PREFERRED STOCK INVESTMENT AGREEMENT
PREFERRED STOCK INVESTMENT AGREEMENT ("Agreement") dated
as of April 24, 1997 between Alteon Inc., a Delaware corporation
("Alteon"), and each person or entity listed as an investor on
Schedule I attached to this Agreement (each individually an
"Investor" and collectively the "Investors").
W I T N E S E T H:
WHEREAS, Alteon desires to sell and issue to the
Investors, and the Investors wish to purchase from Alteon, an
aggregate of 5,000 shares of Alteon's 6% Cumulative Convertible
Preferred Stock, par value $0.01, having the rights, designations
and preferences set forth in the Certificate of Designations of
Alteon (the "Designation") in the identical form and substance
of Exhibit 2.1(c) attached hereto (the "Preferred Shares"), on the
terms and conditions set forth herein;
and
WHEREAS, the Preferred Shares will be convertible into
shares ("Common Shares") of common stock, par value $0.01, of
Alteon ("Common Stock"), pursuant to the terms of the Designation,
and the Investors will have registration rights with respect to
such Common Shares issuable upon conversion, pursuant to the terms
of that certain Registration Rights Agreement to be entered into
between Alteon and the Investors substantially in the form of
Exhibit 4.2(f) hereto ("Registration Rights Agreement");
and
WHEREAS, to induce the Investors to purchase the
Preferred Shares, Alteon has agreed to issue to the Investors
warrants in the form attached as Exhibit 1 (the "Transaction
Warrants");
and
WHEREAS, Alteon has agreed to issue to the Investors
warrants in the form attached hereto as Exhibit 2 which will become
exercisable in the event, inter alia, that shares of Common
Stock of Alteon are delisted from NASDAQ (the "Delisting Warrants"
and together with the Transaction Warrants, the "Warrants");
NOW, THEREFORE, in consideration of the foregoing
premises and the covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Preferred Stock
Section 1.1 Purchase and Sale of Preferred Stock. Upon
the following terms and conditions, Alteon shall issue and sell to
each Investor severally, and each Investor severally shall purchase
from Alteon, the number of Preferred Shares indicated next to such
Investor's name on Schedule I attached hereto.
Section 1.2 Purchase Price. The purchase price for
the Preferred Shares (the "Purchase Price") shall be $1,000 per
share.
Section 1.3 The Closing. (a) The closing of the
purchase and sale of the Preferred Shares (the "Closing"), shall
take place at the offices of the Investors' counsel, at 10:00 am.,
local time on the later of the following: (i) the date on which
the last to be fulfilled or waived of the conditions set forth in
Article IV hereof and applicable to the Closing shall be fulfilled
or waived in accordance herewith, or (ii) such other time and place
and/or on such other date as the Investors and Alteon may agree.
The date on which the Closing occurs is referred to herein as the
"Closing Date."
(b) On the Closing Date, Alteon shall deliver to each
Investor (i) certificates (with the number of and denomination of
such certificates reasonably requested by such Investor
representing the Preferred Shares purchased hereunder by such
Investor registered in the name of such Investor or its nominee or
deposit such Preferred Shares into accounts designated by such
Investor and (ii) Warrants to purchase ten (10) shares of Common
Stock for each Preferred Share purchased hereunder, registered in
the name of Investor or its nominee in such denominations as
reasonably requested by such Investor, and such Investor shall
deliver to Alteon the Purchase Price for the number of Preferred
Shares purchased by such Investor hereunder by wire transfer in
immediately available funds to an account designated in writing by
Alteon. The delivery of payment by each Investor of the Purchase
Price applicable to it as set forth in this paragraph shall
constitute a payment delivered to Alteon in satisfaction of such
Investor's obligation to pay the Purchase Price hereunder. In
addition, each party shall deliver all documents, instruments and
writings required to be delivered by such party pursuant to this
Agreement at or prior to the Closing.
ARTICLE II
Representations and Warranties
Section 2.1 Representations and Warranties of Alteon.
Alteon hereby makes the following representations and warranties
to each of the Investors as of the date hereof and on the Closing
Date:
(a) Organization and Qualification; Material Adverse
Effect. Alteon is a corporation duly incorporated and existing in
good standing under the laws of the State of Delaware and has the
requisite corporate power to own its properties and to carry on its
business as now being conducted. Alteon does not have any direct
or indirect subsidiaries other than the subsidiaries listed on
Schedule 2.1(a) attached hereto. A "subsidiary" of Alteon is any
company of which more than 50% of the voting shares are owned by
Alteon. Alteon is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary other than those in which the failure so
to qualify would not have a Material Adverse Effect. "Material
Adverse Effect" means any adverse effect on the business,
operations, properties, prospects, or financial condition of
the entity with respect to which such term is used and which is
material to such entity and other entities controlling or
controlled by such entity taken as a whole, and any material
adverse effect on the transactions contemplated under this
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Agreement, the Registration Rights Agreement or any other agreement
or document contemplated hereby or thereby.
(b) Authorization; Enforcement. (i) Alteon has the
requisite corporate power and authority to enter into and perform
this Agreement, the Warrants and the Registration Rights Agreement
and to issue the Preferred Shares in accordance with the terms
hereof, (ii) the execution and delivery of this Agreement, the
Warrants and the Registration Rights Agreement by Alteon and the
consummation by it of the transactions contemplated hereby and
thereby, including the issuance of the Preferred Shares, and the
resolutions contained in the Designation, have been duly authorized
by all necessary corporate action, and no further consent or
authorization of Alteon or its Board of Directors or stockholders
is required, (iii) this Agreement and the Registration Rights
Agreement and the Warrants have been duly executed and delivered
by Alteon, and (iv) this Agreement and the Registration Rights
Agreement and the Warrants constitute valid and binding obligations
of Alteon enforceable against Alteon in accordance with their
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement
of creditors' rights and remedies or by other equitable principles
of general application.
(c) Capitalization. The authorized capital stock of
Alteon consists of 30,000,000 shares of common stock and 1,998,329
shares of preferred stock; there are 15,709,825 shares of
common stock issued and outstanding as of March 1, 1997 and no
shares of preferred stock issued and outstanding. All of the
outstanding shares of Alteon's common stock have been validly
issued and are fully paid and nonassessable. No Common Shares are
entitled to preemptive rights; as of March 7, 1997, 3,738,602
Common Shares have been reserved for issuance upon the exercise of
options granted or to be granted under stock option plans and there
are no outstanding warrants for Common Shares (excluding the
Warrants). There are no other scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or
securities or rights exchangeable or convertible into, any shares
of capital stock of Alteon, or contracts, commitments,
understandings, or arrangements by which Alteon is or may become
bound to issue additional shares of capital stock of Alteon or
options, warrants, scrip, rights to subscribe to, or commitments
to purchase or acquire, any shares, or securities or rights
convertible into shares, of capital stock of Alteon (except as
contemplated by this Agreement or disclosed in the SEC Documents
(as defined below)). Other than as set forth in the Pre-Agreement
SEC Documents (as defined below), no holders of Alteon stock
(other than the Investors) are entitled to registration rights.
Attached hereto as Exhibit 2.1(c) are true and correct copies of
Alteon's Certificate of Incorporation (the "Charter") and the
Designation, each as in effect on the date hereof, and Alteon has
furnished or made available to the Investors true and correct
copies of Alteon's By-Laws, as in effect on the date hereof (the
"By-Laws"). The Designation has been duly filed in the State of
Delaware.
(d) Issuance of Common Shares. The Common Shares
issuable upon conversion of the Preferred Shares pursuant to the
Designation (the "Underlying Shares") or upon the exercise of the
Warrants (the "Warrant Shares") are duly authorized and reserved
for issuance and, upon such conversion in accordance with the
Designation and/or exercise in accordance with the Warrants such
Underlying Shares and Warrant Shares will be validly issued, fully
paid and non-assessable, free and clear of any and all liens,
claims and encumbrances, and such Underlying Shares and the Common
Shares issuable upon exercise of the Transaction Warrant
("Transaction Warrant Shares") will be entitled to be traded on the
National Association of Securities Dealers Automated Quotation
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system National Market ("NASDAQ"), and the holders of such
Underlying Shares and Warrant Shares shall be entitled to all
rights and preferences accorded to a holder of Common Shares. The
outstanding Common Shares are currently listed on the NASDAQ.
(e) No Conflicts. The execution, delivery and
performance of this Agreement and the Registration Rights Agreement
and the Warrants by Alteon and the consummation by Alteon of the
transactions contemplated hereby and thereby and the filing of the
Designation do not and will not (i) result in a violation of
Alteon's Charter or By-Laws or (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which
Alteon or any of its subsidiaries is a party, or result in a
violation of any federal, state, local or foreign law, rule,
regulation, order, judgment or decree (including Federal and state
securities laws and regulations) applicable to Alteon or any of its
subsidiaries or by which any property or asset of Alteon or any of
its subsidiaries is bound or affected (except for such conflicts,
defaults, terminations, amendments, accelerations, cancellations
and violations as would not, individually or in the aggregate, have
a Material Adverse Effect); provided that, for purposes of such
representation as to Federal, state, local or foreign law, rule or
regulation, no representation is made herein with respect to any
of the same applicable solely to the Investors and not to Alteon.
The business of Alteon and its direct and indirect subsidiaries is
not being conducted in violation of any law, ordinance or
regulations of any governmental entity, except for violations which
either singly or in the aggregate do not and will not have a
Material Adverse Effect. Alteon is not required under Federal,
state, local or foreign law, rule or regulation to obtain any
consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for
it to execute, deliver or perform any of its obligations under this
Agreement and the Registration Rights Agreement and the Designation
and the Warrants or issue and sell the Preferred Shares in
accordance with the terms hereof and issue the Underlying Shares
upon conversion thereof and issue the Warrant Shares on exercise
of the Warrants, except for the registration provisions provided
in the Registration Rights Agreement, provided that, for purposes
of the representation made in this sentence, Alteon is assuming and
relying upon the accuracy of the relevant representations and
agreements of the Investors herein.
(f) SEC Documents; Financial Statements. The Common
Stock of Alteon is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
and Alteon has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the Securities and
Exchange Commission ("SEC") pursuant to the reporting requirements
of the Exchange Act, including material filed pursuant to Section
13(a) or 15(d), in addition to one or more registration statements
and amendments thereto heretofore filed by Alteon with the SEC (all
of the foregoing including filings incorporated by reference
therein being referred to herein as the "SEC Documents"). Alteon
has delivered or made available to the Investors true and complete
copies of all SEC Documents (including, without limitation, proxy
information and solicitation materials and registration statements)
filed with the SEC since December 31, 1995 and all annual SEC
Documents filed with the SEC since December 31, 1994. Alteon has
not provided to the Investor any material non-public information
or any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by Alteon but which
has not been so disclosed. As of their respective dates, the SEC
Documents complied in all material respects with the requirements
of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder and other federal, state and local laws,
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rules and regulations applicable to such SEC Documents, and none
of the SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The SEC Documents contain all material information
concerning Alteon, and no event or circumstance has occurred which
would require Alteon to disclose such event or circumstance in
order to make the statements in the SEC Documents not misleading
on the date hereof or on the Closing Date but which has not been
so disclosed. The financial statements of Alteon included in the
SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC or other applicable rules and regulations
with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied
on a consistent basis during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements,
to the extent they may not include footnotes or may be condensed
or summary statements) and fairly present in all material respects
the financial position of Alteon as of the dates thereof and the
results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end
audit adjustments).
(g) Principal Exchange/Market. The principal market on
which the Common Shares are currently traded is the NASDAQ.
(h) No Material Adverse Change. Since December 31,
1996, the date through which the most recent report of Alteon on
Form 10-K has been prepared and filed with the SEC, a copy of which
is included in the SEC Documents, no Material Adverse Effect has
occurred or exists with respect to Alteon or its subsidiaries,
except as otherwise disclosed or reflected in other SEC
Documents prepared through or as of a date subsequent to December
31, 1996.
(i) No Undisclosed Liabilities. Alteon and its direct
and indirect subsidiaries have no liabilities or obligations not
disclosed in the SEC Documents, other than those liabilities
incurred in the ordinary course of Alteon's or its subsidiaries'
respective businesses since December 31, 1996, which liabilities,
individually or in the aggregate, do not or would not have a
Material Adverse Effect on Alteon or its direct or indirect
subsidiaries.
(j) No Undisclosed Events or Circumstances. No event
or circumstance has occurred or exists with respect to Alteon or
its direct or indirect subsidiaries or their respective
businesses, properties, prospects, operations or financial
condition, which, under applicable law, rule or regulation,
requires public disclosure or announcement by Alteon but which has
not been so publicly announced or disclosed.
(k) No General Solicitation. Neither Alteon, nor any
of its affiliates, or, to its knowledge, any person acting on its
or their behalf has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D under
the Securities Act of 1933, as amended (the "Act")) in connection
with the offer or sale of the Preferred Shares or Common Shares.
(l) No Integrated Offering. Neither Alteon, nor any of
its affiliates, nor to its knowledge any person acting on its or
their behalf has, directly or indirectly, made any offers or
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sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the
Preferred Shares under the Act.
(m) Form S-3. Alteon is eligible to file the
Registration Statement (as defined in the Registration Rights
Agreement) on Form S-3 under the Act and rules promulgated
thereunder, and Form S-3 is permitted to be used for the
transactions contemplated hereby under the Act and rules
promulgated thereunder.
(n) Intellectual Property. Alteon (and/or its
wholly-owned subsidiaries) owns or has licenses to use certain
patents, copyrights and trademarks ("intellectual property")
associated with its business. Alteon and its subsidiaries have all
intellectual property rights which are needed to conduct the
business of Alteon and its subsidiaries as it is now being
conducted or as proposed to be conducted as disclosed in the SEC
Documents. Alteon and its subsidiaries have no reason to
believe that the intellectual property rights which it owns are
invalid or unenforceable or that the use of such intellectual
property by Alteon or its subsidiaries infringes upon or conflicts
with any right of any third party, and neither Alteon nor any of
its subsidiaries has received notice of any such infringement or
conflict. Alteon and its subsidiaries have no knowledge of any
infringement of its intellectual property by any third party.
(o) No Litigation. Except as set forth in the SEC
Documents delivered to the Investors prior to the date of this
Agreement ("Pre-Agreement SEC Documents") no litigation or
claim (including those for unpaid taxes) against Alteon or any of
its subsidiaries is pending or, to Alteon's knowledge, threatened,
and no other event has occurred, which if determined adversely
would have a Material Adverse Effect on Alteon or would materially
adversely effect the transactions contemplated hereby. The legal
proceedings described in the SEC Documents will not have an effect
on the transactions contemplated hereby, and will not have a
Material Adverse Effect on Alteon.
(p) Brokers. Alteon has taken no action which would
give rise to any claim by any person for brokerage commissions,
finder's fees or similar payments by any Investor relating to this
Agreement or the transactions contemplated hereby, except for
amounts owing to Forest Street Capital, L.L.C., which amounts shall
be paid by Alteon, pursuant to a separate agreement.
(q) Acknowledgement of Dilution. The number of Common
Shares constituting Underlying Shares may increase substantially
in certain circumstances, including the circumstance where the
trading price of the Common Shares declines. Alteon acknowledges
that its obligation to issue Underlying Shares upon conversion of
Preferred Shares and Warrant Shares upon conversion of the Warrants
is absolute and unconditional, regardless of the dilution that such
issuance may have on other shareholders of Alteon.
Section 2.2 Representations and Warranties of the
Investors. Each of the Investors, severally and not jointly,
hereby makes the following representations and warranties to
Alteon as of the date hereof and on the Closing Date:
(a) Authorization; Enforcement. (i) Such Investor has
the requisite power and authority to enter into and perform this
Agreement and the Registration Rights Agreement and to
purchase the Preferred Shares being sold hereunder and to acquire
the Warrant Shares, (ii) the execution and delivery of this
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Agreement and the Registration Rights Agreement by such Investor
and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate
or partnership action, and (iii) this Agreement and the
Registration Rights Agreement constitute valid and binding
obligations of such Investor enforceable against such Investor in
accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting
generally the enforcement of creditors' rights and remedies or by
other equitable principles of general application.
(b) No Conflicts. The execution, delivery and
performance of this Agreement and the Registration Rights Agreement
and the Warrants and the consummation by such Investor of the
transactions contemplated hereby and thereby do not and will
not (i) result in a violation of such Investor's organizational
documents, or (ii) conflict with any agreement, indenture or
instrument to which such Investor is a party, or (iii) result in
a violation of any law, rule, or regulation, or any order, judgment
or decree of any court or governmental agency applicable to such
Investor. Such Investor is not required to obtain any consent or
authorization of any governmental agency in order for it to perform
its obligations under this Agreement or the Registration Rights
Agreement or the Warrants.
(c) Investment Representation. Such Investor is
purchasing the Preferred Shares and acquiring the Warrants for its
own account and not with a view to distribution in violation of
any securities laws. Such Investor has no present intention to
sell the Preferred Shares, Warrants, Underlying Shares or Warrant
Shares and such Investor has no present arrangement (whether or not
legally binding) to sell the Preferred Shares, Warrants, Underlying
Shares or Warrant Shares to or through any person or entity;
provided, however, that by making the representations herein, such
Investor does not agree to hold the Preferred Shares, Warrants,
Underlying Shares or Warrant Shares for any minimum or other
specific term and reserves the right to dispose of the Preferred
Shares, Warrants, Underlying Shares or Warrant Shares at any time
in accordance with Federal and state securities laws applicable to
such disposition. Such Investor or Permitted Transferees (as
defined in the Stockholders Rights Agreement, dated as of July 27,
1995, between Alteon and Registrar and Transfer Company, as rights
agent, as amended (the "Rights Agreement")) is not the Beneficial
Owner (as defined in the Rights Agreement) of more than 4.9% of
Alteon's "common shares" (as defined in the Rights Agreement),
including all "common shares" which are aggregated with those
of such Investor or Permitted Transferee pursuant to a Schedule 13D
filed under Section 13(d) of the Securities Exchange Act of 1934,
but excluding all "common shares" that are Exempt Shares (as
defined in the Rights Agreement).
(d) Accredited Investor. Such Investor is an
"accredited investor" as defined in Rule 501 promulgated under the
Act. The Investor has such knowledge and experience in financial
and business matters in general and investments in particular, so
that such Investor is able to evaluate the merits and risks of an
investment in the Preferred Shares and to protect its own interests
in connection with such investment. In addition (but without
limiting the effect of Alteon's representations and warranties
contained herein), such Investor has received such information as
it considers necessary or appropriate for deciding whether to
purchase the Preferred Shares pursuant hereto.
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(e) Rule 144. Such Investor understands that there is
no public trading market for the Preferred Shares, that none is
expected to develop, and that the Preferred Shares and Underlying
Shares must be held indefinitely unless such Preferred Shares or
Underlying Shares are converted or registered under the Act or an
exemption from registration is available. Such Investor has been
advised or is aware of the provisions of Rule 144 promulgated under
the Act.
(f) Brokers. Such Investor has taken no action which
would give rise to any claim by any person for brokerage
commissions, finder's fees or similar payments by Alteon relating
to this Agreement or the transactions contemplated hereby, except
for amounts owing to Forest Street Capital, L.L.C., which amounts
shall be paid by Alteon, pursuant to a separate agreement.
(g) Reliance by Alteon. Such Investor understands that
the Preferred Shares are being, and the Underlying Shares will be,
offered and sold and Warrants are being issued in reliance on a
transactional exemption from the registration requirements of
Federal and state securities laws and that Alteon is relying upon
the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of such Investor set
forth herein in order to determine the applicability of such
exemptions and the suitability of such Investor to acquire the
Preferred Shares, the Underlying Shares and Warrants.
ARTICLE III
Covenants
Section 3.1 Registration and Listing; Effective
Registration. Until such time as no Preferred Shares or Warrants
are outstanding, Alteon will cause the Common Shares to continue
to be registered under Section 12(g) of the Exchange Act, will
comply in all respects with its reporting and filing obligations
under the Exchange Act, and will not take any action or file any
document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such reporting and filing
obligations. Until such time as no Preferred Shares or Warrants
are outstanding, Alteon shall continue the listing or trading of
the Common Shares on the NASDAQ market and comply in all respects
with Alteon's reporting, filing and other obligations under the
bylaws or rules of the NASDAQ and any exchange or market where the
Common Shares are then traded. Alteon shall cause the Underlying
Shares and the Transaction Warrant Shares to be listed on the
NASDAQ and in addition on such other markets (e.g., the New York
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Stock Exchange or the American Stock Exchange) on which the Common
Shares are then trading prior to the earlier of (i) the
registration of the Underlying Shares or the Warrant Shares under
the Act or (ii) 90 days after the Closing hereunder, and shall
continue such listing(s) in accordance with Alteon's obligations
under the Registration Rights Agreement. Upon the exercisability
of the Delisting Warrants, Alteon shall cause the Common Shares
issuable upon exercise of the Delisting Warrants to be listed on
such exchanges and markets on which the Common Shares are then
trading. As used herein and in the Registration Rights Agreement,
the Designation, and the Warrants, the term "Effective
Registration" shall mean that all registration obligations of
Alteon pursuant to the Registration Rights Agreement have been
satisfied, such registration is not subject to any suspension or
stop order, the prospectus for the Underlying Shares issuable upon
conversion of the Preferred Shares and the Warrant Shares issuable
upon exercise of the Warrants is current and such Common Shares are
listed for trading on the NASDAQ market, and in addition on such
other markets (e.g., the New York Stock Exchange or the American
Stock Exchange) on which the Common Shares are then trading, and
such trading has not been suspended for any reason, and none of
Alteon or any direct or indirect subsidiary of Alteon is subject
to any bankruptcy, insolvency or similar proceeding.
Section 3.2 Certificates on Conversion and Warrants
on Exercise. (a) Upon any conversion by an Investor (or then
holder of Preferred Shares) of the Preferred Shares pursuant to
the Designation, Alteon shall issue and deliver to such Investor
(or holder) within three (3) days of the Conversion Date (as
defined in the Designation) a new certificate or certificates for
the number of Preferred Shares which such Investor (or holder) has
not yet elected to convert but which are evidenced in part by the
certificate(s) submitted to Alteon in connection with such
conversion (with the number of and denomination of such new
certificate(s) designated by such Investor or holder).
(b) Upon any partial exercise by an Investor (or
then holder of the Warrants) of the Warrants, Alteon shall issue
and deliver to such Investor (or holder) within three (3) days of
the date on which such Warrants are exercised a new Warrant or
Warrants representing the number of adjusted Warrant Shares, in
accordance with the terms of Section 2 of the Warrants.
Section 3.3 Replacement Certificates and Warrants.
(a) The certificate(s) representing the Preferred Shares held by
any Investor (or then holder) may be exchanged by such Investor (or
such holder) at any time and from time to time for certificates
with different denominations representing an equal aggregate number
of Preferred Shares, as reasonably requested by such Investor (or
such holder) upon surrendering the same. No service charge will
be made for such registration or transfer or exchange.
(b) The Warrants are exchangeable at the option of
the Investor (or then holder of the Warrants) at the office of
Alteon for other Warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of
Warrant Shares as are purchasable under such Warrants. No service
charge will be made for such transfer or exchange.
Section 3.4 Expenses. Alteon shall pay, at the
Closing and promptly upon receipt of any further invoices relating
to same, all reasonable due diligence fees and expenses and
reasonable attorneys' fees and expenses of Kleinberg, Kaplan, Xxxxx
& Xxxxx, P.C., up to a maximum amount of $20,000, incurred by
certain of the Investors in connection with the preparation,
negotiation, execution and delivery of this Agreement, the
Registration Rights Agreement, the Designation, the Warrants and
the related agreements and documents and the transactions
contemplated hereunder and thereunder. At Closing, Alteon shall
pay the amount due for such fees and expenses (which may include
fees and expenses estimated to be incurred for completion of the
transaction including post-closing matters). In the event such
amount is ultimately less than the actual fees and expenses, Alteon
shall promptly pay such deficiency upon receipt of an invoice
regarding same.
Section 3.5 Securities Compliance. Alteon shall notify
the SEC, the NASDAQ, in accordance with their requirements, of the
transactions contemplated by this Agreement, the Designation, the
Registration Rights Agreement and the Warrants, and shall take all
other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and
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valid issuance of the Preferred Shares hereunder, the Common Shares
issuable upon conversion thereof and the Warrant Shares.
Section 3.6 Intercompany Transactions; Restrictive
Covenant Termination Date. Until the Restrictive Covenant
Termination Date (as defined below), Alteon shall not, and shall
not permit any subsidiary to, transfer assets to any direct or
indirect subsidiary other than for value and for a proper business
purpose. The term "Restrictive Covenant Termination Date" shall
mean the date which is the earlier of (i) the date which is the
last day of the 12th fiscal month following the Effective
Registration ("Maximum Restrictive Covenant Termination Date"), or
(ii) such date on which 80% of the Preferred Shares have been
converted for Common Shares, provided that the Maximum Restrictive
Covenant Termination Date shall not occur until such time as Alteon
has performed all material obligations under this Agreement, the
Registration Rights Agreement, the Designation and the Warrants
which were required under the terms hereof or thereof to have been
so performed prior to such date, and provided further that the
Maximum Restrictive Covenant Termination Date shall be deferred one
and one-half (1/2) days for each day that there is no Effective
Registration after the Registration Deadline (as defined in the
Registration Rights Agreement).
Section 3.7 Dividends or Distributions. So long as
over 20% of the Preferred Shares remain outstanding, Alteon agrees
that it shall not (a) declare or pay any dividends or make any
distributions to any holder or holders of Common Shares, (b)
purchase or otherwise acquire for value, directly or indirectly,
any Common Stock or other equity security of Alteon either junior
to or on parity with the Preferred Shares as to priority in payment
of dividends and amounts payable in liquidation, or (c) authorize
or issue any other equity security senior to the Preferred Shares.
Section 3.8 No Senior Securities. Until the
Restrictive Covenant Termination Date, Alteon agrees that neither
Alteon nor any direct or indirect subsidiary of Alteon shall (i)
create, incur, assume, guarantee, secure or in any manner become
liable in respect of any indebtedness, or permit any liens, claims
or encumbrances to exist against Alteon or any direct or
indirect subsidiary of Alteon or any of their assets, except for
trade payables incurred in the ordinary course of business
consistent with past practices (including, without limitation,
license fees, royalties and pursuant to any lease) and except for
a working capital facility in form and substance and with a lender
reasonably satisfactory to the Investors, which working capital
facility shall not exceed $3,000,000, or (ii) issue any shares of
its preferred stock or any securities convertible into its
preferred stock without prior written approval of such preferred
stock (or convertible security) issuance by a majority in interest
of the holders of outstanding Preferred Shares, except for
preferred stock which is junior to or on parity with the Preferred
Shares as to priority in payment of dividends and amounts payable
in liquidation.
Section 3.9 Notices. Alteon agrees to provide all
holders of Preferred Shares with copies of all notices and
information, including without limitation notices and proxy
statements in connection with any meetings, that are provided to
the holders of shares of Common Shares, contemporaneously with the
delivery of such notices or information to such Common Share
holders.
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Section 3.10 Right of First Refusal.
Until the expiration of six (6) months from the
Closing Date, Alteon shall not (i) offer, sell, contract to sell
or otherwise issue or deliver or dispose of any debt or any Common
Shares or other equity securities or any securities which are
convertible into or exchangeable for its Common Shares or other
equity securities or any convertible security, or any warrants or
other rights to subscribe for or to purchase or any options for the
purchase of Common Shares or other equity securities (other than
in a private placement of Common Stock to an affiliate of The
Palladin Group, L.P., or in a bona-fide underwritten public
offering (other than a continuous offering pursuant to
Rule 415) and other than shares or options issued or which may be
issued pursuant to Alteon's employee, director or consultant stock
option plans or shares issued upon exercise of options,
warrants or rights outstanding on the Closing Date listed in the
SEC Documents), or (ii) obtain any financing from any third party
(excluding trade payables incurred in the ordinary course of
business consistent with past practices, including without
limitation, license fees, royalties and pursuant to any lease),
unless such offer, sale, issuance or financing ("Financing
Transaction") is first offered to the Investors pro rata. Alteon
shall make such offer by providing each Investor with written
notice of Alteon's intention to enter into the Financing
Transaction together with a term sheet containing the economic
terms and significant provisions of the Financing Transaction and
any other information reasonably requested by the Investors (the
"Offer"). Such Offer shall be given with respect to each Financing
Transaction contemplated by Alteon. The Investors shall have ten
(10) business days from receipt of the Offer to deliver a written
notice to Alteon that the Investors wish to accept the Offer in
whole or in part (subject to satisfactory due diligence and
reasonably acceptable definitive documentation) for the Financing
Transaction. To the extent any Investor declines to accept its pro
rata portion of such Offer in whole or in part, such Investor shall
give notice to the other Investors, who may accept such rejected
portion pro rata or in such other proportions as the Investors
shall agree among themselves. Should Alteon become aware that any
Investor wishes to decline its pro rata portion of such Offer in
whole or in part, Alteon shall immediately notify the other
Investors. If the Investors reject the Offer or fail to respond
within such ten (10) business day period, then Alteon shall be
permitted to complete such Financing Transaction without the
Investors on terms and conditions substantially the same as those
contained in the Offer. If any Financing Transaction is
contemplated on terms and conditions not substantially
the same as those contained in the Offer or with proposed
definitive documentation not substantially the same as that
proposed by Alteon with respect the Offer, then such Financing
Transaction shall be deemed a new Financing Transaction and the
Investors shall again be entitled to receive an Offer
for such Financing Transaction on such new terms and conditions
(and/or with such new definitive documentation if applicable). If
the Investors accept the Offer but fail to close the Financing
Transaction within twenty (20) business days of acceptance of the
Offer for any reason other than (i) any breach by Alteon of its
obligations hereunder or thereunder, (ii) any delay by Alteon or
reasonable delay in connection with execution of definitive
documentation, (iii) failure of the parties to reasonably agree on
definitive documentation or (iv) reasonable dissatisfaction by the
Investors with their due diligence examination, the Offer to the
Investors shall terminate and the Investors shall not be entitled
to receive any Offer in any future Financing Transaction, this
being in addition to any other rights or remedies Alteon may have
against the Investors for their failure to close such Financing
Transaction. As among the Investors, each Investor shall have the
right to participate in the Offer in whole or in part, up to the
full extent of the Offer, provided that if such Offer is
oversubscribed by the Investors, each Investor shall only be
entitled to participate in the Offer up to its pro rata share.
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This Section 3.10 shall not apply to a financing
transaction consisting of a private placement of Alteon's
securities in connection with a strategic alliance. For this
purpose, a strategic alliance shall mean a transaction in which the
acquiror of Alteon's securities has a business relationship
material to Alteon with Alteon independent of such acquiror's
acquisition of Alteon's securities.
Section 3.11 Reservation of Stock Issuable Upon
Conversion and Upon Exercise of the Warrants. Alteon shall at all
times reserve and keep available out of its authorized but
unissued Common Shares, solely for the purpose of effecting the
conversion of the Preferred Shares and the exercise of the
Warrants, such number of its Common Shares as shall from time to
time be sufficient to effect the conversion of all outstanding
Preferred Shares and the exercise of the Warrants, and if at any
time the number of authorized but unissued Common Shares shall not
be sufficient to effect the conversion of all the then outstanding
Preferred Shares and the exercise of the Warrants, Alteon will take
such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued Common Shares to
such number of shares as shall be sufficient for such purpose,
including without limitation engaging in best efforts to obtain the
requisite shareholder approval. Without in any way limiting the
foregoing, Alteon agrees to reserve and at all times keep available
solely for purposes of conversion of Preferred Shares and the
exercise of the Warrants 3,191,965 authorized but unissued Common
Shares, which number may be reduced by the number of Common Shares
actually delivered pursuant to conversion of Preferred Shares under
the Designation or exercise of the Warrants and shall be
appropriately adjusted for any stock split, reverse split, stock
dividend or reclassification of the Common Stock. If at any time
the number of authorized but unissued Common Shares is not
sufficient to effect the conversion of all the then outstanding
Preferred Shares or the exercise of the Warrants, the Investors
shall be entitled to the redemption rights provided in the
Registration Rights Agreement.
Section 3.12 Limitations on Offerings. Alteon shall
not offer or sell any equity securities, or any securities
convertible into or exchangeable or exercisable for equity
securities (other than a private placement of Common Stock to an
affiliate of The Palladin Group, L.P. or registered public offering
of common stock (other than a continuous offering pursuant to Rule
415) and other than shares or options issued or which may be issued
pursuant to Alteon's employee, director or consultant stock option
plans or shares issued upon exercise of options, warrants or rights
outstanding on the Closing Date listed in the SEC Documents),
during the three (3) month period commencing with the Closing Date.
Section 3.13 Stockholders Rights Agreement. Alteon
represents that neither the ownership of the Preferred Shares or
the Warrants, nor the acquisition of shares of common stock of
Alteon pursuant to the conversion of Preferred Shares or the
exercise of the Warrants in accordance with the terms thereof will
cause the occurrence of a Distribution Date (as defined in Section
3(b) of the Rights Agreement), or a substantially similar
occurrence under any successor or similar plan; provided, however,
that this Section 3.13 ceases to be applicable during any period
during which the total number of "common shares" (as defined in the
Rights Agreement) of which an Investor or Permitted Transferee (as
defined in the Rights Agreement) would be deemed to be the
Beneficial Owner (exclusive of the Exempt Shares (as defined in the
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Rights Agreement) and "common shares" held by an Affiliate or an
Associate (both as defined in the Rights Agreement) of such
Investor or Permitted Transferee which "common shares" are not
Group Held Shares (as hereinafter defined)), together with all
"common shares" (exclusive of the Exempt Shares) owned by such
Investor or Permitted Transferee, as the case may be, or any person
that is filing a Schedule 13D with such Investor or Permitted
Transferee, as the case may be, as a "group" with regard to
Alteon ("Group Held Shares"), exceeds 4.9% of Alteon's issued and
outstanding Common Shares; and provided, further, that any increase
in the percentage of Common Shares owned by an Investor or a
Permitted Transferee solely as a result of a reduction in Alteon's
outstanding Common Shares shall be disregarded for purposes of
determining such 4.9% ownership. The representation contained in
this Section 3.13 is assignable in connection with the sale,
transfer or assignment of Preferred Shares, Warrants or Common
Shares issued on the conversion or exercise thereof, in whole or
in part, to an Investor or to Permitted Transferees.
ARTICLE IV
Conditions
Section 4.1 Conditions Precedent to the Obligation of
Alteon to Sell the Preferred Shares. The obligation hereunder of
Alteon to issue and/or sell the Preferred Shares and Warrants
to the Investors is subject to the satisfaction, at or before the
Closing, of each of the conditions set forth below. These
conditions are for Alteon's sole benefit and may be waived by
Alteon at any time in its sole discretion.
(a) Accuracy of the Investors' Representations and
Warranties. The representations and warranties of each Investor
shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a
particular date).
(b) Performance by the Investors. Each Investor shall
have performed all agreements and satisfied all conditions required
to be performed or satisfied by such Investor at or prior to the
Closing.
(c) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement or the Designation
or the Warrants.
Section 4.2 Conditions Precedent to the Obligation of
the Investors to Purchase the Preferred Shares. The obligation
hereunder of each Investor to acquire and pay for the Preferred
Shares and acquire the Warrants is subject to the satisfaction, at
or before the Closing, of each of the conditions set forth below.
These conditions are for the Investors' sole benefit and may be
waived by the Investors at any time in their sole discretion.
(a) Accuracy of Alteon's Representations and Warranties.
The representations and warranties of Alteon shall be true and
correct in all material respects as of the date when made and as
of the Closing Date as though made at that time (except for
representations and warranties that speak as of a particular date).
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(b) Performance by Alteon. Alteon shall have performed
all agreements and satisfied all conditions required to be
performed or satisfied by Alteon at or prior to the Closing.
(c) NASDAQ. From the date hereof to the Closing Date,
trading in Alteon's Common Shares shall not have been suspended by
the SEC or the NASDAQ, and trading in securities generally as
reported by NASDAQ shall not have been suspended or limited, and
the Common Shares shall not have been delisted from any exchange
or market where they are currently listed, and the market value of
the outstanding Common Shares shall not have decreased below
$3.50 per share.
(d) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this
Agreement or the Registration Rights Agreement or the Designation
or the Warrants.
(e) Opinion of Counsel. At the Closing the Investors
shall have received an opinion of counsel to Alteon in the form
attached hereto as Exhibit 4.2(e) and such other opinions,
certificates and documents as the Investors or their counsel shall
reasonably require incident to the Closing.
(f) Registration Rights Agreement. Alteon and the
Investors shall have executed and delivered the Registration Rights
Agreement in the form and substance of Exhibit 4.2(f) attached
hereto.
(g) Full Subscription. All Preferred Shares shall have
been purchased in the aggregate by the Investors pursuant to this
Agreement.
(h) Adverse Changes. Since December 31, 1996, no event
which had or is likely to have a Material Adverse Effect on Alteon
or any of its direct or indirect subsidiaries shall have occurred.
(i) Officer's Certificate. Alteon shall have delivered
to the Investors a certificate in form and substance reasonably
satisfactory to the Investors, executed by an officer of Alteon,
certifying as to satisfaction of closing conditions, incumbency of
signing officers, charter, by-laws, good standing and authorizing
resolutions of Alteon.
(j) Designation Filed. The Investors shall have
received copies of the filed Designation.
(k) Warrants. The Investors shall have received
Warrants executed by Alteon in the form and substance of Exhibit
1 hereto.
ARTICLE V
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Legend and Stock
Each certificate representing the Preferred Shares and
the Warrants shall be stamped or otherwise imprinted with a legend
substantially in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED
FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAW OR UPON DELIVERY
TO THIS CORPORATION OF AN OPINION OF LEGAL
COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION THAT AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE.
Alteon agrees to reissue certificates representing the
Preferred Shares and the Warrants without the legend set forth
above at such time as (i) the holder thereof is permitted to
dispose of such Preferred Shares and/or warrants pursuant to Rule
144(k) under the Act, (ii) such Preferred Shares and/or Warrants
are sold to a purchaser or purchasers who (in the opinion of
counsel to the seller or such purchaser(s), in form and substance
reasonably satisfactory to Alteon and its counsel) are able to
dispose of such shares publicly without registration under the Act,
or (iii) such Preferred Shares and/or Warrants are registered under
the Act.
Prior to the Registration Statement (as defined in the
Registration Rights Agreement) being declared effective, any Common
Shares issued pursuant to conversion of Preferred Shares or
exercise of the Warrants shall bear a legend in the same form as
the legend indicated above. Upon such Registration Statement
becoming effective, Alteon agrees to promptly, but no later than
three (3) business days thereafter, issue new certificates
representing such Common Shares without such legend. Any Common
Shares issued pursuant to conversion of Preferred Shares or
exercise of the Warrants after the Registration Statement has
become effective shall be free and clear of any legends, transfer
restrictions and stop orders.
ARTICLE VI
Termination
Section 6.1 Termination by Mutual Consent. This
Agreement may be terminated at any time prior to the Closing by the
mutual written consent of Alteon and the Investors.
Section 6.2 Other Termination. This Agreement may be
terminated by action of the Board of Directors of Alteon or by any
of the Investors at any time if the Closing shall not have been
consummated by the fifth business day following the date of this
Agreement.
ARTICLE VII
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Miscellaneous
Section 7.1 Stamp Taxes; Agent Fees. Alteon shall pay
all stamp and other taxes and duties levied in connection with the
issuance of the Preferred Shares pursuant hereto and the Common
Shares issued upon conversion thereof or upon exercise of the
Warrants.
Section 7.2 Specific Enforcement; Consent to
Jurisdiction.
(a) Alteon and the Investors acknowledge and agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions
hereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity.
(b) Alteon and each of the Investors (i) hereby
irrevocably submits to the exclusive jurisdiction of the United
States District Court, the New York State courts and other courts
of the United States sitting in New York County, New York for the
purposes of any suit, action or proceeding arising out of or
relating to this Agreement and (ii) hereby waives, and agrees not
to assert in any such suit action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum
or that the venue of the suit, action or proceeding is improper.
Alteon and each of the Investors consents to process being served
in any such suit, action or proceeding by mailing a copy thereof
to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this
paragraph shall affect or limit any right to serve process in any
other manner permitted by law.
Section 7.3 Entire Agreement; Amendment. This
Agreement, together with the Registration Rights Agreement, the
Warrants and the agreements and documents executed in connection
herewith and therewith, contains the entire understanding of the
parties with respect to the matters covered hereby and thereby and,
except as specifically set forth herein or therein, neither Alteon
nor any Investor makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by a written
instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.
Section 7.4 Notices. Any notice or other
communication required or permitted to be given hereunder shall be
in writing and shall be effective upon actual receipt of such
notice. The addresses for such communications shall be:
to Alteon: Alteon Inc.
000 Xxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxx
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with copies to: Smith, Stratton, Wise,
Xxxxx & Xxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
to the Investors: To each Investor at
the address and/or fax
number set forth on
Schedule I of this
Agreement.
with copies to: Kleinberg, Kaplan,
Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Att: Xxxxxxx X. Xxxxxxx, Esq.
Any party hereto may from time to time change its address for
notices by giving at least 10 days' written notice of such changed
address to the other parties hereto.
Section 7.5 Indemnity. Each party shall indemnify each
other party against any loss, cost or damages (including reasonable
attorney's fees but excluding consequential damages) incurred as
a result of such parties' breach of any representation, warranty,
covenant or agreement in this Agreement.
Section 7.6 Waivers. No waiver by any party of any
default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such
right accruing to it thereafter.
Section 7.7 Headings. The headings herein are for
convenience only, do not constitute a part of this Agreement and
shall not be deemed to limit or affect any of the provisions
hereof.
Section 7.8 Successors and Assigns. Except as
otherwise provided herein, this Agreement shall be binding upon and
inure to the benefit of the parties and their successors and
permitted assigns. The parties hereto may amend this Agreement
without notice to or the consent of any third party. Alteon may
not assign this Agreement or any rights or obligations hereunder
without the prior written consent of all Investors (which consent
may be withheld for any reason in their sole discretion), except
that Alteon may assign this Agreement in connection with the sale
of all or substantially all of its assets provided that Alteon is
not released from any of its obligations hereunder, such assignee
assumes all obligations of Alteon hereunder, and appropriate
adjustment of the provisions contained in this Agreement, the
Registration Rights Agreement, the Designation and the Warrants is
made, in form and substance satisfactory to the Investors, to place
the Investors in the same position as they would have been but for
such assignment, in accordance with the terms of the Designation
and the Warrants. Any Investor may assign this Agreement (in whole
-17-
or in part) or any rights or obligations hereunder without the
consent of Alteon in connection with any sale or transfer all or
any portion of the Preferred Shares or Warrants held by such
Investor, provided that no Investor may assign this Agreement prior
to the Closing Date without Alteon's prior written consent except
to an affiliate or affiliates of such Investor.
Section 7.9 No Third Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns and is not for
the benefit of, nor may any provision hereof be enforced by, any
other person.
Section 7.10 Governing Law. This Agreement shall be
governed by and construed and enforced in accordance with the
internal laws of the State of New York without regard to such
state's principles of conflict of laws.
Section 7.11 Survival. The representations and warranties
and the agreements and covenants of Alteon and each Investor
contained herein shall survive the Closing.
Section 7.12 Execution. This Agreement may be executed
in two or more counterparts, all of which shall be considered one
and the same agreement, it being understood that all parties need
not sign the same counterpart.
Section 7.13 Publicity. Alteon agrees that it will not
disclose, and will not include in any public announcement, the name
of any Investor without its consent, unless and until such
disclosure is required by law or applicable regulation, and then
only to the extent of such requirement. Alteon agrees that it will
deliver a copy of any public announcement regarding the matters
covered by this Agreement or any agreement and document executed
herewith to each Investor and any public announcement including the
name of an Investor to such Investor, prior to publication of such
announcements.
Section 7.14 Severability. The parties acknowledge and
agree that the Investors are not agents, affiliates or partners of
each other, that all representations, warranties, covenants and
agreements of the Investors hereunder are several and not joint,
that no Investor shall have any responsibility or liability for the
representations, warrants, agreements, acts or omissions of any
other Investor, and that any rights granted to "Investors"
hereunder shall be enforceable by each Investor hereunder.
Section 7.15 Like Treatment of Holders. Neither Alteon
nor any of its affiliates shall, directly or indirectly, pay or
cause to be paid any consideration, whether by way of interest,
fee, payment for the redemptions or exchange of Preferred Shares,
or otherwise, to any holder of Preferred Shares, for or as an
inducement to, or in connection with the solicitation of, any
consent, waiver or amendment of any terms or provisions of the
Preferred Shares or this Agreement or the Registration Rights
Agreement or the Warrants, unless such consideration is required
to be paid to all holders of Preferred Shares bound by such
consent, waiver or amendment whether or not such holders so
consent, waive or agree to amend and whether or not such holders
tender their Preferred Shares for redemption or exchange. Alteon
shall not, directly or indirectly, redeem any Preferred Shares
unless such offer of redemption is made pro rata to all holders of
Preferred Shares on identical terms.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
ALTEON:
ALTEON INC.
By: /s/Xxxxxxx X. Xxxx
______________________
Name: Xxxxxxx X. Xxxx
Title: CFO
INVESTORS:
HALIFAX FUND, L.P.
By: THE PALLADIN GROUP, L.P.
Attorney-in-fact
By: PALLADIN CAPITAL MANAGEMENT,
L.L.C., General Partner
By: /s/Xxxxxx X. Xxxxxxx
_______________________
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
GALILEO CAPITAL, L.L.C.
By:/s/Xxxxxx X. Xxxxxxx
___________________________
Xxxxxx X. Xxxxxxx
Authorized Person
RGC INTERNATIONAL INVESTORS, LDC
By: XXXX XXXX CAPITAL MANAGEMENT, L.P.,
Investment Manager
By: RGC GENERAL PARTNER CORP.,
General Partner
By:/s/Xxxxx Xxxxx
_______________________
Name: Xxxxx Xxxxx
Title: Managing Director
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HERACLES FUND
By: PROMETHEAN INVESTMENT GROUP, L.L.C.,
Its Investment Advisor
By:/s/Xxxxx X. X'Xxxxx, Xx.
________________________
Name: Xxxxx X. X'Xxxxx, Xx.
Title: President
XXXXX XXXXXX
By: PROMETHEAN INVESTMENT GROUP, L.L.C.,
Its Investment Advisor
By:/s/Xxxxx X. X'Xxxxx, Xx.
________________________
Name: Xxxxx X. X'Xxxxx, Xx.
Title: President
XXXXXX X. XXXXXX
By: PROMETHEAN INVESTMENT GROUP, L.L.C.,
Its Investment Advisor
By:/s/Xxxxx X. X'Xxxxx, Xx.
________________________
Name: Xxxxx X. X'Xxxxx, Xx.
Title: President
EXHIBITS AND SCHEDULES
Schedule I List of Investors
Exhibit 1 Form of Transaction Warrant
Exhibit 2 Form of Delisting Warrant
Schedule 2.1(a) List of Subsidiaries
Exhibit 2.1(c)-1 Certificate of Incorporation of Alteon
Exhibit 2.1(c)-2 Certificate of Designations of Alteon
Exhibit 4.2(e) Opinion of Counsel
Exhibit 4.2(f) Registration Rights Agreement
SCHEDULE
Name of Purchaser Purchase Price No. of Shares
HALIFAX FUND, L.P. $3,000,000 3,000
c/o The Palladin Group, L.P.
Investment Manager
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
GALILEO CAPITAL, L.L.C. $300,000 300
c/o The Palladin Group, L.P.
Investment Manager
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
RGC INTERNATIONAL INVESTORS, LDC $700,000 000
x/x Xxxx Xxxx Xxxxxxx Xxxxxxxxxx, L.P.,
Investment Manager
000 Xxxx Xxxxxxxxxx Xxxx, Xxxxx 0000
Xxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
HERACLES FUND $300,000 300
c/o Promethean Investment Group, L.L.C.
Investment Advisor
00 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X'Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXXX XXXXXX $250,000 250
c/o Promethean Investment Group, L.L.C.
Investment Advisor
00 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X'Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXXXX X. XXXXXX $450,000 450
c/o Promethean Investment Group, L.L.C.
Investment Advisor
00 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X'Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
__________ ______
TOTALS $5,000,000 $5,000
SCHEDULE 2.1(a)
List of Subsidiaries
None.
