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EXHIBIT 10.2
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
April 20, 1999, between ISIS PHARMACEUTICALS, INC., a Delaware corporation (the
"Company"), and ELAN INTERNATIONAL SERVICES, LTD., a Bermuda private limited
company ("EIS").
R E C I T A L S:
A. The Company desires to issue and sell to EIS, and EIS desires
to purchase from the Company, (i) 120,150 shares of a newly-created series of
the Company's Preferred Stock, par value $.001 per share, captioned "Series A
Convertible Preferred Stock" (the "Series A Preferred Stock"), (ii) 910,844
shares of the Company's Common Stock, par value $.001 per share (the "Common
Stock") ((i) and (ii) together, the "Shares"), and (iii) a warrant (the
"Warrant") to purchase up to 215,000 shares of Common Stock as provided for
therein. In addition, EIS has agreed to lend certain funds to the Company
pursuant to a convertible promissory note in the form attached hereto as Exhibit
A (as amended at any time, the "Note" and, together with the Series A Preferred
Stock, the Common Stock, and the Warrant, the "Securities"), with a maximum
aggregate principal amount of U.S.$18,400,000, amounts in respect of which shall
be disbursed in accordance with its terms and subject to the conditions
contained herein and therein. The rights, preferences and privileges of the
Series A Preferred Stock are as set forth in the Certificate of Designations,
Preferences and Rights (the "Certificate of Designations"), the form of which is
attached hereto as Exhibit B.
B. The Company and EIS have previously caused to be formed
Orasense Ltd., a Bermuda private limited company ("Newco"), and pursuant to the
terms of a Subscription, Joint Development and Operating Agreement, dated as of
the date hereof (as amended at any time, the "JDOA"), simultaneously with the
transactions contemplated by this Agreement, (i) the Company shall acquire 9,612
common shares of Newco, par value U.S.$1.00 per share (the "Newco Common
Stock"), and (ii) EIS shall acquire 2,388 shares of Newco Common Stock.
Additionally, as of the date hereof, Newco has entered into license agreements
with (i) ELAN CORPORATION, PLC, an Irish public limited company and parent
corporation of EIS ("Elan;" such agreement, as amended at any time, the "Elan
License Agreement"), and (ii) the Company (such agreement, as amended at any
time, the "Newco License Agreement" and, together with the Elan License
Agreement, the "License Agreements").
C. The Company and EIS are executing and delivering on the date
hereof a Registration Rights Agreement, in the form attached hereto as Exhibit C
(as amended at any time, the "Registration Rights Agreement"), in respect of the
Common Stock issued or issuable upon conversion of the Series A Preferred Stock
and the Note and exercise of the Warrant, the Common Stock being purchased
hereunder, and any other Common Stock issued to EIS or any of its affiliates or
permitted transferees upon any stock split, stock dividend, recapitalization or
similar event affecting the Securities. The Company, EIS and Newco are also
executing and delivering on the date hereof a Registration Rights Agreement in
the form attached hereto as
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Exhibit D (as amended at any time, the "Newco Registration Rights Agreement").
Additionally, the Company and EIS are executing and delivering on the date
hereof a Funding Agreement in the form attached hereto as Exhibit E (the
"Funding Agreement;" and, together with this Agreement, the Certificate of
Designations, the JDOA, the Registration Rights Agreement, the Newco
Registration Rights Agreement, the License Agreements and each other document or
instrument executed and delivered in connection with the transactions
contemplated hereby and by the JDOA, the "Transaction Documents").
A G R E E M E N T:
The parties hereto agree as follows:
SECTION 1. Closing.
(a) Time and Place. The closing of the transactions contemplated
hereby (the "Closing") shall occur on the date hereof (the "Closing Date"), at
the offices of Xxxxx Xxxxxxxxxxx LLC, Xxx Xxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
XX 00000.
(b) Issuance of Securities. At the Closing, the Company shall
issue and sell to EIS, and EIS shall purchase from the Company: (i) 120,150
shares of Series A Preferred Stock, (ii) 910,844 shares of Common Stock, (iii)
the Warrant, and (iv) the Note, the principal amount of which shall be disbursed
by EIS subsequent to the Closing in accordance with its terms.
(c) Purchase Price. The purchase price (the "Purchase Price")
shall be the sum of (i) U.S.$12,015,000, the purchase price for the Series A
Preferred Stock, and (ii) U.S.$15,000,000, the purchase price for the Common
Stock.
(d) Delivery. At the Closing:
(i) EIS shall pay the Purchase Price by wire transfer
to an account designated by the Company and the parties hereto shall
execute and deliver to each other, as applicable: (A) a certificate or
certificates for the Series A Preferred Stock and the Common Stock; (B)
the Note; (C) the Warrant; (D) the Registration Rights Agreement; (E)
the Newco Registration Rights Agreement; (F) the JDOA; (G) the
Certificate of Designations, as filed with the Secretary of State of the
State of Delaware; (H) the License Agreements; (I) the Funding
Agreement; (J) certificates as to the incumbency of the officers of the
Company executing any of the Transaction Documents; and (K) any other
documents or instruments reasonably requested by a party hereto; and
(ii) The Company shall cause to be delivered to EIS an
opinion of counsel in the form attached hereto as Exhibit C to the
Letter Agreement, dated March 31, 1998, by and among Elan, EIS and the
Company (the "Letter Agreement").
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(e) Exemption from Registration. The Securities and any
underlying shares of Common Stock will be issued under an exemption or
exemptions from registration under the Securities Act of 1933, as amended (the
"Securities Act"). Accordingly, the certificates evidencing the Series A
Preferred Stock and the Common Stock, the Warrant, the Note and any shares of
Common Stock or other securities issuable upon the exercise, conversion or
exchange of any of the Securities shall, upon issuance, contain a legend,
substantially in the form as follows:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT UNDER ANY
CIRCUMSTANCES BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
ALSO SUBJECT TO THE RESTRICTIONS CONTAINED IN THAT CERTAIN
SECURITIES PURCHASE AGREEMENT, DATED APRIL 20, 1999, BY AND
BETWEEN ISIS PHARMACEUTICALS, INC. AND ELAN INTERNATIONAL
SERVICES, LTD.
SECTION 2. Representations and Warranties of the Company. The
Company hereby represents and warrants to EIS, as of the date hereof, as
follows:
(a) Organization. The Company is duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own and lease its properties, to
carry on its business as presently conducted and as proposed to be conducted and
to consummate the transactions contemplated hereby. The Company is duly
qualified as a foreign corporation and in good standing to do business in each
jurisdiction in which the nature of the business conducted or the property owned
by it requires such qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a material adverse effect on
the business, assets, liabilities (contingent or otherwise), operations,
condition (financial or otherwise), or prospects of the Company (a "Company
Material Adverse Effect").
(b) Capitalization. As of the Closing Date, the Company has
reserved a sufficient number of shares of Common Stock (i) for issuance upon
conversion of the Series A
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Preferred Stock being purchased hereunder by EIS (including dividends in-kind
thereon), (ii) for issuance upon exercise of the Warrant, and (iii) for issuance
upon conversion of the Note (including interest payable thereon). The Shares,
when issued against payment therefor in accordance with this Agreement, will be
duly and validly issued, fully paid and nonassessable, will not be issued in
violation of any preemptive or similar rights. The shares of Common Stock
underlying the Series A Preferred Stock, the Note and the Warrant (the
"Underlying Shares"), when issued upon conversion or exercise in accordance with
the terms thereof, will be duly and validly issued, fully paid and
nonassessable, will not be issued in violation of any preemptive or similar
rights.
(c) Authorization of Transaction Documents. The Company has full
corporate power and authority to execute and deliver this Agreement and each of
the other Transaction Documents to which it is a party, and to perform its
obligations hereunder and thereunder. The execution, delivery and performance by
the Company of this Agreement and each of the other Transaction Documents to
which it is a party, including the issuance and sale of the Securities, have
been duly authorized by all requisite corporate action by the Company and, when
executed and delivered by the Company, this Agreement and each of the other
Transaction Documents to which it is a party will be the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except (A) that enforcement may be limited by (i)
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' rights, and (ii) general equity
principles and limitations on the availability of equitable relief, including
specific performance, and (B) that any rights to indemnity or contribution
hereunder or thereunder may be limited by state and federal securities laws and
by public policy considerations.
(d) No Violation. The execution, delivery and performance by the
Company of this Agreement and each other Transaction Document to which it is a
party, including the issuance and sale of the Securities, and compliance with
the provisions hereof and thereof by the Company, does not conflict with or
constitute or result in a breach of or default under (or an event which with
notice or passage of time or both would constitute a default) or give rise to
any right of termination, cancellation or acceleration under (i) the Certificate
of Incorporation, as amended, or by-laws, of the Company, (ii) applicable law,
statute, rule or regulation, or any ruling, writ, injunction, order, judgment or
decree of any court, arbitrator, administrative agency or other governmental
body applicable to the Company or any of its properties or assets, or (iii) any
contract filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 (the "1998 Form 10-K"), except where such breach,
default, termination, cancellation or acceleration would not, individually or in
the aggregate, have a Company Material Adverse Effect.
(e) Approvals. No material permit, authorization, consent,
approval, or order of or by, or any notification of or filing with, any person
or entity (governmental or otherwise) is required in connection with the
execution, delivery or performance of this Agreement or the Transaction
Documents, including the issuance and sale of the Securities, by the Company,
other
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than the filing of a Form D by the Company pursuant to Regulation D under the
Securities Act ("Regulation D").
(f) SEC Filings. The Company has filed with the Securities and
Exchange Commission (the "SEC") all forms, reports, schedules, statements,
exhibits and other documents (collectively, the "SEC Filings") required to be
filed by the Company on or before the date hereof. At the time filed, the SEC
Filings, including without limitation, any financial statements, exhibits and
schedules included therein or documents incorporated therein by reference (i)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (ii) complied in all material respects with the applicable
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be.
(g) Financial Statements. The audited balance sheets of the
Company at December 31, 1997 and 1998, together with the related statements of
operations, stockholders' equity (deficit) and cash flows for each of the three
years ended December 31, 1998, together with the reports and opinions thereon of
Ernst & Young LLP, contained in the 1998 Form 10-K, comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulation of the SEC with respect thereto, and fairly present, in all
material respects, the financial position of the Company and the results of its
operations and its cash flows at such dates and for the years then ended and
were prepared in conformity in all material respects with generally accepted
accounting principles applied on a consistent basis.
(h) Litigation. Except as disclosed in the 1998 Form 10-K, there
is no legal, administrative, arbitration or other action or proceeding or
governmental investigation pending, or to the Company's knowledge, threatened
against the Company, or any director, officer or employee of the Company that
challenges the validity or performance of this Agreement or the other
Transaction Documents to which the Company is a party.
(i) Absence of Certain Events. Since March 31, 1998, except as
contemplated by the Transaction Documents, (A) the Company has not (i) made,
paid or declared any dividend or distribution to any equity holder (in such
capacity) or redeemed any of its capital stock, (ii) varied its business plan or
practices, in any material respect, from past practices, (iii) entered into any
financing, joint venture, license or similar arrangement that would limit or
restrict its ability to perform its obligations hereunder and under each of the
other Transaction Documents to which it is a party, or (iv) suffered or
permitted to be incurred any liability or obligation or any lien or encumbrance
against any of its properties or assets that would limit or restrict its ability
to perform its obligations hereunder and under each of the other Transaction
Documents to which it is a party, and (B) there has not been any change or
development which has had, or in the Company's reasonable judgment is likely to
have, a Company Material Adverse Effect.
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(j) Brokers or Finders. The Company has not retained any
investment banker, broker, finder or person or entity acting in a similar
capacity, and is not liable for any fee or payment to any such person, in
connection with the transactions contemplated by the Transaction Documents.
SECTION 3. Representation and Warranties of EIS. EIS hereby
represents and warrants to the Company, as of the date hereof, as follows:
(a) Organization. EIS is duly organized, validly existing and in
good standing under the laws of Bermuda and has all requisite corporate power
and authority to own and lease its properties, to carry on its business as
presently conducted and as proposed to be conducted and to consummate the
transactions contemplated hereby. EIS is duly qualified as a foreign corporation
and in good standing to do business in each jurisdiction in which the nature of
the business conducted or the property owned by it requires such qualification,
except where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the business, assets, liabilities
(contingent or otherwise), operations, condition (financial or otherwise), or
prospects of EIS (an "EIS Material Adverse Effect").
(b) Authorization of Transaction Documents. EIS has full
corporate power and authority to execute and deliver this Agreement and each of
the other Transaction Documents to which it is a party, and to perform its
obligations hereunder and thereunder. The execution, delivery, and performance
by EIS of this Agreement and each other Transaction Document to which it is a
party, including the purchase and acceptance of the Securities, have been duly
authorized by all requisite corporate action by EIS and, when executed and
delivered by EIS, this Agreement and each of the other Transaction Document to
which it is a party, will be the valid and binding obligations of EIS,
enforceable against it in accordance with their respective terms, except (A)
that enforcement may be limited by (i) applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws affecting
creditors' rights, and (ii) general equity principles and limitations on the
availability of equitable relief, including specific performance, and (B) that
any rights to indemnity or contribution hereunder or thereunder may be limited
by state and federal securities laws and by public policy considerations.
(c) No Violation. The execution, delivery and performance by EIS
of this Agreement and each other Transaction Document to which it is a party,
including the purchase and acceptance of the Securities, and compliance with
provisions hereof and thereof by EIS, will not conflict with or constitute or
result in a breach of or default under (or an event which with notice or passage
of time or both would constitute a default) or give rise to any right of
termination, cancellation or acceleration under (i) the Memorandum and Articles
of Association of EIS, (ii) applicable law, statute, rule or regulation, or any
ruling, writ, injunction, order, judgment or decree of any court, arbitrator,
administrative agency or other governmental body applicable to EIS or any of its
properties or assets, or (iii) any material contract to which EIS is party,
except where such breach, default, termination, cancellation or acceleration
would not, individually or in the aggregate, have an EIS Material Adverse
Effect.
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(d) Approvals. No material permit, authorization, consent,
approval or order of or by, or any notification of or filing with, any person or
entity (governmental or otherwise) is required in connection with the execution,
delivery or performance of this Agreement or the Transaction Documents by EIS.
(e) Investment Representations.
(i) EIS is sophisticated in transactions of this type
and capable of evaluating the merits and risks of the transactions
described herein and in the other Transaction Documents to which it is a
party, and has the capacity to protect its own interests. EIS has not
been formed solely for the purpose of entering into the transactions
described herein and therein and is acquiring the Securities (and the
Underlying Shares) for investment for its own account, not as a nominee
or agent, and not with the view to, or for resale, distribution or
fractionalization thereof, in whole or in part, and no other person
(other than Elan) has a direct or indirect interest, beneficial or
otherwise in the Securities (or the Underlying Shares); provided,
however, that EIS shall be permitted to convert or exchange such
Securities in accordance with their terms.
(ii) EIS has not and does not intend to enter into any
contract, undertaking, agreement or arrangement with any person or
entity to sell, transfer or pledge the Securities (or the Underlying
Shares).
(iii) EIS acknowledges its understanding that the
private placement and sale of the Securities (and the Underlying Shares)
is exempt from registration under the Securities Act by virtue of the
provisions of Regulation D. In furtherance thereof, EIS represents and
warrants that it is an "accredited investor" as that term is defined in
Regulation D, has the financial ability to bear the economic risk of its
investment, has adequate means for providing for its current needs and
personal contingencies and has no need for liquidity with respect to its
investment in the Company.
(iv) EIS agrees that it shall not sell or otherwise
transfer any of the Securities (or the Underlying Shares) without
registration under the Securities Act or pursuant to an opinion of
counsel reasonably satisfactory to the Company that an exemption from
registration is available, and fully understands and agrees that it must
bear the total economic risk of its purchase for an indefinite period of
time because, among other reasons, none of the Securities (or the
Underlying Shares) have been registered under the Securities Act or
under the securities laws of any applicable state or other jurisdiction
and, therefore, cannot be resold, pledged, assigned or otherwise
disposed of unless subsequently registered under the Securities Act and
under the applicable securities laws of such states or jurisdictions or
an exemption from such registration is available. EIS understands that
the Company is under no obligation to register the Securities (or the
Underlying Shares) on its behalf with the exception of certain
registration rights with respect to certain of the Securities (and the
Underlying
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Shares), as provided in the Registration Rights Agreement. EIS
understands the lack of liquidity and restrictions on transfer of the
Securities (and the Underlying Shares) and that this investment is
suitable only for a person or entity of adequate financial means that
has no need for liquidity of this investment and that can afford a total
loss of its investment.
(f) Litigation. There is no legal, administrative, arbitration or
other action or proceeding or governmental investigation pending, or to EIS's
knowledge threatened, against EIS that challenges the validity or performance of
this Agreement or the other Transaction Documents to which EIS is a party.
(g) Brokers or Finders. EIS has not retained any investment
banker, broker, finder or person or entity acting in a similar capacity, and is
not liable for any fee or payment to any such person, in connection with the
transactions contemplated by the Transaction Documents.
SECTION 4. Covenants of the Parties.
(a) Operating Covenants. From and after the Closing Date and
until the earlier to occur of the exercise or expiration of the EIS Exchange
Right (as such term is defined in Section 6 hereof), the Company shall not
without the prior written consent of EIS: (i) encumber, pledge or otherwise
affect, in any respect, (A) any shares of Newco Common Stock owned by the
Company, including, without limitation, those shares of Newco Common Stock
transferable to EIS upon exercise by EIS of the EIS Exchange Right, or (B) its
ability to permit EIS to exercise the EIS Exchange Right in full, as provided
herein, or (ii) enter into any Significant Transaction (as such term is defined
in the Letter Agreement) with a director, officer or more than 20% beneficial
owner of Common Stock on other than an arm's length basis. From and after the
Closing Date and until the earlier to occur of the exercise or expiration of the
EIS Exchange Right, EIS shall not without the prior written consent of the
Company encumber, pledge or otherwise affect, in any respect, any shares of
Newco Common Stock owned by EIS.
(b) Fully-diluted Stock Ownership. Notwithstanding any other
provision of this Agreement, in the event that EIS shall have determined that at
any time it (together with its affiliates, if applicable) holds or has the right
to receive Common Stock (or securities or rights, options or warrants
exercisable, exchangeable or convertible for or into Common Stock) representing
in the aggregate in excess of 19.9% of the Company's outstanding Common Stock on
a fully diluted basis (assuming the exercise, exchange or conversion of such
securities beneficially owned by EIS or its affiliates, but not the exercise,
exchange or conversion of any other similar securities), EIS shall have the
right, in its sole discretion, rather than acquiring such securities from the
Company, to exchange such number of securities, as are necessary to bring its
holdings to below 19.9% of the voting securities of the Company, for non-voting,
convertible liquidation preferred stock of the Company (which shall be
reasonably satisfactory to each of the Company and EIS), which equity securities
shall be entitled to all of the other rights and benefits of the Common Stock.
In the event that EIS shall undertake to exercise such right, EIS shall
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retain the additional right to exchange such new class of equity security for
Common Stock, in its discretion at any time. Each of the Company and EIS shall
use commercially reasonable effort to effect such transactions and any required
subsequent conversions or adjustments to such securities, on a quarterly basis,
within 10 business days of the end of each of EIS' fiscal quarter.
(c) Use of Proceeds. The Company shall use the proceeds of (i)
the issuance and sale of the Series A Preferred Stock solely to meet its initial
capitalization obligations to Newco as described in the JDOA, and (ii) the
issuance and funding of the Note solely to meet its developmental funding
obligations to Newco, as described in the Funding Agreement.
(d) Confidentiality; Non-Disclosure.
(i) Subject to clauses (ii) and (iii) below, from and
after the date hereof, neither the Company nor EIS (nor their respective
affiliates) shall disclose to any person or entity this Agreement or the
other Transaction Documents or the contents thereof or the parties
thereto, except that such parties may make such disclosure (x) to their
directors, officers, employees and advisors, so long as they shall have
advised such persons of the obligation of confidentiality herein and for
whose breach or default the disclosing party shall be responsible, or
(y) as required by applicable law, rule, regulation or judicial or
administrative process, provided that the disclosing party uses
reasonable efforts to obtain an order or ruling protecting the
confidentiality of confidential information of the other party contained
herein or therein. The parties shall be entitled to seek injunctive or
other equitable relief in respect of any breach or threatened breach of
the foregoing covenant without the requirement of posting a bond or
other collateral.
(ii) Prior to issuing any press release or public
disclosure in respect of this Agreement or the transactions contemplated
hereby, the party proposing such issuance shall obtain the consent of
the other party to the contents thereof, which consent shall not be
unreasonably withheld or delayed; it being understood that if such
second party shall not have responded to such consent request within
five business days, such consent shall be deemed given.
(iii) This Section 4(d) shall not be construed to
prohibit disclosure by the receiving party of any information which has
not been previously determined to be confidential by the disclosing
party, or which shall have become publicly disclosed (other than by
breach of the receiving party's obligations hereunder).
(e) Further Assurances. From and after the date hereof, each of
the parties hereto agree to do or cause to be done such further acts and things
and deliver or cause to be delivered to each other such additional assignments,
agreements, powers and instruments, as each may reasonably require or deem
advisable to carry into effect the purposes of this Agreement and the other
Transaction Documents.
SECTION 5. Standstill.
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(a) Provided that nothing contained herein will prevent or
prohibit EIS from purchasing Voting Stock (as defined below) of the Company
pursuant to subsection 5(b) or from acquiring Voting Stock pursuant to the
conversion of the Series A Preferred Stock or the Note or the exercise of the
Warrant in accordance with their respective terms, EIS will not, directly or
indirectly, without the prior consent of a majority of the Board of Directors of
the Company (the "Board"), (i) acquire (or offer or agree to acquire) any Voting
Stock if, as a result, EIS would beneficially own more than 20% of the then
outstanding Voting Stock; (ii) directly or indirectly solicit proxies or
consents or become a participant in a solicitation (as such terms are defined in
Regulation 14A under the Exchange Act) in opposition to the recommendation of
the majority of the Board for a Takeover Event (as defined below); or (iii)
transfer to any third party, other than its "affiliates," "associates" (as such
terms are defined in Rule 12b-2 under the Exchange Act), officers, directors or
employees, the right to vote any Voting Stock except in connection with the
transfer of ownership of such Voting Stock for fair value. EIS also agrees that
it will not advise, assist or encourage any third party to do any of the
foregoing. Notwithstanding the foregoing, EIS will not be obligated to dispose
of any Voting Stock it owns if its percentage ownership is increased as a result
of a decrease in the number of shares of Voting Stock outstanding.
(b) The provisions of this Section 5 will terminate: (i) if EIS
owns less than 2% of Voting Stock; (ii) if EIS makes a tender offer to purchase
100% of the then outstanding Voting Stock and such offer is accepted by the
holders of more than 50% of the Voting Stock not owned directly or indirectly by
EIS (which tender offer, if it contains such acceptance as a condition to
consummation, will not be a violation of subsection 5(a)); (iii) if any person
or group, excluding EIS, makes a bona fide offer to acquire Voting Stock which
would, if successful, result in the bidder's beneficial ownership of at least
15% of the then outstanding Voting Stock; or (iv) upon the third anniversary of
the date of this Agreement. For purposes of clause (iii), the provisions of this
Section 5 will not terminate until such time as such offer is rejected or
revoked, however, EIS will not have to dispose of any Voting Stock acquired by
it before such offer is rejected or revoked, and EIS will be permitted to
consummate pending transactions which are not cancelable without a penalty.
(c) The Company will give EIS prompt notice of the receipt by the
Company of any written notice couched in such terms as to put the Company
reasonably on notice of the likelihood that a person or group has acquired or is
proposing to acquire an aggregate position of at least 5% of the Voting Stock,
the Company's receiving any bona fide offer to purchase or acquire 15% or more
of the Voting Stock or all or substantially all of the assets of the Company,
and any Board determination to seek an acquiror for in excess of 50% of the
Voting Stock.
(d) EIS will cause its affiliates and associates to comply with
the provisions of this Section 5, whether directly or indirectly, individually
or as part of a "group" (as such term is defined in Rule 13d-5 under the
Exchange Act). When used in this Section 5, the term EIS includes EIS together
with its affiliates and associates.
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(e) For purposes of this Section 5, the term "Takeover Event"
means any proposal for any merger or business combination involving the Company
or any of its subsidiaries, the purchase or sale of any assets of the Company or
any of its subsidiaries, or the purchase of any of the Voting Stock, by tender
offer or otherwise (except pursuant to the exercise of rights, warrants, options
or similar securities distributed by the Company to holders of Voting Stock
generally), and the term "Voting Stock" means the Common Stock and any preferred
stock of the Company possessing voting rights and eligible to participate in
votes of all of the Company's stockholders pursuant to the Company's Certificate
of Incorporation and Delaware law, and includes any options, convertible
securities or other rights to acquire such stock.
SECTION 6. Conversion and Exchange Rights. The Certificate of
Designations sets forth certain rights of the holders of shares of Series A
Preferred Stock to convert such shares of preferred stock into newly issued
shares of Common Stock, or to exchange such shares of Series A Preferred Stock
into certain shares of Newco Common Stock owned by the Company (the "EIS
Exchange Right"), both on the terms and conditions set forth therein.
SECTION 7. Survival Period. The representations and warranties of
the Company and EIS contained herein shall survive for a period of two years
from and after the date hereof.
SECTION 8. Notices. All notices, demands and requests of any kind
to be delivered to any party in connection with this Agreement shall be in
writing and shall be deemed to have been duly given if personally or hand
delivered or if sent by an internationally-recognized overnight delivery or by
registered or certified mail, return receipt requested and postage prepaid, or
by facsimile transmission (with receipt confirmed by telephone) addressed as
follows:
(i) if to the Company, to:
Isis Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: B. Xxxxx Xxxxxxxx
Tel.: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: L. Xxx Xxxxxxxx, Esq.
Tel.: 000-000-0000
Fax: 000-000-0000
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(ii) if to EIS, to:
Elan International Services, Ltd.
Flatts, Smiths Parish
Bermuda, FL 04
Attention: Director
Tel.: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxx Xxxxxxxxxxx LLC
000 Xxxx 00xx Xxxxxx , 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
Tel.: 000-000-0000
Fax: 000-000-0000
or to such other address as the party to whom notice is to be given may have
furnished to the other party hereto in writing in accordance with provisions of
this Section 8. Any such notice or communication shall be deemed to have been
effectively given (i) in the case of personal or hand delivery, on the date of
such delivery, (ii) in the case of an internationally-recognized overnight
delivery service, on the second business day after the date when sent, (iii) in
the case of mailing, on the fifth business day following that day on which the
piece of mail containing such communication is posted, and (iv) in the case of
facsimile transmission, on the date of telephone confirmation of receipt.
SECTION 9. Entire Agreement. This Agreement and the other
Transaction Documents contain the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings among the parties with respect thereto.
SECTION 10. Amendments. This Agreement may not be modified or
amended, or any of the provisions hereof waived, except by written agreement of
the Company and EIS.
SECTION 11. Counterparts and Facsimile. The Transaction Documents
may be executed in any number of counterparts, and each such counterpart hereof
shall be deemed to be an original instrument, but all such counterparts together
shall constitute one agreement. Each of the Transaction Documents may be signed
and delivered to the other party by facsimile transmission; such transmission
shall be deemed a valid signature.
SECTION 12. Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of the Agreement.
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SECTION 13. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to principles thereof relating to conflicts of laws, except that
all issues concerning the relative rights of the Company and its stockholders
shall be governed by the Delaware General Corporation Law, without giving effect
to the principles thereof relating to conflicts of laws.
SECTION 14. Arbitration.
(a) Any dispute under the Transaction Documents which is not
settled by mutual consent shall be finally settled by binding arbitration,
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association by one arbitrator appointed in accordance with said
rules. Such arbitrator shall be reasonably satisfactory to each of the parties;
provided, that if the parties are unable to agree upon the identity of such
arbitrator within 15 days of demand by either party, then either party shall
have the right to petition a presiding justice of the Supreme Court of New York,
New York County, to appoint an arbitrator. The arbitration shall be held in New
York, New York and the arbitrator shall be an independent expert in
pharmaceutical product development and marketing (including clinical development
and regulatory affairs).
(b) The arbitrator shall determine what discovery will be
permitted, consistent with the goal of limiting the cost and time which the
parties must expend for discovery; provided the arbitrator shall permit such
discovery as they deem necessary to permit an equitable resolution of the
dispute. Any written evidence originally in a language other than English shall
be submitted in English translation accompanied by the original or a true copy
thereof. The costs of the arbitration, including administrative and arbitrators'
fees, shall be shared equally by the parties and each party shall bear its own
costs and attorneys' and witness' fees incurred in connection with the
arbitration.
(c) In rendering judgment, the arbitrator shall be instructed by
the parties that he shall be permitted to select solely from between the
proposals for resolution of the relevant issue presented by each party, and not
any other proposal. A disputed performance or suspended performances pending the
resolution of the arbitration must be completed within 30 days following the
final decision of the arbitrators or such other reasonable period as the
arbitrators determine in a written opinion.
(d) Any arbitration under the Transaction Documents shall be
completed within one year from the filing of notice of a request for such
arbitration. The arbitration proceedings and the decision shall not be made
public without the joint consent of the parties and each party shall maintain
the confidentiality of such proceedings and decision unless otherwise permitted
by the other party.
(e) The parties agree that the decision shall be the sole,
exclusive and binding remedy between them regarding any and all disputes,
controversies, claims and counterclaims
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presented to the arbitrators. Application may be made to any court having
jurisdiction over the party (or its assets) against whom the decision is
rendered for a judicial recognition of the decision and an order of enforcement.
SECTION 15. Expenses. Each of the parties shall be responsible
for its own costs and expenses incurred in connection with the transactions
contemplated hereby and by the other Transaction Documents.
SECTION 16. Schedules, etc. All statements contained in any
exhibit or schedule delivered by the parties hereto, or in connection with the
transactions contemplated hereby, are an integral part of this Agreement and
shall be deemed representations and warranties hereunder.
SECTION 17. Assignments and Transfers. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. This
Agreement, the shares of Series A Preferred Stock and Common Stock being
purchased hereunder by EIS, the Note, the Warrant, and the shares of Common
Stock underlying the Series A Preferred Stock, the Note and the Warrant may be
transferred by EIS to its affiliates and subsidiaries, as well as any
off-balance sheet special purpose entity established by EIS, provided, however,
that EIS shall remain liable for its obligations hereunder after any such
assignment. Other than as set forth above, no party shall transfer or assign
this Agreement, the shares of Series A Preferred Stock and Common Stock being
purchased hereunder by EIS, the Note, the Warrant, and the shares of Common
Stock underlying the Series A Preferred Stock, the Note and the Warrant, or any
interest therein, without the prior written consent of the other party;
provided, however, that no consent shall be required in connection with any such
transfer or assignment by a party pursuant to a sale of all or substantially all
of the business of such party to which the Transaction Documents relate, whether
by merger, sale of stock, sale of assets or otherwise.
SECTION 18. Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not be in any way affected or
impaired thereby.
[Signature Page Follows.]
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IN WITNESS WHEREOF, each of the undersigned has duly executed
this Agreement as of the date first written above.
ISIS PHARMACEUTICALS, INC.
By: /s/ B. Xxxxx Xxxxxxxx
------------------------------------
B. Xxxxx Xxxxxxxx
Executive Vice President
ELAN INTERNATIONAL SERVICES, LTD.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx
President
