STOCK EXCHANGE AGREEMENT
This STOCK EXCHANGE AGREEMENT is made and entered into as of February
28, 1997 by and among Enzon, Inc., a Delaware corporation (the "Company"), and
the GFL Performance Fund Ltd., a corporation organized under the laws of the
British Virgin Islands, the holder (the "Series C Stockholder") of the Company's
Series C Convertible Preferred Stock, $0.01 par value per share (the "Series C
Preferred Stock").
R E C I T A L S:
WHEREAS, the Company desires to induce the Series C Stockholder, and
the Series C Stockholder is willing, to (i) exchange its shares of Series C
Preferred Stock for an equal number of shares of the Company's newly designated
Series D Convertible Preferred Stock, $0.01 par value share (the "Series D
Convertible Preferred Stock"), (ii) immediately convert its shares of Series D
Convertible Preferred Stock into the Company's Common Stock, $0.01 par value per
Share (the "Common Stock"), and (iii) agree not to sell or otherwise transfer
the shares of Common Stock issued upon conversion of the Series D Preferred
Stock for a period of twelve (12) months from the date of this agreement without
the prior written consent of the Company.
NOW THEREFORE, in consideration of the foregoing, the representations,
warranties and agreements of the parties contained herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. SHARE EXCHANGE
1.1 Exchange. The Series C Stockholder does hereby transfer,
assign, convey and deliver to the Company the number of shares of Series C
Preferred Stock set forth opposite that Stockholder's name on Schedule 1.1, in
exchange for an equal number of Shares of Series D Preferred Stock. The Series C
Stockholder has delivered to the Company the certificate or certificates
representing such shares of Series C Preferred Stock, with duly executed stock
powers endorsed in blank, and the shares of Series C Preferred Stock delivered
hereunder shall be cancelled and a new certificate or certificates shall be
issued and delivered promptly to the Series C Stockholder evidencing that number
of shares of Series D Preferred Stock equal to the number of shares of Series C
Preferred Stock set forth opposite such Series C Stockholder's name on Schedule
1.1.
1.2 Registration Rights Agreement. The parties hereto acknowledge and agree
that the Common Stock issuable upon conversion of the Series D Preferred Stock
shall be treated as "Conversion Shares" pursuant to that certain Registration
Rights Agreement (the
"Registration Rights Agreement"), dated as of March 15, 1996, by and between the
Company and the Buyer (as defined therein) and that the rights and obligations
of the parties under the Registration Rights Agreement with respect to
Conversion Shares (as defined in the Registration Rights Agreement) will attach
to the shares of Common Stock issuable upon conversion of the Series D Preferred
Stock, provided, however, that the obligation of the Company to file a
registration statement with respect to the shares of Common Stock issuable upon
exercise of the Series D Preferred Stock shall not commence until two hundred
ten (210) days from the date hereof.
1.3 Securities Purchase Agreement. Sections 2(d), (e), (f) and
(g); 4(b), (c), (h) and (j); and 5 (the "Surviving Sections") of the Securities
Purchase Agreement (the "Securities Purchase Agreement"), dated as of March 15,
1996, by and between the Company and the Buyer (as defined therein) and the
definitions of defined terms used in the Surviving Sections but defined
elsewhere in the Securities Purchase Agreement shall remain in full force and
effect as if the shares of Series D Preferred Stock issued to the Series C
Stockholder hereunder were issued and sold to the Series C Stockholder pursuant
to the Securities Purchase Agreement at the time the shares of Series C
Preferred Stock purchased by the Series C Stockholder thereunder were issued.
Except as provided in the preceding sentence, the Securities Purchase Agreement
shall be deemed to be terminated and the provisions thereof to be null and void
and the rights of the Series C Stockholder with respect to the Series D
Preferred Stock and Warrants (as defined in the Securities Purchase Agreement)
issued to the Series C Stockholder shall be governed by and subject to (A) the
Certificate of Designations (the "Certificate of Designations") relating to the
Series D Preferred Stock, a copy of which is attached hereto as Exhibit A and
made a part hereof, (B) the Registration Rights Agreement, a copy of which is
attached hereto as Exhibit B and made a part hereof, and (C) the Amended and
Restated Warrant, of even date herewith, by the Company in favor of GFL
Performance Fund Ltd., a copy of which is attached hereto as Exhibit C.
1.4 Lock-up. The Series C Stockholder agrees that from the
date hereof and continuing for a period of twelve (12) months, it will not,
without the Company's prior written consent, offer, sell or contract to sell,
directly or indirectly, any shares of the Company's Common Stock received by it
upon conversion of the Series D Preferred Stock.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Series C
Stockholder as follows:
2.1 Existence and Power. The Company is validly existing and in good
standing under the laws of its state of incorporation. The Company has the full
corporate power and authority to enter into and perform this Agreement and each
other instrument it is executing and delivering in connection with this
Agreement (collectively, the "Transaction Documents"). The Company has the full
corporate power and authority to carry on its business as now conducted, and to
own, lease and operate its properties as it now does. The
- 2 -
Company is qualified to do business as a foreign corporation in each
jurisdiction in which it is required to be qualified.
2.2 Authorization. The execution, delivery and performance of
each of the Transaction Documents have been duly authorized by all necessary
action, and each of the Transaction Documents constitutes the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law).
2.3 Consents of Third Parties. The execution, delivery and
performance of each of the Transaction Documents by the Company will not (a)
violate or conflict with the certificate of incorporation or by-laws of the
Company; (b) conflict with, or result in the breach, termination or acceleration
of, or constitute a default under, any lease, mortgage, license, agreement,
commitment or other instrument to which the Company is a party or by which it or
any of its properties are bound; (c) constitute a violation of any law,
regulation, order, writ, judgment, injunction or decree applicable to the
Company or any of the Company's properties or require any governmental consent,
registration or approval; or (d) result in the creation of any lien upon the
properties or assets of the Company.
2.4 Litigation. There is no judicial or administrative action
or proceeding pending or, to the best knowledge of the Company, threatened, nor,
to the best knowledge of the Company, is there any governmental investigation
pending or threatened, that questions the validity of any of the Transaction
Documents or any action taken or to be taken by the Company in connection with
any of the Transaction Documents.
2.5 Validity of Shares. The shares of Series D Preferred Stock
issued by the Company in exchange for Series C Preferred Stock, are validly
issued, fully paid and non-assessable.
3. REPRESENTATIONS AND WARRANTIES OF THE Series C Stockholder.
The Series C Stockholder hereby represents and warrants to the
Company as follows:
3.1 Existence and Power. That the Series C Stockholder is
validly existing and in good standing under the law of the jurisdiction of its
organization and has the full power and authority to enter into and perform this
Agreement.
3.2 Authorization. The execution, delivery and performance of this
Agreement has been duly authorized by all necessary action, and this
Agreement constitutes the valid and binding obligation of the Series C
Stockholder enforceable against it in
- 3 -
accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights in general and
subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
3.3 Consents of Third Parties. The execution, delivery and
performance this Agreement will not: (a) violate or conflict with its
partnership agreement, certificate of incorporation or by-laws or other similar
organizational documents of the Series C Stockholder; (b) conflict with, or
result in the breach, termination or acceleration of, or constitute a default
under, any lease, mortgage, license, agreement, commitment or other instrument
to which it is a party or by which it or any of its properties are bound; or (c)
constitute a violation of any law, regulation, order, writ, judgment, injunction
or decree applicable to it or any of its properties or require any governmental
consent, registration or approval.
3.4 Litigation. There is no judicial or administrative action
or proceeding pending or, to the best knowledge of the Series C Stockholder,
threatened, nor, to the best knowledge of the Series C Stockholder, is there any
governmental investigation pending or threatened, that questions the validity of
this Agreement or any action taken or to be taken by it in connection with this
Agreement.
3.5 Investment. The Series C Stockholder is an accredited
investor (within the meaning of the rules and regulations under the Securities
Act of 1933, as amended) and will be acquiring Series D Preferred Stock for
investment and not with a view to distribution in violation of the Securities
Act.
3.6 Brokers. No agreement, arrangement or understanding with
any broker or finder in connection with the transactions contemplated by this
Agreement has been entered into by that Series C Stockholder.
3.7 Ownership. That each Series C Stockholder is the record
and beneficial owner of the shares of Series C Preferred Stock set forth
opposite that Series C Stockholder's name on Schedule 1.1, free and clear of all
liens, claims and encumbrances of any kind.
4. ADDITIONAL AGREEMENTS.
4.1 Indemnification. The Company, on one hand, and the Series
C Stockholder, on the other hand, agree to indemnify and hold harmless the other
party from and against any and all damage, loss, liability, claim, or expense
(including reasonable attorney's fees) incurred by such other party resulting
from, or which exists or arises due to (i) any inaccuracy, breach or omission
of, from, or in, the representations and warranties of such party contained in
this Agreement, or (ii) the nonfulfillment of any agreement or obligation of
such party under this Agreement.
- 4 -
4.2 Further Acknowledgement. The Series C Stockholder hereby
authorizes the cancellation of the Series C Preferred Stock and the issuance of
Series D Preferred Stock to such holder. The Series C Stockholder acknowledges
and agrees that, except as provided herein, upon the consummation of the
transactions contemplated by this Agreement such Series C Stockholder shall have
no rights as a Series C Stockholder and further, that this Agreement constitutes
a settlement and relinquishment of its rights as a holder of the Series C
Preferred Stock, including but not limited to, the conversion rights with
respect to the Series C Preferred Stock. Accordingly, in consideration of the
agreements made by the Company hereunder, the Series C Stockholder hereby
releases and discharges the Company, and its successors and assigns, from any
and all claims, demands, rights or liabilities which the Series C Stockholder
ever had, now has or may have in the future, by reason of, arising out of, or in
any way connected with the Series C Stockholder's status as a holder of the
Series C Preferred Stock.
5. GENERAL PROVISIONS.
The parties further covenant and agree as follows:
5.1 Amendments. This Agreement may be amended, supplemented or
interpreted only by written instrument duly executed by each of the parties
hereto.
5.2 Contents of Agreement, Parties in Interest, Assignment.
This Agreement sets forth the entire understanding of the parties with respect
to the subject matter hereof. Any previous agreements or understandings between
the parties regarding the subject matter hereof are merged into and superseded
by this Agreement in accordance with its terms. All representations, warranties,
terms and conditions of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective heirs, legal representatives,
successors and permitted assigns of the parties hereto.
5.3 Severability. In the event that any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions of this Agreement shall not be in any way impaired.
5.4 Headings. The headings of the Sections and the subsections of this
Agreement are inserted for convenience of reference only and shall not
constitute a part hereof.
5.5 Instruments of Further Assurance. Each of the parties
hereto agrees, upon the request of any of the other party hereto, from time to
time to executive and deliver to such other party or parties all such
instruments and documents of further assurance or otherwise as shall be
reasonable under the circumstances, and to do any and all such acts and things
as may reasonably be required to carry out the obligations of such requested
party hereunder.
- 5 -
5.6 Specific Performance, Etc. Each of the parties hereto will
be entitled to specific performance of its rights under this Agreement. Each of
the parties hereto agrees that a breach of any of the provisions of this
Agreement will cause irreparable injury to the nonbreaching party, that such
nonbreaching party have no adequate remedy at law in respect of such breach and,
as a consequence, that each and every provision contained in this Agreement
shall be specifically enforceable against all parties hereto.
5.7 Governing Law; Jurisdiction. This Agreement shall be
governed, construed and enforced in accordance with the internal laws of the
State of Delaware, excluding any choice of law rules which may direct the
application of the laws of another jurisdiction.
5.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the day and year first above written.
ENZON, INC.
By: /S/XXXXXXX X. XXXXXXXX
---------------------------
Name: Xxxxxxx X. Xxxxxxxx
Its: Vice President, Finance and
Chief Financial Officer
GFL PERFORMANCE FUND LTD.
By: /S/HANS XXXXXXXX XXXX
--------------------------
Name: Hans Xxxxxxxx Xxxx
Its: Director
Address: GFL Performance Fund Ltd.
c/o Clearwater Funds
000 Xxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Administrator
Curacao International Trust Co. N.V.
Xxxx Xxxxxxxxx 0
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxx Antilles
- 6 -
