1
EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
2
EXHIBIT 10.2
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement (the "Agreement") dated as of February 19,
1999 by and between NeoPharm. Inc. (the "Company"), a Delaware corporation, and
Pharmacia & Upjohn, Inc., a Delaware corporation (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Purchaser and the Company have entered into that certain
License Agreement of even date herewith (the "License Agreement") providing for
the Purchaser's acquisition of shares of the Company's common stock par value
$0.0002145 per share (the "Common Stock"); and
WHEREAS, the sale of the shares of Common Stock hereunder is being made
without registration of the Shares under the Securities Act of 1933, as amended
(the "Securities Act"), and is being made only to Purchaser as an "accredited
investor" (as such term is defined in Rule 501 of Regulation D promulgated by
the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act); and
WHEREAS, subject to the terms and conditions of this Agreement, the
Purchaser desires to purchase from the Company the Shares (as defined below),
and the Company desires to sell such Shares to the Purchaser;
NOW, THEREFORE, in consideration of the premises, representations and
warranties, and the mutual covenants herein contained, the Company and Purchaser
hereby agree as follows:
1. Purchase and Sale of Shares. Subject to the terms and conditions set
forth herein, the Purchaser hereby irrevocably subscribes for and agrees to
purchase, and the Company hereby agrees to sell to Purchaser, that number of
shares of Common Stock (the "Shares") as shall equal $8,000,000 divided by 110%
of the average closing price per share of the Common Stock as reported on the
American Stock Exchange during the sixty (60) day period preceding the Closing
as herein defined.
2. The Closing: Payment. Provided that the License Agreement is then in
full force and effect, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the Company's offices commencing
at 10:00 a.m., local time on a date (as agreed to by the Company and Purchaser)
that is within ten (10) days after receipt by NeoPharm of notification from the
U.S. Food and Drug Administration that the U.S. IND filings for LED and LEP (as
those terms are defined in the License Agreement) have been effectively
transferred to Purchaser and activated.
At the Closing, the Company shall deliver to Purchaser:
(a) one or more stock certificates representing the Shares;
3
(b) a Registration Rights Agreement, in the form annexed hereto as
Exhibit A, duly executed by the Company; and
(c) an opinion of the Company's counsel to the effect that the
transactions contemplated in this Agreement are exempt from registration under
the Securities Act and the rules and regulations promulgated thereunder.
At or prior to the Closing, the Purchaser shall deliver to the Company
a certified or bank cashier's check or wire transfer to an account designated in
writing by the Company, in the amount of $8,000,000.
3. Representations by the Company. The Company represents and warrants
to the Purchaser that:
(a) The Company has been duly organized and is validly existing and in
good standing as a corporation under the laws of state of Delaware, with power
and authority (corporate and other) to own, lease and operate its properties and
to conduct its business as currently being conducted by the Company and is duly
qualified to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required, except where the lack of such
qualification would not have a material adverse effect on the business,
financial condition or results of operations of the Company (a "Material Adverse
Effect");
(b) The Company has all requisite corporate power and authority to
execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action of the Company. This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms;
(c) The execution and delivery by the Company of this Agreement, the
consummation by the Company of the transactions contemplated hereby, and
compliance by the Company with the terms and provisions hereof will not result:
i. in a violation of any provision of the certificate of
incorporation, bylaws or any other organizational documents of
the Company;
ii. in any violation of any statute, code, ordinance, rule,
regulation, judgment, ruling, order, writ, decree, injunction
or other restriction of any government, governmental agency or
court to which the Company, its subsidiaries or any of its
properties or assets, is subject, or
iii. conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify or cancel, or require
any notice under any agreement, contract, lease, license.
instrument or other arrangement to which the Company or any of
its subsidiaries is a party or by which the Company or any of
its subsidiaries is
2
4
bound or to which any of its assets is subject, or result in
the creation of any mortgage, pledge, lien, encumbrance,
charge or other security interest (each a "Security Interest")
upon any of the assets of the Company, except where any such
violation, conflict, breach. default, acceleration,
termination, modification, cancellation. failure to give
notice or creation of a Security Interest could not have and
are not reasonably likely to have a Material Adverse Effect
(d) The Company is not required to obtain any consent, approval. order,
authorization, registration, declaration from, or to make any filing with, any
court, agency, or governmental authority or instrumentality or any other third
party in connection with (i) the Company's execution and delivery of this
Agreement or any document, agreement or instrument to be executed pursuant to
this Agreement or (ii) the consummation by the Company of the transactions
contemplated hereby;
(e) The business of the Company is being conducted in compliance with
all laws, ordinances and regulations of any government entity applicable to the
Company, except for violations, if any, which alone or in the aggregate have not
had and are not reasonably likely to have a Material Adverse Effect; all
governmental approvals, permits and licenses required by the Company in
connection with the conduct of its business have been obtained and are in full
force and effect and are being complied with, except for such as alone or in the
aggregate have not had or are not reasonably likely to have a Material Adverse
Effect;
(f) Upon payment for the Shares as provided herein, the Purchaser will
receive good and valid title to the Shares purchased hereunder which shall be
fully paid and nonassessable shares of the Company, free and clear of all liens,
claims, restrictions and encumbrances;
(g) The Company is a reporting company under the Securities Exchange
Act of 1934, as amended (the "1934 Act") and is current in all forms, reports
and documents required to be filed pursuant to the 0000 Xxx. All such filings at
the time they were filed with the Securities and Exchange Commission complied in
all material respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder and, as of the Closing Date, the most
recent Form 10-K and Annual Report to Shareholders of the Company, when read
together with filings made subsequent thereto, including the Form 10-Q for the
quarter ending September 30, 1998 and the Report on Form 8 filed to report the
execution of the License Agreement, do 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. Since the respective
dates as of which information is given in such filings, (i) there has been no
material adverse change in the condition, financial or otherwise, of the
Company, or in the business, operations, or prospects of the Company except for
any changes resulting from entering into the Licensing Agreement, whether or not
arising in the ordinary course of business, (ii) there have been no transactions
entered into by the Company or any of its subsidiaries which are material to the
Company and its subsidiaries considered as a whole, other than those in the
ordinary course of business and those contemplated by this Agreement, and (iii)
there has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
3
5
(h) The authorized, issued and outstanding capital stock of the Company
as of January 31, 1999 is set forth in Schedule A. All of the issued and
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and non-assessable. As of January 31, 1999, there are no
outstanding options, warrants or other rights of any kind to acquire any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for, or which otherwise confer on the holder thereof any right
to acquire, any such additional shares, nor is any Company committed to issue
any such option, warrant, right or security, except as set forth on Schedule A;
(i) The Company has filed with the appropriate governmental agencies
(whether national, regional or local) all material tax returns and tax reports
(the "Returns") required to be filed by it on or before the date hereof with
respect to any period ending on or before the date hereof. As of the time of
filing, the Returns correctly reflected or will correctly reflect the tax
liability of the Company for the relevant period and any other information
required to be shown thereon. The Company has timely paid or made provision for
all taxes that have been shown as due and payable on its Returns. The Company
has made or will make provision for any tax payable for any period ending on or
before the date hereof that has not been paid on or before the date hereof. No
deficiency for any tax has been proposed, asserted or assessed against the
Company, and no delinquencies in the payment of any tax exist for which the
Company could be liable that have not been reserved for in the Company's
financial statements;
(j) Based in part on the representations and warranties made by the
Purchaser herein, the sale of the Shares by the Company to the Purchaser is
exempt from the registration provisions of the Securities Act.
4. Representations by the Purchaser. The Purchaser represents and
warrants to the
(a) The Purchaser is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, with corporate
power and authority to perform its obligations under this Agreement;
(b) This Agreement has been duly authorized, executed and delivered by
Purchaser and constitutes a valid and binding agreement of the Purchaser
enforceable in accordance with its terms;
(c) The Purchaser is not required to obtain any consent, approval,
order, authorization, registration, declaration from, or to make any filing
with, any court, agency, or governmental authority or instrumentality or any
other third party in connection with (i) Purchaser's execution and delivery of
this Agreement or any document, agreement or instrument to be executed pursuant
to this Agreement or (ii) the consummation by Purchaser of the transactions
contemplated hereby;
(d) The Purchaser understands that the Shares have not been registered
under the Securities Act and that the sale provided for in this Agreement is
being made pursuant to an exemption provided in the Securities Act or the rules
and regulations promulgated thereunder and
4
6
that the reliance of the Company on such exemption is predicated in part on the
Purchaser's representations set forth herein, and that none of the Shares may be
offered, sold, pledged or otherwise transferred except in compliance with the
registration requirements of the Securities Act and other applicable securities
laws, pursuant to an exemption therefrom or in a transaction not subject thereto
and, in each case, in compliance with the conditions for transfer set forth in
paragraph (g)below;
(e) The Purchaser is acquiring the Shares for the Purchaser's own
account, for investment and not with a view to, or for sale in connection with,
any distribution thereof in violation of the Securities Act or other applicable
securities laws, subject to any requirement of law that the disposition of its
property be at all times within its control, and any sale, transfer or other
disposition of the Shares by the Purchaser will be made in compliance with all
applicable provisions of the Securities Act and the rules and regulations
promulgated thereunder; and it agrees and each subsequent holder of Shares by
its acceptance thereof will be deemed to agree, to offer, sell or otherwise
transfer such Shares prior to the date which is two years after the later of the
original issuance date thereof and the last date on which the Company or any
"affiliate" of the Company was the owner of such Shares (or any predecessor
Shares) (the "Resale Restriction Termination Date") only (a) to the Company, (b)
pursuant to registration statement which has been declared effective under the
Securities Act, or (c) pursuant to any other available exemption from the
registration requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the disposition of its property
be at all times within its control and to compliance with any applicable state
securities laws; it being understood further that the Company reserves the right
prior to any offer, sale or other transfer prior to the Resale Restriction
Termination Date pursuant to clause (c) above to require the delivery of an
opinion of counsel, certifications and other information satisfactory to the
Company. Purchaser consents to the placement of the following legend (or a
substantially similar legend) on each certificate representing the Shares:
THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THE
SHARES OF COMMON STOCK EVIDENCED HEREBY NOR ANY INTEREST OR PARTICIPATION
THEREIN MAY BE RE-OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION REQUIREMENTS;
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS CERTIFICATE (OR ANY PREDECESSOR
OF
5
7
THIS CERTIFICATE) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, AND (C)
PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE COMPANY PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
(f) The Purchaser is experienced in evaluating companies such as the
Company, has such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of its investment, and has the
ability to bear the economic risks of such investment for an indefinite period.
The Purchaser further represents that it has conducted its own independent
review and analysis of the business, assets, condition, operation and prospects
of the Company and acknowledges that it has had access during the course of the
transaction and prior to the purchase of the Shares to such information
(including audited financial statements) relating to the Company as it has
desired and that it has had the opportunity to ask questions of and receive
answers from the Company concerning the business, management and financial
affairs of the Company and to obtain additional information (to the extent the
Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify the accuracy of any information furnished
to each Purchaser or to which Purchaser has had access; the Purchaser further
understands that no federal or state agency has passed upon the Shares or made
any finding or determination concerning the fairness or advisability of this
investment;
(g) The Purchaser represents that the Purchaser is not an "affiliate"
(as defined in Rule 144 under the Securities Act) of the Company or acting on
behalf of the Company, and the Purchaser is an "accredited investor" within the
meaning of subparagraph (a) of Rule 501 under the Securities Act;
(h) The Purchaser is not (i) acquiring Shares with "plan assets" of an
employee benefit plan or other plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of
the Internal Revenue Code of 1986 (the "Code") (each a "Plan"), an entity whose
underlying assets include 'plan assets" by reason of any Plan's investment in
the entity, or (ii) is acquiring and holding the Shares in a transaction that is
not otherwise prohibited by either ERISA or the Code.
(i) The Purchaser's true and correct federal tax identification or
social security number, as applicable, is indicated below on the signature page
below.
5. No Additional Representations. In entering into this Agreement, the
Purchaser acknowledges that the Company has not made any representations or
warranties of any kind
6
8
whatsoever, except as expressly provided in Paragraph 3 of this Agreement or in
the License Agreement. The Purchaser acknowledges that it has relied solely upon
its own investigation and analysis in determining to acquire the Shares, and
acknowledges that neither the Company nor any of its directors, officers,
employees, affiliates, agents or representatives makes any representation or
warranty, either express or implied, as to the Company or the accuracy or
completeness of any of the information regarding the Company provided or made
available to the Purchaser or its agents or representatives.
6. Further Assurances. The Company and the Purchaser will promptly
execute and deliver such further instruments and documents and take such further
actions as may be necessary or desirable for the parties to obtain the full
benefits of this Agreement.
7. Survival of Representations.
All representations, warranties and agreements made by the parties to
this Agreement shall survive the consummation of the transactions contemplated
hereby.
8. Brokers.
Neither the Company nor the Purchaser has entered into any agreement to
pay any broker's or finder's fee to any person, with respect to this Agreement
or the transactions contemplated hereby.
9. Miscellaneous.
(a) This Agreement, along with the License Agreement, contains the
entire understanding of the parties with respect to the subject matter hereof
and supersedes any prior understandings, agreements or representations by or
among the Purchaser and the Company, written or oral, to the extent they related
in any way to the subject matter hereof this Agreement or any provision hereof
may only be amended, modified or waived by a written instrument duly executed by
each of the parties hereto.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by the Purchaser (whether by operation
of law or otherwise) without the prior written consent of the Company. Subject
to the preceding sentence, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
(c) The Company agrees to pay any stock transfer taxes which may be
imposed in connection with the transfer of the Shares. All other fees and
expenses incurred by either party in connection with this Agreement will be
borne by such party.
(d) This Agreement shall be governed by the laws of the State of
Illinois, without giving effect to the principles of conflicts of laws thereof.
7
9
(e) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same Agreement.
(f) The headings of Paragraphs in this Agreement are for convenience of
reference only and shall not, nor shall they be construed to, qualify or in any
other respect affect the meaning of the text.
[SIGNATURE PAGE FOLLOWS]
8
10
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement on the date first above written in the City of New York in the State
of New York.
COMPANY: NEOPHARM, INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name:
Title:
Address for Notices:
PURCHASER: PHARMACIA & UPJOHN, INC.
By: /s/ Xxxx Xxxxxx
-----------------------------
Name:
Title:
Address for Notices:
Taxpayer Identification Number: ________________
9
11
SCHEDULE A
CAPITAL STRUCTURE OF COMPANY
Common Stock:
As of January 31, 1999, the Company had 15,000,000 shares of its Common
Stock, $0.0002145 par value, authorized, of which 8,343,779 shares were
issued and outstanding.
Warrants:
As of January 31, 1999, the Company had 837,067 Warrants issued and
outstanding each of which authorizes the holder to acquire two shares
of Common Stock at an exercise price of $9.80 ($4.90/share). In
addition, at the time of the Company's initial public offering Warrants
were issued to the underwriter, National Securities Corporation, which
are currently exercisable for 270,000 shares of Common Stock at a price
of $4.90 per share, and 67,500 Representative's Warrants, which may be
exercised to acquire 135,000 additional shares at a price of $6.86 per
share.
Options:
As of December 31, 1998 the Company had issued options to employees,
officers, directors and consultants for approximately 1,188,824 shares
of Common Stock. At the present time the Company's 1998 Equity
Incentive Plan provides for the reservation of 2,000,000 shares of
Common Stock for issuance in accordance with the terms of that Plan. In
addition, up to 100,000 shares of Common Stock may be granted to
non-employee directors of the Company pursuant to the 1995 Director
Option Plan.
10
12
EXHIBIT A
[FORM OF REGISTRATION RIGHTS AGREEMENT]
11
13
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is entered into this [ ] day of __________, 1999, by and
between NeoPharm, Inc. (the "Company") and Pharmacia & Upjohn, Inc. (the
"Investor") in the common stock, par value $0.0002145 per share of the Company
(the "Common Stock");
WHEREAS, pursuant to a Stock Purchase Agreement by and between the
Company and the Investor dated February 19, 1999 (the "Stock Purchase
Agreement"), the Investor has agreed to purchase, and the Company has agreed to
issue and sell, that number of shares of the Company's Common Stock (the
"Shares") as shall equal $8,000,000 divided by 110% of the average closing price
per share of Common Stock as reported on the American Stock Exchange during the
sixty day period preceding the Closing (as defined in the Stock Purchase
Agreement); and
WHEREAS, the Investor will acquire the Shares for investment, and not
with a view to reselling or distributing any of the Shares, and has no present
intention of reselling or otherwise disposing of any of the Shares, except to
the extent that the Shares are registered under the Securities Act of 1933, as
amended and appropriate state securities laws, or exempt from such laws; and
WHEREAS, as a condition to its willingness to purchase the Shares, the
Investor desires that the Shares be registerable, and the Company is willing to
provide for the registration of the Shares upon the terms and conditions herein
contained.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained, the Investor and the Company hereby agree as follows:
1. Definitions.
As used herein:
(a) The term "Demand Registration" shall have the meaning set forth in
Section 2(a) herein.
(b) The term "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(c) The term "Holder" means the holder or holders of Registrable
Securities.
(d) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(e) The term "Person" shall have the meaning set forth in Section 2(2)
of the Securities Act.
14
(f) The term "Prospectus" shall have the meaning set forth in Section
2(10) of the Securities Act.
(g) The term "Registrable Securities" means all of the Company's Common
Stock which the Investor has acquired pursuant to the Stock Purchase Agreement.
(h) The term "Registration Expenses" shall mean any and all expenses
incident to the performance of or compliance by the Company with this Agreement,
including without limitation: (i) all SEC or National Association of Securities
Dealers, Inc. (the "NASD") registration and filing fees, including, if
applicable, the fees and expenses of any "qualified independent underwriter"
(and its counsel) that is required to be retained by any Holder of Registrable
Securities in accordance with the rules and regulations of the NASD, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws (including reasonable fees and disbursements of one counsel for
any underwriters or Holder in connection with blue sky qualification of any of
the Registrable Securities) and compliance with the rules of the NASD, (iii) all
expenses of any Persons in preparing or assisting in preparing, word processing,
printing and distributing any Registration Statement, any Prospectus and any
amendments or supplements thereto, and in preparing or assisting in preparing,
printing and distributing any underwriting agreements, securities sales
agreements and other documents relating to the performance of and compliance
with this Agreement, (iv) all rating agency fees, (v) the fees and disbursements
of counsel for the Company and of the independent certified public accountants
of the Company, including the expenses of any "cold comfort" letters required by
or incident to such performance and compliance, (vi) the fees and expenses of
any exchange agent or custodian, (vii) all fees and expenses incurred in
connection with the listing, if any, of any of the Registrable Securities on any
securities exchange or exchanges, and (viii) the reasonable fees and expenses of
any special experts retained by the Company in connection with any Registration
Statement.
(i) The term "Registration Statement" shall mean any registration
statement of the Company that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, and all amendments and supplements to any
such Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
(j) The term "Securities Act" means the Securities Act of 1933, as
amended.
(k) The term "SEC" means the Securities and Exchange Commission.
2. Demand Registration.
(a) Subject to subsection (c) below, if at any time the Company shall
receive a written request from the Holders of at least 66.67% of the Registrable
Securities requesting that the Company effect the registration of all of the
Registerable Securities held by such Holders under the Securities Act, the
Company shall use its best efforts to effect such registration as soon as
practicable. The Company shall not be required to effect any registration
pursuant to this Section 2(a) unless such registration can be made on Form S-3
or any similar short-form registration. The
2
15
registration requested pursuant to this Section 2(a) is referred to herein as
the "Demand Registration". The request for the Demand Registration shall specify
the approximate number of Registrable Securities requested to be registered and
the anticipated per share price range for such offering. Within twenty (20) days
after receipt of the request, the Company will give written notice of such
requested registration to all other Holders of Registrable Securities, if any,
and, subject to Section 2(b) below, will include in the Demand Registration all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within 20 days after the giving of the Company's
notice.
(b) Priority on Demand Registration. Subject to the provisions of
Paragraph 5, the Company may include in the Demand Registration other securities
which the Company has been requested or otherwise desires to register on behalf
of itself or others, but which are not Registrable Securities; provided,
however, that no securities other than the Registrable Securities shall be
included in such Demand Registration if the Demand Registration is an
underwritten registration and the managing underwriter advises the Company that
the inclusion of securities other than the Registerable Securities would
adversely affect such Demand Registration unless a majority of the Holders who
had requested the Demand Registration shall have consented in writing to the
inclusion of such other securities.
(c) Restrictions on Demand Registration. The Company shall not be
obligated to effect the Demand Registration within 120 days after the effective
date of a previous registration by the Company of any shares of its Common
Stock, other than shares registered pursuant to Form S-8 or Form S-4 in which
the Holders of Registrable Securities were given rights pursuant to Section 3.
(d) Selection of Underwriters. The Holders of a majority of the
Registrable Securities included in the Demand Registration shall have the right
to select the investment banker(s) and manager(s) to administer the offering,
subject to the Company's approval which shall not be unreasonably withheld.
3. Company Registration.
If at any time or from time to time, the Company shall determine to
register any of its equity securities, either for its own account or the account
of a security holder or holder (including, without limitation pursuant to any
public offering or a demand for registration of any shareholder of the Company)
under the Securities Act other than on Form S-8 or Form S-4, the Company will:
(a) promptly give to the Holder written notice thereof (which shall include a
list of the jurisdictions in which the Company intends to attempt to qualify
such securities under the applicable blue sky or other state securities laws);
and (b) include in such registration (and any related qualification under blue
sky laws or other compliance) and in any underwriting involved therein, all the
Registrable Securities specified in a written request made within thirty days
after receipt of such written notice from the Company by the Holder; except that
if, in connection with any offering involving an underwriting of Common Stock to
be issued by the Company, the managing underwriter shall impose a limitation on
the number of shares of Common Stock which may be included in the Registration
Statement because, in its judgment, such limitation is necessary to effect an
orderly public distribution, then the Company shall be obligated to include in
such Registration Statement
3
16
only such limited portion (or none, if so required by the managing underwriter)
of the Registrable Securities with respect to which such Holder has requested
inclusion hereunder.
4. Effectiveness.
A Registration Statement pursuant to which any Registrable Securities
are being offered will not be deemed to have become effective unless it has been
declared effective by the SEC; provided, however, that if, after it has been
declared effective, the offering of the Registrable Securities pursuant to such
registration statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
registration statement will be deemed not to have been effective during the
period of such interference, until the offering of Registrable Securities
pursuant to such registration statement may legally resume. The Company will be
deemed not to have used best efforts to cause the registration statement to
become, or to remain, effective during the requisite period if it voluntarily
takes any action that would result in any such registration statement not being
declared effective or that would result in the Holder not being able to offer
and sell the Registrable Securities during that period unless such action is
required by applicable laws and regulations or currently prevailing
interpretations of the staff of the SEC. The Company shall use best efforts to
maintain the effectiveness for up to one hundred twenty (120) days (or such
shorter period of time as the underwriters need to complete the distribution of
the registered offering) of any Registration Statement pursuant to which any of
the Registrable Securities are being offered, and from time to time will amend
or supplement such Registration Statement and the Prospectus contained therein
to the extent necessary to comply with the Securities Act and any applicable
state securities laws or regulations. The Company shall also provide the Holder
with as many copies of the Prospectus contained in any such Registration
Statement as the Holder may reasonably request.
5. Expenses of Registration.
All Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to this Agreement shall be borne by the
Company. Except as provided herein, the Holder shall pay all fees and expenses
of its legal counsel, underwriters' fees, discounts or com missions or transfer
taxes, if any, relating to the sale or disposition of the Holder's Registrable
Securities.
6. Registration Procedures.
In the case of each registration, qualification, or compliance effected
by the Company pursuant to this Agreement, the Company will keep the Holder
advised in writing as to the initiation of each registration, qualification and
compliance and as to the completion thereof. At its expense, the Company will:
(a) Prepare and file with the SEC a Registration Statement with respect to such
Registrable Securities as described in Sections 2 or Section 3 and use its best
efforts to cause such Registration Statement to become effective and to remain
effective in accordance with Section 4 (provided that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
the
4
17
Company will furnish to the counsel selected by the Holder copies of all such
documents proposed to be filed, which documents will be subject to the review of
such counsel);
(b) 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 and current for a period
of not less than one hundred twenty (120) days and comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such Registration Statement during such period in accordance with the intended
methods of disposition by the sellers thereof as set forth in such Registration
Statement;
(c) (i) Furnish to the Holder, and to each underwriter, if any, without charge,
such number of copies of such Registration Statement, each amendment and
supplement thereto, the Prospectus included in such Registration Statement
(including each preliminary Prospectus), and such other documents as the Holder
or underwriters may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by the Holder; and (ii) consent to the use of
the Prospectus or any amendment or supplement thereto by the Holder of
Registrable Securities included in the Registration Statement in connection with
the offering and sale of the Registrable Securities covered by the Prospectus or
any amendment or supplement thereto;
(d) Use its best efforts to register or qualify such Registrable Securities
under all applicable securities or blue sky laws of such jurisdictions of the
United States by the time the applicable Registration Statement is declared
effective by the SEC as the Holder and any underwriters reason ably request in
writing and do any other related acts which may be reasonably necessary or
advisable to enable the Holder and underwriters to consummate the disposition in
such jurisdictions of the Registrable Securities owned by the Investor;
provided, however, that the Company shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 6(d), (ii) file
any general consent to service of process in any jurisdiction where it would not
otherwise be subject to such service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not then so subject;
(e) Notify the Holder, its counsel, and the managing underwriters, if any,
promptly, and promptly confirm such notice in writing, (i) at any time when a
Prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which, or the fact that, the
Prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of the Investor, the Company will prepare a
supplement or amendment to such Prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such Prospectus will not contain
any untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading; (ii) when a Registration Statement
has become effective and when any post-effective amendments and supplements
thereto become effective, (iii) of any request by the SEC or any state
securities authority for amendments and supplements to a Registration Statement
or Prospectus or for additional information after the Registration Statement has
become effective, (iv) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a Registration
Statement or the qualification of the Registrable Securities or the initiation
of any proceedings for that purpose, (v) if, between the effective date of
5
18
a Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company contained in
any purchase agreement, securities sales agreement or other similar agreement,
if any, cease to be true and correct in all material respects, and (vi) the
Company's reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate;
(f) If applicable, use its best efforts to cause all such Registrable Securities
to be listed or quoted on each securities exchange or interdealer quotation
system on which similar securities issued by the Company are then listed or
quoted;
(g) Provide a transfer agent for all such Registrable Securities not later than
the effective date of such Registration Statement;
(h) Enter into such customary agreements (including underwriting agreements on
customary terms) and take all such other actions as the Investor or the
underwriters, if any, reasonably requests in order to expedite or facilitate the
disposition of such Registrable Securities;
(i) Obtain for delivery to the Company and the managing underwriters, if any,
with copies to the Holder of the Registrable Securities being registered, a
comfort letter from the Company's independent public accountants in customary
form and covering such matters of the type customarily covered by comfort
letters as the Holder shall reasonably request, dated the effective date of the
Registration Statement and brought down to the closing;
(j) If necessary, obtain a CUSIP number for the Registrable Securities not later
than the effective date of the Registration Statement; and
(k) Make available for inspection by the Holder, any underwriter participating
in any disposition pursuant to such Registration Statement and any attorney,
accountant or any other agent retained by the Investor or any such underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to supply
all information reasonably requested by the Holder, any such underwriter,
attorney, accountant or agent in connection with such Registration Statement.
(l) Cooperate with the Holder to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not bearing
any restrictive legends and registered in such names as the Holder or the
underwriters may reasonably request at least two Business Days prior to the
closing of any sale of Registrable Securities pursuant to such Registration
Statement;
(m) Cooperate with the Holder to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not bearing
any restrictive legends and registered in such names as the Holder or the
underwriters may reasonably request at least two Business Days prior to the
closing of any sale of Registrable Securities pursuant to such Registration
Statement;
(n) upon the occurrence of any circumstance contemplated by Section 6(e)(iii),
6(e)(iv), or 6(e)(v) hereof, use best efforts to prepare a supplement or
post-effective amendment to such
6
19
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and to notify the Holder to suspend
use of the Prospectus as promptly as practicable after the occurrence of such an
event, and the Holder hereby agrees to suspend use of the Prospectus until the
Company has amended or supplemented the Prospectus to correct such misstatement
or omission;
(n) cooperate with each seller of Registrable Securities covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD; and
(o) use best efforts to take all other steps necessary to effect the
registration of the Registrable Securities covered by a Registration Statement
contemplated hereby.
7. Indemnification and Contribution.
(a) In connection with any Registration Statement, the Company shall
indemnify and hold harmless the Holder and each underwriter who participates in
an offering of the Registrable Securities, each Person, if any, who controls any
of such parties within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and each of their respective directors, officers,
employees and agents, as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred, arising
out of any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment thereto)
covering Registrable Securities, including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto) or the omission
or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, joint or several, as incurred, to the
extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the prior
written consent of the Company; and
(iii) from and against any and all expenses whatsoever, as
incurred (including reasonable fees and disbursements of counsel chosen
by Holder or any underwriter (except to the extent otherwise expressly
provided in Section 7(c) hereof)), incurred in investigating,
7
20
preparing or defending against any litigation, or any
investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) of this Section 7(a);
provided, however, that (i) this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished in writing to the
Company by the Holder, or any underwriter with respect to the Holder, or any
underwriter, as the case may be, expressly for use in a Registration Statement
(or any amendment thereto) or any Prospectus (or any amendment or supplement
thereto) and (ii) the Company shall not be liable to the Holder, any underwriter
or controlling Person, with respect to any untrue statement or alleged untrue
statement or omission or alleged omission in any preliminary Prospectus to the
extent that any such loss, liability, claim, damage or expense of the Holder,
any underwriter or controlling Person results from the fact that the Holder or
any underwriter, sold Shares to a Person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the final
Prospectus as then amended or supplemented if the Company had previously
furnished copies thereof to the Holder or any underwriter or controlling Person
and the loss, liability, claim, damage or expense of the Holder or underwriter,
or controlling Person results from an untrue statement or omission of a material
fact contained in the preliminary Prospectus which was corrected in the final
Prospectus. Any amounts advanced by the Company to an indemnified party pursuant
to this Section 6 as a result of such losses shall be returned to the Company if
it shall be finally determined by such a court in a judgment not subject to
appeal or final review that such indemnified party was not entitled to
indemnification by the Company.
(b) The Holder agrees to indemnify and hold harmless the Company, any
underwriter and each of their respective directors, officers (including each
officer of the Company who signed the Registration Statement), employees and
agents, any underwriter or any other selling Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all loss, liability, claim, damage and expense whatsoever
described in the indemnity contained in Section 7(a) hereof, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in a Registration Statement or any Prospectus in
reliance upon and in conformity with written information furnished to the
Company by such selling Holder with respect to such Holder expressly for use in
such Registration Statement, or any such Prospectus;
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, enclosing a copy of all papers properly
served on such indemnified party, but failure to so notify an indemnifying party
shall not relieve such indemnifying party from any liability which it may have
under this Section 7, except to the extent that it is materially prejudiced by
such failure. An indemnifying party may participate at its own expense in the
defense of such action, or, if it so elects within a reasonable time after
receipt of such notice, assume the defense of any suit brought to enforce any
such claim; but if it so elects to assume the defense, such defense shall be
conducted by
8
21
counsel chosen by it and approved by the indemnified party or parties, which
approval shall not be unreasonably withheld. In the event that an indemnifying
party elects to assume the defense of any such suit and retain such counsel, the
indemnified party or parties shall bear the fees and expenses of any additional
counsel thereafter retained by such indemnified party or parties; provided,
however, that the indemnified party or parties shall have the right to employ
counsel (in addition to local counsel) to represent the indemnified party or
parties who may be subject to liability arising out of any action in respect of
which indemnity may be sought against the indemnifying party if, in the
reasonable judgment of counsel for the indemnified party or parties, there may
be legal defenses available to such indemnified party or parties which are
different from or in addition to those available to the indemnifying party, in
which event the fees and expenses of appropriate separate counsel shall be borne
by the indemnifying party. In no event shall the indemnifying parties be liable
for the fees and expenses of more than one counsel (in addition to local
counsel), separate from its own counsel, for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 7 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release in form and substance satisfactory to the
indemnified parties of each indemnified party from ail liability arising out of
such litigation, investigation, proceeding or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(d) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 7 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company and the Holder
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement incurred by the
Company and the Holder, as incurred; provided that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person that was not
guilty of such fraudulent misrepresentation. As between the Company and the
Holder, such parties shall contribute to such aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement in such proportion as shall be appropriate to reflect the relative
fault of the Company, on the one hand, and the Holder, on the other hand, with
respect to the statements or omissions which resulted in such loss, liability,
claim, damage or expense, or action in respect thereof, as well as any other
relevant equitable considerations. The relative fault of the Company, on the one
hand, and of the Holder, on the other hand, 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 Company, on the one hand, or by or on behalf of the
Holder, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holder agree that it would not be just and equitable if
contribution pursuant to this Section 7 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the relevant equitable considerations. For purposes of this
9
22
Section 7, each affiliate of the Holder, and each director, officer, employee,
agent and Person, if any, who controls a Holder or such affiliate within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as the Holder, and each director of
the Company, each officer of the Company who signed the Registration Statement,
and each Person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Company.
8. Information by Holder.
The Holder or Holders of Registrable Securities included in any
registration shall furnish to the Company such written information regarding
such Holder or Holders and the distribution proposed by such Holder or Holders
as the Company may reasonably request in writing and as shall be required in
connection with any registration, qualification, or compliance referred to in
this paragraph.
9. Transfer of Registration Rights.
The rights to cause the Company to register the Registrable Securities
granted to the Holder by the Company under Section 2 or Section 3 may be
assigned by a Holder to a transferee or assignee of any of such Holder's
Registrable Securities, provided, that the Company is given written notice by
such Holder at the time of, or within a reasonable time after, said transfer,
stating the name and address of said transferee or assignee and identifying the
securities with respect to which such registration rights are being assigned.
10. No Inconsistent Agreements.
The Company has not entered into nor will the Company on or after the
date of this Agreement enter into any agreement which is inconsistent with the
rights granted to the Investor with respect to the Shares in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Investor hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities under any such agreements.
11. Assignability.
This Agreement shall be binding upon and inure to the benefit of the
respective heirs, successors and assigns of the parties hereto.
12. Changes in Capital Stock.
If, and as often as, there is any change in the Common Stock by way of
a stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the Shares
as so changed.
10
23
13. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of Illinois, without regard to the conflict of laws provisions thereof.
14. Amendment.
Any modification, amendment or waiver of this Agreement or any
provision hereof shall be in writing and executed by Holders of not less than
66-2/3 percent of the Registrable Securities; provided, however, that no such
modification, amendment or waiver shall reduce the aforesaid percentage of
Registrable Securities without the consent of the record or beneficial holders
of no less than 90 percent of the Registrable Securities.
15. Severability.
In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
16. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
successors, assigns and transferees of the Holder, including, without limitation
and without the need for an express assignment, subsequent Holders. If any
transferee of the Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities, such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof.
17. Entire Agreement.
This Agreement and the other writings referred to herein contain the
entire understandings among the parties with respect to its subject matter. This
Agreement supersedes all prior agreements and understandings among the parties
with respect to its subject matter.
18. Headings.
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
11
24
19. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
[SIGNATURE PAGE FOLLOWS]
12
25
IN WITNESS WHEREOF, the undersigned holder of securities and the
Company have executed this Agreement on the day and year first above written.
COMPANY: NEOPHARM, INC.
By: ______________________________
Name:
Title:
Address for Notices:
INVESTOR: PHARMACIA & UPJOHN, INC.
By: ______________________________
Name:
Title (if applicable):
Address for Notices:
