EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is dated as of
December 31, 1997 (the "Effective Date"), and is entered into by and between
Neptune Pharmaceutical Corporation, a Missouri corporation ("Seller"), and
Cellegy Pharmaceuticals, Inc., a California corporation ("Buyer"). Buyer and
Seller are referred to collectively herein as the "Parties."
R E C I T A L S
A. Seller is a corporation that owns all right, title and interest in a
certain nitroglycerin product candidate that is currently under development and
certain other assets.
B. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, all right, title and interest in the Acquired Assets (as defined below)
on the terms and conditions set forth in this Agreement.
C. Seller and Buyer have previously executed a Binding Letter of Intent
dated as of November 3, 1997 (the "Letter of Intent") regarding the purchase by
Buyer of the Acquired Assets. This Agreement, when executed and delivered by
Buyer and Seller, is intended to supersede and replace the Letter of Intent in
its entirety.
AGREEMENT
Buyer and Seller hereby agree as follows:
1. DEFINITIONS.
1.1 Definitions. As used in this Agreement, the following terms shall
have the following meanings:
"Acquired Product" means any product or product candidate of Seller
relating to treatment of anal fissures or hemorrhoids, including without
limitation Seller's product candidate currently named "Anogesic" for the
treatment of anal fissures, hemorrhoids and certain other conditions.
"Acquired Assets" means the Acquired Product, Intellectual Property and
the Other Assets.
"Common Stock" means the Common Stock, no par value, of Buyer.
"Encumbrances" means all mortgages, pledges, liens, licenses, rights of
possession, security interests, restrictions, encumbrances, claims, charges,
title retention, conditional sale or other security arrangements, relating to
the Acquired Assets or by which any Acquired Asset is bound or subject.
"Intellectual Property" means U.S. Patent Nos. 5,504,117 and 5,693,676,
any related or corresponding foreign patents or patent applications, and all
other patents, patent applications (and any reissue, extension, division,
improvement, continuation or continuation-in-part of any
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of the foregoing, in the U.S. or worldwide), worldwide, registered and
unregistered copyrights, registered and unregistered trademarks, trade names,
service marks or service names, licenses or license agreements, clinical and
pre-clinical data and information, FDA applications and all other materials
relating to FDA or other regulatory matters, know-how and any other intellectual
property rights or intangible rights existing under judicial or statutory law of
any country in the world, or under any treaty, owned or licensed by Seller
relating to the Acquired Product, any other intellectual property of Seller, and
any of the foregoing that Seller may acquire after the Closing Date that relates
to the Acquired Product (including without limitation from the person identified
in the December 18, 1997 letter agreement between Buyer and Seller, with whom
Seller has an agreement dated December 29, 1997 (the "December 29 Agreement")),
whether or not listed on Schedule A attached hereto.
"Excluded Assets" means all accounts receivable and cash of Seller as
of the Closing Date (including prepaid expenses and deposits), all leases of
real property to which Seller is a party or is otherwise bound, all liabilities
and obligations of Seller arising out of or relating to the conduct of Seller's
business or the Acquired Assets before the Closing Date, any assets, liabilities
or obligations that Buyer designates in writing as Excluded Assets before the
Closing Date on Schedule B attached hereto, and any other liabilities, debts or
obligations of Seller except for those contractual obligations under agreements
assigned to Buyer that Buyer agrees to assume (or which are otherwise expressly
included in the Other Assets).
"FDA" means the United States Food and Drug Administration.
"Loss" means any liability, injury, damage, expense, cost, fine or
penalty resulting from any action, proceeding, claim, demand, assessment,
judgment or award (including without limitation costs of investigation,
prosecution, defense or settlement), including attorneys fees, costs and
expenses related thereto.
"Other Assets" means all contracts, agreements, other instruments,
files, business records, accounting and financial records, analyses, logs,
books, records, files, correspondence, laboratory, test or study data, notes or
information, of Seller relating to the Acquired Product or Intellectual
Property, in whatever form and however maintained by Seller (whether hard copy,
in electronic format maintained by Seller or any officer of Seller, or
otherwise), and whether possessed by Seller before the Closing Date or acquired
by Seller after the Closing Date. The Other Assets to be delivered to Buyer
hereunder shall, wherever practicable, be the originals of such materials.
"Payment Date FMV" means the actual closing market price of the Common
Stock (as quoted on the Nasdaq National Market or, if the Common Stock is not
quoted on such market, then on such national exchange or market quotation system
as the Common Stock is then quoted on) on the date the relevant payment or
milestone is due or achieved or, if earlier, the last closing price of the
Common Stock prior to public announcement by the Company of the achievement of
the milestone; provided, however, that the Payment Date FMV shall in all events
be deemed to be no higher than $15.00 per share (subject to adjustment in the
event of stock splits, stock dividends or other similar recapitalizations) even
if the actual closing market price of the Common Stock is higher than such
amount.
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"Shares" means shares of Common Stock of Buyer that are issued to
Seller pursuant to Section 3 of this Agreement.
2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Purchase Assets. Subject to the terms and
conditions of this Agreement, and in reliance on the representations, warranties
and covenants set forth in this Agreement, Seller agrees to sell, assign,
transfer and convey to Buyer at the Closing (as defined below), and Buyer agrees
to purchase and acquire from Seller at the Closing, all right, title and
interest in and to (or, with respect to the portion of the Acquired Assets
relating to the December 29 Agreement, all of Seller's right, title and interest
in and to) all of the Acquired Assets. The Acquired Assets will be sold,
assigned, transferred and conveyed to Buyer on the Closing Date (as defined
below), free and clear of all Encumbrances.
2.2 Asset Transfer; Passage of Title; Delivery. Upon the Closing all of
Seller's right title and interest in and to all of the Acquired Assets shall
pass to Buyer; and Seller shall deliver to Buyer possession of all of the
Acquired Assets and shall further deliver to Buyer proper assignments,
conveyances and bills of sale sufficient to convey to Buyer good and marketable
title to all the Acquired Assets in the forms reasonably requested by Buyer,
free and clear of all Encumbrances, and such other instruments of conveyance as
Buyer or its counsel may reasonably deem necessary or desirable (either at and
after the Closing) to effect or evidence the transfers contemplated hereby.
Physical delivery by Seller of all of the Acquired Assets shall occur on or
before January 12, 1998. Physical delivery by Buyer to Seller of the original
stock certificate representing the Shares to be delivered at the Closing, shall
in all events occur on or before January 9, 1998, unless the parties mutually
agree to a different date.
2.3 Excluded Assets. Buyer does not assume any of the Excluded Assets
and shall not become obligated to pay any amounts with respect thereto (except
for those contractual obligations under agreements assigned to Buyer that Buyer
agrees to assume, which obligations and agreements shall not be deemed "Excluded
Assets.") In addition, Seller will be responsible for any amounts owing to its
employees that accrue before the Closing and for any amounts owing to employees
of Seller who do not receive an offer, or who do not accept an offer, of
employment with Buyer.
3. PURCHASE PRICE; PAYMENTS; CLOSING
3.1 Purchase Price. In consideration of the sale, transfer, conveyance
and assignment of all the Acquired Assets to Buyer free and clear of all
Encumbrances, the following amounts shall be payable by Buyer to Seller (such
payments shall be referred to collectively as the "Purchase Price"):
(a) Buyer has previously delivered to Seller 33,057 shares of
Common Stock. Upon the Closing, Buyer shall issue to Seller an additional
429,752 shares of Common Stock.
(b) Upon successful completion * of * Buyer shall issue to
Seller shares of Common Stock having a Payment Date FMV of *. Upon
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* Confidential treatment requested.
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successful completion * of *, Buyer shall issue to Seller shares of Common Stock
having a Payment Date FMV of *. These milestone payments shall also be payable
upon *. In addition, Buyer shall pay Seller the sum of * upon *, if Seller *
(c) Upon *, Buyer shall issue to Seller shares of Common Stock
having a Payment Date FMV of *.
(d) Upon *, Buyer shall issue to Seller shares of Common Stock
having a Payment Date FMV of *.
(e) Upon *, Buyer shall issue to Seller shares of Common Stock
having a Payment Date FMV of *.
(f) Upon *, Buyer shall issue to Seller shares of Common Stock
with a Payment Date FMV of *.
(g) Upon *, Buyer shall issue to Seller shares of Common Stock
having a Payment Date FMV of *.
(h) Upon *, Buyer shall issue to Seller shares of Common Stock
having a Payment Date FMV of *.
(i) Upon FDA approval for over-the-counter ("OTC") marketing
and sales of the Acquired Product for the treatment of hemorrhoids, Buyer shall
issue to Seller shares of Common Stock having a Payment Date FMV of $5,000,000.
3.2 Buyer's Call Right. At each milestone at which the Payment Date FMV
is below *, the Shares issued by Buyer under Section 3.1(b) through (i) shall be
accompanied by a call right (as described below); provided, however, that such
call right shall not be applicable to that portion of such issued and
outstanding Shares as is necessary to maintain a ratio of cash (for
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* Confidential treatment requested.
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this purpose, calculated on a cumulative basis (including Shares issued under
Section 3.1(a)) with respect to each Share issued with a call right, and valued
at * per Share for each such Share)-to-stock value (for this purpose, calculated
on a cumulative basis (including Shares issued under Section 3.1(a)) with
respect to each Share issued without a call right, and valued at the lower of
the Payment Date FMV or fair market value on the date of calculation) of less
than one-to-one; provided, further, that the number of Shares issued at a
milestone at which the Payment Date FMV is below *, but with respect to which
such call right is not applicable in accordance with the preceding proviso,
shall be issued based on a deemed Payment Date FMV of * per share, divided into
the dollar amount of the milestone payment with respect to which Buyer does not
have a call right. Such call right shall be exercisable at the higher of (i) the
fair market value of the Share on the date of exercise of the call right or (ii)
the Payment Date FMV applicable to such Share; provided, however, that no call
right shall be exercisable from and after such time as the fair market value of
a Share issued with a call right of * or greater. By way of example, assuming
that * Shares are issued at the Closing and that the Payment Date FMV at the
time of the first * milestone payment is *, the total value of Shares issued
without a call right would be *, and the total number of Shares that could be
issued in satisfaction of the milestone payment with a call right would be *
shares (since * x * is less than *). If at the second milestone payment date the
Payment Date FMV was *, another calculation would be required, comparing (i) the
value of the number of Shares previously issued with call rights (based on * per
Share) plus the number of Shares potentially issuable in satisfaction of the
second milestone which can have a call right, to (ii) the value of the number of
Shares previously issued without call rights (based on * per Share) plus the
number of shares potentially issuable in satisfaction of the second milestone
which may not have a call right (and in making this calculation, taking into
account that once the initial calculation of the number of Shares potentially
issuable in satisfaction of the second milestone with a call right has been
made, the value of such shares, based on the Payment Date FMV, should be
subtracted from the dollar value of the particular milestone, i.e., the *, to
determine the dollar value of the remaining milestone payment to be satisfied by
issuance of Shares not subject to a call right, which number of Shares must be
determined based on a deemed Payment Date FMV of * per Share). Under no
circumstances may Buyer be required to issue more Shares without call rights
than is determined by dividing * into the dollar value of milestone payments
with respect to which Buyer does not have call rights (assuming Buyer exercised
its call right at the Payment Date FMV).
3.3 Acceleration of Certain Purchase Price Payments Upon Sale of Buyer.
All of the payments of the purchase price described in Section 3.1 above, except
for the final payment following OTC approval described in Section 3.1(i), shall
become due and payable in connection with any sale by Buyer of all or
substantially all of its assets to a third party, or any merger or similar
transaction in which Buyer is acquired and in which Buyer's shareholders do not,
immediately after the closing of such transaction, have at least a majority of
the voting power and equity interest of the surviving company. Such final
payment shall continue to be an obligation of Buyer or its successor or
acquiror, as the case may be.
3.4 Closing. The consummation of the purchase and sale of the Acquired
Assets contemplated hereby will take place at a closing to be held at the
offices of Fenwick & West, Two Xxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxxxxxxxx 00000 at
8:30 p.m. Pacific Standard Time (the "Closing") on December 31, 1997 (the
"Closing Date"), or at such other time or date, and at such
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* Confidential treatment requested.
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place, or by such other means of exchanging documents, as may be agreed to by
the parties hereto.
3.5 Allocation of Purchase Price. The Purchase Price shall be allocated
in the manner set forth on Exhibit A attached hereto. The allocation shall be
consistent in all material respects with applicable regulations of the Internal
Revenue Service.
4. OBLIGATIONS AND LIABILITIES NOT ASSUMED
4.1 Liabilities and Obligations Not Assumed. Except for liabilities
expressly set forth in Section 2 above, Buyer shall not assume or become
obligated in any way to pay for any Excluded Assets, or liabilities, debts or
obligations of Seller whatsoever (collectively, the "Liabilities"), including
but not limited to any liabilities or obligations now or hereafter arising from
or with respect to any other claims brought against Seller by any creditor of
Seller, or any obligations or liabilities or arising from any breach or default
by Seller of any contract, agreement or commitment of Seller.
4.2 No Obligations to Third Parties. The execution and delivery of this
Agreement shall not be deemed to confer any rights upon any person or entity
other than the parties hereto, or to make any person or entity a third party
beneficiary of this Agreement, or to obligate the parties hereto to any person
or entity other than the parties to this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that all of the following
statements are true, accurate and correct:
5.1 Corporate Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
and is duly qualified to do business and is in good standing in the State of
California. Buyer has all necessary corporate power and authority to enter into
this Agreement and all other transactions contemplated hereby.
5.2 Authorization for this Agreement. All corporate action on the part
of Buyer and its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, and the performance of
all obligations of Buyer hereunder, has been taken or will be taken prior to the
Closing, and this Agreement constitutes the valid and legally binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies. The execution and
delivery of this Agreement has been duly authorized by Buyer's Board of
Directors, and no further corporate action or approval is required in order to
render this Agreement binding and enforceable against Buyer.
5.3 No Conflict. The execution, delivery and performance by Buyer of
this Agreement and the performance of Buyer's obligations hereunder will not (A)
cause a violation of Buyer's articles of incorporation or bylaws, (B) cause a
breach under, or allow any party to terminate, or require the consent of any
third party under, any agreement to which the Buyer is a
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party or by which the business or property of Buyer is bound, or (C) cause any
violation of law or of a judgment or order of any court or governmental body.
5.4 Disclosure. To Buyer's knowledge, Buyer's registration statement on
Form S-1, file No. 333-38179, declared effective by the Securities and Exchange
Commission on November 19, 1997, does not, as of the effective date of such
registration statement, contain an omission of material fact or omit to state a
material fact required to be stated therein in order to make the statements
contained therein not misleading.
5.5 Tax Consequences. Buyer makes no representation or warranty to
Seller or its shareholders concerning the tax consequences of the transactions
contemplated by this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that, except as set forth in a
schedule of exceptions dated November 3, 1997 and separately delivered by Seller
to Buyer (the "Disclosure Letter"), each of the following is a true, accurate
and correct statement:
6.1 Corporate Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Missouri,
and is qualified or licensed to do business in all states where Seller is
required to be so licensed or qualified, except for the failure to be so
qualified or licensed would not have any adverse effect on the Acquired Assets.
6.2 Authorization for this Agreement. All corporate action on the part
of Seller and its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, and the performance of
all obligations of Seller hereunder, has been taken or will be taken prior to
the Closing, and this Agreement constitutes the valid and legally binding
obligation of Seller, enforceable against Seller in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies. The execution and delivery of this Agreement has been duly authorized
by Seller's Board of Directors, and no further corporate action or approval is
required in order to render this Agreement binding and enforceable against
Seller.
6.3 No Conflict. The execution, delivery and performance by Seller of
this Agreement and the performance of Seller's obligations hereunder will not
(A) cause a violation of Seller's articles of incorporation or bylaws, (B) cause
a breach under, or allow any party to terminate, or require the consent of any
third party under, any agreement to which the Seller is a party or by which the
business or property of Seller is bound, or (C) cause any violation of law or of
a judgment or order of any court or governmental body.
6.4 Title. Seller holds good and merchantable title to all Acquired
Assets, free and clear of any Encumbrances, and no other party has any right or
interest whatsoever in any of the Acquired Assets, including without limitation
any license, option, right of first refusal or right to acquire, or development,
manufacturing, marketing or distribution rights, relating to any of the Acquired
Assets.
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6.5 Litigation. There is no claim, action, suit or proceeding pending
or asserted against Seller (i) that questions the validity of this Agreement or
the right of the Seller to enter into this Agreement or to consummate the
transactions contemplated hereby, or (ii) relating to or affecting the Acquired
Assets, at law or in equity, nor is Seller aware of any basis therefor. There
are no judgments, decrees, injunctions or orders of any court, governmental
department, commission, agency, instrumentality or arbitrator against Seller
affecting the Acquired Assets
6.6 Intellectual Property; Other Assets. All Intellectual Property in
which Seller has any rights is set forth on Schedule A attached hereto. Seller
has made all filings with governmental agencies and obtained all assignments
(including invention assignments from its employees) necessary to claim and
protect its rights (both U.S. and foreign) in all intellectual property included
in the Acquired Assets. Seller is the sole and exclusive owner of, or with
respect to the data and materials covered by the December 29 Agreement,
possesses valid licenses to, the Acquired Assets. To Seller's knowledge, except
for (i) the possible effect of the references cited in connection with the U.S.
patent applications previously filed by Seller relating to its two issued U.S.
patents and (ii) the fact that Seller has not, prior to the Closing, filed
patent applications in many foreign jurisdictions, no other person or entity has
taken any actions or has materials or intellectual property rights that would
materially adversely affect Seller's or Buyer's ability to claim and protect
their rights (both U.S. and foreign) to enforce any of the Intellectual
Property, or to exclusive use of the intellectual property included in the
Acquired Assets. To the best of Seller's knowledge, each of the patents included
in the Intellectual Property is valid and enforceable and will be valid and
enforceable by Buyer after the Closing Date. To Seller's knowledge, none of the
Acquired Assets or their use as contemplated by Seller infringes upon or
violates any patent, copyright, trademark, trade secret or other intellectual
property rights of any other person or entity. Except as set forth in Schedule
C, there are no outstanding options, licenses or agreements of any kind relating
to the Acquired Assets, nor is Seller bound by or a party to any options,
licenses or agreements of any kind with respect to the intellectual property of
any other person or entity. There are no other assets of Seller that relate to
the Acquired Product other than the Intellectual Property, and Seller does not
have any other substantial intellectual property that is not included in the
Intellectual Property being transferred to Buyer hereunder, and no director or
executive officer of Seller has any substantial intellectual property related to
the Acquired Product that is not included in the Intellectual Property being
transferred to Buyer hereunder.
6.7 Brokerage and Finder's Fees. Seller has not agreed to pay a
brokerage or finder's fee in connection with this Agreement.
6.8 Authorization for this Agreement. No authorization, approval,
consent of, or filing with any governmental department, bureau, agency, public
board, authority or other third party is required for the consummation by Seller
of the transactions contemplated by this Agreement.
6.9 Taxes. Seller has timely filed all tax returns and timely paid all
taxes due. There are no federal, state or local tax liens against any of the
Acquired Assets to be transferred to Buyer hereunder. At the Closing, there will
be no federal, state or local tax liens against or any unsatisfied liability for
taxes of any kind imposed on or levied with respect to any of the Acquired
Assets other than liens for any such taxes which have not become due and
payable. Seller has paid or will pay, when due, any federal, state or local
taxes accruing before the Closing
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Date with respect to the Acquired Assets or Seller's business which, if unpaid,
may result in a liability of Buyer or a lien against any of the Acquired Assets.
6.10 Financial Statements. The financial statements of Seller delivered
to Buyer fairly present the financial condition of Seller and its business as of
their respective dates. The financial records relating to the Acquired Assets
have been provided to Buyer and have been prepared in a manner that is
consistent with Seller's internal business and financial accounting methods.
6.11 [Reserved]
6.12 No Undisclosed Liabilities; Disclosure. There are no liabilities,
obligations or claims (whether contingent or otherwise) relating to the Acquired
Assets that are not disclosed in the Disclosure Letter or in Seller's financial
statements referred to above. To Seller's knowledge, the representations and
warranties made by Seller in this Agreement, when taken together, do not contain
an omission of material fact or omit to state a material fact required to be
stated therein in order to make the statements contained therein not misleading.
6.13 Agreements. Schedule C hereto lists and sets forth a description
of all material licenses, proprietary rights agreements, contracts and all other
agreements, understandings or commitments of Seller relating to the Acquired
Assets ("Agreements"). Seller has delivered to Buyer a true and correct copy of
each written Agreement and has provided a written summary of any material verbal
Agreement relating to the Acquired Assets.
6.14 Purchase Entirely for Own Account. This Agreement is made with the
Seller in reliance upon Seller's representation to Buyer, which by Seller's
execution of this Agreement Seller hereby confirms, that the Shares to be
received by Seller are being acquired for investment for Seller's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that Seller has no present intention of selling, granting
any participation in, or otherwise distributing the same. Except for the
December 29 Agreement, by executing this Agreement, Seller further represents
that Seller does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or to
any third person, with respect to any Shares. Notwithstanding the foregoing, it
is understood that (i) Seller may transfer the Shares to the shareholders of
Seller, (ii) any shareholder of Seller may transfer Shares to another
shareholder of Seller, and (iii) a shareholder of Seller may transfer Shares to
existing shareholders of Buyer who, on the date of this Agreement, beneficially
own more than five percent (5%) of the outstanding Shares of Buyer, provided
that in each of the above instances the transferee agrees to be bound by all of
the provisions of this Agreement relating to the Shares and executes appropriate
investment representations in order to comply with any applicable federal or
state securities laws.
6.15 Disclosure of Information. Seller believes it has received all the
information it considers necessary or appropriate for deciding whether to
acquire the Shares. Seller further represents that it has had an opportunity to
ask questions and receive answers from Buyer regarding the terms and conditions
of the offering of the Shares and the business, properties, prospects and
financial condition of Buyer.
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6.16 Investment Experience. Seller acknowledges that it is able to fend
for itself, can bear the economic risk of its investment, and has such knowledge
and experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in the Shares. Seller also represents it
has not been organized for the purpose of acquiring the Shares.
6.17 Restricted Securities. Seller understands that the Shares it is
acquiring is characterized as "restricted securities" under the United States
federal securities laws inasmuch as the Shares are being acquired in a
transaction not involving a public offering and that under such laws and
applicable regulations the Shares may be resold in the United States without
registration under the Act only in certain limited circumstances. In this
connection, Seller represents that it is familiar with Rule 144 promulgated
under the Act, as presently in effect, and understands the resale limitations
imposed thereby and by the Act.
6.18 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, Seller further agrees not to make any
disposition of all or any portion of the Shares unless:
(a) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) (i) Seller shall have notified Buyer of the proposed
disposition and shall have furnished Buyer with a detailed statement of the
circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by Buyer, Seller shall have furnished Buyer with an opinion of
counsel, reasonably satisfactory to Buyer that such disposition will not require
registration of such shares under the Act. It is agreed that Buyer will not
require opinions of counsel for transactions made pursuant to Rule 144 except in
unusual circumstances.
6.19 Legends. Seller understands and agrees that the legends set forth
below or similar legends will be placed on any Shares certificate(s) evidencing
the Shares, together with any other legends that may be required by applicable
securities laws or Buyer' charter documents:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF CERTAIN STATES. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS."
(b) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON RESALE AND TRANSFER AS SET FORTH IN AN
AGREEMENT BETWEEN THE ISSUER AND THE INITIAL HOLDER OF THE
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SECURITIES REPRESENTED HEREBY, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
OFFICE OF THE ISSUER."
Buyer agrees that it will remove the above legends in
connection with sales of Shares pursuant to a Shelf Registration Statement, as
described further in Section 10.2 below and, in any case, at such time as the
Shares represented by any certificate can be publicly sold without volume
restriction within a three-month period pursuant to Rule 144.
6.20 Refusal to Transfer. Seller acknowledges and agrees that Buyer will
not be required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement or
(ii) to treat as owner of such Shares, or to accord the right to vote or pay
dividends to, any other transferee to whom such Shares have been so transferred.
7. COVENANTS OF SELLER
Seller covenants and agrees with Buyer as follows:
7.1 Access to Information. Seller will provide all information and
supporting documents concerning the Acquired Assets and Seller's business that
Buyer requests to investigate the Acquired Assets or the Seller's business or to
carry into effect this Agreement, and will afford Buyer or its representatives
access to Seller's properties, offices and files, upon reasonable prior notice,
whether before or after the Closing. Seller will confer with representatives of
Buyer and will furnish to Buyer, either orally or by means of such records,
documents, and memoranda as are available or reasonably capable of preparation,
such information as Buyer may reasonably request, and Seller will furnish to
Buyer's auditors all consents and authority that they may reasonably request in
connection with any examination of Buyer.
7.2 Acquired Assets. Seller will use its best efforts to protect the
Acquired Assets, cooperate with Buyer concerning protection of intellectual
property rights relating to the Acquired Assets and take such actions as Buyer
may reasonably request (at Buyer's expense) relating to protection of such
assets, and effect no transfer, sale, assignment, lease, license or encumbrance
of or on any of its Acquired Assets.
7.3 No Inconsistent Transactions. Before the Closing, Seller shall not
engage in any transaction that is materially inconsistent with Seller's
representations and warranties made in this Agreement.
7.4 Intellectual Property. Upon the Closing, Seller will cease any use
of any of the Acquired Assets without Buyer's prior written consent.
7.5 Consent of Third Parties. Prior to the Closing Date, Seller shall
obtain the consent in writing of all persons necessary to permit Seller to
assign and transfer all of the Acquired Assets to Buyer, free and clear of all
Encumbrances and to perform its obligations under, and to conclude the
transactions contemplated by, this Agreement.
7.6 Further Assurances. Seller will provide to Buyer, whether before or
after the Closing, any further documents that Buyer reasonably requests to
investigate the Acquired
15
Assets or the business of Seller or to carry into effect the transactions
contemplated by this Agreement. Seller shall promptly execute and deliver to
Buyer any and all such further assignments, endorsements and other documents as
Buyer may reasonably request for the purpose of effecting the transfer of
Seller's title to the Acquired Assets to Buyer and/or carrying out the
provisions of this Agreement. Seller hereby appoints Buyer as its
attorney-in-fact for the limited purpose of executing such assignments,
endorsements and other documents should Seller be unable or unwilling to do so.
After the Closing, Seller and its employees shall cooperate in good faith with
Buyer and take such actions and execute such instruments as Buyer may reasonably
request for the purpose of preparing, prosecuting, securing, maintaining,
enforcing and defending patents and patent applications, trademarks and
trademark applications, copyright and copyright applications, or other similar
intellectual property filings.
7.8 Taxes. Seller agrees to promptly pay all sales, use or other taxes
imposed on the sale of the Acquired Assets to Buyer under this Agreement (other
than capital gain or income taxes imposed on individual shareholders of Seller).
Seller agrees to defend, indemnify and hold Buyer harmless from and against any
such taxes or claims for payment thereof by any tax authority.
7.9 Clinical Consultant. Seller will provide the services of Xx.
Xxxxxxx Xxxxxxx, an employee of Seller, to act in the capacity of Clinical
Consultant to Buyer, pursuant to the terms of a consulting agreement to be
entered into between Xx. Xxxxxxx and Buyer.
7.10 Litigation. Seller shall notify Buyer promptly upon receipt of any
communication or legal process which commences or threatens litigation against
Seller, its business, or which might adversely affect the value of any of the
Acquired Assets.
7.11 Securities. Seller and any of its shareholders who receive any
Shares, agree to the same lock-up restrictions contained in the form of lock-up
agreement executed by Buyer's directors in connection with the Form S-1
Registration Statement, file No. 333-38179, and the provisions of such lock-up
agreements are hereby incorporated by reference and shall be applicable to
Seller and its shareholders. Any person or entity who acquires Shares from
Seller shall execute an agreement agreeing to be bound by such lock-up
restrictions. The foregoing lock-up restrictions shall not apply, however, to a
private resale of such Shares to a person who agrees in writing to be such
lock-up restrictions.
7.12 No Negotiations. Seller agrees that until December 31, 1997 or the
earlier mutual abandonment of the transaction contemplated hereby, Seller will
not, and will not allow any officer or director of Seller or any other person on
its behalf, to negotiate or accept any offer from any party concerning the
possible disposition of all or any substantial portion of Seller's assets,
equity or business. Seller will promptly notify Buyer of any such inquiries or
proposals.
7.13 Conduct of Business. From the date of this Agreement until the
Closing, Seller will preserve and operate its business in the ordinary course
and will not enter into any transaction or agreement or take any action out of
the ordinary course or enter into any transaction or make any commitment
involving an expense or capital expenditure by Seller relating to the Acquired
Assets, in excess of $5,000, without Buyer's prior written consent.
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7.14 Other. Seller shall use its best efforts after the Closing to
cause its counsel to deliver to Buyer, on or before January 12, 1998, an opinion
of Seller's counsel addressing the following matters: due organization, valid
existence and good standing; corporate power and authority; due and valid
authorization of this Agreement and the other instruments executed by Seller and
delivered at the Closing (the "Seller Ancillary Documents"); enforceability of
this Agreement and the Seller Ancillary Documents; absence of conflict or
material violation of laws or Seller's charter documents resulting from
execution, delivery and performance of this Agreement and the Seller Ancillary
Documents; and the absence of required consents or other approvals or filings
with any governmental agency or authority.
8. COVENANTS OF BUYER
Buyer covenants and agrees with Seller as follows:
8.1 Conduct of Business. Buyer shall use all reasonable efforts to
conduct its business in such a manner so as to not be in material breach of the
representations and warranties made to Seller herein.
8.2 Litigation. Buyer will notify Seller promptly upon receipt of any
communication or legal process which commences or threatens litigation relating
to the Acquired Assets or the transactions contemplated hereby for which Seller
may be required to indemnify Buyer.
8.3 Commercially Reasonable Efforts After the Closing. After the
Closing, Buyer will undertake commercially reasonable efforts for a product of
similar commercial potential as the Acquired Assets, consistent with Buyer's
other business opportunities, financial condition, prospects and commercial
business judgment, to develop and commercialize the Acquired Product in a
reasonably timely manner. The foregoing shall not require Buyer to undertake
development or commercialization efforts that are inconsistent with the
foregoing standard. If Seller believes that Buyer is not so developing or
commercializing the Acquired Product, it may notify Buyer, and the parties shall
promptly meet and confer regarding Buyer's development and commercialization
efforts. If after such meeting Seller continues to believe that Buyer is not so
developing or
commercializing the Acquired Product, it may initiate arbitration proceedings,
in the manner provided herein, regarding Buyer's efforts.
8.4 Other. Buyer shall use its best efforts after the Closing to cause
its counsel to deliver to Seller, on or before January 12, 1998, an opinion of
Buyer's counsel addressing the following matters: due organization, valid
existence and good standing; corporate power and authority; due and valid
authorization of this Agreement and the other instruments executed by Buyer and
delivered at the Closing (the "Buyer Ancillary Documents"); due authorization,
valid issuance and nonassessability of the Shares; enforceability of this
Agreement and the Buyer Ancillary Documents; absence of conflict or material
violation of laws or Buyer's charter documents resulting from execution,
delivery and performance of this Agreement and the Buyer Ancillary Documents;
and the absence of required consents or other approvals or filings with any
governmental agency or authority.
9. CONDITIONS TO CLOSING
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9.1 Conditions to Buyer's Obligations. The obligations of Buyer
hereunder shall be subject to the satisfaction and fulfillment of each of the
following conditions, except as Buyer may expressly waive the same in writing:
(a) Due Diligence. Buyer shall have completed such
investigation of the Acquired Assets and of Seller's business as it deems
appropriate and shall be satisfied with its due diligence, including with
respect to Seller's ownership of its intellectual property and any other matter
affecting Buyer's ownership of the Acquired Assets or liabilities or obligations
with respect to the Acquired Assets.
(b) No Material Adverse Change. Since the date of the Letter
of Intent, there shall have been no material adverse change shall have occurred
in Seller's business or in the Acquired Assets.
(c) Proceeding Satisfactory. All actions, proceedings,
instruments and documents required by Seller to carry out the transactions
contemplated by this Agreement and all other related matters shall have been
completed to the reasonable satisfaction of Buyer's counsel.
(d) Accuracy of Representations and Warranties on Closing
Date. The representations and warranties made herein by Seller shall be true and
correct in all material respects on and as of the date given, and on and as of
the Closing Date with the same force and effect as though such representations
and warranties were made on and as of the Closing Date.
(e) Compliance. Seller shall have complied in all material
respects with, and shall have fully performed in all material respects, all
conditions, covenants and obligations of this Agreement imposed on Seller or
required to be performed or complied with by Seller at or before the Closing
Date.
(f) Delivery of Assets. Seller shall have delivered, and Buyer
shall have received, all the Acquired Assets free and clear of all Encumbrances.
(g) Assignments. Seller shall have executed and Buyer shall
have received Assignment Agreements for all patent, trademark and other
intellectual property rights relevant to the Acquired Assets, in substantially
the form attached.
(h) Seller's Consents Obtained. All consents required to be
obtained by Seller pursuant to Section 7.5 herein shall have been obtained.
(i) Litigation. No communication action, claim or proceeding
shall have been brought or threatened by any party seeking to challenge or
prohibit the transactions contemplated herein or claiming any rights to or
affecting Seller's or Buyer's rights in any of the Acquired Assets.
(j) [Reserved].
(k) Consulting Agreement. Xx. Xxxxxxx shall have entered into
a consulting agreement with Buyer in substantially the form attached to this
Agreement.
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9.2 Conditions to Seller's Obligations. The obligations of Seller
hereunder shall be subject to the satisfaction and fulfillment of each of the
following conditions, except as Seller may expressly waive the same in writing:
(a) Accuracy of Representations and Warranties on Closing
Date. The representations and warranties made herein by Buyer in Section 5
hereof shall be true and correct in all material respects on and as of the date
given, and on and as of the Closing Date with the same force and effect as
though such representations and warranties were made on and as of the Closing
Date.
(b) Compliance. Buyer shall have complied in all respects
with, and be shall have fully performed in all material respects, all
conditions, covenants and obligations of this Agreement imposed on Buyer or
required to be performed or complied with by Buyer at or before the Closing
Date.
(c) Purchase Price. Buyer shall have delivered 429,752 Shares
to Seller with a fair market value representing the negotiated purchase price of
the Acquired Assets, to Seller or Seller's agent(s).
(d) No Material Adverse Change. There shall not have been any
material adverse change in Buyer's business from the date of this Agreement to
the Closing Date (provided, however, that neither a claim brought by a third
party related to the Acquired Assets, nor a decline in the market price of
Buyer's Common Stock, shall, in and of itself, be deemed to be a materially
adverse change in Buyer's business).
10. REGISTRATION RIGHTS
10.1 Definitions. For purposes of this Agreement:
(a) Act. The term "Act" means the Act of 1933, as amended.
(b) Form S-3. The term "Form S-3" means such form under the
Act as is in effect on the date hereof or any successor registration form under
the Act subsequently adopted by the Commission which permits inclusion or
incorporation of substantial information by reference to other documents filed
by the Company with the Commission.
(c) Company. The term "Company" means the Buyer.
(d) Holder. The term "Holders" means Seller and such
shareholders of Seller to whom shares of Common Stock issued to Seller under
this Agreement may be transferred and any permitted successor, assignee, or
transferee thereof.
(e) Registration. The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement.
(f) Registrable Securities. The term "Registrable Securities"
means: (1) all of the Shares, and (2) any shares of Common Stock of the Company
issued as a dividend or other distribution with respect to, or in exchange for
or in replacement of, any of the Shares; provided,
19
however, that the term "Registrable Securities" shall exclude in all events (and
such securities shall not constitute "Registrable Securities") (i) any
Registrable Securities sold or transferred to a person to a person who is not a
Holder as defined above, (ii) any Registrable Securities sold in a public
offering pursuant to a registration statement filed with the Commission or sold
pursuant to Rule 144 promulgated under the Act ("Rule 144") or (iii) as to any
Holder, the Registrable Securities held by such Holder if all of such
Registrable Securities can be publicly sold without volume restriction within a
three-month period pursuant to Rule 144.
(g) Prospectus: The term "Prospectus" shall mean the
prospectus included in any Shelf Registration Statement (including, without
limitation, a prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Act), as amended or supplemented by any
prospectus supplement (including, without limitation, any prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Shelf Registration Statement), and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
(h) Shelf Registration Statement. See Section 10.2(a).
10.2 Form S-3 Shelf Registration.
(a) Registration. The Company shall prepare and file with the
Commission a registration statement on Form S-3 (or, if the Company is not then
eligible to use Form S-3, then another appropriate form) providing for the
resale by the Holders of all of the Registrable Securities (such registration
statement and any additional registration statements that may be filed pursuant
to the next sentence, referred to as the "Shelf Registration Statement"). If
additional Shares are issued after the Closing, then such Shares shall either be
included in the initial Shelf Registration Statement, or shall be registered
under a new Shelf Registration Statement filed by the Company. The Shelf
Registration Statement may include securities other than those held by Holders.
The Company will use all reasonable efforts to cause the initial Shelf
Registration Statement to become effective before February 19, 1998. The Company
shall use its best efforts to keep the Shelf Registration Statement continuously
effective, pursuant to the Act and the Rules and Regulations promulgated
thereunder, until (i) the date when such Registrable Securities cease to meet
the above definition of Registrable Securities, (ii) if all Registerable
Securities have been registered and sold, or (iii) two years after the effective
date of such Shelf Registration Statement (or, if Shares are issued after the
Closing and a new Shelf Registration Statement is filed by the Company covering
such Shares, then two years after the date such Shares are issued; or, if such
additional Shares are included in the initial Shelf Registration Statement, then
two years after the date such Shares are issued); provided, however:
(i) that the Holders will sell the Registrable Securities
pursuant to such registration only during a "Permitted Window" (as defined
below);
(ii) if a "Notice of Resale" (as defined below) has been
given, then if the Company furnishes to the Holders a certificate signed by the
President or Chief Executive Officer of the Company stating that, in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for the
20
Permitted Window to commence at such time) due to (A) the existence of a
material development or potential material development involving the Company
which the Company would be obligated to disclose in the Prospectus contained in
the Shelf Registration Statement, which disclosure would in the good faith
judgment of the Board of Directors of the Company be premature or otherwise
inadvisable at such time or (B) concurrent public filings with the Commission of
other registration statements, then the Company will have the right (the
"Deferral Right") to defer the commencement of the Permitted Window for a period
of not more than 30 days after receipt of the Notice of Resale; provided,
however, that the Company will not utilize the Deferral Right more than once in
any twelve month period; and
(iii) that the Company will not be required to effect any such
registration, qualification or compliance under applicable state blue sky laws
in any particular jurisdiction in which the Company would thereby be required to
qualify to do business or to execute a general consent to service of process.
In the event that the Shelf Registration Statement shall cease
to be effective, the Company shall promptly prepare and file a new registration
statement covering the Registrable Securities and shall use its best efforts to
have such registration statement declared effective as soon as possible. Any
such registration statement shall be considered a "Shelf Registration Statement"
hereunder.
(b) Permitted Window.For the purposes of this Agreement, a
"Permitted Window" with respect to a Holder is a period of 60 consecutive
calendar days commencing upon delivery to the Holder of the Company's written
notification to the Holder in response to a Notice of Resale that the Prospectus
contained in the Shelf Registration Statement is available for resale. In order
to cause a Permitted Window to commence, a Holder must first give written notice
to the Company of its present intention to sell part or all of the Registrable
Securities pursuant to such registration (a "Notice of Resale"). Upon receipt of
such Notice of Resale, the Company will give written notice to the Holders as
soon as practicable, but in no event not more than three business days after
such receipt, that (A) the Permitted Window will commence on the date such
notice is received by the Holder, (B) it is necessary for the Company to
supplement the Prospectus or make an appropriate filing under the Exchange Act
so as to cause the Prospectus to become current (unless a certificate of the
President or Chief Executive Officer is delivered as provided in above), or (C)
the Company is required under the Act and the Rules and Regulations thereunder
to amend the Shelf Registration Statement in order to cause the Prospectus to be
current (unless a certificate of the President or Chief Executive Officer is
delivered as provided in above). If the Company determines that a supplement to
the Prospectus, the filing of a report pursuant to the Exchange Act or an
amendment to the Shelf Registration Statement required under the Act, as
provided above, is necessary, it will take such actions as soon as reasonably
practicable (subject to paragraph (c) below), and the Company will notify the
Holder of the filing of such supplement, report or amendment, and, in the case
of an amendment, the effectiveness thereof, and the Permitted Window will then
commence. Within three business days after the Company has received a Notice of
Resale together with the original stock certificate representing the Registrable
Securities to which the Notice of Resale relates and instructions executed by
the Holder concerning cancellation of such certificate and reissuance of a new
certificate, the Company shall cause its transfer agent to issue a new
certificate for the Registrable Securities to be sold pursuant to the Notice of
Resale without the legends set forth in Section 6.19 above.
21
(c) Closing of Permitted Window. During a Permitted Window and
in the event (i) of the happening of any event of the kind described above or
(ii) that, in the judgment of the Company's Board of Directors, it is advisable
to suspend use of the Prospectus for a discrete period of time due to
undisclosed pending corporate developments or pending public filings with the
Commission (which need not be described in detail), the Company shall deliver a
certificate in writing to the Holder to the effect of the foregoing and, upon
receipt of such certificate, the Permitted Window shall terminate. The Permitted
Window shall resume upon the Holder's receipt of copies of the supplemented or
amended Prospectus, or at such time as the Holder is advised in writing by the
Company that the Prospectus may be used, and at such time as the Holder has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus and which are required to
be delivered as part of the Prospectus. In any event, the Permitted Window shall
resume no later than 30 days after it has been terminated pursuant to this
Section, and if the Permitted Window has been closed, then once resumed the
number of days during which such Permitted Window remains open shall be extended
by the number of days that the Permitted Window was closed. If the Company has
previously terminated a Permitted Window pursuant to this subsection within 90
days of the date that it delivers another notice pursuant this subsection
terminating another Permitted Window, then the time period set forth in the
preceding sentence shall be shortened so that the Permitted Window shall resume
no later than 10 days after it has been terminated pursuant to such second
notice.
(d) Expenses. The registration fees and expenses incurred by
the Company in connection with each Shelf Registration Statement and actions
taken by the Company in connection with each Permitted Window shall be borne by
the Company. Holder shall be responsible for any fees and expenses of its
counsel or other advisers; provided, however, that the Company shall pay the
incremental fees and expenses, if any, reasonably incurred by Holder (upon
submission of appropriate documentation) directly caused by the Company's
exercise of a Deferral Right or the closing of a Permitted Window. Before
incurring any such expenses, Holder shall give prior notice to the Company and
describe the fees and expenses that it proposes to incur for which it may
request reimbursement pursuant to the preceding sentence.
10.3 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(a) Furnish to the Holder such number of copies of a
Prospectus, including a preliminary Prospectus, in conformity with the
requirements of the Act, and such other documents as it may reasonably request
in order to facilitate the disposition of the Registrable Securities owned by it
that are included in such registration.
(b) Use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holder, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(c) Notify the Holder promptly (i) of any request by the
Commission or any other federal or state governmental authority during the
period of effectiveness of a registration
22
statement for amendments or supplements to such registration statement or
related prospectus or for additional information, (ii) of the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of a registration statement or the initiation
of any proceedings for that purpose and (iii) of the receipt by the Company of
any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(d) Make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the Shelf Registration Statement at
the earliest possible time.
(e) Use all reasonable efforts to list the Registrable
Securities for trading on Nasdaq or other stock exchange on which the Company's
Common Stock is then traded.
10.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 10 that the
Holder shall furnish to the Company such information regarding it, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to timely effect the registration of its
Registrable Securities.
10.5 Termination of Buyer's Obligations. The Company shall have no
obligations to register, or maintain, a registration statement governing
Registrable Securities, (i) if all Registrable Securities have been registered
and sold pursuant to registrations effected pursuant to this Agreement, (ii)
with respect to any particular Holder, at such time as all Registrable
Securities held by such Holder may be sold within a three month period under
Rule 144, as it may be amended from time to time, including but not limited to
amendments that reduce that period of time that securities must be held before
such securities may be sold pursuant to such rule or (iii) two years from the
effective date of the Shelf Registration Statement (or, with respect to Shares
that are issued after the Closing two years after the date such Shares are
included in a Shelf Registration Statement).
11. SURVIVAL OF WARRANTIES AND INDEMNIFICATION
11.1 Survival of Warranties. All representations and warranties made by
Seller or Buyer herein, or in any certificate, schedule or exhibit delivered
pursuant hereto, shall survive the Closing.
11.2 Indemnification by Seller. Seller and its shareholders shall
jointly and severally indemnify and hold harmless Buyer, its directors,
officers, shareholders, employees and agents from and against any Loss which
arises out of or results from:
(a) any breach of any covenant of Seller, or the inaccuracy or
untruth of any representation or warranty of Seller, made herein;
(b) any taxes, assessments and other governmental charges of
any kind or nature whatsoever, including without limitation any withholding,
social security or
23
unemployment levies, arising out of, or payable with respect to, Seller's
business operations through the Closing Date;
(c) any claim arising out of or based on any act, omission of
Seller or its directors, officers or employees or circumstance relating to
Seller's business arising before the Closing Date;
(d) any claim of infringement or violation of the intellectual
property rights of a third party or failure of Seller to be the owner of the
intellectual property included in the Acquired Assets or otherwise to have good
title or valid rights to the Acquired Assets;
(e) any claim or cause of action alleging liability related to
any past agreement with any of Seller's employees or independent contractors,
any agreement between Seller and any third party relating to the Acquired
Assets, or any claim by a third party arising out of or relating to the matters
set forth in the Disclosure Letter;
(f) any claim or cause of action by or on behalf of a creditor
of Seller asserting liability against Buyer, as purchaser of the Acquired
Assets, or seeking to impose any lien or any other encumbrance upon any of the
Acquired Assets, for obligations of Seller;
(g) any Loss arising out of or relating to any pilot,
pre-clinical, clinical or other studies or trials or other use by any person of
the Acquired Assets authorized by or conducted by, for or at the request of
Seller relating to any of the Acquired Assets; and
(h) any expenses in excess of Five Thousand Dollars ($5,000)
that are incurred by Buyer to obtain consents of third parties to assignment of
or transfer the Acquired Assets.
The indemnity obligations of the Seller's shareholders hereunder shall
in no event exceed the amounts paid to Seller hereunder (with respect to shares,
valued based on the market price on the date received by Seller), plus any
amounts that may be withheld pursuant Section 11.4.
11.3 Indemnification by Buyer. Buyer shall indemnify and hold harmless
Seller, its directors, officers, shareholders, employees and agents from and
against any Loss which arises out of or results from:
(a) any breach of a covenant of Buyer, or the inaccuracy or
untruth of any representation or warranty of Buyer, made herein;
(b) any claim against Seller or its shareholders relating to
the Acquired Assets and based solely on acts or omissions of Buyer or its
directors, officers or employees after the Closing Date relating to the Acquired
Assets; and
(c) any action against Seller or its shareholders relating to
sale of Shares by such person pursuant to the Shelf Registration Statement and
based upon any untrue statement of a material fact contained in any Shelf
Registration Statement or the omission to state in any such Shelf Registration
Statement a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that Buyer shall not be
liable in any such case for any such Loss to the extent that it arises out of or
is based upon a statement or omission
24
which occurs in reliance upon information furnished by Seller or any other
Holder; and provided further, that Buyer shall not be liable for the legal fees
and expenses of more than one counsel to all indemnified parties under this
Section 11.3.
11.4 Procedures for Indemnification. Buyer may recover the amount of
any Loss from the portion of the purchase price that is withheld or from amounts
otherwise payable after the Closing pursuant to the provisions of this
Agreement. If an indemnified party intends to assert a claim for
indemnification, it must first notify the indemnifying parties in writing. No
claim for indemnification may, however, be paid until the aggregate of such
claims exceeds $20,000. If the indemnifying parties dispute the claim, they
shall deliver a notice of dispute within thirty (30) days of the date on which
the notice of Loss was delivered, and the dispute shall be resolved by binding
arbitration in San Francisco, California under the Commercial Arbitration Rules
of the American Arbitration Association as provided below in this Agreement.
11.5 Further Procedures for Indemnification. If any action, suit or
proceeding shall be commenced by a third party against, or any claim or demand
be asserted by a third party against, Seller or Buyer, as the case may be, in
respect of which Seller or Buyer is entitled to demand indemnification under
this Section 11, then as a condition precedent thereto, the party seeking
indemnification ("Indemnitee") shall promptly notify the other party
("Indemnitor") in writing to that effect and with reasonable particularity. The
Indemnitor shall have the right to assume the control of the defense, compromise
or settlement of such action, suit, proceeding or claim, including the selection
of counsel, subject to the right of the Indemnitee to participate (at its own
expense and with counsel of its choice) in the defense, compromise or settlement
of such action, suit, proceeding, claim or demand, and in connection therewith
the Indemnitee shall cooperate fully in all respects with the Indemnitor in any
such defense, compromise or settlement. The Indemnitor will not compromise or
settle any such action, suit, proceeding, claim or demand without the prior
written consent of the Indemnitee, which consent will not be unreasonably
withheld or delayed. So long as the Indemnitor is defending in good faith any
such action, suit, proceeding, claim or demand asserted by a third party against
the Indemnitee, the Indemnitee shall not settle or compromise such action, suit,
proceeding, claim or demand without the prior written consent of the Indemnitor,
which consent will not be unreasonably withheld or delayed. The Indemnitee shall
make available to the Indemnitor or its agents all records and other materials
in the Indemnitee's possession reasonably required for contesting any third
party claim or demand. If the Indemnitor shall fail to promptly and adequately
defend any such action, suit, proceeding, claim or demand, or if there is an
inherent conflict between the legal or factual positions of Indemnitor and
Indemnitee, then the Indemnitee may defend, through counsel of its own choosing,
such action, suit, proceeding, claim or demand and (so long as Indemnitee gives
the Indemnitor at least ten (10) days' notice of the terms of the proposed
settlement thereof and permits the Indemnitor to then undertake the defense
thereof if Indemnitor objects to the proposed settlement) to settle such action,
suit, proceeding, claim or demand and to recover from the Indemnitor the amount
of such Losses. If Buyer is the Indemnitee, then in addition to exercising any
other rights or remedies Buyer may have under this Agreement, at law or in
equity, Buyer shall have the right, at any time, at Buyer's sole option after
Buyer gives Seller written notice of Buyer's intent to do so, to offset and/or
withhold all or any part of any amounts payable by Buyer to Seller that Buyer
considers necessary to satisfy any claim of which Buyer becomes aware prior to
the date such payments are made and for which Buyer is entitled to be
indemnified hereunder.
25
12. MISCELLANEOUS
12.1 Expenses. Each Party shall be responsible for its own fees and
expenses (including without limitation attorneys' fees) in connection with the
negotiation and consummation of the transaction contemplated hereby.
12.2 Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be given by means of personal delivery,
telecopier, certified or registered United States mail, postage prepaid, or by
nationally recognized overnight service courier and addressed as follows:
(a) If to Seller:
Neptune Pharmaceutical Corporation
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: President
(b) If to Buyer:
Cellegy Pharmaceuticals, Inc.
0000 Xxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: President
Notices shall be deemed given (i) upon delivery if personally delivered, (ii)
one business day after transmission by telecopier, with confirmation of receipt,
(iii) three business days after deposit in the United States mail, or (iv) one
business day after deposit with a nationally recognized overnight courier
service. Any party may change its address for delivery of notices by means of a
notice delivered to the other party.
12.3 Captions. The captions in this Agreement are for convenience only
and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
12.4 Amendment; Waiver. Any term or provision of this Agreement may be
amended only by a writing signed by Seller and Buyer. The observance of any term
or provision of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a writing
signed by the party to be bound by such waiver. No waiver by a party of any
breach of this Agreement will be deemed to constitute a waiver of any other
breach or any succeeding breach.
12.5 No Third Party Beneficiaries. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or to give any
person, firm or corporation, other than the parties hereto, any rights or
remedies under or by reason of this Agreement.
12.6 Execution in Counterparts. 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 instrument.
26
12.7 Assignment. This Agreement may not be assigned by any party hereto
without the prior written consent of each other party; except that Buyer may
assign this Agreement (and all related agreements) by operation of law or in
connection with any merger, consolidation or sale of all or substantially all
Buyer's assets or in connection with any similar transaction or to any
subsidiary, affiliate or parent of Buyer, provided that the entity to which the
Agreement is assigned in connection with any such transaction shall assume all
of Buyer's obligations hereunder; and except that Seller may assign its rights
under this Agreement to receive payment of the purchase price from Buyer and
delivery of any Shares representing such purchase price, but none of its
obligations, liabilities or responsibilities, in whole or in part to the
shareholders of Seller or to any successor entity to Seller.
12.8 Benefit and Burden. This Agreement shall be binding upon, shall
inure to the benefit of, and be enforceable by and against, the parties hereto
and their respective successors and permitted assigns.
12.9 Governing Law. This Agreement and any disputes arising out of or
relating to it shall be governed by the laws of the State of California
(excluding its choice of law rules) and, where appropriate, applicable federal
law.
12.10 Severability. If any provision of this Agreement is for any
reason and to any extent deemed to be invalid or unenforceable, then such
provision shall not be voided but rather shall be enforced to the maximum extent
then permissible under then applicable law and so as to reasonably effect the
intent of the parties hereto, and the remainder of this Agreement will remain in
full force and effect.
12.11 Return of Initial Payment in Certain Circumstances. If the
Closing does not occur because of Seller's bad faith or intentional misconduct
or because in the course of Buyer's due diligence Buyer discovers facts or
circumstances that are inconsistent in material respects with the
representations and warranties of Seller relating to the Acquired Assets and
that can reasonably be expected to have a material adverse effect on the value
of the Acquired Assets, then without limiting Buyer's other remedies, the sum of
$250,000 that Buyer has previously paid to Seller will be promptly repaid by
Seller to Buyer after a written request therefor from Buyer (or, if such payment
was made in shares of Buyer's Common Stock, then Seller shall transfer the
Common Stock to Buyer). The foregoing shall not be deemed to reduce or modify
Seller's obligations hereunder to consummate the transactions contemplated
hereby.
12.12 Prior Agreements. This Agreement (together with the December 18,
1997 letter from Buyer to Seller also executed by Seller, which is hereby
incorporated by reference, except to the extent superseded by the provisions of
Section 3.1(b) above), replaces and supersedes in its entirety the Binding
Letter of Intent dated November 3, 1997 previously entered into by the parties,
and upon execution and delivery of this Agreement by the parties, the Binding
Letter of Intent shall be terminated and shall no further force or effect.
13. ARBITRATION
13.1 Arbitration. Any dispute hereunder ("Dispute") shall be settled by
means of the procedures set forth in this Section. Each party shall give notice
to the other party of any Dispute. Promptly upon delivery of such notice, a
designated senior officer for each of Buyer
27
and Seller (which representative may be changed by a party by means of a notice
delivered to the other party) shall meet and attempt in good faith to resolve
the Dispute on a mutually satisfactory basis. If such the parties are unable to
resolve the Dispute within 60 days after delivery of the notice of a Dispute,
then the Dispute shall be settled by arbitration in San Francisco, California,
under the auspices of Judicial Arbitration and Mediation Services, Inc.
("JAMS"). Any judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction over the subject matter thereof. The
arbitrators shall have the authority to grant any equitable and legal remedies
that could be available in any judicial proceeding instituted to resolve a
Dispute. The parties shall use their best efforts to select an arbitrator within
30 days and to resolve the Dispute within 60 days.
13.2 Arbitrators. Each party shall select one arbitrator, and the two
arbitrators so selected shall appoint the third arbitrator. The parties shall
each pay one-half of the costs of the arbitrators. The arbitrators shall be
compensated at a rate to be determined by the parties or by JAMS, but based upon
reasonable hourly or daily consulting rates for the arbitrators in the event the
parties are not able to agree upon rates of compensation.
13.3 Further Procedures.
(a) Payment of Costs. Seller and Buyer will each pay 50% of
the initial compensation to be paid to the arbitrators in any such arbitration
and 50% of the costs of transcripts and other normal and regular expenses of the
arbitration proceedings. The parties shall pay their own attorneys' fees and
costs, and all costs of arbitration, including those provided for above, will be
paid by the losing party, and the arbitrator will be authorized to make such
determinations.
(b) Burden of Proof. For any Dispute submitted to arbitration,
the burden of proof will be as it could be if the claim were litigated in a
judicial proceeding.
(c) Award. Upon the conclusion of any arbitration proceedings
hereunder, the arbitrators will render findings of fact and conclusions of law
and a written opinion setting forth the basis and reasons for any decision
reached and will deliver such documents to each party to this Agreement along
with a signed copy of the award.
(d) Terms of Arbitration. The arbitrators chosen in accordance
with these provisions will not have the power to alter, amend or otherwise
affect the terms of these arbitration provisions or the provisions of this
Agreement.
(e) Exclusive Remedy. Except as may be specifically otherwise
provided in this Agreement, arbitration will be the sole and exclusive remedy of
the parties for any Dispute arising out of this Agreement.
[Remainder of this page intentionally left blank]
28
IN WITNESS WHEREOF, Buyer and Seller executed and delivered this
Agreement by their duly authorized representatives as of the Effective Date.
SELLER: BUYER:
Neptune Pharmaceutical Corporation Cellegy Pharmaceuticals, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx, M.D. By: /s/ K. Xxxxxxx Xxxxxxx
--------------------------- ----------------------
[Signature page to Asset Purchase Agreement between
Neptune Pharmaceutical Corporation and Cellegy Pharmaceuticals, Inc.]
29
LIST OF EXHIBITS
ASSET PURCHASE AGREEMENT
Exhibit A Purchase Price Allocation
Schedule A Intellectual Property
Schedule B Excluded Assets
Schedule C Seller Agreements
Patent Assignment
Trademark Assignment
Consulting Agreement
Disclosure Letter
30
EXHIBIT A
PURCHASE PRICE ALLOCATION
The purchase price shall be allocated among the Acquired Assets in accordance
with their respective fair market values.
31
SCHEDULE A
LIST OF INTELLECTUAL PROPERTY INCLUDED IN ACQUIRED ASSETS
Patents
Country Patent No. Date of Patent Title
------- ---------- -------------- -----
U.S.A. 5,504,117 4/2/96 Pharmacologic Preparation
for the Treatment of Anal
Disorders
U.S.A. 5,693,676 12/2/97 Nitric Oxide Donor
Composition and Method for
Treatment of Anal Disorders
Patent Applications
Patent applications that are included in the Intelleuctual Property and
Other Assets.
Registered Trademarks
Country Xxxx Reg. No. Class Date Reg.
------- ---- -------- ----- ---------
U.S.A. ANOGESIC 2,037,222 5 2/11/97
Unregistered Trademarks
Unregistered trademarks that are included in the Intellectual Property and
Other Assets.
Registered Copyrights
Unregistered Copyrights
Unregistered Copyrights that are included in the Intellectual Property
and Other Assets
Other Intellectual Property
As set forth in the Asset Purchase Agreement.
32
SCHEDULE B
EXCLUDED ASSETS
Neptune Pharmaceutical trade name and xxxx
33
SCHEDULE C
SELLER AGREEMENTS
34
PATENT ASSIGNMENT
For good and valuable consideration, the receipt of which is hereby
acknowledged, the person(s) named below (referred to as "ASSIGNOR" whether
singular or plural) has sold, assigned, and transferred and does hereby sell,
assign, and transfer to Cellegy Pharmaceuticals, Inc., a California corporation,
having a place of business at 0000 Xxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx
Xxxx, XX 00000 ("ASSIGNEE"), for itself and its successors, transferees, and
assignees, the entire worldwide right, title, and interest in all inventions and
improvements ("SUBJECT MATTER") that are disclosed in United States Letters
Patent listed on Schedule A attached hereto and the patent applications listed
on Schedule B attached hereto, together with any reissue, extension,
improvement, division, continuation or continuation-in-part of any thereof, in
the U.S. or worldwide, and all rights of priority resulting from the filing in
the United States of the patents or patent applications identified on Schedule A
or B.
ASSIGNOR agrees that ASSIGNEE may apply for and receive patents for
SUBJECT MATTER in ASSIGNEE's own name.
ASSIGNOR agrees to do the following, when requested, and without
further consideration, in order to carry out the intent of this Assignment: (1)
execute all oaths, assignments, powers of attorney, applications, and other
papers necessary or desirable to fully secure to ASSIGNEE the rights, titles and
interests herein conveyed; (2) communicate to ASSIGNEE all known facts relating
to the SUBJECT MATTER; and (3) generally do all lawful acts that ASSIGNEE shall
consider desirable for vesting in ASSIGNEE the rights, titles, and interests
herein conveyed. ASSIGNOR further agrees to provide any successor, assign, or
legal representative of ASSIGNEE with the benefits and assistance provided to
ASSIGNEE hereunder.
ASSIGNOR represents that ASSIGNOR has the rights, titles, and interests
to convey as set forth herein, and covenants with ASSIGNEE that the ASSIGNOR has
made or will make hereafter no assignment, grant, mortgage, license, or other
agreement affecting the rights, titles, and interests herein conveyed.
This Assignment may be executed in one or more counterparts, each of
which shall be deemed an original and all of which may be taken together as one
and the same Assignment.
Date of Date Declaration
Name and Signature Signature Executed By This Person
------------------ --------- -----------------------
Neptune Pharmaceutical Corporation
By: __________________________ December 30, 1997 December 30, 1997
[ASSIGNOR NAME]
35
SCHEDULE A
Patents
36
SCHEDULE B
Patent Applications
37
State of ____________________
County of ___________________
On ___________________ before me, _____________________ personally
appeared ____________________ personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that [he/she] executed the same in
[his/her] authorized capacity, and that by [his/her] signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
Notary Seal ______________________________
Notary
38
TRADEMARK ASSIGNMENT
THIS ASSIGNMENT is made this ____ day of December, 1997, from
Neptune Pharmaceutical Corporation, a Missouri corporation, 00 Xxxx 00xx Xxxxxx,
Xxx Xxxx, XX 00000 ("Assignor"), to Cellegy Pharmaceuticals, Inc., a California
corporation, 0000 Xxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx Xxxx, XX 00000
("Assignee").
WITNESSETH:
WHEREAS, Assignor owns the U.S. Registrations, and Assignor
and/or Assignor's predecessor in interest, has filed registration applications
with respect to the trademarks identified in Schedule A hereto (collectively,
the "Marks"); and
WHEREAS, Assignor and Assignee are parties to that certain
Asset Purchase Agreement dated as of December, 1997 (the "Agreement") pursuant
to which Assignor has agreed to sell, assign, transfer, convey and deliver to
Assignee and Assignee has agreed to purchase and acquire from Assignor, all
right, title and interest to certain assets; and
WHEREAS, in accordance with the terms of the Agreement,
Assignor and Assignee are desirous of transferring all right, title and interest
in and to the Marks and said applications and registration from Assignor to
Assignee.
NOW, THEREFORE, in consideration of entering into the
Agreement and other good and valuable consideration paid by Assignee to
Assignor, the receipt and sufficiency of which are hereby acknowledged, Assignor
hereby confirms that it has assigned, transferred and conveyed, and does hereby
assign, transfer and convey, to Assignee, its successors, assigns and other
legal representatives, all right, title and interest, including common law
rights, in and to each of the Marks and the registrations thereof and
applications to register the same (all as set forth in said Schedule A),
together with the goodwill of the business in connection with which the Marks
are used or proposed to be used, and further including all claims for damages by
reason of past infringement of the Marks, with the right to xxx for, and
collect, the same for Assignee's own use and benefit.
Assignor represents to Assignee that before the date of this
Trademark Assignment it has not filed any "Intent to Use" applications under 15
U.S.C. ss. 1051(b).
IN WITNESS WHEREOF, Assignor has caused this Assignment to be
duly executed by its authorized representative on and as of the day and year
first above written.
Neptune Pharmaceutical Corporation,
a Missouri corporation
By: _____________________________
Its: _____________________________
39
STATE OF ____________ )
)
COUNTY OF ______________ )
On _____________________ before me, _______________ personally appeared
____________________ personally known to me or proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument and acknowledged to me that [he/she] executed the same in [his/her]
authorized capacity, and that by [his/her] signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
_________________________________
Notary Public
[SEAL]
40
SCHEDULE A
EXISTING REGISTRATIONS
Marks Reg. No. Class Date Reg.
----- -------- ----- ---------
41
