PREFERRED STOCK PURCHASE AGREEMENT
This PREFERRED STOCK PURCHASE AGREEMENT (the "Purchase Agreement" or the
"Agreement") is made as of this 23rd day of September, 1997 by and between
Alliance Pharmaceutical Corp., a New York corporation (the "Company"), and
Schering Berlin Venture Corp. ("SBVC"), a Delaware corporation ("SBVC").
THE PARTIES AGREE AS FOLLOWS:
1. AUTHORIZATION OF PURCHASE AND SALE OF PREFERRED STOCK.
1.1 AUTHORIZATION OF PREFERRED STOCK. The Company has authorized the
issuance and sale of up to 500,000 shares of its Series D Preferred Stock, $.01
par value (such Series D Preferred Stock being hereinafter referred to as the "D
Stock") to be issued under the Purchase Agreement. The rights, privileges, and
preferences of the D Stock are as set forth in the Company's Certificate of
Amendment of Certificate of Incorporation (the "Certificate of Amendment") in
the form attached to this Purchase Agreement as Exhibit "A".
1.2 PURCHASE AND SALE OF THE PREFERRED STOCK. Subject to the terms and
conditions of this Purchase Agreement and on the basis of the representations
and warranties set forth herein, the Company agrees to sell to SBVC, and SBVC
agrees to purchase from the Company, 500,000 shares of D Stock (the "D Shares")
at a purchase price of $20.00 per share.
1.3 THE CLOSING. The purchase and sale of the D Shares will take place at
the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxxx LLP, Xxx Xxxxxx, Xxxxx Xxxxxx Xxxxx,
Xxx Xxxxxxxxx, XX 00000, at 10:00 a.m. Eastern time on September 23, 1997 or at
such other time and place as the parties shall mutually agree (the "Closing").
At the Closing, the Company will deliver to SBVC a certificate, registered in
SBVC's name, representing the D Shares to be purchased by SBVC against payment
of the purchase price thereof in lawful money of the United States of America by
wire transfer or check payable to the Company.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to SBVC that:
2.1 ORGANIZATION AND CORPORATE POWER. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and is qualified to do business as a foreign corporation in each
jurisdiction where failure to qualify would have a materially adverse effect on
the business or properties of the Company. The Company has full power and
authority to own its property, to carry on its business as presently conducted
and to carry out the transactions contemplated hereby. The copies of the
Certificate of Incorporation, Certificate of Amendment and Bylaws of the
Company, as amended to date, which have been furnished to SBVC by the Company,
are correct and complete.
2.2 AUTHORIZATION. The Company has full power to execute, deliver and
perform this Purchase Agreement, the License Agreement between the Company and
Schering Aktiengesellschaft ("Schering") attached hereto as Exhibit "B" (the
"License Agreement") and
each other agreement entered into by the Company in connection with this
Purchase Agreement, and each such agreement has been duly executed and delivered
by the Company and is the legal, valid and, assuming due execution by the other
parties hereto and thereto, binding obligation of the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors' rights
generally, and to general equitable principles. The execution, delivery and
performance of this Purchase Agreement, including the sale, issuance and
delivery of the D Stock, and the License Agreement, and each other agreement
entered into by the Company in connection with this Purchase Agreement, has been
duly authorized by all necessary corporate action of the Company.
2.3 CAPITALIZATION. The entire authorized capital stock of the Company
consists of 50,000,000 shares of common stock, $0.01 par value per share (the
"Common Stock"), of which 31,432,314 shares are issued and outstanding on August
30, 1996, and 5,000,000 shares of preferred stock, $.01 par value, of which (i)
500,000 have been designated as Series D Preferred Stock, all of which are to be
issued at the Closing, and (ii) 1,500,000 have been designated Series A
Preferred Stock and are not issued or outstanding. None of the remaining
3,000,000 shares of such preferred stock are issued or outstanding. The shares
of Common Stock outstanding are duly authorized, validly issued, fully paid and
nonassessable. No shares of Common Stock or preferred stock are held in the
Company's treasury. The Company has authorized and reserved 500,000 shares of D
Stock for issuance hereunder. When issued in accordance with the terms of this
Purchase Agreement, the D Shares will be duly authorized, validly issued and
outstanding, fully paid and nonassessable, and the certificates representing the
same will be duly and validly authorized, executed and delivered by the Company.
The Company has authorized and reserved for issuance upon conversion of the D
Stock 500,000 shares of its Common Stock or such other number as may be
necessary to be issued upon such conversion (such shares, until sold to the
public generally pursuant to a registration statement or Rule 144(k) promulgated
under the Securities Act of 1933, as amended (the "1933 Act"), are referred to
herein as "Conversion Shares"). The Conversion Shares and any shares of Common
Stock issued upon the exercise of an Option (as hereinafter defined) (such
shares being referred to herein as the "Option Shares") will, upon such issuance
in accordance with the terms of the Company's Certificate of Incorporation, as
amended, be duly authorized, validly issued and outstanding, fully paid and
nonassessable, and the certificates representing the same will be duly and
validly authorized, executed and delivered by the Company. There are no
outstanding warrants, rights of first refusal, options or other rights to
purchase or acquire, or exchangeable for or convertible into, any shares of
Common Stock or Preferred Stock, except as disclosed on Schedule 2.3 or as
otherwise disclosed in writing. The Company has reserved Common Stock for
issuance upon exercise of outstanding options and warrants as set forth in
Section 2.3 of the Disclosure Schedule. Except as provided herein, there are no
preemptive rights with respect to the issuance or sale by the Company of any of
its securities. Except as provided in this Purchase Agreement or as imposed by
applicable securities laws, there are no restrictions on the transfer or voting
of any shares of the Common Stock or D Stock. There are no existing rights with
respect to registration under the 1933 Act of any of the Company's securities
except as set forth herein or as disclosed on Schedule 2.3. Upon consummation of
the transactions contemplated hereby, good and valid title to the D Shares will
pass to SBVC, free and clear of any encumbrances, liens, claims, charges or
assessments of any nature whatsoever. Upon their issuance in accordance with the
Company's Certificate of Incorporation, as amended, and, with respect to the
Option Shares, this Agreement, good and
2
valid title to the Conversion Shares and the Option Shares will pass to SBVC,
free and clear of any encumbrances, liens, claims, charges or assessments of any
nature whatsoever.
2.4 FINANCIAL STATEMENTS. The Company has delivered to SBVC a copy of the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996
(the "1996 10-K"), containing audited consolidated balance sheets for the fiscal
years ended June 30, 1995 and June 30, 1996 and statements of operations and
cash flow for the Company for the fiscal years ending June 30, 1994, June 30,
1995, and June 30, 1996 and a copy of the Company's draft 10-K for the fiscal
year ended June 30, 1997 ("Draft 10-K), Quarterly Report on Form 10-Q for the
quarters ended September 30, 1996, December 31, 1996 and March 30, 1997 (the
"Forms 10 Q" and the financial statements therein and in the 1996 10-K,
collectively, are referred to as the "Financial Statements"). The Financial
Statements are in accordance with the books and records of the Company, have
been prepared in accordance with generally accepted accounting principles,
consistently applied, and fairly present, in all material respects, the
financial position, results of operations and cash flows of the Company as of
each such date and for each of the periods covered thereby, except that such
interim statements are subject to normal year-end adjustments.
2.5 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
reflected or stated in the Financial Statements, the Company has no debts,
liabilities or obligations of any nature, whether accrued, absolute, assigned or
otherwise, whether due or to become due, other than incurred in the ordinary
course of business.
2.6 ABSENCE OF CERTAIN DEVELOPMENTS. Since June 30, 1996, except as
disclosed in the Draft 10-K, Financial Statements or the Disclosure Schedules or
as otherwise expressly contemplated therein or by this Agreement or the License
Agreement, and except for continuing operating losses, Alliance has not:
(a) changed or amended its Articles of Incorporation or By-Laws (or
similar governing documents);
(b) incurred any obligation or liability (fixed or contingent), except
normal trade or business obligations incurred in the ordinary course of business
and consistent with past practice, none of which individually or in the
aggregate is materially adverse;
(c) discharged or satisfied any material lien, security interest, charge
or other encumbrance or paid any material obligation or liability (fixed or
contingent), other than in the ordinary course of business and consistent with
past practice;
(d) mortgaged, pledged or subjected to any lien, security interest, charge
or other encumbrance any of its material assets or properties (other than liens
permitted pursuant to Section 2.7 below);
(e) transferred, leased or otherwise disposed of any of its material
assets or properties, except for fair consideration in the ordinary course of
business and consistent with past practice, or acquired any material assets or
properties, except in the ordinary course of business and consistent with past
practice;
3
(f) declared, set aside or paid any distribution (whether in cash, stock
or property or any combination thereof) in respect of its capital stock or
redeemed or otherwise acquired any of its capital stock or split, combined or
otherwise similarly changed its capital stock or authorized the creation or
issuance of or issued or sold any capital stock or any securities or obligations
convertible into or exchangeable therefor, or gave any person any right to
acquire any capital stock from Alliance, or agreed to take any such action
(other than (i) upon the exercise of outstanding warrants or stock options, and
(ii) the issuance of 248,879 shares of common stock issued in August 1997 to
former shareholders of MDV Technologies, Inc. pursuant to the merger described
in the Financial Statements);
(g) made any investment of a capital nature, whether by purchase of stock
or securities, contributions to capital, property transfers or otherwise, in any
other partnership, corporation or any other entity, or purchase any material
property or assets;
(h) canceled or compromised any debt or claim other than in the ordinary
course of business;
(i) waived or released any rights of material value, including, without
limitation, any patents, trademarks and trade names, trademark and trade name
registrations, logos, servicemark registrations, copyright registrations,
applications pending the date hereof for patent or for trademark, trade name,
servicemark or copyright registrations, and other material proprietary
intellectual property rights (including, but not limited to, know-how,
information, proprietary rights and information) ("Intangible Rights");
(j) transferred or granted any material rights under or with respect to
any Intangible Rights other than on reasonable business terms, or permitted any
license, permit or other form of authorization relating to a material Intangible
Right to lapse; or
(k) suffered any casualty loss or damage (whether or not such loss or
damage shall have been covered by insurance) which affects in any material
respect its ability to conduct business; or
(l) made or granted any wage or salary increase applicable to any group or
classification of employees generally, entered into any employment contract with
or made any loan to, or entered into any material transaction of any other
nature with, any officer, or employee of Alliance, except in the ordinary course
of business; or
(m) suffered a Material Adverse Effect.
2.7 TITLE TO PROPERTIES. Except as stated in the 1996 10-K, to the best of
the Company's knowledge, the Company has good and marketable title to all
material properties and assets necessary to its business as presently conducted
and as proposed to be conducted, and to all of its properties and assets, free
and clear of all mortgages, security interests, liens, restrictions or
encumbrances other than (i) those disclosed on Schedule 2.7, (ii) the lien of
current taxes not yet due and payable and (iii) possible minor liens and
encumbrances which do not in any case, individually or in the aggregate,
materially detract from the value of the property subject thereto or materially
impair the operations of the Company, and would not result in the occurrence of
a
4
Material Adverse Change, and which have not arisen otherwise than in the
ordinary course of business.
2.8 TAX MATTERS. All taxes, including, without limitation, income, excise,
property, sales, transfer, use, franchise, payroll, employees' income
withholding and social security taxes imposed or assessed by the United States
or by any foreign country or by any state, municipality, subdivision or
instrumentality of the United States or of any foreign country, or by any other
taxing authority, which are due or payable by the Company, and all interest,
penalties and additions thereon, whether disputed or not, have been paid in
full, and all tax returns or other documents required to be filed in connection
therewith have been accurately prepared and duly and timely filed. The Company
has not been delinquent in the payment of any foreign or domestic tax,
assessment or governmental charge or deposit and has no tax deficiency or claim
outstanding, assessed or, to the best of its knowledge, proposed against it. The
provisions for taxes in the Financial Statements are sufficient for the payment
of all accrued and unpaid federal, state, county and local taxes of the Company.
2.9 NO DEFAULTS. The Company is not in violation, nor will the execution
of this Agreement or the License Agreement cause a violation, of any term or
provision of (a) its Certificate of Incorporation or Bylaws or any material
note, indenture, mortgage, lease, agreement, contract, purchase order or other
material instrument, document or agreement to which the Company is a party or by
which it or any of its properties or assets is bound or affected or (b) any
order, writ, injunction or decree of any court or any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
2.10 INTELLECTUAL PROPERTY. Except as previously disclosed to SBVC, to the
best of the Company's knowledge;
(a) The Company has good title to and ownership of or licensed rights
to, free and clear of all liens, claims and encumbrances of any nature,
Intangible Rights licensed by the Company to Schering under the License
Agreement, and the conduct by the Company of its business in connection with the
Intangible Rights neither conflicts with or constitutes, or is expected to
conflict with or constitute, an infringement of the rights of others.
(b) The Company has sufficient title to and ownership of, or license
rights to, or has applied for, all Intangible Rights necessary to the proper
conduct of its business as described in the Financial Statements. The
consummation of the transactions contemplated hereby will not alter or impair
any such Intangible Rights.
(c) The Company has not received any communications alleging that,
and has no knowledge that the Company has violated or, by conducting its
business, would violate any of the Intangible Rights of any other person or
entity.
2.11 EFFECT OF TRANSACTIONS. Assuming this transaction is not subject to
compliance with the applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx"), the execution, delivery and
performance of this Purchase Agreement and the transactions contemplated hereby,
and compliance with the provisions hereof by the Company, (a)
5
do not and will not, with or without the passage of time or the giving of notice
or both, (i) violate any current ruling, writ, injunction, order, judgment or
decree of any court, administrative agency or other governmental body or (ii)
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company under the Certificate of Incorporation or Bylaws of the
Company or any material note, indenture, mortgage, lease, agreement, contract,
purchase order or other instrument, document or agreement to which the Company
is a party or by which it or any of its properties or assets is bound or
affected and (b) do not and will not, with or without the passage of time or the
giving of notice, violate any provision of any current law, statute, rule or
regulation.
2.12 NO GOVERNMENTAL CONSENT OR APPROVAL REQUIRED. Based in part on the
representations made by SBVC in Section 3 of this Purchase Agreement, and except
as contemplated herein and assuming compliance with the HSR Act, no
authorization, consent, approval or other order of, declaration to, or
registration, qualification, designation or (other than the Certificate of
Amendment) filing with any federal, state or local governmental agency or body
is required for or in connection with the valid and lawful authorization,
execution and delivery by the Company of this Purchase Agreement or any other
agreement entered into by the Company in connection with this Purchase
Agreement, and consummation of the transactions contemplated hereby or thereby,
or for or in connection with the valid and lawful authorization, issuance, sale
and delivery of the D Shares or for or in connection with the valid and lawful
authorization, reservation, issuance, sale and delivery of the Conversion Shares
other than the qualification (or taking of such action as may be necessary to
secure an exemption from qualification if available) of the offer and sale of
the D Shares under the California Corporate Securities Law of 1968, as amended,
and other applicable state securities laws, which filings and qualifications, if
required, will be accomplished in a timely manner so as to comply with such
qualification or exemption from qualification requirements.
2.13 LITIGATION. There is no claim, arbitration, action, suit, proceeding
or investigation pending, or to the best knowledge of the Company, threatened
against the Company, which questions the validity of this Purchase Agreement or
any other agreement entered into by the Company in connection with this Purchase
Agreement or the right of the Company to enter into any such agreements or to
consummate the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in any material adverse effect
on the condition of the Company or its assets, liabilities, properties,
business, operations or prospects generally (a "Material Adverse Effect"), or
any change in the current equity ownership of the Company. The Company is not a
party to, or subject to the provisions of, any order, writ, injunction, judgment
or decree of any court or governmental agency or instrumentality which would
have a Material Adverse Effect.
2.14 SECURITIES LAWS. Assuming that SBVC's representations and warranties
contained in Section 3 of this Purchase Agreement are and continue to be true
and correct, the offer, issuance and sale to SBVC of the D Shares, the
Conversion Shares and the Option Shares are and will be exempt from the
registration and prospectus delivery requirements of the 1933 Act, and have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws. No person
6
authorized by Alliance as agent, broker, dealer or otherwise in connection with
the offering or sale of the D Shares, the Conversion Shares or the Option
Shares, or any similar securities, has taken or will take any action (including,
without limitation, any offer or sale of any securities under circumstances
which would require the integration of such securities with the D Shares being
sold hereunder under the 1933 Act or the rules and regulations of the Securities
and Exchange Commission which would subject such offer and sale to the
registration provisions of the 1933 Act.
2.15 BROKERAGE. Other than claims of Xxxxxxxxxxx and Co., Inc., there are
no claims for brokerage commissions or finder's fees or similar compensation in
connection with the transactions contemplated by this Purchase Agreement based
on any arrangement made by or on behalf of the Company. The Company agrees to
indemnify and hold SBVC harmless against any damages incurred as a result of any
such claim, including any claims of Xxxxxxxxxxx and Co., Inc..
2.16 INSURANCE. The Company maintains in full force such types and amounts
of insurance issued by issuers of recognized responsibility insuring the
Company, with respect to its liability, workers' compensation, business and
properties, in such amounts and against such losses and risks as are sufficient
for compliance with all requirements of law and are deemed appropriate by the
Company under its present circumstances.
2.17 COMPLIANCE WITH LAWS. The Company is in compliance in all material
respects with every statute, law or regulation applicable to the Company's
business or operations, including (without limitation) statutes, laws and
regulations relating to the environment or occupational health and safety,
laboratory and manufacturing practices (including current Good Manufacturing
Practices prescribed by the U.S. Food and Drug Administration), the experimental
use of animals and the use and disposal of hazardous or potentially hazardous
substances (including, with limitation, radioactive compounds and solvents),
and, to the best of the Company's knowledge, no material expenditures are
required or currently anticipated in order to comply with any such existing
statute, law or regulation. Alliance has not received any notice from any third
party of any alleged material violation of any of the foregoing.
2.18 RETIREMENT OBLIGATIONS, ETC. The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974,
other than as disclosed in the 1996 10-K. The Company does not have any
employees that are represented by a union. The Company is not a party to any
collective bargaining agreement and, to the best of the Company's knowledge, no
organizational efforts are presently being made with respect to any of its
employees. SBVC will not incur through consummation of any of the transactions
contemplated by the Purchase Agreement any liability in respect of employees of
the Company or any of its employee benefit plans.
2.19 INVESTMENT COMPANY. The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, and will not, as
a result of the transactions contemplated hereby, become an "investment
company."
2.20 DISCLOSURE. The Company has fully provided SBVC with all the
information that SBVC has requested for deciding whether to purchase the D
Shares. The 1996 10-K, the Forms
7
10-Q, this Purchase Agreement, and the other exhibits or schedules delivered in
connection herewith or therewith, taken together, do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements herein or therein in view of the circumstances under which they
were made not misleading.
3. REPRESENTATIONS AND WARRANTIES AND OTHER AGREEMENTS OF SBVC.
3.1 REPRESENTATIONS AND WARRANTIES. SBVC hereby represents and warrants
that:
a. AUTHORIZATION. SBVC is a Delaware corporation and has full power
and authority to execute, deliver and perform this Purchase Agreement and to
purchase the D Shares. Assuming due execution by the Company hereof and thereof,
this Purchase Agreement and each other agreement entered into by SBVC in
connection with this Purchase Agreement constitute the valid and legally binding
obligation of SBVC, enforceable against SBVC in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium, reorganization
or similar laws affecting creditors' rights generally, and to general equitable
principles.
b. PURCHASE ENTIRELY FOR OWN ACCOUNT. It is SBVC's intention to
acquire the D Shares, the Conversion Shares and the Option Shares (collectively,
the "Securities") for investment for SBVC's own account, not as a nominee or
agent and not with a view to the sale or other disposition of any part thereof
in violation of the 1933 Act. SBVC has no present intention of selling, granting
any participation in, or otherwise disposing of the same in violation of the
1933 Act. SBVC does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer, or grant participation to such person or to
any third person, with respect to any of the Securities.
c. RESTRICTIONS ON DISPOSITION. SBVC covenants that in no event will
it dispose of any of the Securities (other than pursuant to Rule 144 promulgated
under the 1933 Act ("Rule 144") or pursuant to a registration statement filed
with the Securities and Exchange Commission (the "SEC") pursuant to the 0000
Xxx) unless and until (i) SBVC shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances setting forth the number of shares and price it proposes to sell
at, excluding the name of the transferee and other information unless otherwise
required in the written opinion of Company counsel to comply with the 1933 Act;
and (ii) SBVC shall have furnished the Company with an opinion of SBVC's counsel
reasonably satisfactory in form and substance to the Company and the Company's
counsel to the effect that (a) such disposition will not require registration
under the 1933 Act or compliance with any applicable state, local or foreign
law, or (b) appropriate action necessary for compliance with the 1933 Act and
any applicable state, local or foreign law has been taken. The restrictions on
transfer imposed by this Section 3.1(c) shall cease and terminate as to the
Securities when: (i) such securities shall have been effectively registered
under the 1933 Act and sold by the owner thereof in accordance with such
registration; or (ii) an opinion of the kind described in the preceding sentence
states that all future transfers of such securities by the holder thereof would
be exempt from registration under the 1933 Act and compliance with any
applicable state, local or foreign law. Each certificate evidencing the
Securities shall bear an appropriate restrictive legend as set forth in Section
3.3 below, except that such certificate shall not be required to bear such
legend after a transfer thereof if the transfer was made in compliance with Rule
144 or pursuant to a registration statement or, if the opinion of
8
counsel referred to above is issued and provides that such legend is not
required in order to establish compliance with any provisions of the 1933 Act.
d. RECEIPT OF INFORMATION. SBVC has been furnished access to such
information and documents as SBVC has requested and has been afforded an
opportunity to ask questions of and receive answers from representatives of the
Company concerning the terms and conditions of this Purchase Agreement and the
purchase of the D Shares.
e. BROKERAGE. There are no claims for brokerage commissions or
finder's fees or similar compensation in connection with the transactions
contemplated by this Purchase Agreement based on any arrangement or agreement
made by or on behalf of SBVC, and SBVC agrees to indemnify and hold the Company
harmless against any damages incurred as a result of any such claims.
3.2 FURTHER PROVISIONS REGARDING DISPOSITION.
a. TRANSFER TO AFFILIATES. Notwithstanding the provisions of Section
3.1(c) above, no registration statement or opinion of counsel shall be necessary
for a transfer by SBVC to a subsidiary or affiliate (as defined pursuant to the
0000 Xxx) of SBVC which is an accredited investor, if the transferee makes the
warranties set forth in Sections 3.1 (b) and (c) and agrees in writing to be
subject to the terms hereof regarding the transfer of the Securities, to the
same extent as if such transferee were SBVC hereunder.
b. NEW CERTIFICATES. Whenever the restrictions imposed by Section
3.1(c) above shall terminate as herein provided, the holder of the securities as
to which such restrictions have terminated shall be entitled to receive from the
Company, without expense, one or more new certificates not bearing restrictive
legends and not containing any reference to the restrictions imposed by this
Purchase Agreement.
3.3 LEGENDS. It is understood that, subject to Sections 3.1(c) and 3.2(b),
the certificates evidencing the D Shares, the Option Shares and the Conversion
Shares shall bear the following legend:
a. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT.
b. Any legend required by the laws of any other applicable
jurisdiction.
3.4 NOTICE OF CERTAIN EVENTS. SBVC hereby covenants and agrees that
during the term of the License Agreement (including any extension thereof),
unless notice has been provided in accordance with Section 3.1 (c), it will
provide written notice to the Company of any sale or disposition, on the open
market or in private transactions, by SBVC or any of its affiliates (including
subsidiaries or other entities controlled by SBVC) of any shares of the Common
Stock
9
or other equity securities of the Company (or if SBVC or such affiliates shall
direct any third party to take any such actions on behalf of SBVC or such
affiliates), provided that, no such notice need be given if the relevant
transaction related to 1% or less of the outstanding common stock (on a
consolidated or as converted basis) of the Company. Such notice shall be
transmitted to the Company by facsimile (with telephonic notice) within ten (10)
days after any such transaction, and shall specify the person or entity
effecting the transaction, the date of such transaction, and the number of
securities with respect to such transaction.
3.5 LIMITATION ON NOTICE OF CERTAIN EVENTS. SBVC shall not be required to
comply with the provisions of Section 3.4 if, in connection with any transaction
referred to in Section 3.4, SBVC or its affiliate files with the SEC and sends
to the Company a statement on Schedule 13D or Schedule 13G in connection with
such transaction and in compliance with Rule 13d-1 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
4. CONDITIONS TO SBVC'S OBLIGATIONS AT CLOSING. The obligations of SBVC
under Section 1.2 of this Purchase Agreement are subject to the fulfillment on
or before the Closing of each of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained in Section 2 shall be true in all material respects on and
as of the date of such Closing with the same effect as though such
representations and warranties had been made on and as of the date of such
Closing.
4.2 PERFORMANCE. The Company shall have performed and complied with all
agreements, obligations, and conditions contained in this Purchase Agreement
that are required to be performed or complied with by it on or before the
Closing.
4.3 COMPLIANCE CERTIFICATE. The Chief Executive Officer of the Company
shall deliver to SBVC at the Closing a certificate certifying that the
conditions specified in Sections 4.1, 4.2, 4.4, 4.5 and 4.7 have been fulfilled
and stating that there has been no Material Adverse Effect since March 30, 1997.
4.4 CERTIFICATE OF AMENDMENT. The Company shall have filed with the
Secretary of State of New York the Certificate of Amendment in substantially the
form attached hereto as Exhibit "A" and the Secretary of State shall have
accepted such form for filing.
4.5 QUALIFICATIONS. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state or of any other country that are required in connection with the lawful
issuance and sale of the D Shares to SBVC pursuant to this Purchase Agreement
shall have been duly obtained and shall be effective on and as of the Closing.
4.6 [INTENTIONALLY OMITTED]
4.7 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to SBVC
and SBVC's counsel, and they shall have
10
received all such counterpart original and certified or other copies of such
documents as they may reasonably request.
4.8 LICENSE AGREEMENT. The License Agreement, in substantially the form
attached hereto as Exhibit "B", shall have been executed and delivered by the
Company.
4.9 OPINION OF COMPANY COUNSEL. SBVC shall have received from counsel for
the Company an opinion, dated as of the Closing and addressed to SBVC, covering
the matters set forth in Sections 2.1, 2.2, 2.3 (as to the due authorization,
valid issuance, full payment and non-assessability of the D Shares, Conversion
Shares and Option Shares), 2.11, 2.12 and 2.14.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of
the Company under Section 1.2 of this Purchase Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
SBVC contained in Section 3 shall be true in all material respects on and as of
the date of such Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.
5.2 PERFORMANCE. SBVC shall have performed and complied with all
agreements, obligations and conditions contained in this Purchase Agreement that
are required to be performed or complied with by it on or before such Closing.
5.3 QUALIFICATIONS. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state or of any other country that are required in connection with the lawful
issuance and sale of the D Shares to SBVC pursuant to this Purchase Agreement
shall have been duly obtained and shall be effective on and as of the Closing.
5.4 [Intentionally omitted]
5.5 LICENSE AGREEMENT. The License Agreement, in substantially the form
attached hereto as Exhibit "B", shall have been executed and delivered by
Schering.
6. AFFIRMATIVE COVENANTS OF THE COMPANY.
6.1 BOARD RIGHTS. So long as SBVC owns at least 500,000 shares of
the D Stock or 500,000 shares of the Common Stock into which the D Stock shall
have been converted, the Company shall allow SBVC the rights set forth in either
(a) or (b) below, at SBVC's election:
(a) The Company shall give SBVC or its designated representative
notice of each meeting of its Board of Directors at the same time and in the
same manner as notice is given to the members of the Board of Directors, and the
Company shall permit such representative to attend and observe all meetings of
the Company's Board of Directors and to listen to all such meetings held
telephonically. The Company shall provide SBVC's representative with copies of
written materials and other information given to directors in connection with
such
11
meetings at the same time and in the same manner such materials and information
are given to the directors. If the Company takes any action by written consent
in lieu of a meeting of its Board of Directors, the Company shall give notice
thereof to SBVC's representative at the same time and in the same manner in
which such consent is requested of directors. SBVC's representative must be
reasonably acceptable to the Company and shall be knowledgeable and experienced
in the operations of the pharmaceutical industry. SBVC's representative shall
not be entitled to written materials or other information and shall agree to
excuse himself or herself from meetings or portions thereof at the request of
the Company or the Chairman of the Board of Directors where such information or
his or her attendance or continued presence, at the discretion of the Company,
might jeopardize the confidentiality of proprietary information of the Company
or of any competitor of SBVC or otherwise create a conflict of interest. SBVC's
representative will execute a confidentiality agreement in form and substance
similar to the Company's standard form of confidentiality agreement with
consultants and other third parties.
(b) SBVC shall be entitled to designate a person of its choice to
become, and the Company will select, nominate and use reasonable efforts to have
elected, a member of the Company's Board of Directors.
6.2 REPORTS UNDER THE EXCHANGE ACT. With a view to making available
to SBVC the benefits of Rule 144 promulgated under the 1933 Act and any other
rule or regulation of the SEC that may at any time permit a permitted holder of
Securities to sell securities of the Company to the public without registration,
and with a view to making it possible for any such holder to register the
Securities pursuant to a registration on Form S-3, the Company agrees to
(subject to Section 8 in the case of Section 6.1(b)):
(a) make available adequate current public information as
contemplated by Rule 144 (c)(1) or (2);
(b) take such action as is necessary to enable a holder to utilize
Form S-3 for the sale of Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the Exchange Act; and
(d) furnish to a holder owning any Securities upon request (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the Exchange Act, or that it
qualifies as a registrant whose Securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably required in
availing any holder of Securities of any rule or regulation of the SEC which
permits the selling of any such Securities without registration or pursuant to
such form.
7. ANTI-DILUTION PROVISIONS.
7.1. OPTION. If, on or before the date of conversion of all of the D
Shares, the Company shall issue additional shares of its Common Stock in any
private placement or public offering (excluding issuance or sale as a result of
exercise or conversion of (i) outstanding options,
12
warrants or other convertible or exchangeable securities on the date hereof, or
(ii) stock options granted to employees, directors or consultants whenever
granted under the Company's stock option programs or incentive stock option
plan) (an "Issuance"), the Company hereby grants to SBVC the right (an "Option")
following any such Issuance, to purchase a number of shares of Common Stock as
set forth below. The consideration for shares issued pursuant to an Issuance
(the "Consideration") shall be deemed to be the per share amount of cash and any
other form of consideration received by the Company, meaning, in the case of a
public offering, the public offering price. The amount of any non-cash
Consideration shall be deemed to be the fair value of such non-cash
Consideration determined in good faith by the Company's Board of Directors.
Pursuant to the Option, SBVC shall have the right to purchase the number of
additional shares of Common Stock (the "Option Number") determined by the
following formula:
NO = N(I) (0.0159)
where N(O) is the Option Number and NI is the number of shares issued in the
Issuance. If the Option Number would include a fractional share, it shall be
rounded to the nearest whole share.
7.2. NOTICE OF ISSUANCE. Within ten (10) days after any Issuance, the
Company shall give written notice thereof to SBVC of the terms thereof,
including the Issuance Number, the Consideration and the Option Number of shares
related to such Issuance.
7.3. PURCHASE PRICE. The price for each share purchased pursuant to the
Option shall be an amount (payable in cash) equal to the Consideration for a
share purchased under the Issuance.
7.4. EXERCISE OF OPTION. The Option shall be exercised by written notice to
the Company, given within thirty (30) days following receipt of written notice
of an Issuance pursuant to Section 7.2 above stating that it is SBVC's intent to
exercise the Option. The notice shall specify the number of shares for which the
Option is being exercised (up to the Option Number) and shall be accompanied by
payment in full of the exercise price for such shares.
7.5. DELIVERY OF CERTIFICATES: REGISTRATION. Promptly after each exercise
of the Option, the Company shall cause to be delivered to SBVC a certificate or
certificates evidencing the shares purchased pursuant to the exercise of the
Option; provided, however, that SBVC shall be deemed to be the holder of record
of such shares as of the date of exercise of the Option with respect to such
shares. The Company may postpone the issuance and delivery of such shares upon
any exercise of the Option until (a) the admission of such shares to listing on
any stock exchange on which shares of the same class are then listed and (b) the
completion of such registration or other qualification of such shares under any
state or federal law, rule or regulation as the Company, in the reasonable
opinion of its counsel, shall determine to be necessary or advisable. Nothing in
this Section 7.5 shall be deemed to require that the Company file or amend a
registration statement under the 1933 Act.
7.6. DIVIDENDS AND RECLASSIFICATION. If, following an Issuance but prior to
the exercise of, or expiration of the right to exercise, the Option relating to
such Issuance, there shall be declared payable to holders of record of the
Common Stock on a date prior to such exercise or expiration, or paid, a stock
dividend upon the Common Stock of the Company or if such stock shall be
split-up, combined, converted, exchanged (including by way of merger),
reclassified, or in
13
any way substituted for (collectively, a "Dividend or Reclassification"), the
Option shall entitle SBVC upon the future exercise of the Option relating to
such Issuance to such number and kind of securities or other property, subject
to the terms of the Option, to which SBVC would have been entitled had SBVC
actually owned the Common Stock as to which the Option is then exercised at the
time of such Dividend or Reclassification; and the aggregate purchase price upon
the exercise of the Option relating to such Issuance shall be the same as if the
shares of Common Stock originally optioned were being purchased as provided
herein; provided that no fractions of shares shall be issued, the aggregate
purchase price shall be appropriately reduced on account of any fractions not so
issued and the purchase price shall in no event be less than the par value of
the Common Stock.
7.7. RESERVATION OF COMMON STOCK. The Company hereby represents and
covenants with SBVC that it shall at all times reserve for issuance to SBVC such
number of shares of its Common Stock as will be sufficient to satisfy the
requirements of any Option.
7.8. SUCCESSORS TO OPTION. The Option and all rights hereunder shall be
non-assignable and nontransferable, are intended solely for the benefit of SBVC,
and shall in no way inure to the benefit of its assignees or transferees.
Notwithstanding the foregoing, SBVC may assign or transfer the Option to any
corporation with which SBVC is merged or combined or to any corporation which is
a successor to or an affiliate of SBVC. The Company shall have the right to
require, as a condition precedent to such assignment or transfer, that the
assignee or transferee furnish such information as may in the opinion of counsel
for the Company be appropriate to permit such assignment or transfer in light of
the then applicable federal or state securities laws. As used in this Agreement,
the term "affiliate" shall have the meaning set forth in Rule 12b-2 under the
Exchange Act, and the term "person" or "entity" shall mean any individual,
company, partnership, joint venture, association, corporation, trust, government
or agency thereof, or any other entity.
7.9. INFORMATION FROM SBVC. The Company shall have the right to require, as
a condition precedent to the exercise of the Option, that SBVC furnish such
information (and representations comparable to those in Section 3.1) as may in
the reasonable opinion of counsel for the Company be appropriate to permit the
Company, in light of the then existence or non-existence of an effective
registration statement under the 1933 Act with respect to such shares, to issue
the shares in compliance with the provisions of that or any comparable act.
8. REGISTRATION OF COMMON STOCK.
8.1 REGISTRATION.
(a) The Company will use its best efforts to cause to become
effective, on or prior to the date on which the D Shares shall first be
convertible, a registration statement under the 1933 Act on Form S-3 or such
other registration form as counsel to the Company deems appropriate, covering
the issuance by the Company of all of the Conversion Shares and Option Shares,
or any shares issued pursuant to stock dividends, stock splits or similar
distributions upon such Common Stock, Conversion Shares and Option Shares
("Registrable Stock"); provided, however, that the Company shall not be required
to proceed with such registration statement if the staff of the SEC, following
reasonable efforts by the Company (in which SBVC, if it wishes
14
and at its expense, may participate or have its counsel participate), advises
the Company that the offering or issuance of Registrable Stock by the Company
pursuant to such registration statement would constitute a violation of Section
5 of the 1933 Act. For purposes of this Purchase Agreement, a "Holder" of any
security means the record or beneficial owner of such security or any permitted
successor or assignee thereof.
(b) If the Company does not proceed with the registration statement
contemplated in section 8.1(a) for the reason stated therein, the Company, upon
conversion of the D Stock, will use its best efforts to effect within ninety
(90) days of conversion the registration under the 1933 Act of all of the
Registrable Stock, such registration to be on Form S-3 or such other
registration form as counsel to the Company deems appropriate.
8.2 REGISTRATION EXPENSES. The Company shall pay all expenses incurred in
effecting the registration of Registrable Stock pursuant to Section 8.1
including, without limitation, all federal and state registration, qualification
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration, but not including underwriting
discounts, commissions and expenses and fees of counsel to the participating
Holders.
8.3 REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of Section 8.1 to effect the registration of the Registrable
Stock under the 1933 Act, the Company will, as expeditiously as possible:
(a) prepare and file with the SEC a registration statement which
includes the Registrable Stock and use its best efforts to cause such
registration statement to become and remain effective until the distribution
described in the registration statement has been completed or until the
participating Holders can sell all such Registrable Stock pursuant to Rule 144;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the 1933 Act with respect to the sale or other
disposition of Registrable Stock covered by such registration statement whenever
a Holder shall desire to sell or otherwise dispose of the same, but only to the
extent provided in this Section 8;
(c) furnish to each participating Holder (and to each underwriter, if
any, of Registrable Stock) such number of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the 1933 Act, and
such other documents, as such Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Stock;
(d) use its best efforts to register or qualify the Registrable Stock
covered by such registration statement under such state securities or blue sky
laws of such jurisdiction as each participating Holder shall reasonably request
and do any and all other acts and things which may be necessary under such
securities or blue sky laws to enable such Holder to consummate the public sale
or other disposition in such jurisdictions of the Registrable Stock, except that
the
15
Company shall not for any purpose be required to consent generally to service of
process or qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified;
(e) before filing the registration statement prospectus or amendments
or supplements thereto, furnish to counsel selected by the participating Holders
copies of such documents proposed to be filed which shall be subject to the
reasonable approval of such counsel;
(f) enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offer;
(g) notify the participating Holders at any time when a prospectus
relating to any Registrable Stock covered by such registration statement is
required to be delivered under the 1933 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 therein or necessary to make the statements
therein not misleading in light of the circumstances then existing and promptly
file such amendments and supplements as may be necessary so that, as thereafter
delivered to such Holders, 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 then existing and use its best efforts to cause each such
amendment and supplement to become effective;
(h) furnish at the request of the participating Holders on the date
that such Registrable Stock is delivered to the underwriters for sale in
connection with a registration pursuant to this Section 8 an opinion, dated such
date, of the counsel representing the Company, for purposes of such
registration, in form and substance as is customarily given by company counsel
to the underwriters in an underwritten public offer addressed to the
underwriters, if any, and to such Holders, 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 offer, addressed to the underwriters and
to such Holders;
(i) notify the Holders of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement of the initiation of
any proceedings for that purpose. The Company will make every reasonable effort
to prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest time; and
(j) use its best efforts to cause all such Registrable Stock to be
listed on the securities exchange or the Nasdaq National Market, if any, on
which the Company's Common Stock is then listed.
Upon receipt of any notice from the Company of the happening of any event
of the kind described in paragraph (g), the Holder will forthwith discontinue
disposition of such Registrable Stock covered by such registration statement or
prospectus until receipt of the copies of the supplemented or amended
prospectus, or until it is advised in writing by the Company that the use of the
applicable prospectus may be resumed, and has received copies of an additional
or supplemental filings which are incorporated by reference in such prospectus,
and, if so directed by
16
the Company, the Holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in the Holder's possession, of
the prospectus covering such Registrable Stock current at the time of receipt of
such notice.
8.4 INDEMNIFICATION. In the event Registrable Stock is registered pursuant
to this Section 8:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder of Registrable Stock which is included in a
registration statement filed pursuant to the provisions of this Agreement and
any underwriter (within the meaning of the 0000 Xxx) with respect to the
Registrable Stock, and each officer, director, employee and agent thereof and
each person, if any, who otherwise controls such Holder or underwriter (within
the meaning of the 1933 Act), against any losses or claims, damages, expenses or
liabilities, joint or several, to which they may become subject under the 1933
Act, the Exchange Act or other federal or state law, or otherwise, insofar as
such losses, claims, damages, expenses or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue or allegedly untrue statement
of any material fact contained in the registration statement for the Registrable
Stock, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or any document incident to
the registration or qualification of any Registrable Stock, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or allegedly necessary to make the statements
therein not misleading or arise out of any violation or alleged violation by the
Company of the 1933 Act, the Exchange Act, any state securities law or any rule
or regulation promulgated under the 1933 Act, the Exchange Act or any state
securities law; and will reimburse such Holder, any underwriter, officer,
director, employee, agent or controlling person for 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 8.4(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, expense, liability or action
if such settlement is effected without the written consent of the Company, which
shall not be unreasonably withheld, nor shall the Company be liable under this
Section 8.4(a) to such Holder, such underwriter, officer, director, employee,
agent or controlling person for any such loss, claim, damage, expense, liability
or action to the extent that it arises out of, or is based upon, an untrue
statement or allegedly untrue statement or omission or alleged omission made in
connection with such registration statement, preliminary prospectus, final
prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with information furnished in writing expressly for use in connection
with such registration by such Holder, such underwriter, officer, director,
employee, agent or such controlling person.
(b) To the extent permitted by law, each Holder of Registrable Stock
which is included in a registration statement filed pursuant to the provisions
of this Agreement will indemnify and hold harmless the Company, each of its
employees, agents, directors and officers, each person, if any, who controls the
Company within the meaning of the 1933 Act, and any underwriter (within the
meaning of the 0000 Xxx) against any losses, claims, damages, expenses or
liabilities to which the Company or any such person or underwriter may become
subject, under the 1933 Act, the Exchange Act or other federal or state law or
otherwise, insofar as such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) arise out of, or are based upon any untrue or
allegedly untrue statement of any material fact contained in a registration
17
statement for the Registrable Stock, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto, or
any document incident to the registration or qualification of any Registrable
Stock, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or allegedly
necessary to make the statements therein not misleading; in each case to the
extent that such untrue statement or allegedly untrue statement or omission or
alleged omission was made in such registration statement, preliminary
prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with information furnished in writing by such Holder expressly for
use in connection with such registration; provided, however, that the indemnity
agreement contained in this Section 8.4(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, expense, liability or action if such
settlement is effected without the written consent of such Holder, which shall
not be unreasonably withheld; and such Holder will reimburse the Company or any
such person or underwriter for any legal or other expenses reasonably incurred
by the Company or any such person or underwriter in connection with
investigating or defending such loss, claim, damage, liability, expense or
action.
(c) Promptly after receipt by an indemnified party under this Section
8.4 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against any indemnifying party under
this Section 8.4, notify the indemnifying party in writing of the commencement
thereof and generally summarize such action. The indemnifying party shall have
the right to participate in and to assume the defense thereof with counsel
mutually satisfactory to the parties. An indemnifying party shall not have the
right to direct the defense of such an action on behalf of an indemnified party
if such indemnified party has reasonably concluded that there may be defenses
available to it that are different from or additional to those available to the
indemnifying party; provided, however, that in such event, the indemnifying
party shall bear the fees and expenses of only one (1) separate counsel for all
indemnified parties, such separate counsel to be reasonably satisfactory to the
indemnifying party. The failure to notify an indemnifying party promptly of the
commencement of any such action if prejudicial to the ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 8.4, but the omission so to notify the
indemnifying party will not relieve such party of any liability that such party
may have to any indemnified party otherwise than under this Section.
(d) To the extent permitted by law, the indemnification provided for
under this Section 8.4 will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling person (within the meaning of the 0000 Xxx) of such
indemnified party and will survive the transfer of securities.
(e) If for any reason the foregoing indemnity is unavailable to, or
is insufficient to hold harmless an indemnified party, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party as
a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, 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 party on the other but also the relative fault of the
indemnifying party and the
18
indemnified party as well as any other relevant equitable considerations.
Notwithstanding the foregoing, no underwriter, if any, shall be required to
contribute any amount in excess of the amount by which the total price at which
the securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligation of any underwriters to contribute pursuant to
this Section 8.4(e) shall be several in proportion to their respective
underwriting commitments and not joint.
8.5 INFORMATION FROM SBVC. SBVC shall furnish to the Company in writing
any information regarding SBVC which the Company may reasonably request in
writing in connection with registration pursuant to this Section 8.
8.6 TRANSFERABILITY. The right to have Alliance register Registrable
Stock granted by the Company to the Holders under this Agreement may be assigned
by a Holder to a permitted transferee or assignee of at least one-half of the
Registrable Stock (subject to appropriate adjustment for stock splits, stock
dividends, reclassification and consolidations), provided that the Company must
receive written notice prior to or at the time of said transfer, stating the
name and address of said transferee or assignee. The limitations set forth in
this Article 8 with respect to registration rights shall apply to all
transferees or assignees of Registrable Stock.
9. MISCELLANEOUS.
9.1 INCORPORATION BY REFERENCE. All exhibits and schedules appended to
this Purchase Agreement are herein incorporated by reference and made a part
hereof.
9.2 PARTIES IN INTEREST. All terms, covenants, agreements,
representations, warranties and undertakings in this Purchase Agreement made by
and on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto whether so
expressed or not.
9.3 [Intentionally omitted]
9.4 GOVERNING LAW. This Purchase Agreement shall be deemed a contract made
under the laws of the State of New York and, together with the rights or
obligations of the parties hereunder, shall be construed under and governed by
the laws of such State.
9.5 NOTICES. All notices, requests, consents and demands shall be in
writing and shall be deemed given when (i) personally delivered, (ii) mailed in
a registered or certified envelope, postage prepaid (iii) sent by Federal
Express or another nationally recognized overnight delivery service (paid by
sender), or (iv) sent by telex, facsimile, or telecopier upon receipt of the
correct answerback.
To the Company at:
19
Alliance Pharmaceutical Corp.
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxx
Executive Vice President
FAX #: (000) 000-0000
with a copy to:
Stroock & Stroock & Xxxxx
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq.
FAX #: (000) 000-0000
or to SBVC at:
Berlex Laboratories
000 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
FAX #:
with a copy to:
Xxxxxxx, Phleger & Harrision LLP
Xxx Xxxxxx, Xxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
FAX #: (000)000-0000
or such other address as may be furnished in writing to the other parties
hereto.
9.6 COUNTERPARTS. This Purchase Agreement may be executed in counterparts,
all of which together shall constitute one and the same instrument.
9.7 EFFECT OF HEADINGS. The section and paragraph headings herein are for
convenience only and shall not affect the construction hereof.
9.8 ENTIRE PURCHASE AGREEMENT. This Purchase Agreement, the License
Agreement and the Exhibits and Schedules hereto and thereto constitute the
entire agreement among the Company and the SBVC with respect to the subject
matter hereof. There are no representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Purchase Agreement supersedes all prior
agreements between the parties with respect to the shares purchased hereunder
and the subject matter hereof.
20
9.9 PUBLICITY. Neither party shall originate any publicity, news release,
or other announcement, written or oral, relating to this Purchase Agreement, or
to performance hereunder or the existence of an arrangement between the parties
without the prior written approval of the other.
9.10 SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
9.11 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors and assigns of the parties hereto.
9.12 AMENDMENT AND WAIVER. Except as otherwise provided herein, any term
of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or an a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely), with the written consent of the Company and SBVC. Any amendment
or waiver effected in accordance with this Section 9.12 shall be binding upon
any holder of any securities purchased under this Agreement (including
securities into which such securities have been converted), each future holder
of all such securities (so long as such securities are restricted securities)
and the Company.
9.13 FEES AND EXPENSES. The Company and SBVC shall bear their own expenses
and legal fees incurred on their behalf with respect to this Agreement and the
transactions contemplated hereby, except for any expenses incurred in connection
with the registration of any of the securities sold pursuant to this Agreement
which shall be borne exclusively by Alliance; except as otherwise provided in
this Agreement.
21
IN WITNESS WHEREOF, this Purchase Agreement has been executed as of the
date first above written, by the parties hereto.
ALLIANCE PHARMACEUTICAL CORP.
By:
-----------------------------
Name: Xxxxx X. Xxxx
Title: President
SCHERING BERLIN VENTURE CORP.
By:
-----------------------------
Name:
---------------------------
Title:
-----------------------------
22
Exhibit and Schedule List
Exhibit A Certificate of Amendment
Exhibit B License Agreement
Schedule 2.3 Outstanding Warrants
Outstanding Options
Rights of First Refusal
Rights to Purchase
Registration Rights
Schedule 2.7 Liens & Encumbrances
23
EXHIBIT A
Certificate of Amendment
of
Certificate of Incorporation
of
Alliance Pharmaceutical Corp.
See Exhibit 3(c) to Alliance Pharmaceutical Corp.'s 1997 Annual Report as
filed on Form 10-K on September 25, 1997.
EXHIBIT B
License Agreement
Between
Alliance Pharmaceutical Corp.
and
Schering Aktiengesellschaft
See Exhibit 2(a) to Alliance Pharmaceutical Corp.'s Form 8-K filed on
October 7, 1997.
SCHEDULE 2.3
TO
PREFERRED STOCK PURCHASE AGREEMENT
Outstanding Options (as of June 30, 1997) 3,798,604
Outstanding Warrants 576,414
Xxxxxxx & Xxxxxxx Development Corp. ("J&JDC") has the right and/or obligation
to purchase a number of shares of common stock upon the occurrence of certain
events (the "Deferred Purchase"), such number to be determined by a formula.
Registration Rights
468,102 Warrants with demand and/or piggyback registration rights
The Company has obligations to register the common stock obtained by J&JDC
pursuant to exercise of the Deferred Purchase.
Hoechst Xxxxxx Xxxxxxx, Inc. received 345,327 shares of common stock upon
conversion in June 1997 of preferred stock of Alliance. The Company has
obligations to register such shares.
The Board of Directors has authorized an increase of 1,500,000 shares in its
1991 Stock Option Plan. If such shares are approved by the shareholders at
the November 1997 annual meeting, the shares will be registered under an S-8
registration statement.
SCHEDULE 2.7
TO
PREFERRED STOCK PURCHASE AGREEMENT
The Company has a $1.5 million Line of Credit Agreement with Xxxxx Fargo Bank
which is secured by deposit accounts and investments held by the bank.
In connection with the purchase of land in June 1983, the Company entered
into a land use agreement with the New York City Public Development
Corporation, the provision of which are "covenants running with the land"
binding upon the Company and subsequent owners for a substantial period of
time.
The Company entered into a loan and security agreement in August 1995 under
which the Company received $2.2 million. Amounts borrowed under the agreement
are secured by fixed assets, and will be repaid over three years commencing
September 1995.
The Company entered into a loan and security agreement in January 1997 under
which the Company received $3.5 million. Amounts borrowed under the agreement
are secured by all personal property, excluding (i) intangible assets,
including intellectual property and patents or patent applications, and (ii)
certain equipment and will be payable over four years commencing as of
January 30, 1997.
