or covenants hereunder in any material respect,
which breach in the case of a covenant is not cured within thirty (30) days
after the breaching party has received notice of the terminating party's intent
to terminate this Agreement pursuant to this Section 7(a)(ii).
(b) Effect of Termination. In the event of termination of
this Agreement pursuant to Section 7(a), neither the Purchaser nor the Company
shall have any obligation to perform hereunder from and after the date of such
termination, except that (i) Sections 8(a) and 8(b) shall survive such
termination and continue in effect, (ii) Section 5 shall survive such
termination and continue in effect if the termination is for any reason other
than a material breach by the Company, and (iii) no termination hereof shall
relieve the Purchaser or the Company from liability for any breach of this
Agreement.
8. MISCELLANEOUS PROVISIONS.
(a) Survival of Representations and Warranties. Regardless
of any party's investigations prior to the date hereof, the representations and
warranties contained herein shall survive the execution and delivery hereof and
the purchase and sale of the Shares and shall terminate and expire on the first
anniversary of the date of this Agreement, unless on or before such first
anniversary, either party has notified the other party in writing of a claim
with respect to such representation or warranty in which case such
representation or warranty shall survive until termination or resolution of
such claim, and provided that notwithstanding the foregoing, the
representations and warranties of the Purchaser set forth in Section 4(g) shall
be deemed to be made by the Purchaser at the time of and in connection with
each acquisition of Shares hereunder.
(b) Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by and construed under and enforced in accordance with the
laws of the State of California without regard to its conflicts-of-laws
principles.
(c) Expenses. Except as set forth in Section 6(d), each of
the parties shall pay its own expenses incurred in connection with the
negotiation and preparation of this Agreement and the License Agreement, the
performance of its covenants herein, and the effectuation of
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the transactions contemplated hereby including, without limitation, all fees
and disbursements of its respective legal counsel, advisors, and accountants.
Each party to this Agreement shall indemnify and hold harmless the other
against any claim for fees or commissions of brokers, finders, agents, or
bankers retained or purportedly retained by the indemnifying party in
connection with the transactions contemplated by this Agreement and the License
Agreement.
(d) Notices. In case of any event or circumstance giving
rise to an obligation of the Purchaser or the Company to provide notice
hereunder, such notice shall be delivered within the time specifically set
forth herein or therein, as the case may be, or, if no such time is specified,
then as promptly as practicable after becoming aware of such event or
circumstance. Any notice required or permitted to be given under this
Agreement shall be written, and may be given by personal delivery, by cable,
telecopy, telex or telegram (with a confirmation copy mailed as follows), by a
reputable commercial delivery service, or by registered or certified mail,
first-class postage prepaid, return receipt requested. Notice shall be deemed
given upon actual receipt. Mailed notices shall be addressed as follows, but
each party may change address by written notice in accordance with this
paragraph.
To the Company: La Jolla Pharmaceutical Company
0000 Xxxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0 Xxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
To the Purchaser: Xxxxxx Laboratories
Hospital Products Division
Attn: Xxxxxxxxx
Xxxx. 0000, Xxxx. XX00
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
and
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Xxxxxx Laboratories
Xxxxxx International
Attn: President
Dept. 06WP, Bldg. AP30
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxx Laboratories
General Xxxxxxx
Xxxx. 000, Xxxx XX0X
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
(e) Waiver. Each party hereto may in its sole discretion (i)
extend the time for the performance of any of the obligations or other acts of
the other party hereunder, (ii) waive any inaccuracies in the representations
and warranties of the other party contained herein or in any document,
certificate or writing delivered pursuant hereto or thereto or (iii) waive
compliance by the other party with any of the agreements contained herein. No
term or provision hereof shall be deemed waived and no breach hereof or thereof
excused unless such waiver or consent shall be in writing and signed by the
party claimed to have waived or consented. No waiver hereunder shall apply or
be construed to apply beyond its expressly stated terms. No failure to
exercise and no delay in exercising any right, remedy, power or privilege
hereunder shall operate as a waiver thereof, and no single or partial exercise
of any right, remedy, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. No failure to insist upon strict performance of any term or
provision of this Agreement, or to exercise any right hereunder, shall be
construed as a waiver or as a relinquishment of such term, provision, or right.
(f) Entire Agreement. This Agreement and the License
Agreement constitute the entire agreement between the Purchaser and the Company
with respect to the subject matter hereof and thereof and the transactions
contemplated hereby and thereby and supersede all prior or contemporaneous,
written or oral agreements or understandings with respect thereto. The parties
acknowledge that their agreements hereunder were not procured through
representations or agreements not set forth herein or therein.
(g) Amendment. This Agreement may be amended only to the
extent permissible under applicable law and only by a written instrument
executed and delivered by a duly authorized officer of each of the parties
hereto.
(h) Severability. The provisions set forth in this Agreement
are severable. If any provision of this Agreement is held invalid or
unenforceable in any jurisdiction, the
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remainder of this Agreement and the application of such provision to other
persons or circumstances, shall not be affected thereby, and shall remain valid
and enforceable in such jurisdiction, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(i) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors and
assigns, provided that neither party may assign this Agreement without the
written consent of the other party; provided, however, that (i) either party
hereto may assign this Agreement to any person or entity with or into which
such party may merge or consolidate or to whom all or substantially all of its
assets or businesses may be sold and (ii) the Purchaser may assign its rights
under this Agreement to any subsidiary of the Purchaser if the Purchaser
remains responsible for the subsidiary's performance and liable for its
breaches of this Agreement.
(j) Fair Construction. This Agreement shall be deemed the
joint work product of the parties hereto without regard to the identity of the
draftsperson, and any rule of construction that a document shall be interpreted
or construed against the drafting party shall not be applicable.
(k) Headings; References. Headings used in this Agreement
are inserted as a matter of convenience and for reference, do not constitute a
part of this Agreement for any other purpose, and shall not affect the
interpretation or enforcement hereof. References herein to Sections and
Schedules are, unless otherwise designated, references to the specified Section
or Schedule hereof or hereto.
(l) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
LA JOLLA PHARMACEUTICAL COMPANY XXXXXX LABORATORIES
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxxx, Xx.
--------------------- -----------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxxxxxx, Xx.
Title: President & Chief Executive Officer Title: Senior Vice-President,
International Operations
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