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Exhibit 4.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made as of the 20th
day of September, 1999 by and between InKine Pharmaceutical Company, Inc., a New
York corporation (the "Company"), and the Investors set forth on the signature
page affixed hereto (each an "Investor" and collectively the "Investors").
RECITALS
A. The Company and the Investors are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Section 4(2) of the 1933 Act (defined below);
B. Each Investor wishes to purchase, and the Company wishes to
sell and issue to each Investor, upon the terms and conditions stated in this
Agreement, that number of shares of the common stock of the Company, $0.0001 par
value per share (the "Common Stock") and that number of warrants to purchase
Common Stock in the form attached hereto as EXHIBIT A (the "Warrants"), as are
set forth on the signature page attached hereto and executed by each such
Investor for an aggregate offering of up to $3,000,000; and
C. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as EXHIBIT B (the "Registration Rights
Agreement"), pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and applicable state securities laws;
In consideration of the mutual promises made herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. In addition to those terms defined above and elsewhere
in this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings here set forth:
1.1 "Affiliate" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person.
1.2 "Agreements" means this Agreement, the Registration Rights
Agreement, and the Warrants.
1.3 "Closing" means the consummation of the transactions
contemplated by this Agreement, and "Closing Date" shall have the meaning set
forth in Section 3, below.
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1.4 "Control" means the possession , direct or indirect, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
1.5 "Market Price" means the average of the five lowest
closing bid prices of the Company's Common Stock over the twenty-five (25)
trading days immediately preceding the applicable date.
1.6 "Material Adverse Effect" means a material adverse effect
on the (i) condition (financial or otherwise), business, assets, or results of
operations of the Company and its subsidiaries, taken as a whole; (ii) ability
of the Company to perform any of its material obligations under the terms of
this Agreement; or (iii) rights and remedies of the Investor under the terms of
this Agreement.
1.7 "Person" means an individual, corporation, limited
liability company, partnership, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.
1.8 "SEC Filings" has the meaning set forth in Section 4.6.
1.9 "Securities" means the Shares, the Warrants and the
Warrant Shares (defined below).
1.10 "Shares" means the shares of Common Stock being purchased
by the Investors hereunder.
1.11 "Warrant Shares" means the shares of Common Stock
issuable upon exercise of or otherwise pursuant to the Warrants.
1.12 "1933 Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
1.13 "1934 Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
2. Purchase and Sale of the Shares and Warrants. Subject to the terms
and conditions of this Agreement, each of the Investors hereby severally, and
not jointly, agrees to purchase, and the Company hereby agrees to sell and issue
to the Investor, the number of Shares and Warrants to purchase the number of
Shares of Common Stock set forth on such Investor's signature page attached
hereto. The number of shares to be purchased by each Investor shall be
determined by dividing such Investor's aggregate purchase price (as such
aggregate purchase price is set forth on such Investor's signature page attached
hereto), by an amount equal to 80% of the Market Price on the date hereof (the
"Purchase Price"). The number of shares of Common Stock purchasable by each
Investor pursuant to the Warrants shall be equal to 33% of the number
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of Shares purchased by such Investor and the exercise price of such Warrants
shall be 110% of the Market Price.
3. Closing. On the date of this Agreement, the Purchase Price shall be
determined. The Company shall promptly deliver to Investors' counsel, in trust,
a certificate or certificates, registered in such name or names as the Investors
shall have designated, representing all of the Shares and all of the Warrants,
with instructions that such certificates are to be held for release to the
Investors only upon payment of the Purchase Price to the Company. Upon receipt
by counsel to the Investors of the certificates, the Investors shall promptly
cause a wire transfer in same day funds to be sent to the account of the Company
as instructed in writing by the Company, in an amount representing the entire
Purchase Price, less the amount due pursuant to Section 10.5 below, which shall
be paid directly to Tail Wind, Inc. On the date the Company receives such funds,
the certificates evidencing the Shares and the Warrants shall be released to the
Investors (and such date shall be deemed the "Closing Date").
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that:
4.1 Organization, Good Standing and Qualification. The Company
and each of its subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to carry on
its business as now conducted and own its properties. The Company and each of
its subsidiaries is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property makes such qualification or licensing
necessary unless the failure to so qualify would not have a Material Adverse
Effect.
4.2 Authorization. The Company has the requisite corporate
power and authority and has taken all requisite action on the part of the
Company, its officers, directors and stockholders necessary for (i) the
authorization, execution and delivery of the Agreements, (ii) authorization of
the performance of all obligations of the Company hereunder or thereunder, and
(iii) the authorization, issuance (or reservation for issuance) and delivery of
the Securities. The Agreements constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating
to or affecting creditors' rights generally and general principles of equity.
4.3 Capitalization. Set forth on Schedule 4.3 hereto is (a)
the authorized capital stock of the Company on the date hereof; (b) the number
of shares of capital stock issued and outstanding; (c) the number of shares of
capital stock issuable pursuant to the Company's stock plans; and (d) the number
of shares of capital stock issuable and reserved for issuance pursuant to
securities (other than the Shares and the Warrants) exercisable for, or
convertible into or exchangeable for any shares of capital stock. All of the
issued and outstanding shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. Except as set forth on Schedule 4.3, no Person is entitled to
preemptive or similar statutory or contractual rights with respect to any
securities of
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the Company. Except as set forth on Schedule 4.3, there are no outstanding
warrants, options, convertible securities or other rights, agreements or
arrangements of any character under which the Company is or may be obligated to
issue any equity securities of any kind, or in the case of the Company, to
transfer any equity securities of any kind of any subsidiary of the Company, and
except as contemplated by this Agreement, the Company and its subsidiaries are
not currently in negotiations for the issuance of any equity securities of any
kind, or in the case of the Company, the transfer of any equity securities of
any kind of any subsidiary of the Company. Except as set forth on Schedule 4.3,
the Company has no knowledge of any voting agreements, buy-sell agreements,
option or right of first purchase agreements or other agreements of any kind
among any of the securityholders of the Company relating to the securities of
the Company held by them. Except as set forth on Schedule 4.3, the Company has
not granted any Person the right to require the Company to register any
securities of the Company under the 1933 Act, whether on a demand basis or in
connection with the registration of securities of the Company for its own
account or for the account of any other Person.
4.4 Valid Issuance. The Company has reserved a sufficient
number of shares of Common Stock for the issuance of the Shares pursuant to this
Agreement and upon exercise of the Warrants. The Company will take such steps as
may be necessary to reserve sufficient shares for issuance pursuant to Section 7
below when such issuance is determinable. The Shares and Warrants are duly
authorized, and such Securities, along with the Warrant Shares when issued in
accordance herewith and with the terms of the Warrants, will be duly authorized,
validly issued, fully paid, non-assessable and free and clear of all
encumbrances and restrictions, except for restrictions on transfer imposed by
applicable securities laws.
4.5 Consents. The execution, delivery and performance by the
Company of the Agreements and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official other than filings that have been made
pursuant to applicable state securities laws and the requirements of the Nasdaq
Stock Market, and post-sale filings that the Company undertakes to file within
applicable periods pursuant to applicable state and federal securities laws.
4.6 Delivery of SEC Filings; Business. The Company has
provided the Investors with copies of the Company's most recent Annual Report on
Form 10-KSB for the fiscal year ended June 30, 1998, and all other reports filed
by the Company pursuant to the 1934 Act since the filing of the Annual Report on
Form 10-KSB and prior to the date hereof (collectively, the "SEC Filings"). The
Company and its subsidiaries are engaged only in the business described in the
SEC Filings and the SEC Filings contain a complete and accurate description of
the business of the Company and its subsidiaries as of the date of such SEC
Filings.
4.7 Use of Proceeds. The proceeds of the sale of the Common
Stock and the Warrants hereunder shall be used by the Company for working
capital and general corporate purposes.
4.8 No Material Adverse Change. Since the filing of the
Company's most recent Annual Report on Form 10-KSB or as otherwise identified
and described in subsequent
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reports filed by the Company pursuant to the 1934 Act or as set forth on
Schedule 4.8 hereto, there has not been:
(i) any change in the consolidated assets, liabilities,
financial condition or operating results of the Company from that reflected in
the financial statements included in the Company's Quarterly Report on Form
10-QSB for the quarter ended March 31, 1999, except changes in the ordinary
course of business which have not had, in the aggregate, a Material Adverse
Effect;
(ii) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock of the
Company, or any redemption or repurchase of any securities of the Company;
(iii) any material damage, destruction or loss, whether
or not covered by insurance to any assets or properties of the Company or any of
its subsidiaries;
(iv) any waiver by the Company or any of its subsidiaries
of a valuable right or of a material debt owed to it;
(v) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company or any of its
subsidiaries, except in the ordinary course of business and which is not
material to the assets, properties, financial condition, operating results or
business of the Company and its subsidiaries taken as a whole (as such business
is presently conducted and as it is proposed to be conducted);
(vi) any material change or amendment to a material
contract or arrangement by which the Company or any of their subsidiaries or any
of its assets or properties is bound or subject;
(vii) any material labor difficulties or labor union
organizing activities with respect to employees of the Company or any of its
subsidiaries;
(viii) any transaction entered into by the Company or any
of its subsidiaries other than in the ordinary course of business; or
(ix) any other event or condition of any character that
might have a Material Adverse Effect.
4.9 SEC Filings; Material Contracts.
(a) During the preceding three years, as of its filing
date, each report filed by the Company with the SEC pursuant to the 1934 Act,
complied as to form in all material respects with the requirements of the 1934
Act and did not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
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(b) During the preceding three years, each registration
statement and any amendment thereto filed by the Company with the SEC pursuant
to the 1933 Act, as of the date such statement or amendment became effective,
complied as to form in all material respects with the requirements of the 1933
Act and did not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading; and each prospectus filed pursuant to Rule 424(b) under
the 1933 Act, as of its issue date and as of the closing of any sale of
securities pursuant thereto did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(c) Except as set forth on Schedule 4.3 hereto, there are
no agreements or instruments currently in force and effect that constitute a
warrant, option, convertible security or other right, agreement or arrangement
of any character under which the Company is or may be obligated to issue any
material amounts of any equity security of any kind, or to transfer any material
amounts of any equity security of any kind.
4.10 Form S-3 Eligibility. The Company is currently eligible
to register the resale of its Common Stock on a registration statement on Form
S-3 under the 1933 Act.
4.11 No Conflict, Breach, Violation or Default. The execution,
delivery and performance of the Agreements by the Company and the issuance and
sale of the Securities will not conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under (i) the
Company's Articles of Incorporation ("Articles") or the Company's Bylaws
("Bylaws"), both as in effect on the date hereof, or (ii) except where it would
not have a Material Adverse Effect, (a) any statute, rule, regulation or order
of any governmental agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any subsidiary of the Company or any of their
properties, or (b) any agreement or instrument to which the Company or any such
subsidiary is a party or by which the Company or any such subsidiary is bound or
to which any of the properties of the Company or any such subsidiary is subject.
4.12 Tax Matters. The Company and its subsidiaries have timely
prepared and filed all tax returns required to have been filed by the Company
and its subsidiaries with all appropriate governmental agencies and timely paid
all taxes owed by them. There are no material unpaid assessments against the
Company or any of its subsidiaries nor, to the knowledge of the Company, any
basis for the assessment of any additional taxes, penalties or interest for any
fiscal period or audits by any federal, state or local taxing authority except
such as which are not material. All material taxes and other assessments and
levies that the Company or any subsidiary is required to withhold or to collect
for payment have been duly withheld and collected and paid to the proper
governmental entity or third party when due. There are no tax liens or claims
pending or to the knowledge of the Company threatened against the Company or any
subsidiary or any of their respective assets or property. There are no
outstanding tax sharing agreements or other such arrangements between the
Company or any subsidiary and any other corporation or entity.
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4.13 Title to Properties. Except as disclosed in the SEC
Filings, the Company and its subsidiaries have good and marketable title to all
real properties and all other properties and assets owned by them, in each case
free from liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or currently planned to be
made thereof by them; and except as disclosed in the SEC Filings, the Company
and its subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.
4.14 Certificates, Authorities and Permits. The Company and
its subsidiaries possess adequate certificates, authorities or permits issued by
appropriate governmental agencies or bodies necessary to conduct the business
now operated by them, unless the failure to possess such certificates,
authorities, or permits would not have a Material Adverse Effect, and have not
received any notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate have
a Material Adverse Effect.
4.15 No Labor Disputes. No material labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent.
4.16 Intellectual Property. The Company and its subsidiaries
have sufficient title or adequate rights or licenses to use the inventions,
know-how, patents, copyrights, trademarks, trade names, confidential information
and other intellectual property (collectively, "Intellectual Property Rights"),
material to and used in the conduct of the business now operated by them, or
presently employed by them, and neither the Company nor any of its subsidiaries
has received any notice of infringement of or conflict with asserted rights of
others with respect to any Intellectual Property Rights. Schedule 4.16 sets
forth a list by serial number and title of the patents and/or patent
applications owned or possessed by the Company or any of its subsidiaries. To
the knowledge of the Company such patents and the present activities of the
Company do not infringe any patent, copyright, trademark, trade name or other
proprietary rights of any third party.
4.17 Environmental Matters. Neither the Company nor any of its
subsidiaries is in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court, domestic or foreign, relating
to the use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to hazardous
or toxic substances (collectively, "Environmental Laws"), owns or operates any
real property contaminated with any substance that is subject to any
Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, or is subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation that might lead to such a claim.
4.18 Litigation. Except as disclosed in the SEC Filings or on
Schedule 4.18 hereto, there are no pending actions, suits or proceedings against
or to the knowledge of the
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Company affecting the Company, any of its subsidiaries or any of their
respective properties that, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a Material Adverse
Effect, or which are otherwise material in the context of the sale of the
Securities; and to the Company's knowledge, no such actions, suits or
proceedings are threatened or contemplated.
4.19 Financial Statements. The financial statements included
in each SEC Filing present fairly and accurately in all material respects the
consolidated financial position of the Company and its subsidiaries as of the
dates shown and their consolidated results of operations and cash flows for the
periods shown, and such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis.
Except as set forth in the financial statements of the Company included in the
SEC Filings filed prior to the date hereof, to the best of the Company's
knowledge, the Company has no liabilities, contingent or otherwise, except those
which individually or in the aggregate are not material to the financial
condition or operating results of the Company.
4.20 Insurance Coverage. The Company and its subsidiaries
maintain in full force and effect insurance coverage that is customary for
comparably situated companies for the business being conducted, and properties
owned or leased, by the Company and its subsidiaries, and the Company reasonably
believes such insurance coverage to be adequate against all liabilities, claims
and risks against which it is customary for comparably situated companies to
insure.
4.21 Compliance with Nasdaq Continued Listing Requirements.
The Company is in compliance with all applicable Nasdaq continued listing
requirements. There are no proceedings pending or to the Company's knowledge
threatened against the Company relating to the continued listing of the
Company's Common Stock on the Nasdaq SmallCap Market and the Company has not
received any notice of, nor to the knowledge of the Company is there any basis
for, the delisting of the Common Stock from the Nasdaq SmallCap Market.
4.22 Acknowledgement of Dilution. The number of shares of
Common Stock issuable pursuant to this Agreement may increase substantially in
the event the Company issues securities to third parties in the future under
certain circumstances pursuant to Section 7 hereof. The Company's executive
officers and directors have studied and fully understand the nature of the
transactions being contemplated hereunder and recognize that they have a
potential dilutive effect.
4.23 Brokers and Finders. Except as set forth on Schedule 4.23
hereof, the Company shall have no liability or responsibility for the payment of
any commission or finder's fee to any third party in connection with or
resulting from this Agreement or the transactions contemplated by this
Agreement. No agreement by the Company with any third party will give rise to
any liability or responsibility of any Investor for a finder's fee or commission
related to this Agreement and the transactions contemplated hereby.
4.24 No Directed Selling Efforts or General Solicitation.
Neither the Company nor any Person acting on its behalf has conducted any
general solicitation or general advertising
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(as those terms are used in Regulation D) in connection with the offer or sale
of any of the Securities.
4.25 No Integrated Offering. Neither the Company nor any of
its Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would adversely affect reliance by
the Company on Section 4(2) of the 1933 Act for the exemption from registration
for the transactions contemplated hereby or would require registration of the
Securities under the 0000 Xxx.
4.26 Disclosures. No representation or warranty made under any
Section hereof contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein, in
light of the circumstances under which the statements were made, not misleading.
5. Representations and Warranties of the Investor. Each of the
Investors hereby severally, and not jointly, represents and warrants to the
Company that:
5.1 Organization and Existence. The Investor is a duly
organized or incorporated, validly existing corporation or limited liability
company in good standing under the laws of the jurisdiction of its incorporation
or organization and has all requisite corporate or limited liability company
power and authority to enter into this Agreement and the Registration Rights
Agreement and invest in the Securities pursuant to this Agreement.
5.2 Authorization. The execution, delivery and performance by
the Investor of the Agreements have been duly authorized and the Agreements will
each constitute the legal, valid and binding obligations of the Investor,
enforceable against the Investor in accordance with their terms.
5.3 Purchase Entirely for Own Account. The Securities to be
received by the Investor hereunder will be acquired for investment for the
Investor's own account, not as nominee or agent, and not with a view to the
resale or distribution of any part thereof, and the Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same. The Investor is not a registered broker dealer or an entity engaged in
the business of being a broker dealer.
5.4 Investment Experience. The Investor acknowledges that it
can bear the economic risk and complete loss of its investment in the Securities
and has such knowledge and experience in financial or business matters that it
is capable of evaluating the merits and risks of the investment contemplated
hereby. The Investor acknowledges that the securities to be received by the
Investor hereunder involve a high degree of risk and shall not be purchased by a
Person who cannot afford the loss of their entire investment.
5.5 Disclosure of Information. The Investor has received all
of the SEC Filings and has had an opportunity to receive additional documents
related to the Company and to ask questions of and receive answers from the
Company regarding the Company, its business
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and the terms and conditions of the offering of the Securities. Neither such
inquiries nor any other due diligence investigation conducted by the Investor
shall modify, amend or affect the Investor's right to rely on the Company's
representations and warranties contained in this Agreement.
5.6 Restricted Securities. The Investor understands that the
Securities are characterized as "restricted securities" under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.
5.7 Legends. It is understood that, until registration for
resale pursuant to the Registration Rights Agreement, certificates evidencing
the Securities may bear one or all of the following legends:
(a) "The shares represented by this certificate may
not be transferred without (i) the opinion of counsel satisfactory to the
corporation that such transfer may lawfully be made without registration under
the Securities Act of 1933 or qualification under applicable state securities
laws; or (ii) such registration or qualification."
(b) If required by the authorities of any state in
connection with the issuance of sale of the Securities, the legend required by
such state authority.
Upon registration for resale pursuant to the Registration
Rights Agreement, the Company shall promptly cause certificates evidencing the
Shares previously issued hereunder to be replaced with certificates which do not
bear such restrictive legends, and each Investor will thereafter sell the Common
Stock evidenced by such certificates only pursuant to the Prospectus (as defined
in the Registration Rights Agreement) or pursuant to Rule 144(k) of the 1933
Act.
5.8 Accredited Investor. The Investor is an "accredited
investor" as defined in Rule 501(a) of Regulation D, as amended, under the 0000
Xxx.
5.9 No General Solicitation. The Investor did not learn of the
investment in the Securities as a result of any public advertising or general
solicitation.
5.10 Reliance. The Investor understands and acknowledges that
(i) the Securities to be acquired by it hereunder are being offered and sold to
it without registration under the 1933 Act in a private placement that is exempt
from the registration provisions of the 1933 Act and (ii) the availability of
such exemption depends in part on and the Company will rely upon the accuracy
and truthfulness of the representations contained herein and the Investor hereby
consents to such reliance.
5.11 Transactions in Common Stock. The Investor has not,
during the thirty (30) trading days immediately preceding the date hereof, sold
or established a short position in, any shares of Common Stock.
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5.12 Address/Jurisdiction of Investors. The address and
jurisdiction of formation set forth opposite each Investors name on the
signature pages attached hereto are true and correct and constitute the domicile
or residence of such Investor.
6. Registration Rights Agreement. The parties acknowledge and agree
that part of the inducement for the Investor to enter into this Agreement is the
Company's execution and delivery of the Registration Rights Agreement. The
parties acknowledge and agree that simultaneously with the execution hereof, the
Registration Rights Agreement is being duly executed and delivered by the
parties thereto.
7. Covenants and Agreements of the Company.
7.1 Subsequent Sale at Lower Price.
(a) Required Adjustments. Subject to the exclusions
contained in Section 7.1(f) below, if during the period ending on the later of
(i) thirty-six (36) months following the Closing Date and (ii) thirty-three (33)
months following the date of effectiveness of the Registration Statement
covering the Shares as contemplated by the Registration Rights Agreement (the
"MFN Period"), the Company sells any shares of its Common Stock in a capital
raising transaction at a Per Share Selling Price lower than the Purchase Price
per share set forth in Section 2 hereof, the Purchase Price per share of the
Shares sold to the Investors hereunder shall be adjusted downward to equal such
lower Per Share Selling Price and Investors shall be entitled to receive the
additional shares as provided by Section 7.1(c) and additional Warrants equal to
33% of the additional shares. The Company shall give to the Investors written
notice of any such sale within 24 hours of the closing of any such sale. For so
long as an Investor owns 51% or more of the Shares originally acquired by such
Investor hereunder, such Investor shall be entitled to the full benefit of the
Purchase Price adjustment required by this Section 7.1 in respect of all Shares
originally acquired; in the event an Investor then owns less than 51% of the
Shares originally acquired by it hereunder, such Investor shall be entitled to
additional shares only with respect to the number of Shares originally acquired
and then owned by such Investor as provided in Section 7.1(c). The parties agree
that for purposes of this Section 7 (including determination of the number of
originally acquired shares held by an Investor) shares of Common Stock sold or
otherwise disposed of by an Investor shall be deemed to be those originally
acquired hereunder until that number is reduced to zero.
(b) Definitions.
(i) For the purposes of this Section 7.1,
the term "Per Share Selling Price" as used in this Section 7.1 shall include the
amount actually paid by third parties for each share of Common Stock. In the
event a fee in excess of 6% is paid by the Company in connection with such
transaction, any such excess amount shall be deducted from the selling price pro
rata to all shares sold in the transaction to arrive at the Per Share Selling
Price. A sale in a capital raising transaction of shares of Common Stock shall
include the sale or issuance of rights, options, warrants or convertible
securities under which the Company is or may become obligated to issue shares of
Common Stock, and in such circumstances the Per Share Selling Price of the
Common Stock covered thereby shall also include the exercise or conversion price
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thereof (in addition to the consideration received by the Company upon such sale
or issuance less the excess fee amount as provided above). In case of any such
security issued within the MFN Period in a "Variable Rate Transaction" or an
"MFN Transaction" (each as defined below), the Per Share Selling Price shall be
deemed to be the lowest conversion or exercise price at which such securities
are converted or exercised or might have been converted or exercised in the case
of a Variable Rate Transaction, or the lowest adjustment price in the case of an
MFN Transaction, each over the life of such securities. If shares are issued for
a consideration other than cash, the Per Share Selling Price shall be the fair
value of such consideration as determined in good faith by independent certified
public accountants mutually acceptable to the Company and the Investors.
(ii) The term "Variable Rate Transaction"
shall mean a transaction in which the Company issues or sells (a) any debt or
equity securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (x) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the Common Stock at any time
after the initial issuance of such debt or equity securities, or (y) with a
fixed conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock (but
excluding standard stock split anti-dilution provisions), or (b) any securities
of the Company pursuant to an "equity line" structure which provides for the
sale, from time to time, of securities of the Company which are registered for
resale pursuant to the 1933 Act.
(iii) The term "MFN Transaction" shall mean
a transaction in which the Company issues or sells any equity securities in a
capital raising transaction or series of related transactions (the "New
Offering") which grants to an investor (the "New Investor") the right to receive
additional shares based upon future equity raising transactions of the Company
on terms more favorable than those granted to the New Investor in the New
Offering.
(iv) The term "MFN Period" shall have the
meaning set forth in Section 7.1(a), above.
(c) Adjustment Mechanism. If an adjustment of the
Purchase Price is required pursuant to Section 7.1(a), the Company shall deliver
to the Investors within ten (10) business days of the closing of the transaction
giving rise to the adjustment ("Delivery Date") each Investor's pro-rata share
of such number of additional shares of Common Stock equal to (i) the aggregate
Purchase Price paid by such Investor divided by the adjusted per share purchase
price as required under Section 7.1(a), minus (ii) the total number of shares of
Common Stock previously delivered to that Investor hereunder; provided however,
that the Company shall effect such adjustment in cash, in whole or in part, to
the extent required by Section 7.1(d). In the event the Company fails to deliver
the additional shares (or cash, as the case may be) within five (5) days of the
Delivery Date, the Company shall be liable to the Investors for a penalty equal
to 2% of the aggregate Purchase Price adjustment per month (in each instance to
such Investor pro rata in accordance with its participation in this offering),
payable in Common Stock or cash, at each Investor's election.
13
(d) Limitation on Number of Shares. No Investor shall
be required to accept, by way of any such adjustment a number of shares of the
Company such that the total number of such shares held by an Investor as of the
date of such adjustment would exceed 9.90% of the total outstanding Common Stock
of the Company. In addition, in no event shall the Company issue to the
Investors additional shares pursuant to this Section 7 such that the total
number of shares issued to the Investors (when added to the Warrant Shares)
pursuant to this Agreement would exceed 19.9% of the Company's issued and
outstanding shares of Common Stock on the date hereof. The Company shall effect
the adjustment required by this Section by cash refund (in an amount equal to
the amount paid plus 15%) to the extent necessary to avoid causing the aforesaid
limitations to be exceeded. Only shares acquired pursuant to this Agreement will
be included in determining whether the limitations would be exceeded for
purposes of this Section 7.1(d).
(e) Capital Adjustments. In case of any stock split or
reverse stock split, stock dividend, reclassification of the common stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of Section 7.1 shall be applied
in a fair, equitable and reasonable manner so as to give effect, as nearly as
may be, to the purposes hereof.
(f) Exclusions. Section 7.1(a) and Section 7.2 shall
not apply to (i) sales of shares of Common Stock by the Company upon
conversion or exercise of any convertible securities, options or warrants
outstanding prior to the date hereof pursuant to the terms of such securities,
options or warrants on the date hereof; or (ii) sales of shares of Common Stock
by the Company pursuant to the provisions of any option plan in existence on the
date hereof or a subsequently adopted and shareholder-approved employee option
or similar plan.
7.2 Limitation on Transactions.
(a) Until the date of effectiveness of the
Registration Statement covering the Shares as contemplated by the Registration
Rights Agreement, without the prior written consent of the Investors (which
consent may be withheld in the Investors' discretion), the Company shall not
issue or sell or agree to issue or sell for cash in a non-public offering any
equity securities in a capital raising transaction.
(b) Until the earlier of (i) the expiration of the MFN
Period, and (ii) the date on which the Investors own less than fifteen percent
(15%) of the Securities acquired hereunder, without the prior written consent of
the Investors (which consent may be withheld in the Investors' discretion), the
Company shall not issue or sell, or agree to issue or sell, for cash in a
non-public offering (A) any debt or equity securities that are convertible into,
exchangeable or exercisable for, or include the right to receive additional
shares of Common Stock either (x) at a conversion, exercise or exchange rate or
other price that is based upon and/or varies with the trading prices of or
quotations for the Common Stock at any time after the initial issuance of such
debt or equity securities, or (y) with a fixed conversion, exercise or exchange
price that is subject to being reset at some future date after the initial
issuance of such debt or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the
14
business of the Company or the market for the Common Stock (but excluding
standard stock split anti-dilution provisions), or (B) any securities of the
Company pursuant to an "equity line" structure which provides for the sale, from
time to time, of securities of the Company which are registered for resale
pursuant to the 1933 Act (clauses (A) and (B) are collectively "Variable Rate
Transactions"); provided, however, that the foregoing limitation on Variable
Rate Transactions shall not apply to any such securities convertible into an
amount of Common Stock at any time equal to or less than eight percent (8%) of
the Company's outstanding shares of Common Stock or, in the case of a Variable
Rate Transaction with a minimum conversion or exercise price of $1.25 per share
of Common Stock, equal to or less than fifteen percent (15%) of the Company's
outstanding shares of Common Stock; or (C) any other debt financing in excess of
$750,000.
7.3 Right of First Refusal in Future Transactions. Until the
earlier of (i) the expiration of the MFN Period and (ii) the date on which the
Investors own less than fifteen percent (15%) of the Securities acquired
hereunder, the Company shall give ten (10) calendar days advance written notice
to the Investors prior to any non-public offer or sale of any of its equity
securities or any securities convertible into or exchangeable or exercisable for
such securities by providing to the Investors a comprehensive term sheet
containing all significant business terms of such a proposed transaction. The
Investors shall have the right (pro rata in accordance with such Investor's
participation in this offering, or together with other investors selected by the
Investors and reasonably acceptable to the Company) to purchase all (but not
less than all) of such securities which are the subject of such a proposed
transaction for the same consideration and on the same terms and conditions as
contemplated for such third-party sale. The Investor(s)' right hereunder must be
exercised in writing by the Investor(s) within seven calendar days following
receipt of the notice from the Company. If, subsequent to the Company giving
notice to the Investors hereunder but prior to the Investor exercising its right
to participate (or the expiration of the seven-day period without response from
the Investor), the terms and conditions of the proposed third-party sale are
changed from that disclosed in the comprehensive term sheet provided to the
Investors, the Company shall be required to provide a new notice to the
Investors hereunder and the Investors shall have the right, which must be
exercised within five calendar days of such new notice, to exercise its rights
to purchase the securities on such changed terms and conditions as provided
hereunder. In the event the Investors do not exercise their rights hereunder, or
affirmatively decline to engage in the proposed transaction with the Company,
then the Company may proceed with such proposed transaction on the same terms
and conditions as noticed to the Investors (assuming the Investors have
consented to the transaction, if required, pursuant to Section 7.2 of this
Agreement). The rights and obligations of this Section 7.3 shall in no way
diminish the other rights of the Investor pursuant to this Section 7.
7.4 Opinion of Counsel. On or prior to the Closing Date, the
Company will deliver to the Investors the opinion of legal counsel to the
Company, in form and substance reasonably acceptable to the Investors,
addressing those legal matters set forth in Schedule 7.4 hereto.
7.5 Reservation of Common Stock Pursuant to Section 7.1 and
Exercise of Warrants. The Company hereby agrees at all times to reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of providing for the exercise of the Warrants, such number of shares
of Common Stock as shall from time to time
15
equal the number of shares sufficient to permit the exercise of the Warrants in
accordance with the terms of the Warrants. In addition, as soon as such number
is determinable, the Company agrees to reserve such shares as may be necessary
to permit the issuances to the Investors required by Section 7.1.
7.6 Reports. For so long as the Investors beneficially own ten
percent (10%) or more of the Securities, the Company will furnish to the
Investors the following reports, each of which shall be provided to the
Investors by air mail (within one week after filing with the SEC, in the case of
SEC filings):
(a) Quarterly Reports. The Company's quarterly report
on Form 10-Q or, in the absence of such report, consolidated balance sheets of
the Company and its subsidiaries as at the end of such period and the related
consolidated statements of operations, stockholders' equity and cash flows for
such period and for the portion of the Company's fiscal year ended on the last
day of such quarter, all in reasonable detail and certified by a principal
financial officer of the Company to have been prepared in accordance with
generally accepted accounting principles, subject to year-end and audit
adjustments.
(b) Annual Reports. The Company's Form 10-K or, in the
absence of a Form 10-K, consolidated balance sheets of the Company and its
subsidiaries as at the end of such year and the related consolidated statements
of earnings, stockholders' equity and cash flows for such year, all in
reasonable detail and accompanied by the report on such consolidated financial
statements of an independent certified public accountant selected by the Company
and reasonably satisfactory to the Investor.
(c) Securities Filings. Copies of (i) all notices,
proxy statements, financial statements, reports and documents as the Company or
any subsidiary shall send or make available generally to its stockholders or to
financial analysts, promptly after providing same to the stockholders and (ii)
all periodic and special reports, documents and registration statements (other
than on Form S-8) which the Company or any subsidiary furnishes or files, or any
officer or director of the Company or any of its subsidiaries (in such person's
capacity as such) furnishes or files with the SEC.
7.7 Press Releases. Any press release or other publicity
concerning this Agreement or the transactions contemplated by this Agreement
shall be submitted to the Investors for comment at least two (2) business days
prior to issuance, unless the release is required to be issued within a shorter
period of time by law or pursuant to the rules of a national securities
exchange. The Company shall issue a press release concerning the fact and
material terms of this Agreement within three (3) business days of the Closing.
7.8 No Conflicting Agreements. The Company will not, and will
not permit its subsidiaries to, take any action, enter into any agreement or
make any commitment that would conflict or interfere in any material respect
with the obligations to the Investors under the Agreements.
16
7.9 Insurance. So long as the Investors beneficially own any
Securities, the Company shall, and shall cause each subsidiary to, have in full
force and effect (a) insurance reasonably believed by the Company to be adequate
on all assets and activities of a type customarily insured, covering property
damage and loss of income by fire or other casualty, and (b) insurance
reasonably believed by the Company to be adequate protection against all
liabilities, claims and risks against which it is customary for companies
similarly situated as the Company and the subsidiaries to insure.
7.10 Compliance with Laws. So long as the Investors
beneficially own any Securities, the Company will use reasonable efforts, and
will cause each of its subsidiaries to use reasonable efforts, to comply with
all applicable laws, rules, regulations, orders and decrees of all governmental
authorities, except to the extent non-compliance (in one instance or in the
aggregate) would not have a Material Adverse Effect.
7.11 Listing of Underlying Shares and Related Matters. The
Company hereby agrees, promptly following the Closing of the transactions
contemplated by this Agreement, to take such action to cause the Shares and the
Warrant Shares to be listed on the Nasdaq SmallCap Market as promptly as
possible but no later than the effective date of the registration contemplated
by the Registration Rights Agreement. The Company further agrees that if the
Company applies to have its Common Stock or other securities traded on any other
principal stock exchange or market, it will include in such application the
Warrant Shares and will take such other action as is necessary to cause such
Common Stock to be so listed. For so long as the Investors beneficially own any
of the Securities, the Company will take all action necessary to continue the
listing and trading of its Common Stock on the Nasdaq SmallCap Market and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of such exchange, as applicable, to ensure
the continued eligibility for trading of the Shares and the Warrant Shares
thereon.
In the event it is determined that the issuance of the Shares
would or does constitute an issuance which, pursuant to the rules or regulations
of the Nasdaq SmallCap Market (or any other national securities exchange upon
which the Common Stock is or becomes traded), renders the Shares ineligible for
inclusion on the Nasdaq (or any other national securities exchange upon which
the Common Stock is then traded), then the Company shall promptly redeem such
number of Shares held by the Investors (pro rata in accordance with their
participation in this offering) which are so ineligible at a per share
redemption price equal to 100% of the per share Purchase Price for those Shares
as set forth in Section 2 hereof and shall thereupon reduce the Warrant exercise
price of all outstanding warrants to the Market Price on the date of such
redemption.
7.12 Corporate Existence. So long as the Investors
beneficially own any of the Shares or Warrants (but in no event longer than five
years), the Company shall maintain its corporate existence, except in the event
of a merger, consolidation or sale of all or substantially all of the Company's
assets, as long as the surviving or successor entity in such transaction (a)
assumes the Company's obligations hereunder and under the agreements and
instruments entered into in connection herewith, regardless of whether or not
the Company would have had a sufficient number of shares of Common Stock
authorized and available for issuance in order to
17
fulfill its obligations hereunder and effect the exercise in full of all
Warrants outstanding as of the date of such transaction; (b) has no legal,
contractual or other restrictions on its ability to perform the obligations of
the Company hereunder and under the agreements and instruments entered into in
connection herewith; and (c) is a publicly traded corporation whose common stock
and the shares of capital stock issuable upon exercise of the Warrants are (or
would be upon issuance thereof) listed for trading on the Nasdaq SmallCap
Market, New York Stock Exchange or American Stock Exchange or, if not such a
publicly traded corporation, any such transaction involves the payment of cash
for all outstanding shares of Common Stock and the Investors have the right to
elect to have the acquiror purchase all Shares and Warrant Shares then held by
the Investors at the price paid by the Investors for such Shares and Warrant
Shares.
8. Survival. All representations, warranties, covenants and
agreements contained in this Agreement shall be deemed to be representations,
warranties, covenants and agreements as of the date hereof and shall survive the
execution and delivery of this Agreement for a period of two years from the date
of this Agreement; provided, however, that the provisions contained in Section 7
hereof shall survive in accordance therewith.
9. Arbitration.
9.1 Scope. Resolution of any and all disputes arising from or
in connection with the Agreements, whether based on contract, tort, common law,
equity, statute, regulation, order or otherwise ("Disputes"), shall be
exclusively governed by and settled in accordance with the provisions of this
Section 9; provided, that the foregoing shall not preclude equitable or other
judicial relief to enforce the provisions hereof or to preserve the status quo
pending resolution of Disputes hereunder.
9.2. Binding Arbitration. The parties hereby agree to submit
all Disputes to arbitration for final and binding resolution. Either party may
initiate such arbitration by delivery of a demand therefor (the "Arbitration
Demand") to the other party. The arbitration shall be conducted in New York, New
York by a sole arbitrator selected by agreement of the parties not later than
fifteen (15) business days after delivery of the Arbitration Demand, or, failing
such agreement, appointed pursuant to the Commercial Arbitration Rules of the
America Arbitration Association, as amended from time to time (the "AAA Rules").
If the arbitrator becomes unable to serve, his successor(s) shall be similarly
selected or appointed.
9.3. Procedure. The arbitration shall be conducted pursuant to
the Federal Arbitration Act and such procedures as the parties may agree or, in
the absence of or failing such agreement, pursuant to the AAA Rules.
Notwithstanding the foregoing, (a) each party shall have the right to conduct
limited discovery of information relevant to the Dispute; (b) each party shall
provide to the other, reasonably in advance of any hearing, copies of all
documents that a party intends to present in such hearing; (c) all hearings
shall be conducted on an expedited schedule; and (d) except as otherwise
required by law and as required to conduct the proceedings, all proceedings
shall be confidential, except that either party may at its expense make a
stenographic record thereof.
18
9.4. Timing. The arbitrator shall complete all hearings not
later than 90 days after his or her selection or appointment, and shall make a
final award not later than 30 days thereafter. The arbitrator shall apportion
all costs and expenses of the arbitration, including the arbitrator's fees and
expenses, and fees and expenses of experts ("Arbitration Costs") between the
prevailing and non-prevailing party as the arbitrator shall deem fair and
reasonable. In circumstances where a Dispute has been asserted or defended
against on grounds that the arbitrator deems frivolous, the arbitrator may
assess all Arbitration Costs against the non-prevailing party and may include in
the award the prevailing party's attorney's fees and expenses in connection with
any and all proceedings under this Section 9. Notwithstanding the foregoing, in
no event may the arbitrator award multiple or punitive damages.
10. Miscellaneous.
10.1 Successors and Assigns. This Agreement may not be
assigned by a party hereto without the prior written consent of the other party
hereto, except that without the prior written consent of the Company, but after
notice duly given, an Investor may assign its rights and delegate its duties
hereunder to an Affiliate (so long as such Affiliate reaffirms the Investors'
representations in Section 5 hereof), and without the prior written consent of
the Investors, but after notice duly given and in compliance with this
Agreement, the Company may assign its rights and delegate its duties hereunder
to any successor-in-interest corporation in the event of a merger or
consolidation of the Company with or into another corporation, or any merger or
consolidation of another corporation with or into the Company that results
directly or indirectly in an aggregate change in the ownership or Control of
more than 50% of the voting rights of the equity securities of the Company, or
the sale of all or substantially all of the Company's assets. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective permitted successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
10.2 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.3 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
10.4 Notices. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given only upon delivery to each party to be notified by (i)
personal delivery, (ii) telex or telecopier, upon receipt of confirmation of
complete transmittal, or (iii) an internationally recognized overnight air
courier, addressed to the party to be notified at the address as follows, or at
such other address as such party may designate by ten days' advance written
notice to the other party:
19
If to the Company:
InKine Pharmaceutical Company, Inc.
Sentry Park East
0000 Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx X. Apple, Senior Vice President
and Chief Financial Officer
Facsimile: 000-000-0000
If to the Investors, to the addresses set forth on
the signature pages hereto.
10.5 Fees and Expenses. The parties hereto shall pay their own
costs and expenses in connection herewith, except that the Company shall pay to
Tail Wind, Inc. a sum equal to 1% of the Purchase Price paid by each Investor as
and for reimbursement for legal and due diligence expenses incurred in
connection herewith and such amount shall be paid at Closing from gross proceeds
of the offering.
10.6 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investors.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Securities purchased under this Agreement at the
time outstanding, each future holder of all such securities, and the Company.
10.7 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
10.8 Entire Agreement. This Agreement, including the Exhibits
and Schedules hereto, and the Registration Rights Agreement constitute the
entire agreement among the parties hereof with respect to the subject matter
hereof and thereof and supersede all prior agreements and understandings, both
oral and written, between the parties with respect to the subject matter hereof
and thereof.
10.9 Further Assurances. The parties shall execute and deliver
all such further instruments and documents and take all such other actions as
may reasonably be required to carry out the transactions contemplated hereby and
to evidence the fulfillment of the agreements herein contained.
10.10 Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.
20
10.11 Consent of Investors. In the event the Company is
required to obtain the consent or approval of the Investors pursuant to the
terms of this Agreement, such consent or approval shall be deemed given by the
Investors upon the Investors owning a majority of the Securities acquired under
the Purchase Agreement giving the Company such consent or approval.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
The Company: INKINE PHARMACEUTICAL
COMPANY, INC.
By:_/s/ Xxxxxxx X. Xxxxx, M.D., Ph.D.
----------------------------------
Name: Xxxxxxx X. Xxxxx, M.D., Ph.D.
Title: Chairman and CEO
The Investors:
By:_/s/ Xxxxxxx Xxxxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: V.P., Dir., Treasurer
By:_/s/ Xxxxx XxXxxxxxx
----------------------------------
Name: Xxxxx XxXxxxxxx
Title: Authorized Signatory
By:_/s/ Resonance Limited
----------------------------------
Name: X. Xxxxxx
Title:
Oxford Bioscience Partners II L.P.
By:_/s/ OBP Management II L.P.
----------------------------------
Name:
Title:
By:_/s/ Xxxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: General Partner
21
Oxford Bioscience Partners (Bermuda) II
Limited Partnership
By:_/s/ OBP Management (Bermuda) II
--------------------------------
Limited Partnership
--------------------------------
Name:
Title:
THE TAIL WIND FUND LTD.
MEESPIERSON (BAHAMAS) LTD.
ATTN: XXXXX MCCARRAOLL,
WINDERMERE HOUSE, 000 XXXX XXX XX.,
XX XXX XX0000, NASSAU, BAHAMAS
TEL: 000 000 0000 FAX: 000 000 0000
PLEASE COPY ALL CORRESPONDENCE TO:
XXXXX XXXXX, ESQ.
THE TAIL WIND FUND LTD
X/X XXXX
0XX XXXXX XX. 0 XXXXXX XXXXXX
XXXXXX, XX0X 0XX, XX
TEL: x00 000 000 0000 FAX 7657
22
SCHEDULE 4.3
CAPITALIZATION OF THE COMPANY
Common Stock outstanding at September 15, 1999 - 23,332,736
1995 IPO Warrants, expire Jan. 2000, $4 per share 183,632
1995 Consultant Warrants, expire Oct. 2000, $0.59 per share 546,399
1997 Private Placement Warrants, expire Nov. 2002, $1 per share 1,334,958
Options granted pursuant to "1993 Plan" 3,852,182
Options granted pursuant to Consultant Stock Option Plan 1,807,500
Options granted to CEO & Consultant outside of Plans 2,586,773
Shares issuable based on Sales milestones of CBP-1011 440,000
Shares issuable based on FDA milestones of second
generation drug from Fc-receptor technology 280,000
Options issuable pursuant to Consultant Stock Option Plan 692,500
Options issuable pursuant to "1993 Plan" 293,285
----------
12,017,229
Total Common Stock Outstanding and Issuable Shares 35,349,965
Authorized Common Stock Shares
50,000,000
Remaining Common Stock for Issuance 14,650,035
Authorized Preferred Stock 5,000,000
Preferred Stock Outstanding 0
23
SCHEDULE 4.8
MATERIAL ADVERSE CHANGES
None
24
SCHEDULE 4.16
LIST OF PATENTS AND PATENT APPLICATIONS
PURGATIVE
Non-Aqueous colonic Purgative Formulations, U.S. Patent # 5,616,346, issued
April 1, 1997.
Non-Aqueous colonic Purgative Formulations, PCT application pending in Europe &
Canada, WO 97/41838.
Non-Aqueous colonic Purgative Formulations, pending worldwide, filed March 7,
1997.
FC RECEPTORS
Inhibition of Immune Clearance using Progesterone Analogues, U.S. Patent #
4,902,681, issued February 20, 1990.
Inhibition of Immune Clearance using Progesterone Analogues, U.S. Patent #
4,908,358, issued March 13, 1990.
Methods of Treating Disease Characterized by Interactions of IgG-Containing
Immune Complexes with Macrophage Fc Receptors Using Antiestrogenic
Benzothiophenes, U.S. Patent # 5,075,321, issued December 29, 1991.
Chimeric IGG Fc Receptors, U.S. Patent # 5,641,863, issued June 24, 1997.
DNA Encoding Chimeric IGG Fc Receptors, U.S. Patent # 5,641,875, issued June 24,
1997
Methods of Stimulating Phagocytosis, U.S. Patent # 5,776,910, issued July 7,
1998.
Methods of Stimulating Phagocytosis, U.S. Patent # 5,821,071 issued October 13,
1998.
Methods of Inhibiting Phagocytosis, U.S. Patent # 5,858,981, issued January
1999.
Methods of Inhibiting Phagocytosis, pending worldwide PCT/US96/11108 filed
September 30, 1994 and PCT /US96/10494, filed June 7, 1996.
Methods of Stimulating Phagocytosis, pending worldwide PCT US94/11111, filed
September 30, 1994.
Method of treating atherosclerosis, pending.
25
THROMBOSPONDIN
Use of Thrombospondin to Promote Wound Healing, U.S. Patent # 5,155,038, issued
October 13, 1992.
Peptide Fragments and analogs of Thrombospondin and Methods of Use, U.S. Patent
# 5,190,918, issued March 2, 1993.
Method for using Synthetic Analogs of Thrombospondin for Inhibiting Metastasis
Activity, U.S. Patent 5,190,920, issued March 2, 1993.
Use of Peptide Analogs of Thrombospondin for the Inhibition of Angiogenic
Activity, U.S. Patent 5,200,397, issued April 6, 1993.
Cys-Ser-Val-Thr-Cys-Gly Specific Tumor Cell Adhesion Receptor, U.S. Patent #
5,367,059, issued November 22, 1994.
Peptide fragments and analogs of thrombospondin, U.S. Patent # 5,426,100, issued
June 20, 1995.
Method of Using Synthetic Analogs of Thrombospondin for Inhibiting Angiogenesis
Activity, U.S. Patent # 5,506,208, April 9, 1996.
Synthetic analogs of Thrombospondin and Therapeutic Use Thereof, U.S. Patent #
5,648,461, issued July 15, 1997.
Peptides having thrombospondin-like activity and their therapeutic use, U.S.
Patent # 5,654,277, issued August 5, 1997.
Peptide Fragments and Analogs of Thrombospondin, U.S. Patent # 5,840,692, issued
November 24, 1998.
Synthetic analogs of Thrombospondin and Therapeutic uses Thereof, pending.
Retroinverso polypeptides that mimic or inhibit thrombospondin activity,
pending.
Peptide Fragments and Analogs of Thrombospondin, pending.
Compositions for treating Doxorubicin-Resistant Tumor Cells, pending.
Cys-Ser-Val-Thr-Cys-Gly Specific Tumor Cell Adhesion Receptor, pending.
Most of the applications are pending worldwide.
26
SCHEDULE 4.18
LITIGATION
None to which the Company is aware.
27
SCHEDULE 4.23
BROKERS/FINDERS AND COMMISSIONS
Ladenburg Xxxxxxx & Co., Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Finders Fee - 4-1/2 % of Aggregate Capital Raised
Expense Allowance - $11,250
Xxxx Xxxxxx Capital Corp.
000 Xxxxxxx Xxxx.
Xxxxx Xxxx XX 00000
Finders Fee - 1-1/2% of Aggregate Capital Raised
Expense Allowance - $3,750
