1
EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of June 29,
2001, among WOMEN FIRST HEALTHCARE, INC., a Delaware corporation (the
"Company"), ELAN INTERNATIONAL SERVICES, LTD., a Bermuda exempted limited
liability company ("EIS"), and a wholly-owned subsidiary of ELAN CORPORATION,
PLC., an Irish public limited liability company ("Elan"), and ELAN PHARMA
INTERNATIONAL LIMITED, an Irish private limited liability company, a
wholly-owned subsidiary of Elan and an affiliate of EIS ("EPIL").
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, on the date hereof, 422,467 shares (the "Shares"), of
the Company's common stock, par value U.S.$.001 per share (the "Common Stock").
The Company further desires to issue and sell to EPIL, and EPIL desires to
purchase from the Company, a convertible promissory note of the Company, in the
form attached hereto as Exhibit A (the "Note"), in a principal amount of
U.S.$11,000,000 (excluding capitalized interest) in accordance with its terms
and subject to the conditions contained herein and therein. The Shares and the
Note are referred to, collectively, herein as the "Securities."
B. The Company, EIS and EPIL are executing and delivering on the date
hereof a Registration Rights Agreement, in the form attached hereto as Exhibit B
(as amended at any time, the "Company Registration Rights Agreement"), in
respect of (i) the Common Stock issued and purchased hereunder, the Common Stock
issued or issuable upon conversion of all or any portion of the Note and (ii)
any other Common Stock owned by EIS, EPIL or any of their affiliates or
permitted transferees. The Company, EPIL and ELAN PHARMACEUTICALS, INC., a
Delaware corporation ("EP"), are executing and delivering on the date hereof the
Midrin Asset and Inventory Purchase Agreement, in the form attached hereto as
Exhibit C (as amended at any time, the "Asset Purchase Agreement"). This
Agreement, the Company Registration Rights Agreement, the Asset Purchase
Agreement, and each other document or instrument executed and delivered in
connection with the transactions contemplated hereby are referred to,
collectively, herein as the "Transaction Documents."
A G R E E M E N T:
In consideration of the foregoing premises and the mutual covenants
contained herein, the sufficiency of which is hereby acknowledged, the parties
hereby agree as follows:
SECTION 1. Closing.
(a) Time and Place. The closing of the Purchase (as defined
below) (the "Closing") shall occur on the date hereof (the "Closing Date"). The
Closing shall be held at the offices of Reitler Xxxxx LLC, 000 Xxxxx Xxxxxx, Xxx
Xxxx, XX 00000 (by means of facsimile or overnight mail).
2
(b) Sale and Purchase. At the Closing, subject to the terms and
conditions hereof, the Company shall issue and sell to EIS, and EIS shall
purchase from the Company, the Shares and the Company shall issue to EPIL the
Note (the "Purchase").
(c) Purchase Price. The aggregate purchase price for the
Purchase shall be U.S.$15,000,000 (the "Purchase Price"), U.S.$4,000,000
purchase price for the Common Stock and U.S.$11,000,000 purchase price by
issuance of the Note.
(d) Closing Delivery. On the Closing Date, subject to the terms
and conditions hereof:
(i) EIS shall pay U.S.$4,000,000 by wire transfer and
EPIL shall pay U.S.$11,000,000 by wire transfer to an account designated
in writing by the Company;
(ii) EIS, EPIL and/or EP, as applicable, shall execute
and deliver to the Company: (A) this Agreement, (B) the Company
Registration Rights Agreement and (C) the Asset Purchase Agreement;
(iii) the Company shall execute and deliver to EIS, EPIL
and EP, as applicable: (A) certificates representing the Shares, (B) the
Note, (C) this Agreement, (D) the Company Registration Rights Agreement,
(E) the Asset Purchase Agreement, (F) a customary secretary's
certificate from the secretary of the Company, including a certificates
as to the incumbency of the officers of the Company executing any of the
Transaction Documents, and (G) any other customary documents or
instruments reasonably requested by EIS or EPIL; and
(iv) the Company shall cause to be delivered to EIS and
EPIL an opinion of counsel in the form attached hereto as Exhibit D.
(e) Post-Closing Delivery. Within 2 business days of the Closing
Date, the Company will execute, deliver, file and record any statement,
assignment, instrument, document, agreement or other paper and take any other
action (including, without limitation, any filings of financing or continuation
statements under the UCC and appropriate filings with the US Patent and
Trademark Office and the US Copyright Office) which EPIL reasonably requests.
Within 10 days of the delivery to the Company of UCC-1 financing statements
describing the Collateral (as defined below), the Company shall deliver to EPIL
a legal opinion of counsel to the Company, in a form reasonably satisfactory to
EPIL, opining as to the perfection of the Security Interest (as defined below)
in the Collateral granted in favor of EPIL to secure the obligations to EPIL
under Note.
(f) Exemption from Registration; Legend. The Securities and the
shares of Common Stock underlying the Note will be issued under an exemption or
exemptions from registration under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), and are also subject to certain rights and obligations
set forth herein. Accordingly, the certificates evidencing the Shares, 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:
-2-
3
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS
AND NO INTEREST THEREIN MAY BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES SHALL BE
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR (2) SUCH SECURITIES ARE TRANSFERRED
PURSUANT TO RULE 144 UNDER THE ACT (OR ANY SUCCESSOR
RULE), OR (3) THE ISSUER OF THESE SECURITIES SHALL HAVE
RECEIVED AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES SATISFACTORY TO THE ISSUER THAT NO VIOLATION
OF THE ACT OR SIMILAR STATE SECURITIES LAWS WILL BE
INVOLVED IN SUCH TRANSFER.
SECTION 2. Representations and Warranties of the Company. The
Company hereby represents and warrants to EIS and EPIL, as of the Closing Date,
as follows:
(a) Organization and Qualification. 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.
(i) The authorized capital stock of the Company
immediately prior to the Closing, consists of (A) 40,000,000 shares of
Common Stock, of which 17,969,666 shares are issued and outstanding, and
of which 2,210,122 shares are reserved for issuance upon exercise of
outstanding options granted to employees, officers, directors and
consultants and outstanding stock purchase warrants and (B) 5,000,000
shares of Preferred Stock, none of which are issued or outstanding.
(ii) As of the Closing Date, the Company has reserved a
sufficient number of shares of Common Stock for issuance upon conversion
of the Note.
(iii) There are no preemptive rights, voting agreements,
rights of first offer or refusal or other similar rights (collectively,
"Preemptive Rights"), except as described on Schedule 2(b) attached
hereto. There are no agreements to register any of the Company's
outstanding securities under U.S. federal securities laws, other than
the Company Registration Rights Agreement and except as described on
Schedule 2(b).
-3-
4
(iv) All of the outstanding shares of capital stock of
the Company have been issued in accordance with applicable state and
federal laws and regulations (or exemptions therefrom) governing the
sale and purchase of securities. All of such shares have been duly and
validly issued and are fully paid and non-assessable. The Shares, when
issued against payment therefor in accordance with this Agreement will
be duly and validly issued, fully paid and non-assessable, and the Note
(including additional amounts issued as accrued interest), when issued
against payment therefor in accordance with this Agreement, will be duly
and validly issued, and in each case will not be issued in violation of
any Preemptive Rights. The shares of Common Stock issuable upon
conversion the Note (including capitalized interest), or as payment for
any required anti-dilution adjustment according to the terms thereto,
when issued upon conversion, exercise or in accordance with the terms
thereof (the "Underlying Shares"), will be duly and validly issued,
fully paid and non-assessable, and will not be issued in violation of
any Preemptive 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 and the
issuance of the Underlying Shares) 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, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity.
(d) No Violations. 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 and the
issuance of the Underlying Shares) and the compliance with the provisions hereof
and thereof by the Company do not and will not violate, 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, or result in the
creation of any Encumbrance (as defined below) upon any properties or assets of
the Company under (i) the Certificate of Incorporation or bylaws of the Company,
(ii) any 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 material contract, indenture, mortgage, deed
of trust, lease, agreement or other instrument, to which the Company is a party
or by which the Company or any of its property is bound, except, in each case,
where such violation, conflict, breach, default, termination, cancellation,
acceleration or Encumbrance would not, individually or in the aggregate, have a
Company Material Adverse Effect. As used herein, the term "Encumbrance" shall
mean any lien, charge, encumbrance, claim, option, proxy, pledge, security
interest, or other similar right of any nature other than statutory liens
securing payments not yet due and payable or due but not yet delinquent.
-4-
5
(e) Approvals. Except as set forth on Schedule 2(e) attached
hereto and for consent which may be required under any applicable anti-trust
law, 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 other Transaction Documents (including the issuance and
sale of the Securities and the issuance of the Underlying Shares) by the
Company.
(f) Financial Statements. Schedule 2(f) attached hereto contains
(i) the audited balance sheets of the Company at December 31, 2000 (the "Last
Audit Date"), and December 31, 1999 and the related statements of operations,
stockholders' equity (deficit) and cash flows for the years then ended, together
with the reports and opinions thereon of Ernst & Young LLP (the "Audited
Financial Statements"), and (ii) the unaudited balance sheet of the Company at
March 31, 2001 and the related statements of operations and cash flows for the
three months then ended (the "Unaudited Financial Statements"; collectively with
the Audited Financial Statements, the "Financial Statements"). The Financial
Statements are accurate and complete in all material respects and fairly present
the financial position of the Company and the results of its operations and its
cash flows at such dates and for the periods indicated and were prepared in
conformity with United States generally accepted accounting principles applied
on a consistent basis throughout the periods indicated (except as may be
otherwise indicated therein), subject, in the case of the Unaudited Financial
Statements, to normal year-end audit adjustments (which shall not be material in
the aggregate) and the absence of footnote disclosures. As of the Closing Date,
the Company has not incurred and is not liable for any material liabilities or
obligations incurred outside the ordinary course of business except as set forth
on the face of the March 31, 2001 balance sheet or Schedule 2(f).
(g) Taxes. Except as set forth on Schedule 2(g), the Company has
filed in a timely manner all material federal, state, local and foreign tax
returns, reports, declarations and filings (collectively, "Returns"), including
income, franchise, property, gross receipts, payroll, employment and other
taxes, and has paid or accrued the appropriate amounts reflected on such Returns
heretofore required to be filed, along with all interest and penalties, if any.
All such Returns are true, correct and complete in all material aspects. Except
as set forth on Schedule 2(g) attached hereto, none of the Returns have been
audited or challenged, nor has the Company received any notice of challenge nor
have any of the amounts or other data included in the Returns been challenged or
reviewed by any governmental authority. Prior to the Closing, the Company
provided EIS with true and complete copies of each federal and state income tax
Return for 1999. The Company has no knowledge of any material liability of any
tax, interest and penalties to be imposed as of the Closing that is not
adequately provided for.
(h) Plans. Except as set forth on Schedule 2(h) attached hereto,
which sets forth an accurate and complete list and description of all employee
benefit plans maintained or sponsored by the Company or to which the Company is
required to make contributions (the "Benefit Plans"), the Company does not
maintain, sponsor, is not required to make contributions to or otherwise have
any liability with respect to any pension, profit sharing, thrift or other
retirement plan, employee stock ownership plan, deferred compensation, stock
ownership, stock purchase, performance share, bonus or other incentive plan,
severance plan, health or group insurance plan, welfare plan, or other similar
plan, agreement, policy or understanding (whether written or oral), whether or
not such plan
-5-
6
is intended to be qualified under Section 401(a) of the U.S. Internal Revenue
Code of 1986, as amended, or within the meaning of Section 3(3) of the U.S.
Employee Retirement Income Security Act of 1974, as amended, which plan covers
any employee or former employee of the Company. The Benefit Plans have been and
are administered in substantial compliance with their terms and the requirements
of applicable law.
(i) Absence of Certain Events. Since March 31, 2001, except as
contemplated by the Transaction Documents or as set forth on Schedule 2(i)
attached hereto, (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 or (iv) suffered or permitted to be incurred any liability or
obligation or any 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; and (B) there has not been any change
or development which has had, or could reasonably be expected to have, a Company
Material Adverse Effect.
Without limiting the generality of the foregoing, since March
31, 2001, except as set forth on Schedule 2(i), there has not been (1) any lapse
of any of the Company's trade secrets, inventions, patents, patent applications
or continuations (in whole or in part), trademarks, trademark registrations,
service marks, service xxxx registrations, copyrights, copyright registrations,
or any application therefor or filing in respect thereof (collectively, and
together with any and all know-how, trade secrets and proprietary business or
technology information, the "Intellectual Property") that could reasonably be
expected to result in a Company Material Adverse Effect; (2) any loss of the
services of any of the key officers or key employees of the Company; (3) any
incurrence of or entry into any liability, mortgage, Encumbrance, commitment or
transaction, including without limitation, any borrowing (or assumption or
guarantee thereof) or guarantee of a third party's obligations, or capital
expenditure (or lease in the nature of a conditional purchase of capital
equipment) in excess of U.S.$50,000, other than in the ordinary course of
business; (4) any material change by the Company in accounting methods or
principles; or (5) any change in the assets, liabilities, condition (financial
or otherwise), results or operations or prospects of the Company from those
reflected on the Financial Statements, except changes in the ordinary course of
business and changes that have not had or could not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
(j) No Liabilities. Since March 31, 2001, the Company has not
incurred or suffered any liability or obligation, matured or unmatured,
contingent or otherwise, except in the ordinary course of business and except
any such liability or obligation that has not had and could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(k) Properties and Assets; Etc.
(i) Except as set forth on Schedule 2(k) attached
hereto, the Company has good and marketable title to its properties and
assets shown in the Financial Statements
-6-
7
to be owned by the Company, and has valid leasehold interests to the
properties and assets shown in the Financial Statements to be leased by
the Company, in each case subject to no material Encumbrances.
(ii) The Company owns or possesses sufficient legal
rights to use pursuant to license, sublicense, agreement or permission
all Intellectual Property used in the operation of its business as
presently conducted, in each case, subject to no Encumbrances required
to be disclosed in the Financial Statements except as set forth therein,
other than any failure to own or possess sufficient legal rights which,
individually or in the aggregate, would not have a Company Material
Adverse Effect. Except as set forth on Schedule 2(k), all of the
Intellectual Property which is owned by the Company is owned free and
clear of all Encumbrances; none of the Company's rights in or use of the
Intellectual Property has been or, to the Company's knowledge, is
currently threatened to be challenged; to the Company's knowledge,
without making any inquiry other than those, if any, routinely conducted
by the Company in the ordinary course of business, no current or
currently planned product based upon the Company's Intellectual Property
would infringe any patent, trademark, service xxxx, trade name or
copyright of any other person or entity issued or pending on the Closing
Date if the Company were to distribute, sell, market or manufacture such
products, and the Company is not aware of any actual or threatened claim
by any person or entity alleging any infringement by the Company of a
patent, trademark, service xxxx, trade name or copyright possessed by
such person or entity. None of such Intellectual Property, whether
foreign or domestic, has been canceled, abandoned, or otherwise
terminated, other than such cancellations, abandonments or terminations
which, individually or in the aggregate, would not have a Company
Material Adverse Effect.
(iii) Schedule 2(k) lists each contract and agreement of
the Company which is required to be filed (i) as an exhibit to the
Company's Form 10-K report for the year ended December 31, 2000, (ii) as
an exhibit to the Company's Form 10-Q report for the three months ended
March 31, 2001 and (iii) as an exhibit to the Company's Form 10-Q report
for the three months ended June 30, 2001, and each is a legal and valid
agreement binding upon the Company and, to the Company's knowledge, is
in full force and effect. To the Company's knowledge, except as set
forth on Schedule 2(k), there is no breach or default by any party
thereunder except any such breach or default that has not had and could
not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(iv) The Company has and maintains adequate and
sufficient insurance, including liability, casualty and products
liability insurance, covering risks associated with its business,
properties and assets, including insurance that is customary for
companies similarly situated.
(v) To the best of its knowledge, except as set forth on
Schedule 2(k), the Company, its business and properties and assets are
in compliance in all material respects with all applicable statutes,
laws and regulations, including without limitation, those relating to
(i) health, safety and employee relations, (ii) environmental matters,
including the discharge of any hazardous or potentially hazardous
materials into the environment, and
-7-
8
(iii) the development, commercialization and sale of
pharmaceutical and biotechnology products, including all applicable
regulations of the U.S. Food and Drug Administration and comparable
applicable foreign regulatory authorities and to its knowledge, no
material expenditures are or will be required in order to comply with
any such existing statute, law or regulation. No Hazardous Materials (as
defined below) are used or have been used, stored, or disposed of by the
Company or, to the Company's knowledge after reasonable investigation,
by any other person or entity on any property owned, leased or used by
the Company. For the purposes of the preceding sentence, "Hazardous
Materials" shall mean (a) materials which are listed or otherwise
defined as "hazardous" or "toxic" under any applicable local, state,
federal and/or foreign laws and regulations that govern the existence
and/or remedy of contamination on property, the protection of the
environment from contamination, the control of hazardous wastes, or
other activities, involving hazardous substances, including building
materials, or (b) any petroleum products or nuclear materials.
(l) Legal Proceedings, etc. Except as set forth on Schedule
2(l), 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 in their capacities as such that (i) challenges the validity or
performance of this Agreement or the other Transaction Documents or (ii) could
reasonably be expected to have a Company Material Adverse Effect. The Company is
not in violation of, or default under, any material laws, judgments,
injunctions, orders or decrees of any court, governmental department,
commission, agency, instrumentality or arbitrator applicable to its business,
other than any violations or defaults which, individually or in the aggregate,
would not have a Company Material Adverse Effect.
(m) Disclosure. The representations and warranties set forth
herein and in the other Transaction Documents, when viewed collectively together
with the SEC Filings, do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements contained
herein not misleading in light of the circumstances in which they were made. (n)
Brokers or Finders. Except as set forth on Schedule 2(n) attached hereto, there
have been no investment bankers, brokers or finders used by the Company in
connection with the transactions contemplated by the Transaction Documents and
no persons or entities are entitled to a fee or compensation in respect thereof.
(n) Brokers or Finders. Except as set forth on Schedule 2(n)
attached hereto, there have been no investment bankers, brokers or finders used
by the Company in connection with the transactions contemplated by the
Transaction Documents and no persons or entities are entitled to a fee or
compensation in respect thereof.
(o) SEC Filings. The Company has timely 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.
-8-
9
SECTION 3. Representations and Warranties of EIS and EPIL. Each
of EIS and EPIL (each, an "Investor"), hereby represents and warrants, severally
but not jointly, as to itself and not as to the other Investor, to the Company,
as of the date hereof, as follows:
(a) Organization. Such Investor is duly organized, validly
existing and, where applicable, in good standing under the laws of the
jurisdiction of its organization 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. Such Investor, where applicable, 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 Investors, as applicable (an "Elan
Material Adverse Effect").
(b) Authorization of Transaction Documents. Such Investor 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 such Investor 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 such
Investor and, when executed and delivered by such Investor, this Agreement and
each of the other Transaction Documents to which it is a party will be the valid
and binding obligations of such Investor, as applicable, enforceable against it
in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of equity.
(c) No Violation. The execution, delivery and performance by
such Investor 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 such Investor will not violate
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 charter or bylaws of such Investor, (ii) any 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 such Investor or any of their properties or assets or (iii) any material
contract to which such Investor is a party, except, in each case, where such
violation, breach, default, termination, cancellation or acceleration would not,
individually or in the aggregate, have an Elan Material Adverse Effect.
(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 by such Investor or the other
Transaction Documents to which it is a party.
-9-
10
(e) Investment Representations.
(i) Such Investor 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.
Such Investor 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, that such Investor shall be permitted to convert or exchange
such Securities in accordance with their terms.
(ii) Such Investor 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), other than to an affiliate of such Investor.
(iii) Such Investor acknowledges its understanding that
the private placement and sale of the Securities (and the Underlying
Shares) is exempt from registration under the Securities Act. In
furtherance thereof, such Investor represents and warrants that it is an
"accredited investor" as that term is defined in Rule 501 of Regulation
D under the Securities Act, 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) Such Investor agrees that it shall not sell or
otherwise transfer any of the Securities (or the Underlying Shares)
without registration under the Securities Act, pursuant to Rule 144 (or
any successor rule) under the Securities Act or pursuant to an opinion
of counsel reasonably satisfactory to the Company that no violation of
the Securities Act will be involved in such transfer, 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. Such Investor 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 Shares), as provided in
the Company Registration Rights Agreement. Such Investor 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) Legal Proceedings; Etc. There is no legal, administrative,
arbitration or other action or proceeding or governmental investigation pending,
or to the knowledge of such Investor
-10-
11
threatened, against such Investor that challenges the validity or performance of
this Agreement or the other Transaction Documents to which such Investor is a
party.
(g) Brokers or Finders. There have been no investment bankers,
brokers or finders used by such Investor or its affiliates in connection with
the transactions contemplated by the Transaction Documents and no persons or
entities are entitled to a fee or compensation in respect thereof.
SECTION 4. Covenants of the Parties.
(a) Fully-diluted Stock Ownership. Notwithstanding any other
provision of this Agreement, in the event that EIS and EPIL shall have
determined that at any time they (together with their affiliates, if applicable)
hold or have 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 19.5% of the Company's outstanding
Common Stock on a fully-diluted basis, each of EIS and EPIL shall have the right
to elect to convert all or any part of the Securities or the Underlying Shares
into other preferred, non-voting securities of the Company (to be specified by
EIS or EPIL, as the case may be, but having terms no more favorable than the
Securities or the Underlying Shares being so converted by EIS or EPIL, as the
case may be) such that EIS, EPIL and their affiliates will not directly or
indirectly own more than 19.5% of the Common Stock (in aggregate) for a period
of at least two years from the Closing Date. In the event that EIS or EPIL shall
elect such conversion, EIS, EPIL and their affiliates shall retain the right to
transfer all or a portion of such securities (including the Common Stock
issuable upon conversion thereof) to their respective affiliates. Each of the
Company, EIS and EPIL shall use commercially reasonable efforts to promptly
effect such transactions and any required subsequent conversions or adjustments
to the securities position of EIS and EPIL, on a quarterly basis, within 15
business days of the end of each of EIS's and EPIL's fiscal quarters.
(b) Confidentiality; Non-Disclosure.
(i) From and after the date hereof, neither the Company,
EIS nor EPIL (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, and potential bank creditors and investors, 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 commercially reasonable efforts to obtain an order or ruling
protecting the confidentiality of confidential information of the other
party contained herein or therein and notifies the other party prior to
such disclosure so that such other party may, if it chooses, seek such
relief. 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.
-11-
12
(ii) Prior to issuing the initial press release or
public disclosure in respect of this Agreement or the transactions
contemplated hereby (the "Initial Press Release"), 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. Thereafter, the Company may issue press releases made in the
ordinary course of its business, referring to research collaborations
involving the Company, and which do not differ from or go beyond the
terms of the Initial Press Release (except that no quotes from EIS or
EPIL shall be repeated), without obtaining the consent of the other
parties to the contents thereof; provided, that any other type of press
release or public disclosure by the Company in respect of this Agreement
or the transactions contemplated hereby will require the consent of EIS
or EPIL 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 three business days,
such consent shall be deemed given.
(c) 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. Security Interest.
(a) Certain Definitions. For purposes of this Section 5, the
following definitions shall apply:
"Proceeds" means all proceeds of, and all other profits,
products, rents or receipts, in whatever form, arising from the sale, exchange,
assignment, or other disposition of Collateral.
"Secured Obligations" means (a) all principal of, and
interest (including, without limitation, any interest which accrues after the
commencement of any case, proceeding or other actions relating to the
bankruptcy, insolvency or reorganization of the Company) on, the Note, (b) all
other amounts payable by the Company under the Note and (c) any renewals or
extensions of any of the foregoing.
"Security Interest" means the security interest in the
Collateral (as defined below) granted hereunder securing the Secured
Obligations.
"UCC" means the Uniform Commercial Code as in effect on
the date hereof in the State of California; provided, that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the Security Interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than California,
"UCC" means the Uniform Commercial Code as in effect is such other jurisdiction
for purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
-12-
13
(b) Grant of Security Interest. In order to secure the full and
punctual payment of the Secured Obligations in accordance with the terms
thereof, and to secure the performance of the obligations of the Company
thereunder, the Company hereby grants to EPIL a continuing security interest in
and to all of the assets transferred, to the Company pursuant to the Asset
Purchase Agreement (the "Collateral") and all Proceeds of all or any of the
Collateral.
(c) Covenants and Representations Regarding Security Interest.
(i) The Security Interest constitutes a valid security
interest under the UCC and the US Patent and Trademark Office and the US
Copyright Office securing the Secured Obligations. When UCC financing
statements shall have been filed in the appropriate UCC filing offices
for a debtor (i) with a chief executive office and principal place of
business located in the County of San Diego, of the State of California
and (ii) organization under the law of the State of Delaware, and
appropriate filings have been recorded with the US Patent and Trademark
Office and the US Copyright Office, the Security Interests shall
constitute perfected security interests in the Collateral, prior to all
other Encumbrances and rights of others therein.
(ii) The Company will not change its name, identity or
corporate structure in any manner unless it shall have given EPIL prior
notice thereof and delivered an opinion of counsel with respect thereto.
The Company will not change the location of (i) the state under whose
law the Company is organized, (ii) its chief executive office or
principal place of business or (iii) the locations where it keeps or
holds any Collateral or any records relating thereto unless it shall
have given EPIL prior notice thereof and delivered an opinion of counsel
with respect thereto. The Company shall not in any event change the
location of any Collateral if such change would cause the Security
Interests in such Collateral to lapse or cease to be perfected.
(iii) The Company will, from time to time, at its
expense, execute, deliver, file and record any statement, assignment,
instrument, document, agreement or other paper and take any other action
(including, without limitation, any filings of financing or continuation
statements under the UCC and appropriate filings with the US Patent and
Trademark Office and the US Copyright Office) that from time to time may
be necessary or desirable, or that EPIL may reasonably request, in order
to create, preserve, perfect, confirm or validate the Security
Interests, or to enable EPIL to exercise or enforce any of its rights,
powers and remedies hereunder with respect to any of the Collateral. To
the extent permitted by applicable law, the Company hereby authorizes
EPIL to execute and file financing statements or continuation statements
without the Company's signature appearing thereon. The Company agrees
that a carbon, photographic, photostatic or other reproduction of this
Agreement or of a financing statement is sufficient as a financing
statement.
(iv) Notwithstanding any other provisions of this
Section 5, the Company shall be free in its sole discretion to sell or
transfer in the ordinary course of business inventory included in the
Collateral and shall have no obligation to segregate, or to provide any
special handling of, such inventory or the proceeds thereof.
-13-
14
(d) Remedies. If any Event of Default (as defined in the Note)
under the Note has occurred and is continuing, EPIL may exercise all rights of a
secured party under the UCC (whether or not in effect in the jurisdiction where
such rights are exercised). EPIL may be the purchaser of any or all of the
Collateral so sold at any public sale. The Company will execute and deliver such
documents and take such other action as EPIL deems necessary or advisable in
order that any such sale may be made in compliance with law. Upon any such sale
the Collateral shall be delivered, assigned and transferred to EPIL. At any such
sale, EPIL shall hold the Collateral absolutely and free from any claim or right
of whatsoever kind, including any equity or right of redemption of the Company
which may be waived, and the Company, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal which it has or
may have under any law now existing or hereafter adopted.
(e) Termination of Security Interest. Upon the repayment in full
of all Secured Obligations and the termination of any obligations under the
Note, the Security Interests shall terminate and all rights to the Collateral
shall revert to the Company.
SECTION 6. Survival and Indemnification.
(a) Survival. For the purposes of this Section, the
representations and warranties of the Company, EIS and EPIL contained herein
shall survive for a period of 24 months from and after the date hereof.
(b) Indemnification. In addition to all rights and remedies
available to the parties hereto at law or in equity, the Company (in such
capacity, "Indemnifying Party") shall indemnify EIS and EPIL and their
respective stockholders, officers, directors and assigns, affiliates, and their
affiliates' stockholders, officers, directors, employees, agents,
representatives, successors and assigns (each, an "Indemnified Person"), and
save and hold each Indemnified Person harmless from and against and pay on
behalf of or reimburse each such Indemnified Person, as and when incurred, for
any and all loss, liability, demand, claim, action, cause of action, cost,
damage, deficiency, tax, penalty, fine or expense, whether or not arising out of
any claims by or on behalf of such Indemnified Person or any third party,
including interest, penalties, reasonable attorneys' fees and expenses and all
amounts paid in investigation, defense or settlement of any of the foregoing
(collectively, "Losses"), that any such Indemnified Person may suffer, sustain
incur or become subject to, as a result of, in connection with, relating or
incidental to or by virtue of:
(i) any misrepresentation or breach of warranty on the
part of the Indemnifying Party under Section 2 of this Agreement or any
of the other Transaction Documents; or
(ii) any nonfulfillment, default or breach of any
covenant or agreement on the part of the Indemnifying Party under
Sections 4 or 5 of this Agreement.
(c) Maximum Recovery. Notwithstanding anything in this Agreement
to the contrary, in no event shall the Indemnifying Party be liable for
indemnification under this Section 8 in an amount in excess of the aggregate of
the purchase price paid for the Shares, and the advances
-14-
15
made and not repaid under the Note. No Indemnified Person shall assert any such
claim unless Losses in respect thereof incurred by any Indemnified Person, when
aggregated with all previous Losses hereunder, equal or exceed U.S.$100,000, in
which case the Indemnifying Party shall be liable for all such Losses in excess
of U.S.$100,000, such claim shall include all Losses covered by this Section 6.
(d) Investigation. All indemnification rights hereunder shall
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, irrespective of any investigation, inquiry or
examination made for or on behalf of, or any knowledge of the Indemnified Person
or the acceptance of any certificate or opinion.
(e) Contribution. If the indemnity provided for in this Section
6 shall be, in whole or in part, unavailable to any Indemnified Person, due to
Section 6(b) being declared unenforceable by a court of competent jurisdiction
based upon reasons of public policy, so that Section 6(b) shall be insufficient
to hold each such Indemnified Person harmless from Losses which would otherwise
be indemnified hereunder, then the Indemnifying Party and the Indemnified Person
shall each contribute to the amount paid or payable for such Loss in such
proportion as is appropriate to reflect not only the relative benefits received
by the Indemnifying Party on the one hand and the Indemnified Person on the
other, but also the relative fault of the Indemnifying Party and be in addition
to any liability that the Indemnifying Party may otherwise have. The indemnity,
contribution and expense reimbursement obligations that the Indemnifying Party
has under this Section 6 shall survive the expiration of the Transaction
Documents. The parties hereto further agree that the indemnification and
reimbursement commitments set forth in this Agreement shall apply whether or not
the Indemnified Person is a formal party to any such lawsuit, claims or other
proceedings.
(f) Limitation. This Section 6 is not intended to limit the
rights or remedies otherwise available to any party hereto with respect to this
Agreement or the Transaction Documents.
SECTION 7. 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 courier
or by registered or certified mail, return receipt requested and postage
prepaid, or by facsimile transmission addressed as follows:
(i) if to the Company, to:
Women First Healthcare, Inc.
0000 Xx Xxxxxx Xxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: President and Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
-15-
16
Xxxxxx & Xxxxxxx
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
(ii)(a) If to EIS, to:
Elan International Services, Ltd.
000 Xx. Xxxxx Xxxxx
Xxxxxx, Xxxxxx Xxxxxx
Xxxxxxx XX 04
Attention: Chief Executive Officer
Facsimile: 000-000-0000
(b) If to EPIL, to:
Elan Pharma International Limited
Wil House
Xxxxxxx Business Xxxx
Xxxxxxx, Co. Xxxxx
Ireland
Attention: Secretary
Facsimile: 011-353-61-362097
with a copy, in the case of (a) or (b) above, to:
Reitler Xxxxx LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: 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 7 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 courier, 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, the date of telephone confirmation of receipt.
SECTION 8. Withholding Taxes. Amounts of income or other taxes
which the Company is required by law to pay or withhold with respect to payments
or distributions made by it to EIS or EPIL pursuant to the terms of this
Agreement and the Securities (the "Tax Amount") shall
-16-
17
be deducted from such payment or distribution. If the Company is so required to
deduct or withhold, the Company will promptly notify the appropriate party,
either EIS or EPIL, of such requirement, pay the relevant authorities the full
amount required to be deducted or withheld promptly upon the earlier of (i)
determining that such deduction or withholding is required or (ii) receiving
notice that such amount has been assessed against EIS or EPIL. The Company shall
promptly forward to EIS or EPIL an official receipt or certified copy or other
documentation reasonably acceptable evidencing the payment to such authorities.
The parties agree to cooperate in all respects necessary to take advantage of
any double tax agreements or similar agreements as may from time to time be
available to reduce or eliminate any withholding taxes.
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 and Waiver. This Agreement may not be
modified or amended, or any of the provisions hereof waived, except by written
agreement of the Company, EIS and EPIL dated after the date hereof.
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.
SECTION 13. Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York,
without giving effect to principles of conflicts of laws.
SECTION 14. 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 15. Exhibits and Schedules. The exhibits to and
schedules delivered by or on behalf of any party in connection with this
Agreement are an integral part of this Agreement, and any statements contained
in such schedules shall be deemed to be representations and warranties under
this Agreement.
SECTION 16. Assignments. 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. All or any part of
this Agreement may be assigned by EIS, EPIL and their permitted assigns to their
respective affiliates and subsidiaries, as well as any special purpose
-17-
18
financing or similar vehicle established by EIS or EPIL. Other than as set forth
above, no party shall assign all or any part of this Agreement without the prior
written consent of the other party.
SECTION 17. 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]
-18-
19
IN WITNESS WHEREOF, each of the undersigned has duly executed
this Agreement as of the date first written above.
WOMEN FIRST HEALTHCARE, INC.
By:
-------------------------------------
Name:
Title:
ELAN INTERNATIONAL SERVICES, LTD.
By:
-------------------------------------
Name:
Title:
ELAN PHARMA INTERNATIONAL LIMITED
By:
-------------------------------------
Name:
Title:
-19-
20
EXHIBIT A
FORM OF NOTE
21
EXHIBIT B
FORM OF COMPANY REGISTRATION RIGHTS AGREEMENT
22
EXHIBIT C
FORM OF ASSET PURCHASE AGREEMENT
23
EXHIBIT D
FORM OF OPINION OF COMPANY COUNSEL
