ATHENA MEDICAL CORPORATION
STOCK PURCHASE AGREEMENT
Dated as of
December 6, 1996
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CONTENTS
Section 1. Purchase and Sale of Stock................................. 1
1.1 Sale and Issuance of Stock................................. 1
1.2 Closing.................................................... 1
Section 2. Representations and Warranties of the Company.............. 2
2.1 Organization, Good Standing and Qualification.............. 2
2.2 Capitalization............................................. 2
2.3 Subsidiaries............................................... 2
2.4 Authorization.............................................. 2
2.5 Valid Issuance of Securities............................... 3
2.6 Governmental Consents...................................... 3
2.7 Litigation................................................. 3
2.8 Permits.................................................... 3
2.9 Compliance With Other Instruments.......................... 4
2.10 Offering................................................... 4
2.11 Disclosure................................................. 4
2.12 Title to Property and Assets............................... 4
2.13 Employee Benefit Plans..................................... 5
2.14 Taxes...................................................... 5
2.15 Labor Agreements and Actions............................... 5
2.16 Insurance.................................................. 5
2.17 Environmental, Health and Safety........................... 5
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2.18 Financial Statements....................................... 6
2.19 Changes.................................................... 7
2.20 Filings with the Securities and Exchange Commission
and Compliance with Securities Laws........................ 7
Section 3. Representations and Warranties of the Investors and
Xxxxxxx Xxxxx.............................................. 7
3.1 Enforceability............................................. 7
3.2 Purchase Entirely for Own Account.......................... 7
3.3 Disclosure of Information; Due Diligence................... 8
3.4 Investment Experience; Accredited Investor Status.......... 8
3.5 Restricted Securities...................................... 8
3.6 Legend..................................................... 9
3.7 Residency.................................................. 9
3.8 Payment of Commission...................................... 9
3.9 Purchaser Representative................................... 9
Section 4. Conditions of Investors' Obligations at the Closing........ 9
4.1 Representations and Warranties............................. 10
4.2 Performance................................................ 10
4.3 Corporate Documents........................................ 10
4.4 Delivery of Shares......................................... 10
4.5 Consents, Permits and Waivers.............................. 10
4.6 Qualifications............................................. 10
4.7 Opinion of Company Counsel................................. 10
4.8 Material Adverse Occurrence................................ 11
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4.9 Compliance Certificate.................................... 11
Section 5. Conditions of the Company's Obligations to the Investors
at the Closing............................................ 11
5.1 Representations and Warranties............................ 11
5.2 Payment of Purchase Price................................. 11
5.3 Securities Laws Qualification............................. 11
5.4 Performance............................................... 11
Section 6. Registration Rights....................................... 11
6.1 Definitions............................................... 12
6.2 Request for Registration.................................. 12
6.3 Obligations of the Company................................ 14
6.4 Furnish Information....................................... 16
6.5 Expenses of Registration.................................. 16
6.6 Indemnification........................................... 16
6.7 Reports Under Securities Exchange Act of 1934............. 18
Section 7. Covenants of the Company and the Investors................ 19
7.1 Insurance................................................. 19
7.2 Price Protection.......................................... 19
7.3 Use of Proceeds........................................... 21
7.4 No Trading in the Company's Stock......................... 21
Section 8. Miscellaneous............................................. 21
8.1 Survival of Warranties.................................... 21
8.2 Successors and Assigns.................................... 21
8.3 Governing Law............................................. 21
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8.4 Counterparts.............................................. 21
8.5 Titles and Subtitles...................................... 22
8.6 Notices................................................... 22
8.7 Expenses; Attorneys' Fees................................. 22
8.8 Amendments and Waivers.................................... 23
8.9 Severability.............................................. 23
8.10 Entire Agreement.......................................... 24
Common Stock..................................................... 1
Certain Antidilution Rights...................................... 1
Change in Control................................................ 1
SCHEDULE 1.1 Securities Purchased
SCHEDULE 2A Supplemental Disclosure Schedule
SCHEDULE 2B Schedule of Exceptions
SCHEDULE 2.1 Description of Securities
SCHEDULE 4.7 Form of Legal Opinion
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is made as of December
6, 1996, by and among ATHENA MEDICAL CORPORATION, a Nevada corporation (the
"Company"), and the several investors named on the signature page hereto
(each an "Investor" and, collectively, the "Investors").
WHEREAS, the Investors desire in the aggregate to purchase, and the
Company desires to sell and issue to the Investors, 225,000 shares (the
"Shares") of the Company's common stock, $0.01 par value per share (the
"Common Stock").
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
Section 1. Purchase and Sale of Stock
1.1 Sale and Issuance of Stock
Subject to the terms and conditions of this Agreement, the Company
agrees to issue and sell to each Investor, and each Investor, severally and
not jointly, agrees to purchase from the Company, the number of Shares set
forth opposite the name of such Investor under the heading "Number of Shares
to be Purchased" on Schedule 1.1 at a price of $2.00 per share.
1.2 Closing
The closing of the purchase and sale of the Shares shall take place at
the offices of Perkins, Coie, 0000 X.X. Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx,
Xxxxxx, at 10:00 a.m., on December 6, 1996, or at such other location and
time as the Company and the Investors hereto mutually agree upon (such
closing being referred to herein as the "Closing" and such date and time
being referred to herein as the "Closing Date"). At the Closing, the Company
shall issue and deliver to each Investor a stock certificate or certificates,
registered in the name of such Investor, representing the Shares being
purchased by such Investor at the Closing. As payment in full for the Shares
being purchased by an Investor under this Agreement, and against delivery of
the stock certificate or certificates therefor on the Closing Date, each
Investor shall deliver to the Company a check payable to the order of the
Company in the amount set forth opposite
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the name of such Investor under the heading "Aggregate Purchase Price" on
Schedule 1.1, or shall transfer such amount to the account of the Company by
wire transfer.
Section 2. Representations and Warranties of the Company
The Company represents and warrants to the Investors that, except as set
forth in the Company's reports filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended (the "1934
Act Reports"), the Supplemental Disclosure Schedule attached hereto as
Schedule 2A, or on the Schedule of Exceptions attached hereto as Schedule 2B:
2.1 Organization, Good Standing and Qualification
The Company is a corporation duly organized and validly existing under
the laws of the State of Nevada and has the requisite corporate power and
authority to own and operate its properties and assets and to conduct its
business as now conducted and as proposed to be conducted in the future, to
execute and deliver this Agreement, to issue and sell the Shares, and to
carry out the provisions of this Agreement. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on its business,
properties, prospects or financial condition (a "Material Adverse Effect").
2.2 Capitalization
As of September 30, 1996, the authorized capital of the Company
consisted of 33,000,000 shares of Common Stock, 9,458,597 shares of which
were issued and outstanding, and 3,300,000 shares of which are reserved for
issuance to employees, consultants and directors pursuant to stock option
plans or other plans or arrangements approved by the Company's Board of
Directors (collectively, the "Plan"). Options for 2,266,530 shares of Common
Stock have been granted under the Plan; options to purchase 2,213,030 shares
of Common Stock were outstanding as of September 30, 1996. The Company has
issued, and there were outstanding as of September 30, 1996, warrants to
purchase 3,500,150 shares of Common Stock. The Common Stock is described on
Schedule 2.1.
2.3 Subsidiaries
The Company does not own or control, directly or indirectly, any
interest in any other corporation, association, partnership or other entity.
The Company is not a participant in any joint venture, partnership, or
similar arrangement.
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2.4 Authorization
All corporate action on the part of the Company, its officers, directors
and shareholders necessary for the authorization, execution and delivery of
this Agreement and the transactions contemplated herein, the performance of
all obligations of the Company hereunder and the authorization, issuance and
delivery of the Shares and any other securities to be issued hereunder
(collectively, the "Securities") have been taken or will be taken prior to
the Closing Date, and this Agreement constitutes the valid and legally
binding obligation of the Company, enforceable in accordance with its terms.
2.5 Valid Issuance of Securities
The Securities, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and free of any liens or encumbrances
created by the Company.
2.6 Governmental Consents
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal,
regional, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated
by this Agreement, except for filings, if any, required pursuant to
applicable securities laws, which filings will be made within the required
statutory period.
2.7 Litigation
There is no action, suit, proceeding, or investigation pending or, to
the Company's knowledge, currently threatened against the Company which
questions the validity of this Agreement or the right of the Company to enter
into this Agreement, or to consummate the transactions contemplated hereby,
or which might result, either individually or in the aggregate, in a Material
Adverse Effect, or any change in the current equity ownership of the Company.
The Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no legal action, lawsuit, legal proceeding or
investigation related to any of the foregoing by the Company currently
pending or which the Company intends to initiate.
2.8 Permits
The Company has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by
it, the lack of which would have a Material Adverse Effect, and believes it
can obtain, without undue
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burden or expense, any similar authority for the conduct of its business as
planned to be conducted. The Company is not in default under any of such
franchises, permits, licenses or other similar authority.
2.9 Compliance With Other Instruments
The Company is not in violation of any provision of its Articles of
Incorporation or Bylaws or in violation or default of any provision of any
instrument, judgment, order, writ, decree or contract to which it is a party
or by which it is bound or any provision of any federal or state statute,
rule or regulation applicable to the Company, which violation or default
would have a Material Adverse Effect. The execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby will not result in any such violation or default or require any
consent under or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a violation or default under any
such provision, instrument, judgment, order, writ, decree or contract or an
event which results in the creation of any lien, charge or encumbrance upon
any assets of the Company.
2.10 Offering
Subject in part to the truth and accuracy of the Investors'
representations set forth in this Agreement, the offer, sale and issuance of
the Securities as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and will have been registered or qualified (or are exempt
from registration or qualification) under the registration, permit or
qualification requirements of all applicable state securities laws.
2.11 Disclosure
The Company has fully provided the Investors with all the information
reasonably available to the Company that the Investors have requested for
deciding whether to purchase the Securities. This Agreement (including the
schedules and exhibits attached hereto) and the 1934 Act Reports when taken
as a whole do not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made herein and
therein not misleading.
2.12 Title to Property and Assets
The Company has good and marketable title to its property and assets,
free and clear of any material liens, claims or encumbrances. With respect
to the property and assets it leases, the Company is in compliance with such
leases and, to the Company's knowledge, holds a valid leasehold interest free
of any material liens, claims or encumbrances.
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2.13 Employee Benefit Plans
The Company does not have any Employee Benefit Plan as defined in the
Employee Retirement Income Security Act of 1974.
2.14 Taxes
The Company has timely and properly filed all tax returns (federal,
state, foreign and local) required to be filed by it in connection with the
Company's income. All such returns, when filed, were true, correct and
complete in all material respects. All taxes relating to the Company's
income, all assessments imposed and all other taxes (federal, state, foreign
and local) due and payable on or before the date hereof have been timely
paid. The Company has paid all payroll and withholding taxes. There are no
agreements, waivers or other arrangements providing for an extension of time
with respect to the assessment of any tax or deficiency against the Company,
nor are there any actions, suits, proceedings, investigations or claims now
pending against the Company in respect of any tax or assessment, or, to the
Company's knowledge, any matters under discussion with any federal, state,
foreign or local authority relating to any taxes or assessments, or any
claims for additional taxes or assessments asserted by any such authority.
2.15 Labor Agreements and Actions
Except as set forth in the Schedule of Exceptions, the Company is not
bound by or subject to any written or oral, express or implied, contract,
commitment or arrangement with any employee or labor union, and no labor
union has requested or, to the Company's knowledge, has sought to represent
any of the employees, representatives or agents of the Company.
2.16 Insurance
The Company has in full force and effect fire and casualty insurance
policies, with extended coverage, sufficient in amount (subject to reasonable
deductibles) to allow it to replace any of its properties that might be
damaged or destroyed. The Company has in full force and effect products
liability and errors and omissions insurance in amounts customary for
companies similarly situated.
2.17 Environmental, Health and Safety
The Company has obtained all material permits, licenses, and other
authorizations which are required, and otherwise has no liability, under
federal, state, and local laws or regulations relating to public health and
safety, worker health and safety and pollution or protection of the
environment, including laws ("Environmental
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Laws") relating to emissions, discharges, releases or threatened releases of
hazardous substances, pollutants, contaminants or hazardous or toxic
materials or wastes into air, surface water, groundwater, or soil, sediment,
lands, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of hazardous
substances, pollutants, contaminants or hazardous or toxic materials or
wastes. The Company is in material compliance with all terms and conditions
of any and all required permits, licenses, and authorizations, and is in
compliance with and has no material liability under any Environmental Laws or
any codes, plans, orders, decrees, judgments or notice issued thereunder.
Except as disclosed in any Public Report (as defined in Section 2.20),
including the financial statements of the Company contained therein, the
Company has no liability for cleanup, responsibility for cleanup costs, or
damages for personal injury or property damage with respect to air, surface
water, soil, groundwater, sediments or land contamination at any site,
location or facility.
2.18 Financial Statements
The Company has delivered to the Investors its (a) audited financial
statements (balance sheet, income statement and statement of cash flows
including notes thereto) at December 31, 1995 and for the fiscal year then
ended, and (b) unaudited financial statements at March 31, 1996, June 30,
1996, and September 30, 1996 and for the three-month periods then ended (the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated and with each other, except
that unaudited Financial Statements may not contain all footnotes required by
generally accepted accounting principles. The Financial Statements present
fairly the financial condition and operating results of the Company as of the
dates, and for the periods, indicated therein. Except as set forth in the
Financial Statements, the Company has no material liabilities, contingent or
otherwise, other than (x) liabilities incurred in the ordinary course of
business subsequent to September 30, 1996 and (y) obligations under contracts
and commitments incurred in the ordinary course of business and not required
under generally accepted accounting principles to be reflected in the
Financial Statements, which, in both cases, individually or in the aggregate,
are not material to the financial condition or operating results of the
Company. Except as disclosed in the Financial Statements, the Company is not
a guarantor or indemnitor of any indebtedness of any other person, firm, or
corporation. The Company maintains and will continue to maintain a standard
system of accounting established and administered in accordance with
generally accepted accounting principles.
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2.19 Changes
To the Company's knowledge and except for transactions contemplated
herein, since September 30, 1996, there has not been any change in the
assets, liabilities, financial condition, or operating results of the Company
from that reflected in the Financial Statements, except changes in the
ordinary course of business that have not been, in the aggregate, materially
adverse to the Company, its business properties, prospects or financial
condition.
2.20 Filings with the Securities and Exchange Commission and Compliance
with Securities Laws
The Company's Annual Reports on Form 10-KSB, as amended, for the fiscal
years ended December 31, 1993, 1994 and 1995, respectively, and its Quarterly
Reports on Form 10-QSB for the fiscal quarters ending March 31, 1996, June
30, 1996, and September 30, 1996 (each, a "Public Report"), as of their
respective filing dates with the Securities and Exchange Commission (the
"Commission"), (a) complied in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations promulgated thereunder, and (b) except with respect to
statements of third parties contained in any exhibits, 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 made
therein, in light of the circumstances under which they were made, not
misleading. All such Public Reports were timely filed. Copies of the Public
Reports have been delivered to each Investor.
Section 3. Representations and Warranties of the
Investors and Xxxxxxx Xxxxx
Each Investor hereby represents and warrants to the Company that:
3.1 Enforceability
This Agreement constitutes a valid and legally binding obligation of
such Investor, enforceable in accordance with its terms.
3.2 Purchase Entirely for Own Account
This Agreement is made with such Investor in reliance upon such
Investor's representation to the Company, which, by such Investor's execution
of this Agreement, such Investor hereby confirms, that the securities to be
received by such Investor will be acquired for investment for such Investor's
own account and not with a view to the distribution of any part thereof, and
that such Investor has no present intention of
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selling, granting any participation in, or otherwise distributing the same in
a manner contrary to the Securities Act or applicable state securities laws.
3.3 Disclosure of Information; Due Diligence
Such Investor represents that it has had an opportunity to ask questions
of and receive answers from the Company regarding the Company regarding its
business and affairs. Such Investor represents that he, she or it (a) is
relying solely on the information and representations and warranties of the
Company contained in this Agreement and the Public Reports and (b) on no
other information, representation or warranty (including, without limitation,
any information or statement contained in the Business Plan Overview prepared
by Xxxxxxxxx Group), in connection with such Investor's decision to enter
into this Agreement and to purchase the securities to be purchased hereunder.
3.4 Investment Experience; Accredited Investor Status
Such Investor can bear the economic risk of this investment (including
possible complete loss of such investment) for an indefinite period of time
and has such knowledge and experience in financial or business matters that
such Investor is capable of evaluating the merits and risks of the investment
in the securities to be purchased hereunder. Such Investor understands that
the securities to be purchased hereunder have not been registered under the
Securities Act, or under the securities laws of any jurisdiction, by reason
of reliance upon certain exemptions, and that the reliance on such exemptions
is predicated upon the accuracy of such Investor's representations and
warranties in this Section 3. The Investor is familiar with Regulation D
promulgated under the Securities Act (Regulation D) and is either (a) an
"accredited investor" as defined in Rule 501(a) of Regulation D or
represented by Xxxxxxx Xxxxx, a purchaser representative who meets the
requirements of Rule 501(h) of Regulation D and, together with such purchaser
representative, has such knowledge and experience in financial and business
matters that the Investor is capable of evaluating the merits and risks of
this investment.
3.5 Restricted Securities
Such Investor understands that the securities to be purchased hereunder
are characterized as "restricted securities" under the 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
Securities Act only in certain limited circumstances. In this connection,
such Investor represents that it is familiar with Rule 144, as currently in
effect under the Securities Act, and understands the resale limitations
imposed thereby and by the Securities Act.
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3.6 Legend
It is understood that the certificates evidencing the securities to be
purchased hereunder may bear the following legend for a period of three years
from the Closing date:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES LAW, AND NO INTEREST
THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (ii) THIS
CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF
THESE SECURITIES SATISFACTORY TO THIS CORPORATION STATING THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION, OR (iii) THIS CORPORATION
OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION.
3.7 Residency
For purposes of the application of state securities laws, such Investor
represents that he, she or it is a resident of the state set forth under such
Investor's name on the signature pages hereof.
3.8 Payment of Commission
Investors are aware that Xxxxxxx Xxxxx is receiving a commission from
the Issuer in connection with this Stock Purchase Agreement.
3.9 Purchaser Representative
Xxxxxxx Xxxxx represents and warrants to the Company that he is a
purchaser representative who meets the requirements of Rule 501(h) of
Regulation D.
Section 4. Conditions of Investors' Obligations at the Closing.
The obligations of the Investors under Section 1.1 of this Agreement are
subject to the fulfillment at or before the Closing of each of the following
conditions:
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4.1 Representations and Warranties
The representations and warranties contained in Section 2 hereof shall
be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been
made as of the Closing Date.
4.2 Performance
The Company shall have performed and complied with all agreements,
covenants, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
4.3 Corporate Documents
The Company shall have delivered to the Investors or special counsel to
the Investors, copies of all corporate documents of the Company as the
Investors shall reasonably request.
4.4 Delivery of Shares
The Company shall have delivered to each Investor at the Closing a stock
certificate representing the Shares to be purchased by such Investor.
4.5 Consents, Permits and Waivers
The Company and the Investors shall have obtained any and all consents,
permits and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement (except for such as may be
properly obtained subsequent to the Closing).
4.6 Qualifications
The offer, sale and issuance of the Shares to the Investors pursuant to
this Agreement shall be qualified or exempt from qualification under all
applicable federal and state securities laws.
4.7 Opinion of Company Counsel
The Investors shall have received from Xxxxxxx Coie, counsel for the
Company, an opinion, dated as of the Closing Date, in substantially the form
of Schedule 4.7 attached hereto.
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4.8 Material Adverse Occurrence
There shall not have occurred any event or condition of any character
that might, in the reasonable opinion of the Investors, result in a Material
Adverse Effect.
4.9 Compliance Certificate
The President of the Company shall have delivered to the Investors at
the Closing a certificate certifying that the conditions specified in
Sections 4.1 and 4.2 have been fulfilled.
Section 5. Conditions of the Company's Obligations to the Investors
at the Closing
The obligations of the Company to the Investors under this Agreement are
subject to the fulfillment at or before the Closing of each of the following
conditions:
5.1 Representations and Warranties
The representations and warranties of the Investors contained in Section
3 shall be true in all material respects on and as of the Closing with the
same effect as though such representations and warranties had been made as of
the date of the Closing.
5.2 Payment of Purchase Price
Each Investor shall have delivered the Aggregate Purchase Price for the
Shares to be purchased by such Investor as set forth in Schedule 1.1 hereto,
in same-day funds.
5.3 Securities Laws Qualification
The offer and sale to the Investors of the Shares shall be qualified or
exempt from qualification under all applicable federal and state securities
laws, which qualification or exemption the Company shall have exercised its
best efforts to obtain.
5.4 Performance
The Investors shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to
be performed or complied with by them on or before the Closing.
Section 6. Registration Rights
The Company covenants and agrees as follows:
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6.1 Definitions
For purposes of this Section 6:
(a) The term "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement or
document by the Securities and Exchange Commission ("SEC").
(b) The term "Registrable Securities" means (i) the Shares sold
hereby and (ii) any Common Stock of the Company issued as (or issuable upon
the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange
for, or in replacement of the Securities; provided, however, that shares of
Common Stock shall no longer be treated as Registrable Securities after they
(x) have been sold (A) to or through a broker, dealer or underwriter in a
public distribution or a public securities transaction, whether in a
registered offering or pursuant to Rule 144, or (B) by a person in a
transaction in which its rights under this Section 6 are not assigned or (y)
are eligible for resale under Rule 144.
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding that are, and the number of shares of Common Stock issuable
pursuant to then convertible securities that upon issuance would be,
Registrable Securities.
(d) The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any
assignee thereof in accordance with Section 6.10 hereof.
6.2 Request for Registration
(a) If the Company shall receive at any time after the date six
months after the Closing Date a written request from the Holders of at least
50% of the Registrable Securities then outstanding that the Company file a
registration statement under the Securities Act covering at least 40% of the
Registrable Securities then outstanding, then the Company shall, within 10
days of the receipt thereof, give written notice of such request to all
Holders and shall, subject to the limitations of Section 6.2(b), effect as
soon as practicable, and in any event shall use its best efforts to effect
within 120 days of the receipt of such request, the registration under the
Securities Act of all Registrable Securities that the Holders request to be
registered within 20 days of the mailing of such notice by the Company.
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(b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise
the Company as a part of their request made pursuant to this Section 6.2 and
the Company shall include such information in the written notice referred to
in Section 6.2(a). In such event, the right of any Holder to include his or
her Registrable Securities in such registration shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise
mutually agreed by Initiating Holders holding a majority of the Registrable
Securities to be included in the registration and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by Initiating Holders holding a majority of
the Registrable Securities to be included in the registration. Such
underwriter or underwriters shall be reasonably acceptable to the Company.
Notwithstanding any other provision of this Section 6.2, if the
underwriter advises the Company in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Company shall
so advise all Holders of Registrable Securities that would otherwise be
underwritten pursuant hereto, and the number of shares of Registrable
Securities that may be included in the underwriting shall be allocated among
all Holders thereof, including the Initiating Holders, in proportion (as
nearly as practicable) to the amount of Registrable Securities of the Company
owned by each Holder. Any Registrable Securities excluded or withdrawn from
such underwriting shall be withdrawn from the registration.
(c) The Company is obligated to effect only one such registration
pursuant to this Section 6.2.
(d) Notwithstanding the foregoing, (i) the Company shall not be
obligated to effect a registration pursuant to this Section 6.2 during the
period starting with the date of the Company's filing of, and ending on the
date 120 days following the effective date of, a registration statement
pertaining to an underwritten public offering of securities for the account
of the Company, provided the Company is at all times during such period
diligently pursuing such registration and (ii) if the Company shall furnish
to Holders requesting a registration statement pursuant to this Section 6.2,
a certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would interfere with any material transaction then being pursued
by the Company for such registration statement to be filed and it is
therefore essential to defer the filing of such registration statement, the
Company shall have the right to defer taking action with respect to such
filing for a period of not more than 120 days after receipt of the request
13
of the Initiating Holders; provided, however, that this right to delay any
requested registration shall not be utilized more than once in any 12-month
period.
6.3 Obligations of the Company
Whenever required under this Section 6 to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby determined as provided hereafter.
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by
them and covered by such registration statement.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue
Sky laws of any of the states of Florida, Georgia, New Jersey, New York,
Oregon and Washington as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as
a condition thereto to qualify to do business or to file a general consent to
service of process in any such states.
(e) Enter into customary agreements (including, if the method of
distribution is by means of an underwriting, an underwriting agreement in
customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Securities
to be so included in the registration statement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated
14
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and, at the request of any such
Holder, promptly prepare and furnish to such Holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they are made.
(g) Furnish, at the request of any Holder requesting registration
of Registrable Securities pursuant to this Section 6, on the date that such
Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 6, if such securities
are being sold through underwriters, or, if such securities are not being
sold through underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion, dated such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering, addressed to the underwriters, if any,
and to the Holders requesting registration of Registrable Securities and (ii)
a letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
(h) Otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders,
as soon as reasonably practicable, but not later than 18 months after the
effective date of the registration statement, an earnings statement covering
the period of at least 12 months beginning with the first full month after
the effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
(i) Use its best efforts to list the Restricted Securities covered
by such registration statement with any securities exchange on which the
Common Stock of the Company is then listed.
For purposes of Sections 6.3(a) and (b), the period of distribution of
Registrable Securities in a firm commitment underwritten public offering
shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of
distribution of Registrable Securities in any other registration shall be
deemed to extend until the earlier of the sale of all Registrable Securities
covered thereby and six months after the effective date thereof.
15
6.4 Furnish Information
It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Section 6 with respect to the Registrable
Securities of any selling Holder, that such Holder shall furnish to the
Company such information regarding it, the Registrable Securities held by it,
and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities
and to execute such documents in connection with such registration as the
Company may reasonably request.
6.5 Expenses of Registration
All expenses, other than underwriting discounts and commissions relating
to Registrable Securities, incurred in connection with registrations, filings
or qualifications pursuant to Section 6.2, including, without limitation, all
registration, filing and qualification fees, printers and accounting fees,
fees and disbursements of counsel for the Company, and the reasonable fees
and disbursements of one special counsel for the selling Holders selected by
them, shall be borne by the Company. The Holders shall bear and pay the
underwriting discounts and commissions applicable to securities offered for
their account, together with all fees and disbursements of counsel for the
selling Holders beyond the reasonable fees and disbursements of one special
counsel for the selling Holders, selected by them, in connection with any
registrations, filings and qualifications made pursuant to Section 6.2 of
this Agreement.
6.6 Indemnification
In the event any Registrable Securities are included in a registration
statement under this Section 6:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers, directors, employees and
agents of each Holder, any underwriter (as defined in the Securities Act) for
such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act against any
losses, claims, damages, or liabilities (joint or several and including,
without limitation, reasonable attorneys' fees and expenses) to which any of
them may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a
"Violation"): (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or
16
necessary to make the statements therein not misleading or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and
the Company will pay to each such Holder, partner, officer, director,
employee or agent, underwriter or controlling person, as incurred, any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this Section
6.6(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities in such registration
statement and any partner, officer, director, or controlling person of any
such underwriter or other Holder, against any losses, claims, damages, or
liabilities (joint or several and including, without limitation, reasonable
attorneys' fees and expenses) to which any of the foregoing persons may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (but only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished by such
Holder under an instrument duly executed by such Holder and stated to be
specifically for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred
by any person intended to be indemnified pursuant to this Section 6.6(b) in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement
contained in this Section 6.6(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this Section 6.6(b) exceed the gross proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 6.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against
17
any indemnifying party under this Section 6.6, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party shall have the
right to retain its own counsel, with fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time
of the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 6.6, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
6.6.
(d) If the indemnification provided for in this Section 6.6
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or liabilities
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall, to the extent permitted by applicable
law, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnifying party, on the
one hand, and of the indemnified party, on the other, in connection with the
Violation(s) that resulted in such loss, claim, damage or liability, as well
as any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by a
court of law by reference to, among other things, whether the untrue or
allegedly untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The obligations of the Company and Holders under this Section
6.6 shall survive the completion of any offering of Registrable Securities in
a registration statement under this Section 6, and otherwise.
6.7 Reports Under Securities Exchange Act of 1934
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the
SEC that may at any time permit a Holder to sell securities of the Company to
the public without registration, the Company agrees to:
18
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144;
(b) use it best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the Securities
Act and the Exchange Act; and
(c) furnish to any Holder forthwith upon request, so long as the
Holder owns any Registrable Securities, (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144,
the Securities Act and the Exchange Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents filed by the Company with the SEC or distributed to shareholders
and (iii) such other information as the Holder may reasonably request in
availing such Holder of any SEC rule or regulation allowing such Holder to
sell any Registrable Securities without registration.
Section 7. Covenants of the Company and the Investors
7.1 Insurance
The Company agrees to maintain valid policies of workers' compensation
insurance and of insurance with respect to its properties and business of the
kinds and in amounts not less than is customarily obtained by corporations
engaged in the same or similar business and similarly situated, including,
without limitation, insurance against loss, damage, fire, theft, public
liability and other risks.
7.2 Price Protection
(a) If the average reported last sale price of Common Stock for
the 20 business days immediately preceding the date which is the first
anniversary of the Closing Date (the "Average Price"), is less than $2.00
per share (the "Purchase Price"), as adjusted as set forth below, the
Company shall promptly issue to each Investor, without the payment of any
additional consideration by such Investor, additional shares of Common Stock
in an amount equal to the difference between (x) the quotient resulting from
dividing (A) the aggregate purchase price set forth opposite the name of such
Investor under the heading "Aggregate Purchase Price" on Schedule 1.1
attached hereto by (B) the Average Price and (y) an amount (the "Base Number
of Shares"), subject to adjustment as set forth below, originally equal to
the number of Shares set forth opposite the name of such Investor under the
heading "Number of Shares to be Purchased" on Schedule 1.1. No fractional
shares or scrip representing fractional shares shall be issued in connection
with the rights described in this Section.
19
(b) It is understood that the certificates evidencing any
securities issued under this Section 7.2 shall bear the legend set forth in
Section 3.6.
(c) No Investor shall, solely by virtue of this Section 7.2, have
any of the rights of a holder of Common Stock of the Company, either at law
or equity, with respect to any securities which may be issued under this
Section until such securities are issued to such Investor, at which time such
Investor shall be deemed the holder of record o such securities for all
purposes.
(d) No Investor may assign, sell, transfer or otherwise dispose of
any of such Investor's rights set forth in this Section 7.2 without the
assignment, sale, transfer or other disposition of all of such Investor's
Shares.
(e) For purposes of this Section 7.2, the Purchase Price and the
Base Number of Shares under this Section for a given Investor are subject to
adjustment from time to time as follows:
(i) If the Company, at any time prior to the Anniversary
Date, shall split, subdivide or combine the securities as to which
rights under this Section 7.2 exist, into a different number of
securities of the same class, the Purchase Price and the Base
Number of Shares shall be proportionately decreased in the case of
a split or subdivision or proportionately increased in the case of
a combination.
(ii) If the Company, at any time prior to the Anniversary
Date, by reclassification of securities or otherwise, shall change
any of the securities as to which rights under this Section 7.2
exist into the same or a different number of securities of any
other class or classes, the rights granted to the Investors under
this Section 7.2 shall thereafter represent the right to acquire
such number and kind of securities as would have been issuable as
the result of such change with respect to the securities that were
subject to the rights under this Section 7.2 immediately prior to
such reclassification or other change and the Purchase Price and
the Base Number of shares shall be appropriately adjusted.
(iii) Upon the occurrence of each adjustment or
readjustment pursuant to this Section 7.2(e), the Company shall
promptly compute such adjustment or readjustment in accordance with
the terms hereof and furnish to the Investor a certificate setting
forth such adjustment or readjustments.
20
7.3 Use of Proceeds
The Company shall use the proceeds from the sale of the Securities for
working capital.
7.4 No Trading in the Company's Stock
Each Investor agrees that, during the 35 business days immediately
preceding the first anniversary of the Closing Date, such Investor will not
directly or indirectly in any way dispose of any equity security of the
Company or any debt or equity security or other instrument convertible into
or exercisable for any equity security of the Company without the prior
written consent of the Company.
Section 8. Miscellaneous
8.1 Survival of Warranties
The warranties, representations and covenants contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing Date.
8.2 Successors and Assigns
Except to the extent that the application of certain provisions of this
Agreement to transferees and assignees of the Securities is expressly
limited, the provisions of this Agreement shall inure to the benefit of and
be binding upon the respective 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.
8.3 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of Oregon.
8.4 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.
21
8.5 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.
8.6 Notices
All notices required or permitted to be given under this Agreement shall
be in writing. Notices may be served by certified or registered mail,
postage paid with return receipt requested; by private courier, prepaid; by
telex, facsimile or other telecommunication device capable of transmitting or
creating a written record; or personally. Mailed notices shall be deemed
delivered five (5) days after deposit with the U.S. Postal Service, properly
addressed. Couriered notices shall be deemed delivered on the date that the
courier warrants that delivery will occur. Telex or telecommunicated notices
shall be deemed delivered when receipt is either confirmed by confirming
transmission equipment or acknowledged by the addressee or its office.
Personal delivery shall be effective when accomplished. Unless a party
changes its address by giving notice to the other party as provided herein,
notices shall be delivered to the Company, at the address set forth below, or
to any of the Investors, care of Xxxxxxx Xxxxx, Hammershlag Kempner & Co.,
00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000:
If to the Company, to it at: Xxxxxx Xxxxxxx Xxxxxxxxxxx
Xxxxx X-0, 00000 XX Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxxx Coie
0000 XX Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
8.7 Expenses; Attorneys' Fees
Each of the Company and the Investors shall be responsible for payment
of legal fees incurred by such parties in connection with the transaction
contemplated by this Agreement.
22
8.8 Amendments and Waivers
After the Closing, any term of this Agreement may be amended and the
observance of any term 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 holders of at least two-thirds of the
Securities.
8.9 Severability
If one or more provisions of this Agreement is 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.
23
8.10 Entire Agreement
This Agreement and the other documents delivered at the Closing
constitute the full and entire understanding and agreement between the
parties with respect to the subject matter hereof and supersede all prior
agreements with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this STOCK PURCHASE
AGREEMENT as of the date first above written.
ATHENA MEDICAL CORPORATION
By:
------------------------------
Name:
Title:
INVESTORS:
SUNBELT INVESTMENTS
by X. X. XXXXXX & CO.
By:
--------------------------
Name: Xxxxx X. Xxxx
Address: X. X. Xxxxxx & Co.
Suite 1200
1100 Louisiana
Houston, TX 77002
X. X. XXXXXX & CO. F/B/O
XXXXXX X. XXXXX
24
By:
---------------------------
Name: Xxxxx X. Xxxx
Address: X. X. Xxxxxx & Co.
Suite 1200
1100 Louisiana
Houston, TX 77002
X. X. XXXXXX & CO. F/B/O
XXXXXX X. XXXXX
By:
---------------------------
Name: Xxxxx X. Xxxx
Address: X. X. Xxxxxx & Co.
Suite 1200
1100 Louisiana
Houston, TX 77002
X. X. XXXXXX & CO. F/B/O
XXXXX X. XXXXX
By:
---------------------------
Name: Xxxxx X. Xxxx
Address: X. X. Xxxxxx & Co.
Suite 1200
0000 Xxxxxxxxx
Xxxxxxx, XX 00000
00
X. X. XXXXXX & XX. X/X/X
XXXXXXXX X. XXXXXXX
By:
---------------------------
Name: Xxxxx X. Xxxx
Address: X. X. Xxxxxx & Co.
Suite 1200
0000 Xxxxxxxxx
Xxxxxxx, XX 00000
TRUST U/I DATED 10/29/74 F/B/O XXXXXXX
X. XXXXXXX ET AL
By:
---------------------------
Name: Xxxxxxx Xxxxx, Trustee
Address: Hammershlag Kempner & Co.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXX-XXXXXXX FOUNDATION
By:
---------------------------
Name: Xxxxxxx Xxxxx
Address: 0000 Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
26
XXXXXXX X. XXXXXXX
By:
---------------------------
Name: Xxxxxxx Xxxxx
Address: 0000 Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
XXXXXXXX X. XXXXXXX
By:
---------------------------
Name: Xxxxxxx Xxxxx
Address: 0000 Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
XXXX X. XXXXXXX XX. AND XXXX XXXXX
TRUSTEES, HAMMERSHLAG KEMPNER
SAVINGS & INVESTMENT PLAN DATED
1/1/84 F/B/O XXXXXXX X. XXXXX
By:
---------------------------
Name: Xxxxxxx Xxxxx, Trustee
Address: Hammershlag Kempner & Co.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
27
X. X. XXXXX TRUSTEE F/B/O XXXXXXXX X.
XXXXXXX TRUST #3 U/I DATED 1/12/83
By:
---------------------------
Name: Xxxxxxx Xxxxx, Trustee
Address: Hammershlag Kempner & Co.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
X. X. XXXXX TRUSTEE F/B/O XXXXX X.
XXXXXXX TRUST #3 U/I DATED 1/12/83
By:
---------------------------
Name: Xxxxxxx Xxxxx, Trustee
Address: Hammershlag Kempner & Co.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
X. X. XXXXX TRUSTEE F/B/O XXXXXXX X.
XXXXXXX TRUST #3 U/I DATED 12/22/82
By:
---------------------------
Name: Xxxxxxx Xxxxx, Trustee
Address: Hammershlag Kempner & Co.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
28
XXXXXXX XXXXX, CUSTODIAN FOR E. T.
XXXXX SPECIAL #9
By:
---------------------------
Name: Xxxxxxx Xxxxx, Trustee
Address: Hammershlag Kempner & Co.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
29
XXXXXXX XXXXX, CUSTODIAN FOR E. T.
XXXXX SPECIAL #10
By:
---------------------------
Name: Xxxxxxx Xxxxx, Trustee
Address: Hammershlag Kempner & Co.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
30
SCHEDULE 1.1
Securities Purchased
Number of Shares Aggregate
Investors to be Purchased Purchase Price
--------- --------------- --------------
Sunbelt Investments 50,000 $100,000
X. X. Xxxxxx & Co. F/B/O 25,000 $ 50,000
Xxxxxx X. Xxxxx
X. X. Xxxxxx & Co. F/B/O 25,000 $ 50,000
Xxxxxx X. Xxxxx
X. X. Xxxxxx & Co. F/B/O 25,000 $ 50,000
Xxxxx X. Xxxxx
X. X. Xxxxxx & Co. F/B/O 12,500 $ 25,000
Xxxxxxxx X. Xxxxxxx
Trust U/I dated 10/29/74 25,000 $ 50,000
F/B/O Xxxxxxx X. Xxxxxxx
et xx
Xxxxx-Xxxxxxx Foundation 12,500 $ 25,000
Xxxxxxx X. Xxxxxxx 12,500 $ 25,000
Xxxxxxxx X. Xxxxxxx 6,250 $ 12,500
Xxxx X. Xxxxxxx Xx. and 6,250 $ 12,500
Xxxx Xxxxx Trustees,
Hammershlag Kempner
Savings & Investment Plan
dated 1/1/84 F/B/O
Xxxxxxx X. Xxxxx
X. X. Xxxxx Trustee F/B/O 5,000 $ 10,000
Xxxxxxxx X. Xxxxxxx Trust
#3 U/I dated 1/12/83
1
X. X. Xxxxx Trustee F/B/O 5,000 $ 10,000
Xxxxx X. Xxxxxxx Trust #3
U/.I dated 1/12/83
X. X. Xxxxx Trustee F/B/O 5,000 $ 10,000
Xxxxxxx X. Xxxxxxx Trust #3
U/I dated 12/22/82
Xxxxxxx Xxxxx, Custodian 5,000 $ 10,000
for E. T. Xxxxx Special #9
Xxxxxxx Xxxxx, Custodian 5,000 $ 10,000
for E. T. Xxxxx Special #10 ------- --------
Totals: 225,000 $450,000
------- --------
------- --------
2
SCHEDULE 2A
SUPPLEMENTAL DISCLOSURE SCHEDULE
December 6, 1996
This Supplemental Disclosure Schedule has been prepared and delivered in
connection with the Stock Purchase Agreement, dated as of the date hereof
(the "Agreement"), between ATHENA MEDICAL CORPORATION (the "Company") and the
persons identified on the signature page of the Agreement (collectively, the
"Investors"). Certain matters are described in this Supplemental Disclosure
Schedule for information purposes notwithstanding the fact that, because they
do not rise above applicable materiality thresholds or otherwise, they are
not required to be listed by the terms of the Agreement. In no event shall
the inclusion of such matters in this Supplemental Disclosure Schedule be
deemed or interpreted to broaden or otherwise amplify the representations and
warranties contained in the Agreement. Any matter referred to in this
Supplemental Disclosure Schedule shall be deemed to be referred to in all
Sections of the Schedule of Exceptions attached as Schedule 2B to the
Agreement, to the extent applicable, whether or not there is an express
cross-reference and, in accepting delivery of this Supplemental Disclosure
Schedule, each Investor acknowledges that he, she or it is on notice as to
any matter set forth in this Supplemental Disclosure Schedule. Neither the
delivery of this Supplemental Disclosure Schedule nor any sale made under the
Agreement shall, under any circumstances, create any implication that there
has been no change in the affairs of the Company since the dated hereof or
that the information contained herein is correct as of any time subsequent to
the date hereof. Except as otherwise defined herein, capitalized terms used
herein have the meanings assigned in the Agreement.
---------------------------
1. Change in Executive Management
In September 1996, Xxxx Xxxxx resigned as the Chief Executive Officer of
the Company. He remains with the Company as General Manager of the Florida
Division.
2. China
The Company has received purchase orders from a distributor in China for
Fresh'n Fit Padette totaling approximately $1.2 million. The Company ships
against such orders upon receipt of a letter of credit. The Company has
shipped one order to
3
China totaling approximately $160,000. The other orders were scheduled to be
shipped in the third and fourth quarters of 1996. The Company has not
received letters of credit for these shipments. The Company has been
informed that the Padette has been placed on the shelves of more than 200
retail stores in the Shanghai-Pudong region. Although sales of the product
have occurred, the Company has not received any specific sales data or orders
for additional product. The Company has no reason to believe that additional
product will be ordered by the distributor. The Company has no present plans
to replace the distributor.
3. Florida Roll-Out
The Padette is carried by more than 350 Walgreen stores in Florida. It
is also available at certain FedMart, Rexall, Discount Drugs and other retail
stores in Florida. Sales of the Padette product to date in Florida have been
modest, with sales of $40,000 since its introduction in June 1996. The
Company believes that insufficient marketing support, including lack of
advertising, is the primary reason sales have not been higher. If the
Company is successful in raising additional funds, the Company intends to
increase its marketing efforts in Florida by means of newspaper advertising,
light mailings of its Padette product to potential users, restocking
physicians' offices with the product and by having representatives of the
Company attend women's fairs in the area. There can be no assurance that the
Company's marketing and promotional activities will be successful in
increasing sales of the Padette product or that demand for the product will
expand.
4. Private Placement Financing
In June 1996, the company announced that it had engaged Sands Brothers &
Co., Ltd. to act as placement agent in connection with a proposed private
placement of approximately $7-10 million in equity securities and that net
proceeds of the private placement would be used principally to fund the
Company's roll-out of products in the Southeastern region of the United
States, development of foreign markets and for research and development of
additional products. Although the Company is pursuing such financing, the
Company and Sands Brothers have not yet been able to arrange for the sale of
such amount of securities and the financing may not be completed in those
amounts or at all. The Company expects to use the net proceeds of the sale
of common stock pursuant to the Agreement to fund its operations until
additional financing is obtained.
The Company's operations to date have consumed substantial and
increasing amounts of cash. (See the Company's financial statements
contained in the 1934 Act Reports.) The Company has in the past financed its
growth and operations principally through private placements of equity
securities. The continued development and
4
commercialization of the Company's current and proposed products will require
a commitment of substantial funds. The Company believes that its existing
capital resources and , the net proceeds from the sale of its common stock
pursuant to the Agreement will enable the Company to maintain its current and
planned operating levels into the first quarter of 1997. Thereafter, the
Company will need to raise additional capital to fund its operations. The
Company may seek such additional funding through public or private equity or
debt financings. If additional funds are raised by issuing equity
securities, further dilution to shareholders may result. There can be no
assurance that additional funds can be obtained on acceptable terms, or at
all. If the Company is unable to raise additional funds, the Company will be
materially adversely affected and may not be able to continue to operate.
5. Additional Product
In September 1996, the Company received clearance from the U.S. Food and
Drug Administration to market a one-step visual home pregnancy test called
Affirm. The Company has no definite schedule to market the Affirm pregnancy
test. In spite of the FDA clearance, the Company's ability to commercialize
this product successfully is subject to the risks inherent in new products.
These risks include uncertainties whether the product, once developed, can be
successfully manufactured and marketed or will be commercially successful.
Moreover, the costs of developing and introducing new products cannot be
reliably forecast and may substantially exceed the Company's expectations and
financial resources. Delays in development of the Affirm product may result
in a later than anticipated introduction, which could have a material adverse
effect on the Company. There can be no assurance that the Company will be
successful in commercializing the Affirm product.
5
SCHEDULE 2B
SCHEDULE OF EXCEPTIONS
None.
6
SCHEDULE 2.1
DESCRIPTION OF SECURITIES
Common Stock
Holders of Common Stock are entitled to receive dividends as may from
time to time be declared by the Board of Directors out of funds legally
available therefor and to one vote per share on all matters on which the
holders of Common Stock are entitled to vote. The current policy of the
Company is to retain earnings to provide funds for the operation and
expansion of its business. The Company has never paid any cash dividends,
and the Board of Directors does not anticipate paying cash dividends in the
foreseeable future. Any future decision with respect to dividends will
depend on future earnings, future capital needs and the Company's operating
and financial condition, among other factors. Holders of Common Stock do not
have any cumulative voting rights or conversion, pre-emptive, redemption or
sinking fund rights. In the event of a liquidation, dissolution or winding
up of the Company, holders of Common Stock are entitled to share equally and
ratably in the Company's assets, if any, remaining after the payment of all
liabilities of the Company.
Certain Antidilution Rights
Holders of Common Stock who owned shares of Common Stock on February 17,
1994 have the right to receive additional shares of Common Stock (without
consideration) sufficient to maintain their percentage ownership if the
Company issues Common Stock (or warrants or options to acquire Common Stock)
on or after February 17, 1994 and before February 17, 1997 at a price of less
than $.40 per share. No other holders of Common Stock have antidilution
rights.
Change in Control
The Nevada Control Share Acquisition Act places certain restrictions on
acquisition of control shares, similar to those found in other jurisdictions.
The Company has opted, as permitted by Nevada law, to provide in its bylaws
that this Act does not apply to acquisition of shares of the Company's stock.
The Company's articles and bylaws do not contain any provisions that would
delay, defer or prevent a change in control of the Company.
7
SCHEDULE 4.7
Form of Legal Opinion
To the Investors Listed on Schedule A
Re: Athena Medical Corporation
Ladies and Gentlemen:
We have acted as counsel to Athena Medical Corporation (the "Company")
in connection with the issuance, sale and delivery of ____ shares of its
Common Stock, par value $0.01 per share (the "Shares"), pursuant to a Stock
Purchase Agreement (the "Agreement"), dated as of December __, 1996, among
the Company and the investors identified in the Agreement (the "Investors").
This opinion is rendered pursuant to Section 4.7 of the Agreement.
Capitalized terms used herein, not otherwise defined herein, shall have the
meanings assigned to them in the Agreement.
We have examined the originals or certified, conformed or photostatic
copies of records, agreements, instruments and documents and have made such
other investigation as we have deemed relevant or necessary as a basis for
the opinions expressed herein. We have assumed without investigation the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals and the conformity to original documents of all documents
submitted to us as conformed, certified or photostatic copies. As to various
questions of fact relevant to this opinion, we have relied on certificates of
public officials and statements or certificates of officers or
representatives of the Company.
We have also assumed that the parties to the Agreement other than the
Company have the power to enter into and perform their obligations under the
Agreement and that the Agreement has been duly authorized, executed and
delivered by, is valid and binding upon, and is enforceable in accordance
with its terms against, such parties. We have further assumed that the
representations and warranties made by the Investors in the Agreement are
true and correct and that the representations and warranties as to factual
matters made by the Company in the Agreement are true and correct.
Whenever a statement herein is qualified by the phrase "to our
knowledge," it is intended to indicate that, during the course of our
representation of the Company, no information that would give us actual
knowledge of the inaccuracy of such statement has come to the attention of
those attorneys in this firm who have rendered legal
8
To the Investors Listed
on Schedule A
-----------------------
Page 2
services to the Company in connection with the transactions contemplated by
the Agreement.
Based on the foregoing, and subject to the limitations set forth above
and below, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing
under the laws of the State of Nevada, and the Company has the requisite
corporate power and authority to conduct its business as now conducted and as
proposed to be conducted in the future.
2. The Company has the requisite corporate power and authority to
execute, deliver and perform the Agreement. All corporate action on the part
of the Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of the Agreement, the performance of
all obligations of the Company thereunder and the authorization, issuance and
delivery of the Shares have been taken and the Agreement has been duly and
validly authorized, executed and delivered by the Company and constitutes
valid and legally binding obligations of the Company, enforceable in
accordance with its terms.
3. The Shares, when issued, sold and delivered in accordance with the
terms of the Agreement for the consideration expressed therein, will be duly
and validly issued, fully paid and nonassessable.
4. The authorized capital stock of the Company is as follows:
(i) Stock. _________ shares of Common Stock, __________ shares of
which have been authorized, issued and outstanding.
5. The execution, delivery, performance and compliance with the terms of
the Agreement and the Collateral Agreements by the Company do not violate any
provision of any applicable federal or state law, rule or regulation or any
provision of the Company's Restated Articles of Incorporation or Restated
Bylaws, or, to our knowledge, any judgment, writ, decree or order directed
specifically to and binding upon the Company and, to our knowledge, do not
conflict with, require any consent under or constitute a breach or default
under the provision of any material agreement to which the Company is a party
or by which it is bound.
9
To the Investors Listed
on Schedule A
___________________
Page 3
The opinions expressed above are specifically subject to the following
limitations, exceptions, qualifications and assumptions:
A. We express no opinion as to the effect of any bankruptcy,
insolvency, reorganization, moratorium or other similar law relating to or
affecting the relief of debtors or the rights and remedies of creditors
generally.
B. We express no opinion as to compliance by the Company with any
federal or state securities laws, rules and regulations.
C. We express no opinion as to limitations imposed by state law,
federal law or general equitable principles (i) upon the specific
enforceability of any of the remedies, covenants or other provisions of any
applicable agreement, (ii) upon the availability of injunctive relief or
other equitable remedies, regardless of whether enforcement of any such
agreement is considered a proceeding in equity or at law, or (iii) upon
rights of indemnification and contribution in respect of federal and state
securities matters.
We are members of the Bar of the State of Oregon and our opinions
expressed herein are limited to the laws of the State of Oregon and the
federal laws of the United States, and we do not express any opinion herein
concerning the laws of any other jurisdiction.
The opinions expressed herein are rendered as of the date hereof, and we
expressly disclaim any undertaking or obligation to advise you of any changes
which may occur after the date hereof which would affect this opinion. The
opinions expressed herein are for the benefit of and may be relied upon only
by you, and then solely in connection with the closing of the transactions
contemplated by the Agreement. Neither these opinions nor any extract
herefrom or reference hereto shall be published or furnished to, quoted to,
or relied upon by any other person for any other purpose without our express
written permission.
Very truly yours,
XXXXXXX COIE
10
SCHEDULE A
1
