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EXHIBIT 99.1
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") is made and entered into
as of January 14, 2000 by and among SciClone Pharmaceuticals, Inc., a California
corporation (the "Company"), and those parties listed on the signature page
hereof as "Investors" (who are referred to individually as an "Investor" and
collectively as the "Investors").
In consideration of the above recitals and the mutual covenants made
herein, the parties hereby agree as follows:
1. Sale of Common Stock and Warrants; Closing; Delivery
(a) Purchase and Sale of Common Stock and Warrants. Subject to
the terms and conditions hereof, the Company will issue and sell to each
Investor, and each Investor will purchase from the Company, at the Closing (as
defined below) the number of shares of common stock ("Shares"), no par value, of
the Company ("Common Stock"), and the number of warrants to purchase shares of
Common Stock ("Warrant Shares") set forth opposite each Investor's name on
Exhibit A. The exercise price per Warrant Share shall be $7.00. A form of the
warrant is attached as Exhibit B ("Warrant"). Each Warrant entitles the Investor
to purchase one Warrant Share. The purchase price per Share shall be $6.00 per
share. The Purchase price per Warrant shall be $0.13.
(b) Closing. The closing of the purchase and sale of the Shares
and Warrants shall take place at the offices of the Company at 000 Xxxxxxxx
Xxxxxx Xxxx., Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx at 9:00 a.m., PDT, on January 18,
2000 (the "Closing"). The date of the Closing is hereinafter referred to as the
"Closing Date."
(c) Delivery. Subject to the terms and conditions of this
Agreement, at the Closing, or, in the case of the original stock certificates,
as soon as practicable after the Closing, the Company will deliver to each
Investor (1) a stock certificate representing the Shares to be purchased by such
Investor and (2) a Warrant representing the Warrants to be purchased by such
Investors against payment of the purchase price therefor by a wire transfer of
immediately available funds to the Company as follows:
Bank: Union Bank of California
Bank Address: Santa Xxxxx Valley Commercial Banking
X X Xxx 00000
Xxxxxxx, XX 00000-0000
ABA #: 000000000
Account Name: SciClone Pharmaceuticals
Account #: 6480121382
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2. Representations and Warranties of Investors. Each Investor represents
and warrants, severally, to the Company that:
(a) Authorization. This Agreement constitutes the valid and
legally binding obligation of such Investor, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency and
similar laws affecting the enforcement of creditors' rights generally and
equitable remedies, and except as indemnity provisions in the enforcement of
Section 4 of this Agreement (relating to registration rights) may be limited by
law, and such Investor (if an individual) is over eighteen (18) years of age,
and such Investor has full legal capacity, power and authority to enter into and
be bound by this Agreement.
(b) Purchase for Own Account for Investment. Such Investor is
purchasing the Shares and Warrants for investment purposes only and not with a
view to, or for sale in connection with, a distribution of the Shares and
Warrants within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). Such Investor has no present intention of selling or
otherwise disposing of all or any portion of the Shares and Warrants.
(c) Access to Information. Such Investor has had an opportunity
to ask questions of the Company's representatives concerning the Company, its
present and prospective business, assets, liabilities and financial condition
that such Investor reasonably considers important in making the decision to
purchase the Shares and Warrants. Such Investor has received a copy of (1) the
Company's Annual Report to the U.S. Securities and Exchange Commission ("SEC" or
"Commission") on Form 10-K for the fiscal year ending December 31, 1998, (2) the
Company's Quarterly Report to the SEC on Form 10-Q for the fiscal quarter ending
September 30, 1999 and (3) the Company's press releases issued from September
30, 1999 through December 31,1999 (collectively, the "Press Releases").
(d) Understanding of Risks. Such Investor is fully aware of: (i)
the highly speculative nature of the investment in the Shares and Warrants; (ii)
the financial hazards involved; (iii) the lack of liquidity of the Shares, the
Warrants and Warrant Shares and the restrictions on the transferability of the
Shares, the Warrants and Warrant Shares (e.g., that such Investor may not be
able to sell or dispose of the Shares, the Warrants and Warrant Shares or use
them as collateral for loans); and (iv) the tax consequences of investment in
the Shares and Warrants.
(e) Investor's Qualifications. Such Investor is an "accredited"
investor as defined under Rule 501 of Regulation D promulgated under the
Securities Act. Such Investor is aware of the general business and financial
circumstances of the Company and, by reason of such Investor's business or
financial experience, such Investor is capable of evaluating the merits and
risks of this investment and is financially capable of bearing a total loss of
this investment.
(f) Compliance with Securities Laws. Such Investor understands
and acknowledges that, in reliance upon the representations and warranties made
by such Investor herein, the Shares, the Warrants and Warrant Shares are not
being registered with the SEC under
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the Securities Act or being qualified under the California Corporate Securities
Law of 1968, as amended (the "Law"), but instead are being issued under an
exemption or exemptions from the registration and qualification requirements of
the Securities Act or the Law or other applicable state securities laws which
impose certain restrictions on such Investor's ability to transfer the Shares,
the Warrants and Warrant Shares.
(g) Restrictions on Transfer. Such Investor understands that
such Investor may not transfer any of the Shares, the Warrants or Warrant Shares
unless such Shares, the Warrants or Warrant Shares are registered under the
Securities Act unless, in the opinion of counsel to the Company, exemptions from
such registration and qualification requirements are available. Such Investor
understands that only the Company may file a registration statement with the
SEC. Such Investor has also been advised that exemptions from registration and
qualification may not be available or may not permit such Investor to transfer
all or any of the Shares, the Warrants or Warrant Shares in the amounts or at
the times proposed by such Investor.
(h) Rule 144. In addition, such Investor has been advised that
SEC Rule 144 ("Rule 144") promulgated under the Securities Act, which permits
certain limited sales of unregistered securities, is not presently available
with respect to the Shares and Warrant Shares solely due to the holding periods
required thereunder and, in any event, requires that the Shares and Warrant
Shares be held for a minimum of one year, and in certain cases two years, after
they have been purchased and paid for (within the meaning of Rule 144), before
they may be resold under Rule 144. Such Investor understands that Rule 144 may
indefinitely restrict transfer of the Shares and Warrant Shares if such Investor
is an "affiliate" of the Company and "current public information" about the
Company (as defined in Rule 144) is not publicly available.
(i) Legends and Stop-Transfer Orders. Such Investor understands
that certificates or other instruments representing any of the Shares, the
Warrants and Warrant Shares acquired by such Investor may bear legends
substantially similar to the following, in addition to any other legends
required by federal or state laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS UNLESS SOLD PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT.
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In order to ensure and enforce compliance with the restrictions imposed
by applicable law and those referred to in the foregoing legend, or elsewhere
herein, the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any, with respect to any certificate or other instrument
representing the Shares, the Warrants and Warrant Shares, or if the Company
transfers its own securities, it may make appropriate notations to the same
effect in the Company's records. Any legend endorsed on a certificate pursuant
to this Subsection (i) and the related stop transfer instructions with respect
to such securities shall be removed, and the Company shall issue a certificate
without such legend to the holder thereof, if such securities are registered
under the Securities Act and a prospectus meeting the requirements of Section 10
of the Securities Act is available, if such legend may be properly removed under
the terms of Rule 144 promulgated under the Securities Act or if such holder
provides the Company with an opinion of counsel for such holder, reasonably
satisfactory to legal counsel for the Company, to the effect that a sale,
transfer or assignment of such securities may be made without registration.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that, except as set forth in this
Section, on the Schedule of Exceptions attached hereto as Exhibit C (the
"Schedule of Exceptions"), or in the Press Releases, with any disclosure thereon
being deemed disclosure for all purposes and all relevant subsections hereof,
which exceptions will be deemed to be representations and warranties as if made
hereunder:
(a) Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. The Company has all necessary corporate power and authority
to own its assets and to carry on its business as now being conducted and
presently proposed to be conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
its ownership or leasing of assets, or the conduct of its business, makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a material adverse effect on the Company and its
subsidiaries considered as a whole.
(b) Requisite Power and Authorization. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to issue the Shares, the Warrants and the Warrant Shares and to carry out the
provisions of this Agreement and the Warrants. All corporate action on the part
of the Company required for the lawful execution and delivery of this Agreement,
and issuance and delivery of the Shares, the Warrants and the Warrant Shares has
been taken. Upon execution and delivery, this Agreement and the Warrants
constitute valid and binding obligations of the Company enforceable in
accordance with their respective terms, except as enforcement may be limited by
insolvency and similar laws affecting the enforcement of creditors' rights
generally and equitable remedies, and except as the indemnity provisions of
Section 4 of this Agreement (relating to registration rights) may be limited by
law. The Shares and the Warrants and the Warrant Shares issuable upon exercise
of the Warrants, when issued in compliance with the provisions of this Agreement
or the Warrants, as the case may be, will be duly authorized and validly issued,
fully paid, non-assessable, and issued in compliance with federal securities
laws and the securities laws of the State of California. No shareholder of the
Company or other person has any preemptive or similar right
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with respect to the Shares, Warrants or Warrant Shares. The Company has reserved
such number of shares of its Common Stock necessary for issuance of the Warrant
Shares.
(c) SEC Documents. The Company has furnished to each Investor:
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, excluding exhibits, the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1999, excluding exhibits, and all documents
that the Company was required to file, which it represents and warrants it did
timely file, with the SEC under Sections 13 or 14(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), since December 31, 1998
(collectively, the "SEC Documents"). As of their respective filing dates, or
such later date on which such reports were amended, the SEC Documents complied
in all material respects with the requirements of the Exchange Act. The SEC
Documents as of their respective dates, or such later date on which such reports
were amended, did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The financial statements included in the SEC Documents
("Financial Statements") comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto. Except as may be indicated in the notes to the
Financial Statements or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC, the Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present the consolidated financial position of the Company and any subsidiaries
at the dates thereof and the consolidated results of their operations and
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring adjustments).
(d) Capital Stock. The authorized capital stock of the Company
consists of 75,000,000 shares of Common Stock, without par value, and 10,000,000
shares of Preferred Stock, without par value. As of January 14, 2000, there were
25,646,486 shares of Common Stock issued and outstanding and there was no issued
and outstanding Preferred Stock. All outstanding shares of Common Stock have
been duly authorized and validly issued and are fully paid and non-assessable.
As of January 14, 2000, (a) 4,484,614 shares of Common Stock were reserved for
future issuance pursuant to options granted and outstanding under the Company's
stock option plans, (b) 826,345 shares of Common Stock were reserved for future
issuance pursuant to options which may be granted under the Company's stock
option plans, (c) 4,930,602 shares of Common Stock were reserved for future
issuance pursuant to outstanding warrants, and (d) 382,478 shares of Common
Stock were reserved for issuance under the Company's Employee Stock Purchase
Plan. Except as set forth above, the Company has no outstanding securities
convertible into or exchangeable for Common Stock and no contracts, rights,
options or warrants to purchase or otherwise acquire Common Stock or securities
convertible into or exchangeable for Common Stock. Since January 14, 2000, the
Company has not issued any shares of capital stock or any options, warrants or
other rights with respect thereto except for shares issued upon exercise of
options, warrants and rights, as set forth above.
(e) Compliance with Other Agreements. Neither the execution and
delivery of, nor the consummation of any transaction or execution of any
instrument contemplated by,
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this Agreement, nor the issuance of the Shares, the Warrants and the Warrant
Shares, has constituted or resulted in, or will constitute or result in, a
material default under or breach or violation of any term or provision of the
Company's Bylaws, Articles of Incorporation, or material contracts with third
parties, state or federal laws, rules or regulations, writs, orders or judgments
or decrees which are applicable to the Company or its properties.
(f) Consents. All consents necessary for the Company to perform
its respective obligations hereunder have been obtained, except for the approval
of the SEC of the registration statement contemplated by Section 4.
(g) No Material Adverse Change. Since September 30, 1999, except
as set forth in the Schedule of Exceptions and the Press Releases, there has not
been:
(i) any changes in the assets, liabilities, financial
condition or operations of the Company from that reflected in the Financial
Statements except changes in the ordinary course of business which have not
been, either in any individual case or in the aggregate, materially adverse to
the Company and its subsidiaries taken as a whole;
(ii) any material change, except in the ordinary course
of business, in the contingent obligations of the Company whether by way of
guarantee, endorsement, indemnity, warranty or otherwise;
(iii) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties or
business of the Company; or
(iv) any declaration or payment of any dividend or other
distribution of the assets of the Company.
(h) Litigation. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently threatened
against the Company that questions the validity of this Agreement or the
Warrants, or the right of the Company to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any material adverse changes
in the business, assets, condition, affairs or prospects of the Company,
financially or otherwise, or any change in the current equity ownership of the
Company.
4. Registration Rights.
(a) Definitions. For purposes of this Section 4:
(i) "Register", "registered", and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement.
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(ii) "Registrable Securities" means all shares of Common
Stock of the Company issued under this Agreement, including all shares of Common
Stock issued or issuable pursuant to the exercise of the Warrants, excluding in
all cases, however, the Warrants and all Registrable Securities sold pursuant to
Rule 144.
(iii) "Holder" means any person owning of record
Registrable Securities that have not been sold to the public or any assignee of
record of such Registrable Securities to whom rights under this Section 4
(and/or, with respect to the rights of the Investors set forth in Section 5,
under such Section 5) have been assigned in accordance with this Agreement.
(b) Shelf Registration.
(i) The Company will file as soon as practicable, and in
no event later than 30 days after the Closing Date (the "Filing Date"), a
registration statement under the Securities Act for, and all such qualifications
and compliances as may be so required and as would permit, the sale and
distribution of all of the Holders' Registrable Securities and thereafter shall
use its best efforts to secure the effectiveness of such registration statement
as soon as practicable thereafter.
(ii) The Company will pay all expenses incurred in
connection with any registration, qualification and compliance requested
hereunder (excluding underwriters' or brokers' discounts and commissions and the
fees and disbursements of counsel for any Investor), including without
limitation all filing, registration and qualification, printers' and accounting
fees and the fees and disbursements of counsel for the Company.
(iii) The Company will use its best efforts to cause the
registration statement to remain effective until the earlier of (A) the date
ending three (3) years after the Closing Date, (B) the date as all the
Registrable Securities have been resold, or (C) the date on which each Holder of
Registrable Securities is able to sell all of such Holder's Registrable
Securities in any single three (3) month period without registration under the
Securities Act pursuant to Rule 144.
(c) Obligations of the Company. In order to effect the
registration of any Registrable Securities under Section 4(b) of this Agreement,
the Company will, as expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and deliver such
registration statement, at the time of such filing, to each Holder.
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration
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statement as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
registration statement.
(iii) Furnish to the Holders such number of copies of a
prospectus in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by them that are included in
such registration.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
"blue sky" laws of such jurisdictions as will be reasonably requested by the
Holders, provided that the Company will not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(v) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and upon such notice the Company shall use its best efforts to
promptly correct such misstatement or omission and deliver to each Holder copies
of such corrected prospectus. The Company shall have the right, upon such
notice, to suspend the delivery of prospectuses included in such registration
statement from the date of notice until the date of such correction. The period
during which the Company is required to keep any registration statement filed
pursuant to Section 4(b) effective shall be extended for the amount of time
required to amend such registration statement and deliver such prospectus
relating thereto.
(d) Furnish Information. It will be a condition precedent to the
obligations of the Company to take any action pursuant to Section 4(b) hereof
that the selling Holders will furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as will be required to effect the registration of
their Registrable Securities.
(e) Indemnification. In the event any Registrable Securities are
included in a registration statement under Section 4(b) hereof:
(i) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, shareholders, officers
and directors of each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively, a "Violation"):
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(A) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto;
(B) the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading; or
(C) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any federal or state securities
law or any rule or regulation promulgated under the Securities Act, the Exchange
Act or any federal or state securities law in connection with the offering
covered by such registration statement;
and the Company will reimburse each such Holder, partner, shareholder, officer
or director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them, as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided however,
that the indemnity agreement contained in this Section 4(e)(i) will not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
will not be unreasonably withheld), nor will the Company be liable in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, shareholder, officer, director,
underwriter or controlling person of such Holder.
(ii) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such registration statement or any
of such other Holder's partners, directors or officers or shareholders or any
person who controls such Holder within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, partner or director, officer, shareholder or
controlling person of such other Holder may become subject under the Securities
Act, the Exchange Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation that arises solely as a result of written
information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter or other Holder, partner, officer, director, shareholder or
controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action: provided, however,
that the indemnity agreement contained in this Section 4(e)(ii) will not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder, which
consent will not be unreasonably withheld; and provided further, that the total
amounts payable in
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indemnity by a Holder under this Section 4(e)(ii) in respect of any Violation
will not exceed the aggregate proceeds (net of discounts) received by such
Holder upon the sale of the Shares or Warrant Shares.
(iii) Promptly after receipt by an indemnified party
under this Section 4(e) of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 4(e),
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party will have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party will
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if the indemnifying party is materially
prejudiced thereby, will relieve such indemnifying party of liability, but only
to the extent that such indemnifying party is prejudiced with respect to a
specific claim.
(iv) The foregoing indemnity agreement with respect to
any prospectus shall not inure to the benefit of any Holder or underwriter, or
any person controlling such Holder or underwriter, from whom the person
asserting any losses, claims, damages or liabilities purchased Registrable
Securities, if a copy of the prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) provided by
the Company was not sent or given by or on behalf of such Holder or underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Registrable Securities to such person,
and if the prospectus (as so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or liability.
(v) If the indemnification provided for in Sections
4(e)(i) or 4(e)(ii) hereof shall be unavailable to hold harmless an indemnified
party in respect of any liability under the Securities Act, then, and in each
such case, the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statement or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided that in no event shall any contribution under
this subsection (v) by any Holder exceed the gross proceeds from the offering
received by such indemnifying party. No person or entity guilty of fraudulent
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misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
(vi) The obligations of the Company and Holders under
this Section 4(e) will survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
(f) Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, while a public market exists for the Common Stock of the Company,
the Company will:
(i) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times while the Company is reporting under the Exchange Act;
(ii) Use its best efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time it is subject to such reporting
requirements); and
(iii) So long as a Holder owns any Registrable
Securities, furnish to the Holder forthwith upon request a written statement by
the Company as to its compliance with the reporting requirements of Rule 144,
and of the Securities Act and the Exchange Act (at any time it is subject to the
reporting requirements of the Exchange Act), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company as a Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing a Holder to sell any such securities without
registration (at any time the Company is subject to the reporting requirements
of the Exchange Act).
(g) The Company may notify the Investor that the Company will
refuse to permit the Investor to resell any Registrable Securities pursuant to
the registration statement for an initial period not to exceed thirty (30) days;
provided, however, that in order to exercise this right, the Company must
deliver a certificate in writing to the Investor to the effect that a delay in
such sale is necessary because a sale pursuant to such registration statement in
its then-current form would not be in the best interests of the Company and its
shareholders due to disclosure obligations of the Company. In such event, the
Company shall use its best efforts to amend the registration statement, if
necessary, and to take all other actions reasonably necessary to allow such
sale, and shall notify the Investor promptly after it has determined that such
sale has become permissible. Notwithstanding the foregoing, the Company shall
not be entitled to exercise its right to refuse to permit a sale by any
particular Investor more than three (3) times in any twelve-month period or for
more than two (2) consecutive thirty (30) day periods in any twelve-month
period; provided, however, that no particular Investor will be refused
permission to sell under this Section 4(g) at the same time that another person
is permitted to sell under the registration statement. Each Investor hereby
covenants and agrees that it will not sell any
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Registrable Securities pursuant to the registration statement during the periods
the registration statement is withdrawn as set forth in this Section 4(g).
(h) Investor Information. Each Investor covenants that it will
promptly notify the Company of any changes in the information set forth in the
registration statement regarding such Investor or such Investor's "Plan of
Distribution."
(i) Penalties. If (i) the registration statement covering all
the applicable Registrable Securities and required to be filed by the Company
pursuant to this Agreement is not (A) filed with the Commission on or before the
Filing Date or (B) declared effective by the Commission within 90 days after the
Filing Date (the "Effectiveness Date") or (ii) on any day after the registration
statement has been declared effective by the Commission (A) sales of all the
Registrable Securities required to be included on a registration statement
cannot be made pursuant to the registration statement (including, without
limitation, because of a failure to keep the registration statement effective,
to disclose such information as is necessary for sales to be made pursuant to
the registration statement, or to register sufficient shares of Common Stock) or
(B) the Common Stock is not listed or included for quotation on the National
Market System of the Nasdaq Stock Market ("Nasdaq"), the New York Stock Exchange
("NYSE") or the American Stock Exchange (the "AMEX") after being so listed or
included for quotation, (each such event specified in (i) and (ii) above, an
"Event"), then, as partial relief for the damages to any Investor by reason of
any such delay in or reduction of its ability to sell the Registrable Securities
(which remedy shall not be exclusive of any other remedies available at law or
in equity), the Company shall pay to each Investor an amount in cash (a
"Registration Delay Payment") equal to the purchase price of Common Stock as set
forth herein (the "Aggregate Price") multiplied by two hundredths (.020) times
the sum of: (i) the number of months (prorated for partial months) after the end
of the Effectiveness Date and prior to the date the registration statement is
declared effective by the Commission, provided, however, that there shall be
excluded from such period any delays which are solely attributable to changes
required by the Investors or the Commission in the registration statement with
respect to information relating to the Investors; (ii) the number of months
(prorated for partial months) that sales cannot be made pursuant to the
registration statement after the registration statement has been declared
effective (including, without limitation, when sales cannot be made by reason of
the Company's failure to properly supplement or amend the prospectus in
accordance with the terms of this Agreement, or otherwise, but excluding when
such sales cannot be made solely by reason of any act or omission solely
attributable to the Investors or information in the registration statement
relating to the Investors and excluding any suspensions of the registration
statement within the time limits set forth in Section 4(g)); and (iii) the
number of months (prorated for partial months) that the Common Stock is not
listed or included for quotation on the Nasdaq, NYSE or AMEX or that trading
thereon is halted after the registration statement has been declared effective,
but excluding any months or portion thereof during which sales cannot otherwise
be made as set forth in (ii). The Company shall pay any Required Registration
Delay Payments to each Investor in cash on the last business day of each month
during which an Event has occurred and is continuing. In the event the Company
fails to make a Registration Delay Payment in a timely manner, such Registration
Delay Payment shall bear interest at the rate of 2.0% per month (prorated for
partial months) until paid in full.
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5. Conditions to Obligations of the Investors. The obligation of each
Investor to purchase the Shares and Warrants at the Closing is subject to the
fulfillment on or prior to the Closing Date of the following conditions, any of
which may be waived by such Investor:
(a) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Company in Section 3
hereof shall be true and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been made on and as
of said date, except for representations and warranties made as of a specific
date which shall be true and correct as of such date; and the Company shall have
performed all obligations and conditions herein required to be performed or
observed by it under this Agreement on or prior to the Closing Date.
(b) Consents and Waivers. The Company shall have obtained any
and all consents (including all governmental or regulatory consents, approvals
or authorizations required in connection with the valid execution and delivery
of this Agreement), permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement.
(c) Compliance Certificate. The Company shall have delivered to
the Investors a certificate, executed by the Chief Executive Officer of the
Company, dated the Closing Date, certifying to the fulfillment of the conditions
specified in subsection (a) of this Section 5.
(d) Opinion of Company's Counsel. Investors shall have received
from Xxxx Xxxx Xxxx & Freidenrich, counsel to the Company, an opinion addressed
to the Investors, dated the Closing Date and in substantially the form attached
hereto as Exhibit D.
6. Conditions to Obligations of the Company. The obligation of the
Company to sell and issue the Shares and Warrants to each Investor at the
Closing is subject to the fulfillment on or prior to the Closing Date of the
following conditions, any of which may be waived by the Company:
(a) Representations and Warranties. The representations and
warranties made by such Investor in Section 2 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date with the same force
and effect as if they had been made on and as of said date.
(b) Consents and Waivers. The condition set forth in subsection
(b) of Section 5 hereof shall have been fulfilled.
7. Miscellaneous.
(a) Governing Law. This Agreement will be governed by and
construed in accordance with the internal laws of the State of California
applicable to contracts made among
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residents of, and wholly to be performed within, the State of California,
without regard to principles of conflict of laws or choice of laws.
(b) Further Instruments. From time to time, each party hereto
will execute and deliver such instruments and documents as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
(c) Successors; No Other Beneficiaries. This Agreement will be
binding upon and will inure to the benefit of the executors, administrators,
legal representatives, heirs, successors, and assigns of the parties hereto;
provided, however, that (i) rights of Investors hereunder may be transferred
only in connection with (and to the transferee of) Common Stock of the Company
purchased by a Investor hereunder, but the Company may prohibit such transfer of
rights if the transfer to a particular transferee would not, in the good faith
judgment of the Company's Board of Directors, be in the Company's best
interests, and (ii) any transferee of any shares of stock of the Company
affected by this Agreement to whom rights are so transferred (a "Permitted
Transferee") will be required, as a condition precedent to acquiring such
shares, to agree in writing to be bound by all the terms and conditions of this
Agreement applicable to such Permitted Transferee's transferor, and (iii) upon
and after such transfer the Permitted Transferee will be deemed to be an
Investor for purposes of this Agreement. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(d) Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This Agreement will be
effective following the parties signatory hereto upon such counterpart signature
by all initial parties hereto.
(e) Entire Agreement. This Agreement, including and
incorporating the Schedule of Exceptions and all Exhibits attached hereto and
referred to herein, constitutes and contains the entire agreement and
understanding of the parties regarding the subject matter of this Agreement and
supersedes in its entirety any and all prior negotiations, correspondence,
understandings and agreements among the parties respecting the subject matter
hereof.
(f) Notices. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be addressed to the Senior Vice
President and Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to an Investor shall be addressed to
the Investor at the address indicated below or to such other address as such
party may designate in writing from time to time to the Company. Unless
otherwise provided, notice required or permitted to be given to a party pursuant
to the provisions of this Agreement will be in writing and will be effective and
deemed given under this Agreement on the earliest of (i) the date of personal
delivery, or (ii) the date of delivery by facsimile, or (iii) the business day
after deposit with a nationally-recognized courier or overnight service,
including Federal Express or Express Mail, for United States deliveries or three
(3) business days after such deposit for deliveries outside of the United
States, or (iv) three
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15
(3) business days after deposit in the United States mail by registered or
certified mail for United States deliveries. All notices not delivered
personally or by facsimile will be sent with postage and other charges prepaid
and properly addressed to the party to be notified at the address set forth on
the signature page, or at such other address as such party may designate by ten
(10) days' advance written notice to the other parties hereto. All notices for
delivery outside the United States will be sent by facsimile, or by nationally
recognized courier or overnight service, including Express Mail. Any notice
given hereunder to more than one person will be deemed to have been given, for
purposes of counting time periods hereunder, on the date given to the last party
required to be given such notice.
(g) Broker's Fee. Each Investor acknowledges that the Company
intends to pay a fee and issue warrants to X.X. Xxxxxxxxxx & Co., Inc. in
respect of the sale of the Shares and Warrants to the Investors. Each of the
parties hereto hereby represents that, on the basis of any actions and
agreements by it, there are no other brokers or finders entitled to compensation
in connection with the sale of the Shares and Warrants to the Investors.
(h) Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of the Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and each of the
Investors. Any amendment or waiver effected in accordance with this Section 8(h)
will be binding upon the Company, each Investor, and their permitted transferees
and assignees.
(i) Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provisions will be
excluded from this Agreement to the extent unenforceable and the balance of such
provisions, and of this Agreement, will be interpreted as if such provision or
part and hereof were so excluded and will be enforceable in accordance with its
terms.
(j) Aggregation of Stock. All shares of Common Stock held or
acquired by affiliated entities or persons will be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
(k) Expenses. The Company and each Investor will bear its own
costs and expenses incurred on its behalf with respect to the Agreement and the
transactions contemplated hereby, including fees of legal counsel.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
INVESTOR
-------------------------------------- Shares Subscribed: ______________
(Print Name of Individual or Entity) Share Purchase Price: ___________
Warrants Subscribed: ____________
Warrant Purchase Price: _________
Aggregate Purchase Price: _______
By:
-----------------------------------
(Signature)
Name:
---------------------------------
Title:
--------------------------------
Address:
------------------------------
--------------------------------------
--------------------------------------
--------------------------------------
Tax ID:
-------------------------------
COMPANY
SCICLONE PHARMACEUTICALS, INC. Shares Issued: __________________
Warrants Issued: ________________
By:
-----------------------------------
Name: Xxxxx X. Xxxxx, X. X.
Title: Chief Business Officer
Address: SciClone Pharmaceuticals, Inc.
000 Xxxxxxxx Xxxxxx Xxxx.
Xxx Xxxxx, XX 00000
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EXHIBIT A
TO
SUBSCRIPTION AGREEMENT
INVESTOR NUMBER OF SHARES NUMBER OF WARRANTS
-------- ---------------- ------------------
Xxxxx Xxxxxxx Strategic Growth Fund, Ltd. 631,000 504,800
Xxxxx Xxxxxxx Strategic Growth Fund, L.P. 369,000 295,200
TOTAL 1,000,000 800,000
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EXHIBIT B
TO
SUBSCRIPTION AGREEMENT
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION THEREUNDER OR
EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
SCICLONE PHARMACEUTICALS, INC.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
VOID AFTER JANUARY 17, 2005
1. Warrant to Purchase Common Stock.
1.1 Warrant to Purchase Shares. This warrant (this "Warrant")
certifies that for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, _____________________________ (the "Warrant
Holder") is entitled, effective as of January 18, 2000, subject to the terms and
conditions of this Warrant to purchase from SciClone Pharmaceuticals, Inc., a
California corporation (the "Company") up to a total of _______ shares of Common
Stock of the Company (the "Shares") at the price of $7.00 per share (the
"Exercise Price") prior to 5:00 p.m. Pacific Time on January 17, 2005 (the
"Expiration Date"). The Warrant must be exercised, in whole or in part, any time
on or before the Expiration Date. Unless the context otherwise requires, the
term "Shares" shall mean and include the common stock of the Company and other
securities and property at any time receivable or issuable upon exercise of this
Warrant. The term "Warrant" as used herein, shall include this Warrant and any
warrants delivered in substitution or exchange therefor as provided herein.
1.2 Adjustment of Exercise Price and Number of Shares. The
number and character of Shares issuable upon exercise of this Warrant (or any
shares of stock or other securities or property at the time receivable or
issuable upon exercise of this Warrant) and the Exercise Price therefor, are
subject to adjustment upon occurrence of the following events:
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(a) Adjustment for Stock Splits, Stock Dividends,
Recapitalizations, etc. The Exercise Price of this Warrant and the number of
Shares issuable upon exercise of this Warrant shall each be proportionally
adjusted to reflect any stock dividend, stock split, reverse stock split,
combination of shares, reclassification, recapitalization or other similar event
altering the number of outstanding shares of the Company's Common Stock.
(b) Adjustment for Other Dividends and Distributions. In
case the Company shall make or issue, or shall fix a record date for the
determination of eligible holders entitled to receive, a dividend or other
distribution with respect to the Shares payable in securities of the Company
then, and in each such case, the Warrant Holder, on exercise of this Warrant at
any time after the consummation, effective date or record date of such event,
shall receive, in addition to the Shares (or such other stock or securities)
issuable on such exercise prior to such date, the securities of the Company to
which such Warrant Holder would have been entitled upon such date if such
Warrant Holder had exercised this Warrant immediately prior thereto (all subject
to further adjustment as provided in this Warrant).
(c) Adjustment for Capital Reorganization,
Consolidation, Merger. If any capital reorganization of the capital stock of the
Company, or any consolidation or merger of the Company with or into another
corporation, or the sale of all or substantially all of the Company's assets to
another corporation shall be effected in such a way that holders of the
Company's Common Stock will be entitled to receive stock, securities or assets
with respect to or in exchange for the Company's Common Stock, and in each such
case the Warrant Holder, upon the exercise of this Warrant, at any time after
the consummation of such capital reorganization, consolidation, merger, or sale,
shall be entitled to receive, in lieu of the stock or other securities and
property receivable upon the exercise of this Warrant prior to such
consummation, the stock or other securities or property to which such Warrant
Holder would have been entitled upon such consummation if such Warrant Holder
had exercised this Warrant immediately prior to the consummation of such capital
reorganization, consolidation, merger, or sale, all subject to further
adjustment as provided in this Section 1.2; and in each such case, the terms of
this Warrant shall be applicable to the shares of stock or other securities or
property receivable upon the exercise of this Warrant after such consummation.
(d) Issuance's Below Exercise Price. If the Company, at
any time prior to December 31, 2000:
(i) issues or sells, or is deemed to have issued
or sold, any Common Stock;
(ii) in any manner grants, issues or sells any
rights, options, warrants, options to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for Common
Stock (other than any Excluded Securities) (such rights, options or warrants
being herein called "Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"); or
(iii) in any manner issues or sells any
Convertible Securities; for (a) with respect to paragraph (h)(i), a price per
share, or (b) with respect to paragraphs h(ii) or h(iii), a price per share for
which Common Stock issuable upon the exercise of such Options or
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upon conversion or exchange of such Convertible Securities, which is less than
the Exercise Price in effect immediately prior to such issuance or sale, then,
immediately after such issuance, sale or grant, the Exercise Price then in
effect shall be reduced to an amount equal to the consideration per share of the
Common Stock in such issuance, sale or grant, or shall be reduced to equal the
price per share for which Common Stock are issuable upon the exercise of such
Options, or upon the conversion or exchange of such Convertible Securities, as
the case may be. No adjustment of the Exercise Price shall be made upon the
actual issuance of such Common Stock upon conversion or exchange of such Options
or Convertible Securities. If there is a change at any time in (i) the exercise
price provided for in any Options, (ii) the additional consideration, if any,
payable upon the issuance, conversion or exchange of any Convertible Securities
or (iii) the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock, then immediately after such change the Exercise
Price in effect shall be reduced to the Exercise Price which would have been in
effect at such time had such Options or Convertible Securities still outstanding
provided for such changed exercise price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold; provided that no adjustment shall be made if such adjustment would result
in an increase of the Exercise Price then in effect.
(e) Effect on Exercise Price of Certain Events. For
purposes of determining the adjusted Exercise Price under Section 1.2(d), the
following shall be applicable:
(i) Calculation of Consideration Received. If
any Common Stock, Options or Convertible Securities are issued or sold or deemed
to have been issued or sold for cash, the consideration received therefor will
be deemed to be the net amount received by the Company therefor, without
deducting any expenses paid or incurred by the Company or any commissions or
compensations paid or concessions or discounts allowed to underwriters, dealers
or others performing similar services in connection with such issue or sale. In
case any Common Stock, Options or Convertible Securities are issued or sold for
a consideration other than cash, the amount of the consideration other than cash
received by the Company will be the fair value of such consideration. In case
any Common Stock, Options or Convertible Securities are issued to the owners of
a non-surviving entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefor will be deemed to be the
fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than
cash or securities will be determined jointly by the Company and the holders of
a majority of the Warrant Shares and Warrants then outstanding. If such parties
are unable to reach agreement within ten (10) days after the occurrence of an
event requiring valuation (the "Valuation Event"), the fair value of such
consideration will be determined within five (5) Business Days of the tenth
(10th) day following the Valuation Event by a nationally recognized or major
regional investment banking firm or firm of independent certified public
accountants of recognized standing (an "Appraiser") selected in good faith by
the Company and agreed upon in good faith by the holders of a majority of the
Warrant Shares and the Warrants then outstanding. The determination of such
Appraiser shall be binding upon all parties absent manifest error.
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(ii) Integrated Transactions. In case any Option
is issued in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the Options
will be deemed to have been issued for an aggregate consideration of $.01.
(iii) Record Date. If the Company takes a record
of the holders of Common Stock for the purpose of entitling them (a) to receive
a dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (b) to subscribe for or purchase Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issue or sale of the Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
(f) Certain Events. If any event that would adversely
affect the rights of any holder of the Warrants occurs but is not expressly
provided for by Section 1.2 hereof (including, without limitation, the granting
of stock appreciation rights, phantom stock rights or other rights with equity
features), then the Board of Directors of the Company will make an appropriate
adjustment in the Exercise Price so as to protect the rights of the holders of
the Warrants; provided, however, that no such adjustment will increase the
Exercise Price.
(g) Definitions: The following terms shall have the
meanings ascribed below for the purposes of this Section 1.2:
"Excluded Securities" means (i) shares of Common Stock
issued or issuable pursuant to the terms of this Agreement, (ii) shares of
Common Stock issuable upon exercise of any option or warrant outstanding as of
January 14, 2000 or (iii) Common Stock (including options and warrants) deemed
to have been issued by the Company in connection with an Approved Stock Plan.
"Approved Stock Plan" means any contract, plan or
agreement which has been approved by the Board of Directors of the Company, or
committee thereof pursuant to which the Company's securities may be issued to
any employee, officer, director or consultant.
2. Manner of Exercise.
2.1 Exercise Agreement. This Warrant may be exercised, in whole
or in part, on any business day on or prior to the Expiration Date. To exercise
this Warrant, the Warrant Holder must surrender to the Company this Warrant and
deliver to the Company: (a) a duly executed exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
Company from time to time (the "Exercise Agreement"); and (b) payment in full of
the Exercise Price for the number of Shares to be purchased upon exercise
hereof. If someone other than the Warrant Holder exercises this Warrant, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise this Warrant. Upon a partial exercise,
this Warrant shall be surrendered, and a new Warrant of the same tenor for
purchase of the number of remaining Shares not previously
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purchased shall be issued by the Company to the Warrant Holder. This Warrant
shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the
person entitled to receive the Shares issuable upon such exercise shall be
treated for all purposes as the holder of record of such Shares as of the close
of business on such date.
2.2 Limitations on Exercise. This Warrant may not be exercised
as to fewer than 1,000 Shares unless it is exercised as to all Shares as to
which this Warrant is then exercisable.
2.3 Limitation on Resale. Before the earlier to occur of (i)
October 14, 2000 or (ii) the date one (1) trading day following the trading day
the closing sales price for a share of the Company's Common Stock as reported on
the Nasdaq National Market equals or exceeds $10.00, the Holder shall not,
directly or indirectly, sell, offer to sell, contract to sell (including,
without limitation, any short sale), loan, grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any of the Warrant Shares or securities issuable upon exercise of this
Warrant held by it any time during such period. In order to enforce the
foregoing, the Company may impose stop-transfer instructions with respect the
Warrant Shares until the end of such period.
2.4 Payment. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the Shares being purchased in cash (by
certified or cashiers check or wire transfer or other immediately available
funds), or where permitted by law and provided that a public market for the
Company's stock exists, (a) through a "same day sale" commitment from the
Warrant Holder and a broker-dealer that is a member of the National Association
of Securities Dealers (an "NASD Dealer") whereby the Warrant Holder irrevocably
elects to exercise this Warrant and to sell a portion of the Shares so purchased
to pay for the Exercise Price and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to the
Company, or (b) through a "margin" commitment from the Warrant Holder and an
NASD Dealer whereby the Warrant Holder irrevocably elects to exercise this
Warrant and to pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount of the
Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the Exercise Price directly to the Company.
2.5 Tax Withholding. Prior to the issuance of the Shares upon
exercise of this Warrant, the Warrant Holder must pay or provide for any
applicable federal or state withholding obligations of the Company.
2.6 Issuance of Shares. Provided that the Exercise Agreement and
payment have been received by the Company as provided above, the Company shall
issue the Shares (adjusted as provided herein) registered in the name of the
Warrant Holder, the Warrant Holder's authorized assignee, or the Warrant
Holder's legal representative, and shall deliver certificates representing the
Shares with the appropriate legends affixed thereto.
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3. Registration Rights. The Shares will have the registration rights as
provided for in Section 4 of the Subscription Agreement entered into between the
Company and the Warrant Holder as of the date of this Warrant.
4. Redemption. The Company, at its sole discretion, may, at any time and
from time to time after January 18, 2000, redeem all or any part of the
outstanding Warrants by paying therefor in cash an amount equal to $0.13 per
Share for which the Warrant is then exercisable; provided, however, that any
such redemptions may be made by the Company only upon 30 days' prior written
notice (the "Redemption Date" being the close of business on the 30th day
following the date the notice is deemed to be given to Warrant Holders pursuant
to Section 9 hereof) and only if the closing sales price for a share of the
Company's Common Stock as reported on the Nasdaq National Market has exceeded
$12.00 for 20 consecutive trading days ending not more than ten business days
prior to the date the notice of redemption is faxed and delivered by overnight
courier to Warrant Holder; and provided further that the holder of any Warrant
subject to such redemption may exercise such Warrant at any time prior to the
expiration of the 30-day notice period; and provided further that the Company's
right to redeem the Warrant shall be suspended in the event the shelf
registration statement required under Section 4 of the Subscription Agreement is
subject to a stop order or is otherwise not in effect or if a Warrant Holder is
advised under Section 4(c) of the Subscription Agreement that the prospectus
thereto contains a material misstatement or omission during any portion of the
30-day notice period, with such suspension to terminate and the Company's right
to redeem to be reinstated on the date following such time as (i) a registration
statement covering the Shares is effective and not subject to any stop orders
and (ii) the Company has delivered to the Warrant Holder a prospectus covering
the Shares of such Warrant Holder under Section 4(c) of the Subscription
Agreement. The notice period shall then be extended for a period equal to the
number of days during the notice period during which registration was not
effective or the prospectus was not available or contained a material
misstatement or omission. If less than all of the outstanding Warrants are
redeemed, Warrants shall be redeemed on a pro rata basis.
5. Compliance with Laws and Regulations. The exercise of this Warrant
and the issuance and transfer of Shares shall be subject to compliance by the
Company and the Warrant Holder with all applicable requirements of federal and
state securities laws and with all applicable requirements of any stock exchange
and/or over-the-counter market on which the Company's Common Stock may be listed
at the time of such issuance or transfer.
6. Transfer and Exchange. This Warrant and the rights hereunder may not
be transferred in whole or in part without the Company's prior written consent,
which consent shall not be unreasonably withheld, and may not be transferred
unless such transfer complies with all applicable securities laws. If a transfer
of all or part of this Warrant is permitted as provided in the preceding
sentence, then this Warrant and all rights hereunder may be transferred, in
whole or in part, on the books of the Company or its agent maintained for such
purpose at the principal office of the Company or its agent, by the Warrant
Holder hereof in person, or by duly authorized attorney, upon surrender of this
Warrant properly endorsed and upon payment of any necessary transfer tax or
other governmental charge imposed upon such transfer. Upon any permitted partial
transfer, the Company will issue and deliver to the Warrant Holder a new Warrant
or
6
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Warrants with respect to the Warrants not so transferred. Each taker and holder
of this Warrant, by taking or holding the same, consents and agrees to be bound
by the terms, conditions, representations and warranties hereof, including the
registration provisions contained in Section 4 of the Subscription Agreement,
(and as a condition to any transfer of this Warrant the transferee shall execute
an agreement confirming the same), and, when this Warrant shall have been so
endorsed, the person in possession of this Warrant may be treated by the
Company, and all other persons dealing with this Warrant, as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented hereby, any notice to the contrary notwithstanding; provided,
however that until a transfer of this Warrant is duly registered on the books of
the Company or its agent, the Company may treat the Warrant Holder hereof as the
owner of this Warrant for all purposes.
7. Privileges of Stock Ownership. The Warrant Holder shall not have any
of the rights of a shareholder with respect to any Shares until the Warrant
Holder exercises this Warrant and pays the Exercise Price.
8. Entire Agreement. The Warrant Exercise Agreement is incorporated
herein by reference. This Warrant and the Warrant Exercise Agreement constitute
the entire agreement of the parties and supersede all prior undertakings and
agreements with respect to the subject matter hereof.
9. Notices. Any notice required to be given or delivered to the Company
under the terms of this Warrant shall be in writing and addressed to the Senior
Vice President, Corporate Development, and Secretary of the Company at its
principal corporate offices. Any notice required to be given or delivered to the
Warrant Holder shall be in writing and addressed to the Warrant Holder at the
address indicated below or to such other address as such party may designate in
writing from time to time to the Company. All notices shall be deemed to have
been given or delivered upon: personal delivery; five (5) days after deposit in
the United States mail by certified or registered mail (return receipt
requested); one (1) business day after deposit for next business day delivery
with any return receipt express courier (prepaid); or one (1) business day after
transmission by fax or telecopier.
10. Successors and Assigns. This Warrant shall be binding upon and inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Warrant shall be binding upon
the Warrant Holder and the Warrant Holder's heirs, executors, administrators,
legal representatives, successors and assigns.
11. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.
12. Acceptance. The Warrant Holder has read and understands the terms
and provisions of this Warrant, and accepts this Warrant subject to all the
terms and conditions hereof. The Warrant Holder acknowledges that there may be
adverse tax consequences upon exercise of this Warrant or disposition of the
Shares and that the Warrant Holder should consult a tax adviser prior to such
exercise or disposition.
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13. Restriction on Conversion by Either the Registered Owner or the
Company. Notwithstanding anything herein to the contrary, in no event shall the
Warrant Holder or the Company have the right or be required to exercise this
Warrant if as a result of such conversion the aggregate number of shares of
Common Stock beneficially owned by the Warrant Holder and its affiliates (as
defined pursuant to Rule 12b-2 of the Exchange Act Rules) exceed 4.99% of the
outstanding shares of the Common Stock following such exercise. For purposes of
this Section 13, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended. The provisions
of this Section 13 may be waived by the Warrant Holder as to itself (and solely
as to itself) upon not less than 65 days prior written notice to the Company,
and the provisions of this Section 13 shall continue to apply until such 65th
day (or later, if stated in the notice of waiver).
13.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized representative as of January 18, 2000.
SCICLONE PHARMACEUTICALS, INC.
Signed:
-----------------------------
Printed: Xxxxx X. Xxxxx, X.X.
Title: Chief Business Officer
Address:
000 Xxxxxxx'x Xxxxxx Xxxxxxxxx
Xxxxx 000 Xxx Xxxxx, XX 00000
9
27
EXHIBIT C
SCHEDULE OF EXCEPTIONS
TO THE
SUBSCRIPTION AGREEMENT
DATED AS OF JANUARY 14, 2000
On December 17, 1997, the Company entered into an Alpha Rights Acquisition
Agreement (the ("Acquisition Agreement") with Alpha-1 Biomedicals, the Company's
then-current licensor ("Alpha 1"), whereby the Company acquired Alpha 1's
worldwide marketing, development and manufacturing rights to the Company's lead
drug, ZADAXIN thymosin alpha 1. Pursuant to the Acquisition Agreement, which was
approved by Alpha 1's stockholders, the Company loaned Alpha 1 an aggregate
principal amount of $350,000 (the "Alpha 1 Loans"), approximately $325,000 of
which amount is still outstanding. As partial consideration for the acquired
assets, the Company also issued 600,000 shares of its Common Stock to Alpha 1
(the "Acquisition Shares").
As security for the repayment of the Alpha 1 Loans, the Company has a perfected
security interest in 69,085 of the Acquisition Shares (the "Collateral Shares").
Alpha-1 has been in default of its obligations repay the Alpha 1 Loans to the
Company since May 1999. In mid-December 1999, the Company began aggressively
pursuing repayment of the Alpha 1 Loans. In response to the Company's
collection's efforts, in late-December 1999, Alpha-1 stated that it believes it
may have claims against the Company for securities fraud. The Company has
responded to Alpha 1 that these claims are without merit and that the Company
intends to defend them vigorously if formally asserted against the Company.
Alpha 1's claims were asserted only after the Company began collection efforts
with respect to the Alpha 1 Loans. Alpha-1 has stated that they would like to
find an amicable solution to this situation and the Company and Alpha-1 are in
active discussions.
The Company believes that Alpha-1's only assets are the Collateral
Shares and 75,000 remaining Acquisition Shares held by Alpha 1 in a brokerage
account. The Company believes that Alpha 1 anticipates that the Company's stock
price will appreciate further during 2000 and is seeking a means to survive
without dissolving by holding its remaining 75,000 Acquisition Shares and
preventing the Company from forcing a sale of the Collateral Shares until after
the Company's stock price further appreciates to enable Alpha 1 to repay all of
its outstanding debts and recapitalize. The Company expects the matter to be
resolved in the near term by obtaining a release of claims, a $162,500 payment
from Alpha-1 from proceeds from the sale of the Collateral Shares and
cancellation of the balance of the Alpha 1 Loans.
28
EXHIBIT D
TO
SUBSCRIPTION AGREEMENT
Form of Opinion of Xxxx Xxxx Xxxx & Freidenrich LLP
1. The Company has been duly organized and is validly existing and in
good standing under the laws of the State of California. The Company has all
necessary corporate power and authority to own its assets and to carry on its
business as presently conducted. The Company is duly qualified to transact
business as a foreign corporation and is in good standing under the laws of all
other United States jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
where the failure to be so qualified or in good standing would not have a
material adverse effect on the Company and its subsidiaries considered as a
whole.
2. The Company has all necessary corporate power and authority to enter
into the Agreement and to issue the Shares, the Warrants and the Warrant Shares
in accordance with the terms thereof.
3. The Company has an authorized capitalization consisting of 75,000,000
shares of Common Stock, no par value, and 10,000,000 shares of Preferred Stock,
no par value, consisting of 875,000 shares of Series A Preferred Stock,
2,000,000 shares of Series B Preferred Stock and 800,000 shares of Series C
Preferred Stock, no par value, except that 661,157 shares of Series C Preferred
Stock have been reacquired upon conversion and may not be reissued.
4. The issuance and sale of the Shares, the Warrants and the Warrant
Shares have been duly authorized by the Company. The Shares are duly and validly
issued, fully paid and nonassessable. The Warrant Shares, when and if issued and
delivered in accordance with the Warrants, will be duly and validly issued,
fully paid and nonassessable.
5. The execution and delivery of the Agreement has been duly authorized
by all necessary action of the Company and has been duly executed and delivered
by the Company, and is the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject, as to
enforcement, to the effect of bankruptcy, insolvency, reorganization, moratorium
and other laws of general applicability relating to or affecting creditors'
rights and to general principles of equity.
6. The execution and delivery by the Company of the Agreement does not
(i) violate any provision of the Restated Articles of Incorporation or Bylaws of
the Company, or (ii) violate any provision of any applicable federal or
California statute, rule or regulation to which the Company is subject.
7. The issuance to each of you of the Shares and the Warrants should be
exempt from the registration requirements under the Securities Act under either
Section 4(2) of the Securities Act or Regulation D thereunder.
