EXHIBIT 1
INVESTMENT AGREEMENT
This Agreement is entered into as of September 7, 1995 by
Molecular Biosystems, Inc., a Delaware corporation with an address at
00000 Xxxxxx Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 ("MBI"), and
Mallinckrodt Medical, Inc., a Delaware corporation with an address at
000 XxXxxxxxx Xxxxxxxxx, Post Office Xxx 0000, Xx. Xxxxx, Xxxxxxxx
00000 ("Mallinckrodt").
Recitals
Concurrently with entering into this Agreement, MBI and
Mallinckrodt are entering into an Amended and Restated Distribution
Agreement (the "Amended and Restated Distribution Agreement") amending
and restating the Distribution Agreement that they entered into as of
December 7, 1988.
In connection with (and as a condition of) the parties' entering
into the Amended and Restated Distribution Agreement, Mallinckrodt
will make an additional equity investment in MBI on the terms and
subject to the conditions of this Agreement.
Now, therefore, in consideration of their mutual promises, the
parties agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings specified below:
1.01 Affiliate shall mean, with respect to a corporation,
association, partnership, individual, trust or unincorporated
organization, any other corporation, association, partnership,
individual, trust or unincorporated organization that, directly or
indirectly, controls, is controlled by or is under common control with
such corporation, association, partnership, individual, trust or
unincorporated organization.
1.02 Agreement shall mean this Investment Agreement, as amended
from time to time.
1.03 Balance Sheet shall mean the March 31, 1995 consolidated
balance sheet of MBI.
1.04 Balance Sheet Date shall mean March 31, 1995.
1.05 business day shall mean any day of the week except
Saturday, Sunday and any legal holiday observed by a national banking
association or one of the parties.
1.06 Closing shall mean the closing of the transaction
contemplated by this Agreement. The date of Closing shall be the
"Effective Date" as defined in Section 16.15 of the Amended and Restated
Distribution Agreement, at such time and place as Mallinckrodt and MBI
may agree.
1.07 Commission shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act.
1.08 Common Stock shall mean the shares of MBI common stock, par
value $.01 per share, issued to Mallinckrodt pursuant to this
Agreement. Shares of MBI common stock constituting shares of "Common
Stock" shall cease to be shares of Common Stock if and when they cease
to be owned by Mallinckrodt or an Affiliate of Mallinckrodt.
1.09 Distribution Agreement shall mean the Distribution
Agreement dated as of December 7, 1988 between MBI and Mallinckrodt,
as amended and restated by the Amended and Restated Distribution
Agreement.
1.10 Exchange Act shall mean the Securities Exchange Act of
1934, as amended, or any similar successor Federal statute, and the
rules and regulations of the Commission issued under such Act, as they
each may, from time to time, be in effect.
1.11 Holder or Holders shall mean the owner or owners of
Registrable Shares.
1.12 Mallinckrodt shall mean Mallinckrodt Medical, Inc., a
Delaware corporation.
1.13 MBI shall mean Molecular Biosystems, Inc., a Delaware
corporation.
1.14 MBI Securities shall mean shares of MBI common stock or
securities convertible into shares of MBI common stock. Stock options
granted under a Stock Option Plan (or under any other stock option
plan that MBI may adopt in the future) shall not be considered "MBI
Securities."
1.15 1988 Investment Agreement shall mean the Investment
Agreement dated as of December 7, 1988 entered into by MBI and
Mallinckrodt, Inc. (to which Mallinckrodt is the successor in
interest), pursuant to which MBI issued to Mallinckrodt 181,818 shares
of MBI common stock.
1.16 1995 Form 10-K shall mean MBI's annual report on Form 10-K
for the fiscal year ended March 31, 1995, as filed with the
Commission.
1.17 Other Common Stock shall mean (i) all MBI Securities issued
in respect of shares of Common Stock (because of stock splits, stock
dividends, reclassifications, recapitalizations or similar events),
(ii) all MBI Securities that Mallinckrodt acquires pursuant to
Sections 6.02, 6.03 or 6.04 and (iii) all MBI Securities issued in
respect of MBI Securities that Mallinckrodt acquires pursuant to
Sections 6.02, 6.03 or 6.04 (because of stock splits, stock dividends,
reclassifications, recapitalizations or similar events). MBI
Securities constituting "Other Common Stock" shall cease to be Other
Common Stock if and when they cease to be owned by Mallinckrodt or an
Affiliate of Mallinckrodt.
1.18 Other MBI Securities shall mean all MBI Securities that
Mallinckrodt acquires other than shares of Common Stock or Other
Common Stock. MBI Securities constituting "Other MBI Securities"
shall cease to be Other MBI Securities if and when they cease to be
owned by Mallinckrodt or an Affiliate of Mallinckrodt.
1.19 Person shall mean a corporation, association, partnership,
individual, trust, unincorporated organization and a government agency
or political subdivision thereof.
1.20 Registrable Shares shall mean (i) all shares of Common
Stock, (ii) all shares of Other Common Stock and (iii) all Other MBI
Securities.
1.21 Registration Expenses shall mean the expenses described in
Section 8.05 of this Agreement.
1.22 Registration Statement shall mean a registration statement
filed by MBI with the Commission for a public offering and sale of MBI
Securities (other than a registration statement on Form S-8 or Form S-
4, or their successors, or any other form for a limited purpose, or
any registration statement covering only securities proposed to be
issued in exchange for securities or assets of another corporation).
1.23 Securities Act shall mean the Securities Act of 1933, as
amended, or any similar successor Federal statute, and the rules and
regulations of the Commission issued under such Act, as they each may,
from time to time, be in effect.
1.24 Stock Option Plans shall mean MBI's 1993 Stock Option Plan,
1993 Outside Directors Stock Option Plan, 1984 Incentive Stock Option
Plan, 1984 Nonstatutory Stock Option Plan and Pre-1984 Nonstatutory
Stock Option Plan, each as amended to date and as it may be amended in
the future.
1.25 Subsidiary shall mean as of a particular date any
corporation more than 50% of whose outstanding stock having ordinary
voting power for the election of directors shall at the time be owned
or controlled by Mallinckrodt or MBI or by a Subsidiary of either
party.
ARTICLE 2
PURCHASE AND SALE OF COMMON STOCK
2.01 Common Stock. At the Closing, MBI will issue and sell, and
Mallinckrodt will purchase, the Common Stock subject to the terms and
conditions set forth in this Agreement.
2.02 Purchase Price. The aggregate purchase price of the Common
Stock shall be $13,000,000 United States dollars in immediately
available funds to be delivered by Mallinckrodt to MBI at the Closing.
The number of shares constituting the Common Stock shall be equal to
the aggregate purchase price of the Common Stock divided by the
purchase price per share (ignoring any fractional share otherwise
issuable). The purchase price per share shall be the greater of (i)
$10.00 or (ii) the product determined by multiplying (A) the average
(mean) of the closing price of MBI common stock on the New York Stock
Exchange on the five most recent trading days preceding the date of
this Agreement by (B) 1.40.
2.03 Stock Certificate. At the Closing, MBI shall deliver to
Mallinckrodt one stock certificate registered in Mallinckrodt's name
representing the Common Stock.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce Mallinckrodt to purchase the Common Stock
described in Article 2, MBI represents and warrants to Mallinckrodt
that, except as disclosed on any Appendix to this Agreement, as of the
date of this Agreement:
3.01 Organization, Subsidiary. MBI is a corporation legally
organized, validly existing and in good standing under the laws of the
State of Delaware and has all necessary corporate power and authority
to carry on its business as now conducted and as proposed to be
conducted and to own or lease and operate its properties. MBI has two
Subsidiaries, Syngene, Inc. and Scan Pharmaceuticals, Inc., each of
which is a corporation legally organized, validly existing and in good
standing under the laws of the State of Delaware and has all necessary
corporate power and authority to carry on its business as now
conducted and as proposed to be conducted and to own, lease and
operate its properties. MBI owns all of the issued and outstanding
stock of Syngene, Inc. and Scan Pharmaceuticals, Inc. free and clear
of all liens, claims, security interest or encumbrances. MBI and its
two Subsidiaries are duly licensed or qualified to do business and are
in good standing in every jurisdiction in which the nature of their
business or the ownership of their properties require such
qualification. Except for the stock of Syngene, Inc. and Scan
Pharmaceuticals and cash equivalents and marketable securities held
for investment purposes, MBI does not control, or have any contract or
commitment to own or control, any capital stock, bonds or other
securities of and does not have a proprietary interest in, any
corporation, partnership, proprietorship or other business
organization. MBI has delivered to Mallinckrodt complete and correct
copies of MBI's Certificate of Incorporation and By-Laws as amended
and in effect on the date hereof.
3.02 Authorization and Binding Effect. The execution and
delivery of this Agreement and the performance by MBI of its
obligations hereunder are within MBI's corporate power, have been duly
authorized by proper corporate action on the part of MBI, are not in
violation of, or constitute a default under, any existing law, rule or
regulation of any governmental agency or authority, any order or
decision of any court, the Certificate of Incorporation or By-Laws of
MBI or the terms of any agreement, restriction or undertaking to which
MBI is a party or by which it is bound, and except for the
notification required by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, do not require the approval or consent of or
notice to the shareholders of MBI, any governmental body, agency or
authority or any other person or entity.
3.03 Consolidated Financial Statements; Other Information. MBI
has previously delivered to Mallinckrodt true, accurate and complete
copies of the following documents, including the exhibits and
schedules thereto:
(a) The 1995 Form 10-K, which incorporates by reference (to
MBI's 1995 Annual Report to Shareholders, which was filed as
Exhibit 13 to the 1995 Form 10-K) the audited consolidated balance
sheets of MBI as of March 31, 1995 and 1994, and the audited
consolidated statements of operations, cash flows and
shareholders' equity for the years ended March 31, 1995, 1994 and
1993 (together, the "Financial Statements"), certified by Xxxxxx
Xxxxxxxx LLP, which were prepared in accordance with generally
accepted principles of accounting consistently applied throughout
the periods involved, and, in all material respects, are correct
and complete and fairly present the financial condition of MBI as
of those dates and the results of its operations for the years
then ended;
(b) MBI's quarterly report on Form 10-Q for the quarterly
period ended June 30, 1995, as filed with the Commission (the
"June 30, 1995 Form 10-Q"), which includes as Item 1 MBI's
unaudited consolidated balance sheet dated June 30, 1995 and
unaudited consolidated statements of operations and cash flows for
the three months ended June 30, 1995. These financial statements
were prepared in accordance with generally accepted accounting
principles consistent with the Financial Statements and, in all
material respects, fairly present the financial position of MBI as
of June 30, 1995 and the results of its operations for the three-
month period ended June 30, 1995; and
(c) The proxy statement in definitive form for MBI's 1995
annual meeting of shareholders to be held on September 7, 1995, as
filed with the Commission (the "1995 Proxy Statement").
Except for the 1995 Form 10-K and the June 30, 1995 Form 10-Q, MBI
has not filed any reports or registration statements with the
Commission since March 31, 1995. MBI has timely filed all reports and
other documents required to be filed by it under the Exchange Act, the
Securities Act, and any applicable state securities or corporation
statutes and regulations. The documents provided pursuant to this
Section 3.03 did not contain at the time of filing thereof 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 therein, in
light of the circumstances under which they were made, not misleading.
3.04 Litigation. Except as set forth in the 1995 Form 10-K and
June 30, 1995 Form 10-Q, there are no judicial or administrative
actions, suits, proceedings or, to the best of MBI's knowledge,
investigations pending or, to the best of MBI's knowledge, threatened,
against MBI or in respect to the business, condition, properties,
assets or operations of MBI or which question the validity of this
Agreement or of any action taken or to be taken pursuant to or in
connection with the provisions of this Agreement, and to the best of
MBI's knowledge, no facts exist which would constitute a basis for any
such action, suit, proceeding or investigation, which if concluded
adversely against MBI would have a materially adverse effect on the
business or financial condition of MBI.
3.05 Real and Personal Property. Except as disclosed in Note 5
to the Financial Statements and, in the case of real property, except
for recorded covenants, conditions and restrictions existing at the
time of MBI's acquisition of the property, all real and personal
property that MBI owns is owned free and clear of all mortgages,
security interests, claims, restrictions and encumbrances, and there
exists no restrictions on the use of such property. To the best of
MBI's knowledge, all material contracts, agreements, leases and
commitments with respect to real or personal property to which MBI is
a party are legally valid and binding and in full force and effect,
and there are no material defaults thereunder. None of the rights of
MBI under any such leasehold or other interest in such property will
be materially impaired by the consummation of the transaction
contemplated by this Agreement. MBI enjoys peaceful and undisturbed
possession under all material leases under which it operates.
3.06 Condition of Real and Personal Property. All buildings and
other structures and all machinery, equipment, tools, dies, fixtures,
vehicles, spare parts and other properties owned, leased or used by
MBI are, to the best of MBI's knowledge, in good operating condition
and repair and are adequate and sufficient for all material operations
conducted by it. To the best of MBI's knowledge, none of the real or
personal properties owned, leased, occupied or operated by MBI, or the
ownership, leasing, occupancy or operation thereof, is in violation of
any law or any zoning, environmental or other ordinance, code, rule or
regulation, where such violation would have a materially adverse
effect on the business or financial condition of MBI, and no notice
from any governmental body or other person has been served upon MBI
or, to the best of MBI's knowledge, upon any property owned, leased,
occupied or operated by MBI, claiming any material violation of any
such law, ordinance, code, rule or regulation or requiring, or calling
attention to the need for, any work, repairs, construction,
alterations or installation on or in connection with such property
which has not been complied with, where failure to comply therewith
would have a materially adverse effect on the business or financial
condition of MBI.
3.07 Material Contracts. The contracts listed as Exhibits 10.1-
10.52 on the list of exhibits under Part II, Item 14(a)(3) of the 1995
Form 10-K, and filed as Exhibits 10.1-10.52 to the 1995 Form 10-K,
were all of the contracts required to be listed pursuant to the
Commission's instructions for the completion of Form 10-K and filed as
exhibits pursuant to Item 601(b)(10) of the Commission's Regulation S-
K. Except as disclosed in the June 30, 1995 Form 10-Q and except for
MBI's employment contract with its new president and chief operating
officer, MBI has not entered into any contract since March 31, 1995
which is required to be filed as an exhibit to a quarterly report on
Form 10-Q or an annual report on Form 10-K. To the best of MBI's
knowledge, all of the contracts filed as exhibits to the 1995 Form 10-
K or disclosed in the June 30, 1995 Form 10-Q or Appendix 3.07 are in
full force and effect and except as disclosed on Appendix 3.07, to the
best of MBI's knowledge, all parties to such contracts have performed
all obligations required to be performed by them to date, are not in
default and do not have a right of rescission. No employees of MBI
are covered by any collective bargaining agreement.
3.08 Taxes. MBI has filed when due all federal, state and local
income and other tax returns, reports and declarations which are
required to have been filed by it and has, to the best of MBI's
knowledge, paid all taxes which have become due pursuant thereto and
all other taxes, assessments and other governmental charges imposed by
law upon it or any of its properties, assets, income, receipts,
payrolls, transactions, capital, net worth or franchises other than
those not delinquent. All such tax returns are complete and correct
in all material respects as filed. To the best of MBI's knowledge,
there is no tax lien upon any property or asset of MBI, whether owned
or leased, except for liens for taxes not yet payable. To the extent
that tax liabilities have accrued on or before the Balance Sheet Date
but have not become payable, to the best of MBI's knowledge, they have
been adequately reflected as liabilities on the Balance Sheet and
adequate provision for payment thereof has been made. There have been
no examinations by any state or federal taxing authority of the books
and financial statements of MBI. The accruals and reserves for
federal, state or local taxes, as shown on the Balance Sheet are
adequate in the opinion of MBI. MBI has not granted any waiver of any
statute of limitation with respect to, or any extension of a period
for the assessment of, any federal, state or local tax. To the best
of MBI's knowledge, MBI has withheld and duly paid to the appropriate
governmental authority all taxes required to be withheld by it
pursuant to any ordinance, statute or other law.
3.09 Capitalization. The total number of shares of capital
stock, all of which is voting common stock of one class and not
divided into any series or other subdivisions, and the par value
thereof which MBI is authorized to issue and the number of such shares
which are issued and outstanding as of July 17, 1995 (i.e., the record
date for purposes of determining the shareholders entitled to vote at
MBI's 1995 annual meeting of shareholders) are as follows:
Issued and
Authorized Shares Par Value Per Share Outstanding Shares
----------------- ------------------- ----------------------
20,000,000 $.01 12,171,975
The issued and outstanding shares of MBI common stock have been duly
and validly issued and are fully paid and nonassessable, and the
Common Stock, when issued, will be duly and validly issued and fully
paid and nonassessable. MBI holds no shares of its common stock in
its treasury. Except for stock options granted under a Stock Option
Plan, there are no outstanding options, warrants or other rights in
existence, other than under this Agreement, to acquire from MBI any of
its shares of capital stock. Since the Balance Sheet Date there have
been no dividends or other distributions declared or paid in respect
of the shares of capital stock of MBI.
3.10 Compliance with Instruments, Laws; Governmental
Authorizations. MBI is not: (i) in violation of any term or provision
of its Certificate of Incorporation or By-Laws or, to the best of
MBI's knowledge, any governmental license or permit; or (ii) in
violation or default under (and no act or omission by MBI has occurred
which, with the giving of notice or the passage of time, would
constitute a default under) any material contract, agreement or other
instrument to which MBI is a party or by which it is bound; or (iii)
to the best of MBI's knowledge, subject to enforcement or threat of
enforcement or in violation of any statute, law, ordinance, rule,
regulation, judgment, order, decree, permit, concession, grant,
franchise, license or other governmental authorization or approval
which is material to MBI's business or the penalties or other
sanctions for the violation of which reasonably could be expected to
have a material adverse effect on MBI's business or financial
condition. All material permits, concessions, grants, franchises,
licenses and other governmental authorizations and approvals necessary
for the conduct of the business of MBI have been duly obtained and are
in full force and effect, and, to the best of MBI's knowledge, there
are no proceedings pending or threatened which may result in the
revocation, cancellation or suspension, or any adverse modification,
of any permit, concession, grant, franchise, license or other
governmental authorization which would have a materially adverse
effect on the business or financial condition of MBI. There have been
no material citations, fines or penalties heretofore assessed against
MBI and, to the best of MBI's knowledge, MBI has complied in all
material respects with any and all federal, state or local laws,
including but not limited to laws relating to air or water pollution,
solid waste disposal or other environmental protection matters, or
relating to occupation, health or safety, and, to the best of MBI's
knowledge, no such citations, fines or penalties which are material in
amount have been assessed or have been threatened since the Balance
Sheet Date or are now being threatened.
3.11 Patents, Trademarks and Technology Rights.
(a) All of MBI's United States and foreign patents, trademarks,
trade names, service marks and copyrights relating to ALBUNEX (as
"ALBUNEX" is defined in Section 1.04 of the Amended and Restated
Distribution Agreement), and all of MBI's pending United States and
foreign applications for patents, trademarks, trade names, service
marks, trade designations and copyrights relating to ALBUNEX, are
described in Appendix 3.11.
(b) To the best of MBI's knowledge, MBI and its successors and
assigns have a right (i) to practice all ALUNEX-related processes and
process steps as now practiced or planned to be practiced by MBI, and
(ii) to make, use and sell throughout the world ALBUNEX-related
intermediate and other products now made, used or sold or planned to
be made, used or sold by MBI without substantial risk of infringement
of any right, interest, or patent of any third party.
(c) MBI owns and possesses, or is licensed as to, all patents,
trademarks, copyrights and such pending applications therefore and
trade secrets, technologies, know-how, processes and other proprietary
rights necessary for conducting its ALBUNEX-related business
operations.
(d) MBI does not have knowledge of, or any reason to believe
that there exists, any contest, litigation, infringement, fraud,
misappropriation, or misuse pending or threatened in respect of any
patent, trademark, trade name, service xxxx, copyright, application
therefor, or any license or agreement therefor (including, but not
limited, to the License Agreement dated as of November 5, 1986 between
MBI and Xxxxxx X. Xxxxxxxxx, M.D., as amended) which is necessary for
the conduct of its ALBUNEX-related business.
3.12 Certain Transactions. To the best of MBI's knowledge, no
Affiliate of MBI owns or controls, directly or indirectly in whole or
in part, any property, asset or right, tangible or intangible
(including but not limited to, any patent, trademark, service xxxx,
trade name, brand name, copyright, or pending application for any
patent, trademark, service xxxx, or copyright, invention, process,
know-how, formula, design or trade secret), which is associated with
any property, asset or right owned by MBI or which MBI is presently
operating or using or the use of which is necessary for its business.
3.13 Absence of Changes. Since the Balance Sheet Date, except as
disclosed in the 1995 Form 10-K, the June 30, 1995 Form 10-Q or
Appendix 3.13, MBI has conducted its operations in the ordinary course
of business and there has been no material adverse change in MBI's
financial condition, assets, business, results of operations or
prospects.
3.14 Restrictions on Personnel. No officer or employee of MBI
has entered into any agreement which is now in effect with any person,
corporation, partnership or business organization other than MBI (a)
requiring such officer or employee to assign any interest in any
invention or trade secrets developed while employed by MBI or (b)
containing any prohibition or restriction of competition or
solicitation of customers which if enforced against such officer or
employee would have a materially adverse affect on the business or
financial condition of MBI.
3.15 Disclosure. Neither this Article 3 (when read in
conjunction with the Appendices to this Agreement) nor any Appendix to
this Agreement, nor the 1995 Form 10-K, June 30, 1995 Form 10-Q or
1995 Proxy Statement, contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the
statements contained herein and therein in the context in which they
were made not misleading.
3.16 Brokers. This Agreement was not induced or procured through
any person, firm or corporation acting as a broker or finder for MBI
except for Vector Securities International, Inc. MBI agrees to hold
Mallinckrodt harmless from any loss, damage, cost or expense resulting
from any claim by any person, firm or corporation, including Vector
Securities International, Inc. and Lazard Freres & Co., based upon any
such person, firm or corporation having acted as a broker or finder
for MBI in connection with the transaction contemplated by this
Agreement.
ARTICLE 4
CONDITIONS PRECEDENT TO PURCHASE OF COMMON STOCK
The obligation of Mallinckrodt to purchase the Common Stock
described in Article 2 is, at the option of Mallinckrodt, subject to
the satisfaction of the following conditions:
4.01 Opinion of Counsel. Mallinckrodt shall have received an
opinion, addressed to Mallinckrodt and dated as of the Closing, from
Xxxxxxx and Colmar, counsel for MBI, satisfactory in substance and
form to Mallinckrodt and its counsel.
4.02 Representations and Warranties True and Correct. The
representations and warranties in Article 3 hereof shall be true and
correct as of the date of Closing as if they were made on and as of
the date of Closing (with the exception, in the case of the
representation and warranty in Section 3.09 regarding MBI's issued and
outstanding shares of common stock, for any changes since July 17,
1995 resulting from the issuance of shares of common stock pursuant to
(i) the exercise of a stock option granted under a Stock Option Plan
or (ii) the exercise of a stock purchase warrant described in Appendix
3.09). Mallinckrodt shall have received from MBI's Chairman of the
Board and Chief Executive Officer, or its Vice President - Finance and
Chief Financial Officer or its Vice President - Legal Affairs and
General Counsel an officer's certificate to the foregoing effect dated
as of the Closing.
4.03 Closing Certificates. Mallinckrodt shall have received
copies, certified by the Secretary or an Assistant Secretary of MBI to
be true and correct and in full force and effect, of (i) the
Certificate of Incorporation and By-Laws of MBI; (ii) resolutions of
the Board of Directors of MBI authorizing the issuance of the Common
Stock, the execution and delivery of this Agreement and any other
documents to be executed by or on behalf of MBI pursuant to this
Agreement; and (iii) a statement containing the names and titles of
the officer or officers of MBI authorized to sign this Agreement and
other documents required by this Agreement, together with true
signatures of such officers.
4.04 Proceedings Satisfactory to Mallinckrodt. All proceedings
taken in connection with the transaction contemplated by this
Agreement and all instruments, authorizations and other documents
applicable thereto shall be satisfactory in form and content to
Mallinckrodt and Mallinckrodt shall have received copies of all such
documents reasonably required by it.
ARTICLE 5
AFFIRMATIVE COVENANTS
During the term of this Agreement, MBI covenants that it will:
5.01 Annual Audited Consolidated Financial Statements. Furnish
to Mallinckrodt within 90 days after the end of each fiscal year of
MBI an audited consolidated balance sheet of MBI as of the close of
such fiscal year and related audited consolidated statements of
operations, cash flows and shareholders' equity for such year, setting
forth in each case in comparative form corresponding figures from the
preceding annual audit, all in reasonable detail, prepared in
accordance with generally accepted principles of accounting applied on
a consistent basis, certified with an unqualified opinion by a
nationally recognized or major regional independent certified public
accountant selected by MBI. The annual audited financial statements
shall be furnished in consolidated form for MBI and all Subsidiaries
which it may have at the time.
5.02 SEC Reports. Furnish to Mallinckrodt, promptly upon filing,
copies as filed with the Commission of (i) MBI's annual reports on
Form 10-K, (ii) MBI's quarterly reports on Form 10-Q, (iii) MBI's
current reports on Form 8-K and (iv) all other reports filed pursuant
to the Exchange Act.
5.03 Audit Reports. Furnish to Mallinckrodt, promptly upon
receipt, (i) copies of all detailed audit reports submitted to MBI by
independent accountants in connection with each annual audit of the
books of MBI and (ii) copies of any and all management reports and
recommendations given by its independent accountants to MBI if such
management reports and recommendations relate to or question the
viability of MBI to conduct its business as an on-going concern or
indicate a material weakness in internal controls.
5.04 Books and Records. Keep proper, complete and accurate books
of record and account and, at Mallinckrodt's request, meet with
Mallinckrodt from time to time at a reasonably convenient time and
place for both parties to discuss the financial condition of MBI.
ARTICLE 6
ANTI-DILUTION RIGHTS AND LIMITATIONS ON OWNERSHIP
6.01 Anti-Dilution Rights. If at any time MBI agrees to sell MBI
Securities in a private placement or a public offering, Mallinckrodt
shall have the right, but not the obligation, to acquire all or any
portion of a number of MBI Securities sufficient for Mallinckrodt to
maintain after the private placement or public offering the same
percentage of ownership of issued and outstanding shares of MBI common
stock that Mallinckrodt possessed immediately prior to the private
placement or public offering (the "Pre-Offering Percentage"). For
this purpose: (i) the issued and outstanding shares of MBI common
stock shall be determined assuming the conversion of all issued and
outstanding MBI Securities convertible into shares of MBI common
stock; and (ii) Mallinckrodt's Pre-Offering Percentage shall be
determined solely in respect of shares of Common Stock and Other
Common Stock owned by Mallinckrodt and its Affiliates and shall not
take into account any Other MBI Securities which Mallinckrodt or an
Affiliate of Mallinckrodt may own.
6.02 Private Placement. With respect to a private placement, MBI
shall within five (5) business days after the closing of the private
placement notify Mallinckrodt in writing of the private placement and
the number of MBI Securities which Mallinckrodt is entitled to
purchase under Section 6.01 (which shall be of the same character as
the MBI Securities which MBI sold in the private placement) and
provide Mallinckrodt with copies of all relevant documentation.
Mallinckrodt shall have twenty (20) business days from the date of
receipt of MBI's notice in which to advise MBI whether or to what
extent Mallinckrodt elects to exercise its rights under Section 6.01.
If Mallinckrodt does not respond, or if Mallinckrodt indicates that it
will not exercise its rights, Mallinckrodt shall be considered
irrevocably to have waived its rights under Section 6.01 with respect
to the private placement. If Mallinckrodt timely advises MBI that
Mallinckrodt will exercise its rights under Section 6.01, Mallinckrodt
shall have the right to acquire all or any portion of the number of
MBI Securities which it would be necessary for Mallinckrodt to
purchase in order to maintain Mallinckrodt's Pre-Offering Percentage,
at a price per share, payable at the closing of Mallinckrodt's
purchase, equal to the average (mean) of the closing price of MBI
common stock on the New York Stock Exchange on the five most recent
trading days preceding the date of closing of the private placement
(or if the MBI Securities which Mallinckrodt is entitled to purchase
are not shares of MBI common stock, at the price specified in the
private placement agreement entered into between MBI and the
purchaser). Closing of Mallinckrodt's purchase shall take place at
MBI's principal office, unless MBI and Mallinckrodt agree on a
different location, at a mutually convenient date and time as soon as
practicable after Mallinckrodt advises MBI that Mallinckrodt will
exercise its rights under Section 6.01. At closing, Mallinckrodt and
MBI shall provide customary and appropriate representations to one
another regarding the purchase and sale of the MBI Securities being
purchased by Mallinckrodt (with MBI making substantially the same
representations to Mallinckrodt that MBI made to the purchaser or
purchasers in the private placement) and shall also provide any
additional documentation reasonably requested by the other party (for
example, an appropriate opinion of counsel).
6.03 Public Offering. If at any time MBI proposes to register
any MBI Securities under the Securities Act in connection with a
public offering, MBI shall notify Mallinckrodt no later than five (5)
business days after MBI has determined to do so, and shall provide
Mallinckrodt with a copy of any letter of intent. Mallinckrodt shall
have twenty (20) business days from the date of receipt of MBI's
notice in which to advise MBI whether Mallinckrodt elects to exercise
its rights under Section 6.01. If Mallinckrodt does not respond or if
Mallinckrodt indicates that it will not exercise its rights,
Mallinckrodt shall be considered irrevocably to have waived its rights
under Section 6.01 with respect to the public offering. If
Mallinckrodt timely advises MBI that Mallinckrodt desires to retain
its rights under Section 6.01, then when MBI files a registration
statement containing a preliminary prospectus with the Commission, MBI
shall provide Mallinckrodt with copies of the preliminary prospectus
and all subsequent amendments. Mallinckrodt shall have twenty (20)
business days from its receipt of the preliminary prospectus in which
to exercise its rights under Section 6.01(b) by making an offer, based
on the price and the other terms contained in the final prospectus, to
acquire all or any portion of the MBI Securities to be offered in the
public offering which it would be necessary for Mallinckrodt to
purchase in order to maintain Mallinckrodt's Pre-Offering Percentage.
No such offer to buy shall be accepted prior to the time that the
registration statement becomes effective. The registration statement
shall indicate that Mallinckrodt has anti-dilution rights to purchase
MBI Securities on the terms offered to the public.
6.04 Stock Options. With respect to the issuance of shares of
MBI common stock pursuant to the exercise of stock options granted
under a Stock Option Plan, or under any other stock option plan or any
stock-based incentive compensation plan that MBI may adopt in the
future, Mallinckrodt shall have the right, in respect of each fiscal
year of MBI beginning with its fiscal year ending March 31, 1996, to
purchase from MBI all or any portion of the number of shares of MBI
common stock which it would be necessary for Mallinckrodt to purchase
in order to maintain the same percentage of ownership of issued and
outstanding shares of MBI common stock that Mallinckrodt possessed as
of the last day of that fiscal year without regard to shares of MBI
common stock issued pursuant to the exercise of stock options during
that fiscal year (or in the case of MBI's fiscal year ending March 31,
1996, after the date of this Agreement). For this purpose: (i) the
issued and outstanding shares of MBI common stock as of the last day
of MBI's fiscal year shall be determined assuming the conversion of
all issued and outstanding MBI Securities convertible into shares of
MBI common stock; and (ii) Mallinckrodt's percentage of ownership
shall be determined solely in respect of shares of Common Stock and
Other Common Stock owned by Mallinckrodt and its Affiliates and shall
not take into account any Other MBI Securities which Mallinckrodt or
an Affiliate of Mallinckrodt may own. MBI shall notify Mallinckrodt
no later than 20 business days after the end of each fiscal year of
MBI of the shares of MBI common stock which Mallinckrodt is entitled
to purchase under this Section 6.04 in respect of that fiscal year.
Mallinckrodt shall have twenty (20) business days from the date of
receipt of MBI's notice in which to advise MBI whether or to what
extent Mallinckrodt elects to exercise its rights under this Section
6.04. If Mallinckrodt does not respond, or if Mallinckrodt indicates
that it will not exercise its rights, Mallinckrodt shall be considered
irrevocably to have waived its rights under this Section 6.04 with
respect to the fiscal year in question. If Mallinckrodt timely
advises MBI that Mallinckrodt will exercise its rights, Mallinckrodt
shall have the right to acquire all or any portion of the number of
shares of MBI common stock which it is entitled to purchase at a price
per share equal to the market price on the date Mallinckrodt advises
MBI that it will exercise its rights. Closing shall be as soon as
practicable after Mallinckrodt advises MBI that it will exercise its
rights under this Section 6.04. At closing, Mallinckrodt and MBI
shall provide customary and appropriate representations to one another
regarding the purchase and sale of the MBI common stock being
purchased by Mallinckrodt and shall also provide any additional
documentation reasonably requested by the other party (for example, an
appropriate opinion of counsel).
6.05 Limitations. Notwithstanding the preceding provisions of
this Article 6, the number of MBI Securities or shares of MBI common
stock which Mallinckrodt shall be entitled to purchase under Sections
6.01 and 6.04 shall be a whole number (obtained by rounding up any
fraction equal to or greater than one-half and rounding down any
fraction less than one-half), and Mallinckrodt may exercise its rights
under Sections 6.01 and 6.04 only in respect of a whole number of MBI
Securities or shares of MBI common stock. MBI shall not be required
to transfer any MBI Securities to Mallinckrodt under this Article 6 if
to do so would result in the violation of any applicable law, rule or
regulation. Mallinckrodt's rights under Sections 6.01 and 6.04 shall
terminate if and when Mallinckrodt and Affiliates of Mallinckrodt at
any time cease to own in the aggregate at least 70% of the largest
number of shares of MBI common stock and other MBI securities which,
at any preceding time, constituted shares of Common Stock and Other
Common Stock. Mallinckrodt's rights under Section 6.01 shall also
terminate if and when, on each of any two consecutive occasions after
the fourth anniversary of the date of this Agreement that Mallinckrodt
is entitled to exercise its rights under Section 6.01, Mallinckrodt
fails to purchase at least 50% of the MBI Securities which it is
entitled to purchase. Mallinckrodt's rights under Section 6.04 shall
also terminate if and when, in respect of each of any two consecutive
fiscal years of MBI beginning on or after April 1, 1999, Mallinckrodt
fails to purchase at least 50% of the shares of MBI common stock which
it is entitled to purchase under Section 6.04. Any such termination
of Mallinckrodt's rights under Sections 6.01 or 6.04 shall not require
notice or other action by MBI.
6.06 Limitations on Mallinckrodt's Ownership. During the term of
this Agreement neither Mallinckrodt nor any of its Affiliates shall
directly or indirectly acquire any Other MBI Securities (except by way
of stock dividends, stock splits, or similar events affecting holders
of MBI Securities generally) if the effect of the acquisition would be
to increase the aggregate voting power in the election of directors of
all MBI Securities owned by Mallinckrodt and its Affiliates to more
than fifteen percent (15%) of the total combined voting power of all
MBI Securities then outstanding. Notwithstanding this limitation:
(a) Mallinckrodt or any of its Affiliates may acquire Other
MBI Securities if any of the following events occur:
(1) A tender or exchange offer is made by any Person or
13D Group (other than Mallinckrodt, an Affiliate of
Mallinckrodt or an Affiliate of or Person acting in concert
with Mallinckrodt or an Affiliate of Mallinckrodt) to acquire
MBI Securities such that, if added to the MBI Securities
already owned by that Person or 13D Group, would represent
more than fifteen percent (15%) of the total combined voting
power of all MBI Securities issued and outstanding; or
(2) There is public disclosure or Mallinckrodt otherwise
learns that MBI Securities representing more than fifteen
percent (15%) of the total combined voting power of all MBI
Securities issued and outstanding have been acquired or are
proposed to be acquired by any Person or 13D Group; or
(3) Any Person or 13D Group shall beneficially own MBI
Securities representing more than fifteen percent (15%) of the
total combined voting power of all issued and outstanding MBI
Securities.
(b) Neither Mallinckrodt nor any of its Affiliates shall be
required to dispose of any shares of MBI Securities if their
aggregate percentage ownership is increased as a result of MBI's
recapitalization or any other action taken by MBI.
As used herein, "13D Group" means any group of Persons formed for the
purpose of acquiring, holding, voting or disposing of securities that
would be required under Section 13(d) of the Exchange Act and the
related rules and regulations (as now in effect, and based on present
legal interpretations) to file a statement on Schedule 13D or 13G with
the Commission as a "person" within the meaning of Section 13(d)(3) of
the Exchange Act if the group beneficially owned common stock
representing more than five percent (5%) of the total combined voting
power of all MBI Securities then issued and outstanding.
6.07 Receipt of Offer To Acquire Control. In the event that
MBI's board of directors receives an offer from a third party to
acquire control of MBI through the acquisition of voting MBI
Securities, or in the event that MBI's chief executive officer or
chief operating officer receives such an offer which he intends to
present to MBI's board, MBI shall promptly notify Mallinckrodt of the
offer and disclose to Mallinckrodt all material details concerning the
offer. To the extent that neither the third party nor MBI has made
any public disclosure regarding the third party's offer or its terms,
Mallinckrodt shall treat all information about the offer that it
receives from MBI as confidential. If the third party has not set a
deadline for MBI's response to the third party's offer, MBI shall
permit Mallinckrodt a reasonable period of time under the
circumstances (but not more than 10 business days) in which to present
MBI with a competitive offer. If the third party has set a deadline
for MBI's response, MBI may set a deadline for Mallinckrodt's response
no earlier than (i) 48 hours prior to the deadline for MBI's response
if MBI's deadline is at least 10 business days from the date of MBI's
notice to Mallinckrodt of the third party's offer or (ii) 24 hours
prior to the deadline for MBI's response if MBI's deadline is less
than 10 days from the date of MBI's notice to Mallinckrodt of the
third party's offer. Mallinckrodt's offer to MBI in no event shall be
for a lesser amount of voting MBI Securities or for a lower value than
that of the third party's offer.
ARTICLE 7
RIGHTS OF FIRST REFUSAL
7.01 General Limitation on Transfer. Except for (i) sales by
Mallinckrodt and its Affiliates under the Commission's Rule 144 which
do not exceed 25,000 shares in the aggregate during any 90-day period
and (ii) transfers to an Affiliate of Mallinckrodt pursuant to Section
7.06, Mallinckrodt shall not directly or indirectly offer for sale or
transfer any Registrable Shares without offering MBI a right of first
refusal as provided in this Article 7. Mallinckrodt and its
Affiliates may sell Registrable Shares under Rule 144 in excess of
25,000-share limit on aggregate sales during any 90-day period if (and
only if) MBI does not exercise its right of first refusal in respect
of the shares in excess of the limit.
7.02 Transfer Notice. Mallinckrodt shall give MBI written notice
of Mallinckrodt's intention to sell Registrable Shares (the "Transfer
Notice"), specifying the number of Registrable Shares proposed to be
sold or transferred and whether the shares are to be sold under Rule
144, in a privately negotiated sale or in connection with a tender or
exchange offer pursuant to Regulation 14D of the Exchange Act. For
this purpose, Mallinckrodt's request for registration pursuant to
Sections 8.01 or 8.02 shall be considered a Transfer Notice in respect
of all of the Registrable Shares that Mallinckrodt has requested to be
registered. If the shares are to be sold in a privately negotiated
sale, the Transfer Notice shall also specify the proposed purchaser or
transferee and the proposed price. The proposed price of a bona fide
third party tender or exchange offer pursuant to Regulation 14D shall
be considered the cash price offered, in the case of a cash offer, or
the cash price plus the value of the offered securities, in the case
of a partial cash and exchange offer, or the value of the offered
securities in an exchange offer, without regard to any provisions with
respect to proration or any conditions to the offeror's obligation to
purchase. If the Transfer Notice is in respect of Registrable Shares
that Mallinckrodt has requested to be registered pursuant to Sections
8.01 or 8.02, the proposed price shares shall be considered (i) the
price at which shares of MBI common stock are sold to the underwriters
(net of underwriters' discounts and commissions), in the case of a
Transfer Notice in connection with a registration for an underwritten
public offering, or (ii) the closing price of MBI common stock on the
New York Stock Exchange on the last trading day preceding the day that
the registration statement is declared effective by the Commission, in
the case of a Transfer Notice in connection with a registration which
is not for an underwritten public offering.
7.03 Exercise by MBI. Except as qualified under Sections 7.04(b)
and 7.05(a), MBI shall have fifteen (15) business days from the date
of the Transfer Notice (or sixty (60) days from the date of the
Transfer Notice if the Transfer Notice discloses that Mallinckrodt
intends to sell or transfer more than 50% of its aggregate Registrable
Shares) in which to exercise its right of first refusal, by written
notice to Mallinckrodt, with respect to all (or in the case of (i) a
sale in the open market pursuant to Rule 144 or (ii) a Transfer Notice
in respect of Registrable Shares that Mallinckrodt has requested to be
registered pursuant to Sections 8.01 or 8.02, all or a portion) of the
Registrable Shares specified in the Transfer Notice. (In the case of
a tender or exchange offer pursuant to Regulation 14D, however, MBI
shall have until no later than 48 hours prior to the latest time by
which Registrable Shares must be tendered in order to be accepted or
to qualify for any proration). The purchase price shall be the
proposed price specified in Section 7.02 and shall be paid in cash.
7.04 Valuation. Except where property or securities offered in
exchange for Registrable Shares has a readily ascertainable fair
market value, the following procedures shall be followed with respect
to a Transfer Notice which includes any property other than cash:
(a) The value of the offered securities or property shall be
determined by MBI and Mallinckrodt jointly, or if they are unable
to agree, the determination shall be made by a nationally or
regionally recognized investment banking or consulting firm
selected by two such firms respectively chosen by MBI and
Mallinckrodt, and its determination shall be conclusive. MBI and
Mallinckrodt shall use their best efforts to cause this
determination to be made no later than fifteen (15) days after the
date of the Transfer Notice, and MBI and Mallinckrodt shall each
pay one-half of fees of the firm making the determination; and
(b) The period in which MBI may exercise its right of first
refusal shall be extended to the date five (5) business days after
the date that the value of the offered securities or property is
determined as provided in subparagraph (a).
7.05 Closing.
(a) If MBI exercises its right of first refusal, the closing
of its purchase of the Registrable Shares with respect to which it
has exercised its right of first refusal shall take place within
thirty (30) calendar days after the date that MBI gives notice of
its exercise, or within 10 days after the price is determined (in
the case of MBI's exercise of its right of first refusal in
respect of Registrable Shares that Mallinckrodt has requested to
be registered pursuant to Sections 8.01 or 8.02), or within twenty
(20) calendar days after MBI has obtained any necessary government
approval or nonobjection, if any, whichever is later. MBI shall
make application for any necessary governmental approval as soon
as practicable after exercising its right of first refusal; and
(b) If MBI does not timely exercise its right of first
refusal in respect of shares to be sold in a privately negotiated
sale or in connection with a tender or exchange offer,
Mallinckrodt shall be free during the ninety (90) days following
the expiration of MBI's right of first refusal to sell the
Registrable Shares specified in the Transfer Notice to the
proposed purchaser or transferee identified in the notice at the
price specified in the notice or at any greater price. MBI's
right of first refusal shall survive with respect to any such
Registrable Shares that are not sold by Mallinckrodt to the
proposed purchaser or transferee during this 90-day period. If
MBI does not timely exercise its right of first refusal in respect
of all of the Registrable Shares to be sold under Rule 144,
Mallinckrodt shall be free to sell the remaining shares specified
in its Transfer Notice under Rule 144 at any time following the
expiration of MBI's right of first refusal. If MBI does not
timely exercise its right of first refusal in respect of all of
the Registrable Shares that Mallinckrodt has requested to be
registered in accordance with Sections 8.01 or 8.02, the remaining
shares shall be subject to registration in accordance with Article
8.
7.06 Survival. MBI's right of first refusal granted under
Section 7.01 shall survive the term of this Agreement.
7.07 Transfers to Affiliates. Mallinckrodt may transfer all or
any shares of Common Stock or Other Common Stock to an Affiliate of
Mallinckrodt if, prior to the transfer, (i) the Affiliate provides MBI
with the Affiliate's written acknowledgement that it will be bound by
the restrictions in this Article 7 as if it were Mallinckrodt and (ii)
Mallinckrodt provides MBI with an opinion of counsel, satisfactory to
MBI in its reasonable discretion, to the effect that the shares may be
transferred to the Affiliate without registration under the Securities
Act or the securities laws of any state.
ARTICLE 8
REGISTRATION RIGHTS
8.01 Piggy-back Registration. If at any time MBI proposes to
register any of its common stock under the Securities Act in
connection with the public offering of such securities on a form that
would also permit the registration of the Registrable Shares, MBI
shall, at such time, promptly give the Holders written notice of such
determination. Upon the written request of any Holder given within 20
business days after receipt of any such notice by the Holder, MBI
shall use its best efforts (subject to MBI's right to decide for any
reason not to proceed with the public offering and MBI's exercise of
its right of first refusal under Section 7.01) to cause to be
registered under the Securities Act all of the Registrable Shares that
each such Holder has requested be registered.
If the registration of which MBI gives notice is for a registered
public offering involving an underwriting, then MBI shall so advise
the Holders as a part of such written notice. In such event, the
right of any Holder to registration pursuant to this Section 8.01
shall be conditioned upon such Holder's agreeing to participate in
such underwriting and the inclusion of such Holder's Registrable
Shares in the underwriting to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting
shall (together with MBI and the other holders distributing their
securities through such underwriting) enter into an underwriting
agreement in customary form, and upon the terms agreed upon between
MBI and the underwriter, with the underwriter selected for such
underwriting by MBI. Notwithstanding any other provision of this
Section 8.01, if the underwriter reasonably determines that inclusion
of such shares will jeopardize the success of the offering, then the
underwriter may exclude some or all Registrable Shares from such
registration and underwriting in accordance with the provisions of
this Section 8.01. MBI shall so advise all Holders and the other
holders distributing their securities through such underwriting, and
the number of Registrable Shares and other securities that may be
included in the registration and underwriting shall be allocated among
the Holders and the other holders (excluding MBI), in proportion, as
nearly as practicable, to the respective amounts of securities
proposed for inclusion in such registration by each such Holder and
other holders at the time of filing the Registration Statement;
provided, however, in no event shall the number of Registrable Shares
included in the offering be reduced below 25% of the aggregate number
of Registrable Shares that all Holders request MBI to include in the
offering. If any Holder or other holder disapproves of the terms of
any such underwriting, then he may elect to withdraw therefrom by
written notice to MBI and the underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such
registration. Subject to the foregoing, MBI and the underwriter
selected by MBI shall make all determinations with respect to the
timing, pricing and other matters relating to the offering.
8.02 Demand Registration.
(a) At any time after the fourth anniversary of the date of
this Agreement, Holders of Registrable Shares shall have the right
to request MBI to use its best efforts to effect a registration of
the Holders' Registrable Shares under the Securities Act on the
Commission's Form S-3, subject to the following limitations and
conditions and the limitation in Section 8.02(c):
(1) Each request for registration shall be in writing and
shall specify the number and character of the Registrable
Shares requested to be registered and the intended method of
disposition of those shares.
(2) MBI shall not be required to effect more than three
registrations under this Section 8.02.
(3) MBI shall not be required to effect a registration
pursuant to this Section 8.02 unless the number of Registrable
Shares requested to be registered (taking into account
Registrable Shares requested to be registered following MBI's
notice to all Holders in accordance with Section 8.02(b))
constitute at least 10% of the outstanding Registrable Shares.
(4) MBI shall not be required to effect a registration
pursuant to this Section 8.02 within 180 days after the
effective date of the last registration pursuant to this
Section 8.02.
(5) MBI shall not be required to effect a registration
for the period (not exceeding 120 days) specified in the
certificate signed by the president of MBI and delivered to
the requesting Holder or Holders stating that, in the good
faith judgment of MBI's Board of Directors, it would be
detrimental to MBI and its shareholders for a registration
statement to be filed prior to the expiration of the specified
period. MBI may not exercise this deferral right more
frequently than once during any 12-month period.
If for any reason MBI cannot qualify for registration on Form
S-3, MBI shall effect the registration on Form S-1 or other
appropriate form, in which case this Section 8.02(a) shall
apply in all respects as if the term "Form S-3" were replaced
by the term "Form S-1" or the designation of the other form.
(b) MBI shall give written notice to all Holders of
Registrable Shares of the receipt of a request for registration
pursuant to Section 8.02(a) and shall provide a reasonable
opportunity for all other Holders to participate in the
registration.
(c) The sale or other disposition of Registrable Shares
registered under this Section 8.02 shall be subject to the
limitation that during each calendar month beginning with the
calendar month in which the registration statement covering those
Registrable Shares is declared effective by the Commission, each
Holder may not sell or otherwise dispose of more than one-twelfth
(1/12) of the Holder's Registrables Shares which were covered by
that registration statement.
8.03 Obligations of MBI. Whenever required under Sections 8.01
or 8.02 that MBI use its best efforts to effect the registration of
any Registrable Shares, MBI shall, as expeditiously as possible:
(a) Prepare and file with the Commission a Registration
Statement with respect to such Registrable Shares and use its best
efforts to cause such Registration Statement to become and remain
effective;
(b) Prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used
in connection with such Registration Statement as may be necessary
to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration
Statement;
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the
disposition of Registrable Shares owned by them;
(d) Use its best efforts to register and qualify the
securities covered by such Registration Statement under such other
securities or Blue Sky laws of such jurisdictions as shall be
reasonably appropriate for the distribution of the securities
covered by the Registration Statement, provided that MBI shall not
be required in connection herewith 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. The Holders shall
pay all of the expenses of qualifying in jurisdictions where MBI's
underwriters have not requested qualification; and
(e) Furnish, at the request of the Holders on the date that
such Registrable Shares are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Shares are
not being sold through underwriters, on the date the Registration
Statement with respect to such Registrable Shares becomes
effective (i) an a opinion dated such date, of independent counsel
representing MBI for the purposes of such registration, addressed
to the underwriters, if any, and to the Holders stating that such
Registration Statement has become effective under the Securities
Act and covering substantially the same matters with respect to
the Registration Statement (and the prospectus included therein)
as are customarily covered (at the time of such registration) in
the opinions of issuer's counsel delivered to underwriters in
connection with underwritten public offerings of securities; and
(ii) a letter dated such date from the independent certified
public accountant of MBI, addressed to the underwriters, if any,
and the Holders, stating that they are independent certified
public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements
and other financial data of MBI included in the Registration
Statement or the prospectus, or any amendment or supplement
thereto, comply as to form in all material respects with the
applicable accounting requirements of the Securities Act. Such
opinion of counsel shall additionally cover such other legal
matters with respect to the registration in respect of which such
opinion is being given as the Holders may reasonably request.
Such letter from the independent certified public accountants
shall additionally cover such other financial matters (including
information as to the period ending not more than five business
days prior to the day of such letter) with respect to the
registration in respect of which such letter is being given as the
Holders may reasonably request.
8.04 Holders' Obligation to Furnish Information. It shall be a
condition precedent to the obligation of MBI to take any action
pursuant to this Article 8 that the Holders shall furnish to MBI such
information regarding them, the Registrable Shares held by them and
the intended method of disposition of such securities as MBI shall
reasonably request and as shall be required in connection with the
action to be taken by MBI.
8.05 Expenses of Registration. All expenses incurred in
connection with all registrations pursuant to Section 8.01 (excluding
underwriters' discounts and commissions), including, without
limitation, all registration and qualification fees, printers' and
accounting fees, and fees and disbursements of counsel for MBI shall
be borne by MBI. All expenses incurred in connection with all
registrations pursuant to Section 8.02, including, without limitation,
all registration and qualification fees, printers' and accounting
fees, and reasonable fees and disbursements of counsel for MBI shall
be borne by the Holders whose Registrable Shares are included in the
registration (in proportion to such shares).
8.06 Indemnification. In the event any Registrable Shares are
included in a Registration Statement under this Article 8:
(a) To the extent permitted by law, MBI shall indemnify and
hold harmless each Holder requesting or joining in a registration,
and each person, if any, who controls such Holder within the
meaning of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, (including reasonable counsel
fees) to which such person may become subject under the Securities
Act, the Exchange Act, state securities laws, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based on any untrue or
alleged untrue statement of any material fact contained in such
Registration Statement, including any preliminary prospectus or
final prospectus contained therein or any amendments or
supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or arise out of any violation by MBI of
any rule or regulation promulgated under the Securities Act
applicable to MBI and relating to any action or inaction required
of MBI in connection with any such registration; and MBI will
reimburse each such Holder or controlling person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability
or action; provided, however, that the indemnity agreement
contained in this Section 8.06 shall not apply to any such loss,
claim, damage, liability or action to the extent that it arises
out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in connection with
such Registration Statement, preliminary prospectus, final
prospectus, or amendments or supplements thereto, in reliance upon
and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder or
controlling person;
(b) To the extent permitted by law, each Holder requesting or
joining in a registration will indemnify and hold harmless MBI,
each of its directors, each of its officers who have signed the
Registration Statement, each person, if any, who controls MBI
within the meaning of the Securities Act, and each agent and any
underwriter for MBI (within the meaning of the Securities Act)
against any losses, claims, damages or liabilities (including
reasonable counsel fees), to which MBI or any such director,
officer, controlling person, agent, or underwriter may become
subject under the Securities Act, the Exchange Act, state
securities laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise from
or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such Registration Statement,
including any preliminary prospectus or final prospectus contained
therein or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in such
Registration Statement, preliminary or final prospectus, or any
amendment or supplement thereto, in reliance upon and in
conformity with 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 MBI or any such director, officer, controlling person,
agent, or underwriter in connection with investigating or
defending any such loss, claim, damage, liability or action; and
(c) Promptly after receipt by an indemnified party under this
Section 8.06 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 8.06,
notify the indemnifying party in writing of the commencement
thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties. The failure to notify an indemni-
fying party promptly of the commencement of any action, if
prejudicial to his ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party
under this Section 8.06, but the omission so to notify the
indemnifying party will not relieve him of any liability that he
may have to any indemnified party otherwise than under this
Section 8.06.
8.07 Reports Under Exchange Act. With a view to making available
to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission that
may at any time permit a Holder to sell securities of MBI to the
public without registration, MBI agrees to use its best efforts to:
(a) File with the Commission in a timely manner all reports
and other documents required of MBI under the Securities Act and
the Exchange Act; and
(b) Furnish to any Holder so long as such Holder owns any
Registrable Shares upon request at any time a written statement by
MBI that it has complied with the reporting requirements of Rule
144 and of the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of MBI on Form 10-K or Form
10-Q, and such other reports and documents so filed by MBI as may
be reasonably requested availing any Holder of any rule or
regulation of the Commission permitting the selling of any such
securities without registration.
8.08 Certain Limitations in Connection with Future Grants of
Registration Rights; Priority with Other Shares Entitled to
Registration Rights. MBI shall not enter into any agreement with any
holder or prospective holder of any securities of MBI providing for
the granting to such holder of registration rights unless such
agreement includes a provision that, in the case of a public offering
involving an underwritten registered offering, protects the Holders if
marketing factors require a limitation on the number of securities to
be included in the underwriting in the manner in which the Holders are
protected under Section 8.01.
ARTICLE 9
REPRESENTATIONS OF MALLINCKRODT
To induce MBI to sell the Common Stock described in Article 2,
Mallinckrodt represents and warrants to MBI as follows:
9.01 Investment Purpose. Mallinckrodt is acquiring the shares of
Common Stock issued pursuant to this Agreement for purposes of
investment and not with a view to the sale or other distribution
thereof as such terms are defined in the Securities Act, as amended,
and the regulations of the Commission promulgated thereunder.
Mallinckrodt acknowledges that (i) these shares have not been
registered under the Securities Act, as amended, or the securities
laws of any state and that (ii) the transfer of any of these shares is
subject to the restrictions and limitations of this Agreement.
9.02 Authorization and Binding Effect. The execution and
delivery of this Agreement and the performance by Mallinckrodt of its
obligations hereunder are within Mallinckrodt's corporate power, have
been duly authorized by proper corporate action on the part of
Mallinckrodt, are not in violation of, or in default under, any
existing law, rule or regulation of any governmental agency or
authority, any order or decision of any court, the Certificate of
Incorporation or By-Laws of Mallinckrodt or the terms of any
agreement, restriction or undertaking to which Mallinckrodt is a party
or by which it is bound, and except for the notification required by
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended,
do not require the approval or consent of or notice to the
shareholders of Mallinckrodt, any governmental body, agency or
authority or any other person or entity.
9.03 Brokers. This Agreement was not induced or procured through
any person, firm or corporation acting as a broker or finder for
Mallinckrodt. Mallinckrodt agrees to hold MBI harmless from any loss,
damage, cost or expense resulting from any claim by any person, firm
or corporation based upon any such person, firm or corporation having
acted as a broker or finder for Mallinckrodt or any other Person in
connection with the transaction contemplated by this Agreement.
ARTICLE 10
MISCELLANEOUS
10.01 Survival of Representations and Warranties. MBI's
representations and warranties contained in Article 3 hereof shall
survive the Closing for a period of 2 years from the date of Closing,
provided, however, MBI's representations and warranties contained in
Sections 3.02 and 3.09 shall survive indefinitely.
10.02 Amendment of 1988 Investment Agreement. The 1988
Investment
Agreement is amended as follows, effective as of Closing:
(a) Sections 1.08 ("Common Stock"), 1.13 ("Holder" or
"Holders") and 1.19 ("Registrable Shares") of the 1988 Investment
Agreement are amended to read the same as Sections 1.08. 1.11 and
1.20, respectively, of this Agreement;
(b) Provisions reading the same as Sections 1.14 ("MBI
Securities"), 1.17 ("Other Common Stock") and 1.18 ("Other MBI
Securities") of this Agreement are added to the 1988 Investment
Agreement as Sections 1.26, 1.27 and 1.28, respectively;
(c) Articles 5 ("Affirmative Covenants"), 6 ("Anti-Dilution
Rights and Limitations on Ownership"), 7 ("Rights of First
Refusal") and 8 ("Registration Rights") of the 1988 Investment
Agreement are amended to read the same as Articles 5, 6, 7 and 8,
respectively, of this Agreement (with the exception that the
reference to the 1988 Investment Agreement in Section 6.06 of this
Agreement shall be considered a reference to this Agreement); and
(d) A provision reading the same as Section 10.11 ("Term")
of this Agreement is added to the 1988 Investment Agreement as
Section 10.12.
10.03 Assignment. This Agreement shall be assignable by either
party only with the written consent of the other party, except that
either party may assign this Agreement, without such consent, to the
purchaser of all its assets, or of all the assets of its business to
which the Distribution Agreement relates, and Mallinckrodt may assign
this Agreement or its rights hereunder to any Affiliate of
Mallinckrodt.
10.04 Notice. All notices, communications, demands and payments
required or permitted to be given or made hereunder or pursuant hereto
shall be sent by certified or registered mail, postage prepaid,
overnight messenger services, telecopier or personal delivery as
follows:
If to Mallinckrodt:
Mallinckrodt Medical, Inc.
000 XxXxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Vice President - Ultrasound Imaging
Telecopier: (000) 000-0000
with a copy to:
Mallinckrodt Medical, Inc.
000 XxXxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Vice President and General Counsel
Telecopier: (000) 000-0000
If to MBI:
Molecular Biosystems, Inc
00000 Xxxxxx Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Operating Officer
Telecopier: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxxx and Colmar
000 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
All notices sent by certified or registered mail shall be considered
to have been given two business days after being deposited in the
mail. All notices sent by overnight messenger service, telecopier or
personal delivery shall be considered to have been given when actually
received by the intended recipient. Either party may change the
address designated by notifying the other party in writing.
10.05 Governing Law. This Agreement is deemed to have been
entered into in the State of Missouri, and its interpretation,
construction, and the remedies for its enforcement or breach are to be
applied pursuant to and in accordance with the laws of the State of
Missouri.
10.06 Validity of Agreement. If any provision of this Agreement
is, becomes, or is deemed invalid or unenforceable in any
jurisdiction, such provision shall be deemed amended to conform to
applicable law so as to be valid, legal and enforceable in such
jurisdiction so deeming. The validity, legality and enforceability of
such provision shall not in any way be affected or impaired thereby in
any other jurisdiction. If such provision cannot be so amended
without materially altering the intention of the parties, it shall be
stricken in the jurisdiction so deeming, and the remainder of this
Agreement shall remain in full force and effect.
10.07 Waiver. No waiver of any right under this Agreement shall
be deemed effective unless contained in a writing signed by the party
charged with such waiver, and no waiver of any right arising from any
breach or failure to perform shall be deemed to be a waiver of any
future such right or of any other right arising under this Agreement.
10.08 Entire Agreement. This Agreement, together with the
Distribution Agreement and the 1988 Investment Agreement, set forth
and constitute the entire agreement between the parties hereto with
respect to the subject matter hereof, and supersede any and all prior
agreements, understandings, promises and representations made by
either party to the other concerning the subject matter hereof and the
terms applicable hereto.
10.09 Headings and References; Incorporation of Exhibits. The
headings contained in this Agreement are inserted for convenience of
reference only and shall not be a part, control or affect the meaning
hereof. All references herein to Articles and Sections are to the
Articles and Sections of this Agreement (unless specifically referring
to Articles or Sections of the 1988 Investment Agreement or the
Distribution Agreement). All references herein to Appendices are to
the Appendices hereto, each of which shall be incorporated into and
deemed a part of this Agreement. An exception in any Appendix to any
particular representation and warranty in Article 3 shall be
considered an exception to all other applicable representations and
warranties in Article 3.
10.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but
which together shall constitute one and the same instrument.
10.11 Legends. The stock certificate delivered at the Closing in
accordance with Section 2.03, and each stock certificate representing
any shares of Other Common Stock which MBI may issue to Mallinckrodt
or an Affiliate of Mallinckrodt, shall bear a legend substantially to
the effect that the shares represented by the certificate have not
been registered under the Securities Act, as amended, or the
securities laws of any state and that (ii) the transfer of any of
these shares is subject to the restrictions and limitations of this
Agreement. MBI shall remove the former legend if and when the shares
represented by the certificate have been registered under the
Securities Act in accordance with Article 8 or become freely salable
under the Commission's Rule 144(k). Each such stock certificate shall
also bear a legend to the effect that the shares represented by the
certificate, while owned of record by Mallinckrodt or an Affiliate of
Mallinckrodt, constitute "Repurchasable Shares" as defined in Section
9.02 of the Amended and Restated Distribution Agreement.
10.12 Term. The term of this Agreement shall continue until the
later of (i) the date that MBI exercises either of its options under
Sections 9.01(a) or (b) of the Distribution Agreement in respect of
each affected territory or (ii) the date that Mallinckrodt and its
Affiliates cease to own any shares of Common Stock or Other Common
Stock.
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MOLECULAR BIOSYSTEMS, INC.
By /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx,M.D.
-------------------------
Title: Chairman and Chief
Executive Officer
------------------------
MALLINCKRODT MEDICAL, INC.
By /s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Mousssa
-------------------------
Title: President and Chief
Executive Officer
------------------------
