EXHIBIT 4.4
FORM OF
CONTRIBUTION AGREEMENT
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CONTRIBUTION AGREEMENT (this "Agreement") made as of the date set forth on
the signature page hereof between Lakaro Biopharmaceuticals, Inc. (the
"Company"), and the undersigned (the "Noteholder").
W I T N E S S E T H
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WHEREAS, the Noteholder holds a 12% convertible note of Partec, Ltd. in
that face amount as is set forth on the signature page hereof (the "Note");
WHEREAS, the Noteholder desires to contribute the Note to the Company in
exchange for shares of the Company's Series A Preferred Stock (the "Preferred
Stock") and a warrant to purchase shares of the Company's common stock on the
terms and conditions hereinafter set forth; and
WHEREAS, the Company desires to issue shares of its Preferred Stock and a
warrant to the Noteholder in exchange for a contribution of such Note;
NOW, THEREFORE, in consideration of the premises and the mutual
representations and covenants hereinafter set forth, the parties hereto do
hereby agree as follows:
I. CONTRIBUTION OF NOTE AND REPRESENTATIONS BY NOTEHOLDER
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I.1 Subject to the terms and conditions hereinafter set forth, the
Noteholder hereby contributes to the Company the Note free and clear of any
liens, claims, charges or encumbrances of any kind or nature, and the Company
agrees to accept the Note from the Noteholder, and issue to the Noteholder (i)
that number of shares of Preferred Stock as is calculated, subject to Article
IV.1, below, by dividing (A) the face amount of the Note plus all accrued and
unpaid interest thereon as of November 23, 1999 (the "Note Amount"), by (B) by
100; and (ii) a ten-year warrant to purchase that number of shares of the
Company's common stock, par value $0.001 (the "Common Stock") equal to that
number of shares of Common Stock as is calculated by (C) multiplying the Note
Amount by 0.2, and (D) dividing that amount by 2.91, at an exercise price of
$0.01 per share (the "Warrant"). The Preferred Stock and Warrant shall be
delivered to the Noteholder by the Company within ten (10) business days
following the contribution.
I.2 The Noteholder recognizes that an investment in the Preferred Stock
and Warrant involves a high degree of risk including, but not limited to, the
following: (a) the Company is a development stage business with no operating
history, and requires substantial additional funds; (b) an investment in the
Company is highly speculative, and only investors who can afford the loss of
their entire investment should consider investing in the Company and the
Preferred Stock; (c) the Noteholder may not be able to liquidate his investment;
(d) transferability of the Preferred Stock and Warrant is extremely limited; and
(e) in the event of a disposition, the Noteholder could sustain the loss of his
entire investment. Such risks are
more fully set forth in the Confidential Private Placement Memorandum, dated
November 19, 1999, and the exhibits thereto, all of which constitute an integral
part thereof, furnished by the Company to the Noteholder (the "PPM"). The
Noteholder agrees and understands that the PPM was prepared in connection with a
soon to be commenced offering by the Company of Preferred Stock for cash and,
therefore, the portions of the PPM concerning such offering do not apply to the
transaction contemplated by this Agreement.
I.3 The Noteholder represents that he is an "accredited investor" as such
term is defined in Rule 501 of Regulation D promulgated under the Securities Act
of 1933, as amended (the "Securities Act").
I.4 The Noteholder hereby acknowledges and represents that (a) he has
significant prior investment experience, including investments in securities
that are non-listed, unregistered and/or neither traded on a national securities
exchange nor on the National Association of Securities Dealers' (the "NASD")
automated quotation system, or he has employed the services of an investment
advisor, attorney and/or accountant to read all of the documents furnished or
made available by the Company to him and to assist him in evaluating the merits
and risks of such an investment; (b) he recognizes the highly speculative nature
of this investment; and (c) he is able to bear the economic risk that he hereby
assumes.
I.5 The Noteholder hereby acknowledges receipt from the Company and
careful review by him of the PPM including without limitation, the section
entitled "Risk Factors", and hereby represents that he has been furnished by the
Company during the course of this transaction with all information regarding the
Company that he has requested or desired to know, has been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other representatives of the Company concerning the terms and
conditions of the issuance of the Preferred Stock and the Warrant to him and has
received any additional information that he has requested.
I.6 (a) The Noteholder has relied solely upon the information provided by
the Company in the PPM and in this Agreement in making the decision to make a
contribution of his Note for shares of Preferred Stock and the Warrant. To the
extent he deems it to be necessary, he has retained, at his own expense, and
relied upon appropriate professional advice regarding the investment, tax and
legal merits and consequences of this Agreement and the transactions
contemplated hereby. The Noteholder acknowledges and agrees that (i) the Company
has prepared the PPM and that no other person, including without limitation,
Paramount Capital, Inc. (the "Finder"), has supplied any information for
inclusion in the PPM, (ii) the Finder has no responsibility for the accuracy or
completeness of the PPM and (iii) the Noteholder has not relied upon the
independent investigation or verification, if any, that may have been undertaken
by the Finder.
(b) The Noteholder represents that (i) he was contacted regarding the
contribution of his Note for shares of Preferred Stock and the Warrant by the
Finder or the Company (or an authorized agent or representative thereof) with
whom he had a prior substantial pre-existing relationship and (ii) no shares of
Preferred Stock or warrants were
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offered or sold to him by means of any form of general solicitation or general
advertising, and in connection therewith he did not (A) receive or review any
advertisement, article, notice or other communication published in a newspaper
or magazine or similar media or broadcast over television or radio, whether
closed circuit, or generally available; or (B) attend any seminar meeting or
industry investor conference whose attendees were invited by any general
solicitation or general advertising.
I.7 The Noteholder hereby represents that he, by reason of his business or
financial experience or the business or financial experience of his professional
advisors (who are unaffiliated with and who are not compensated by the Company
or any affiliate or selling agent of the Company, including the Finder, directly
or indirectly), has the capacity to protect his own interests in connection with
the transactions contemplated hereby.
I.8 The Noteholder hereby acknowledges that the terms of issuance of the
Preferred Stock and the Warrant contemplated by this Agreement have not been
reviewed by the United States Securities and Exchange Commission (the "SEC" or
"Commission") nor any state, local or foreign regulatory authority because such
issuance is intended to be exempt from the registration requirements of Section
5 of the Securities Act pursuant to Section 4(2) of the Securities Act, and/or
Regulation D promulgated under the Securities Act. The Noteholder agrees that
he will not sell or otherwise transfer the shares of Preferred Stock or the
Warrant unless they are registered under the Securities Act or unless an
exemption from such registration is available.
I.9 The Noteholder understands that neither the shares of Preferred Stock
nor the Warrant have been registered under the Securities Act or any other law
by reason of a claimed exemption under the provisions of the Securities Act and
other laws that depend, in part, upon the Noteholder's investment intention. In
this connection, the Noteholder hereby represents that he is obtaining the
shares of Preferred Stock and the Warrant for his own account for investment and
not with a view toward the resale or distribution to others. The Noteholder, if
an entity, further represents that it was not formed for the purpose of entering
into the transactions contemplated by this Agreement. THE SALE OF THESE
SECURITIES SHALL BE VOIDABLE BY ANY FLORIDA RESIDENT WITHIN 3 DAYS AFTER THE
FIRST TENDER OF CONSIDERATION IS MADE BY SUCH FLORIDA RESIDENT TO THE COMPANY OR
WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH
FLORIDA RESIDENT, WHICHEVER OCCURS LATER, AS REQUIRED BY SECTION
517.061(11)(a)(5), FLORIDA STATUTES.
I.10 The Noteholder understands that there is no public market for the
Preferred Stock, the Warrant, or the Common Stock issuable upon the conversion
of the Preferred Stock or upon the exercise of the Warrant and that no market
may develop. The Noteholder understands that even if a public market develops
for such securities, Rule 144 ("Rule 144") promulgated under the Securities Act,
requires for non-affiliates, among other conditions, a one-year holding period
prior to the resale (in limited amounts) of securities acquired in a non-public
offering without having to satisfy the registration requirements under the
Securities Act.
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The Noteholder understands and hereby acknowledges that the Company is under no
obligation to register any shares of Preferred Stock or the Warrant under the
Securities Act or any state securities or "blue sky" laws other than as set
forth in Article III. The Noteholder consents that, the Company, may but is not
obligated to do so, and accordingly, may permit transfer of the Preferred Stock
or the Warrant only when the request for transfer is accompanied by an opinion
of counsel satisfactory to the Company that neither the proposed sale nor the
proposed transfer results in the violation of the Securities Act or any other
applicable state, local or foreign securities or blue sky laws. The Noteholder
agrees to hold the Company and its directors, officers, employees, affiliates,
controlling persons and agents (including the Finder and its officers,
directors, employees, counsel, controlling persons and agents) and their
respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by them as a
result of (a) any misrepresentation made by the Noteholder contained in this
Agreement, (b) any sale or distribution by the Noteholder in violation of the
Securities Act or any applicable state securities or "blue sky" laws, or (c) any
untrue statement of a material fact made by the Noteholder and contained herein.
I.11 The Noteholder consents to the placement of a legend on any
certificate or other document evidencing the Preferred Stock or the Warrant that
such securities have not been registered under the Securities Act or any local,
foreign or state securities or "blue sky" laws and setting forth or referring to
the restrictions on transferability and sale thereof contained in this
Agreement. The Noteholder is aware that the Company will make a notation in its
appropriate records with respect to the restrictions on the transferability of
such securities.
I.12 The Noteholder hereby represents that the Note contributed by him in
connection with this Agreement is owned by him and will be delivered to the
Company free and clear of any liens, claims charges or encumbrances of any kind
or nature.
I.13 The Noteholder hereby represents that his address furnished on the
signature page hereof is his principal residence if he is an individual or its
principal business address if it is a corporation or other entity.
I.14 The Noteholder represents that he has full power and authority
(corporate, statutory and otherwise) to execute and deliver this Agreement and
to enter into and perform the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding obligation of the Noteholder,
enforceable against him in accordance with its terms.
I.15 If the Noteholder is a corporation, partnership, limited liability
Company, trust, employee benefit plan, individual retirement account, Xxxxx
Plan, or other tax-exempt entity, it is authorized and qualified to become an
investor in the Company and the person signing this Agreement on behalf of such
entity has been duly authorized by such entity to do so. (If the Noteholder is
an employee benefit plan, individual retirement amount, Xxxxx Plan or other tax-
exempt entity, it may have special tax and ERISA considerations to take into
account.)
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I.16 The Noteholder acknowledges that if he is a Registered Representative
of an NASD member firm, he must give such firm the notice required by the NASD's
Rules of Fair Practice.
I.17 The Noteholder acknowledges that the Finder will assist the Company
in identifying potential investors for which it will receive certain
compensation as described in the PPM.
II. REPRESENTATIONS BY THE COMPANY
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The Company hereby represents and warrants to the Noteholder that:
II.1 Organization, Good Standing and Qualification. The Company is a
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corporation duly organized and validly existing under the laws of the State of
Delaware and has full corporate power and authority to conduct its business as
described in the PPM.
II.2 Capitalization and Voting Rights. The shares of Preferred Stock and
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the Warrant, and the shares of Common Stock issued upon the conversion of the
Preferred Stock and the exercise of the Warrant, when issued and paid for in
accordance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable. Except as set forth in the PPM, in this Agreement and as
otherwise required by law, there are no restrictions upon the voting or transfer
of any of the shares of capital stock of the Company pursuant to the Company's
Certificate of Incorporation and/or By-Laws (collectively, the "Incorporation
Documents"), or other governing documents or any agreement or other instruments
to which the Company is a party or by which the Company is bound.
II.3 Authorization; Enforceability. The Company has all corporate right,
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power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate action necessary for the
authorization, execution, delivery and performance of this Agreement by the
Company, the authorization, sale, issuance and delivery of the Preferred Stock
and the Warrant contemplated hereby and the performance of the Company's
obligations hereunder has been taken. This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies, and to limitations of public
policy. Upon the issuance and delivery of the shares of Preferred Stock, such
shares will be validly issued, fully paid and nonassessable. Upon the issuance
and delivery of Warrant, such Warrant will be validly, fully paid (subject to
the payment of the exercise price when exercised for the purchase of shares of
Common Stock) and nonassessable. The issuance of the Preferred Stock and the
Warrant contemplated hereby will not give rise to any preemptive rights or
rights of first refusal on behalf of any person.
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II.4 No Conflict; Governmental Consents.
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(a) The execution and delivery by the Company of this Agreement and
the consummation of the transactions contemplated hereby will not result in the
violation of any law, statute, rule, regulation, order, writ, injunction,
judgment or decree of any court or governmental authority to or by which the
Company is bound, or of any provision of the Incorporation Documents of the
Company, and will not conflict with, or result in a breach or violation of, any
of the terms or provisions of, or constitute (with due notice or lapse of time
or both) a default under, any lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which the Company
is a party or by which it is bound or to which any of its properties or assets
is subject, nor result in the creation or imposition of any lien upon any of the
properties or assets of the Company.
II.5 No consent, approval, authorization or other order of any
governmental authority is required to be obtained by the Company in connection
with the authorization, execution and delivery of this Agreement or with the
authorization and issue of the Preferred Stock or the Warrant, except such
filings as may be required to be made with the SEC, the NASD and the NASDAQ and
with any state or foreign blue sky or securities regulatory authority.
III. REGISTRATION RIGHTS
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III.1 Any capitalized terms used herein that are not otherwise defined
herein shall have the meanings ascribed to such terms in the PPM, the
definitions from which are hereby incorporated as if set out in full herein. As
used in this Agreement, the following terms shall have the following meanings:
(a) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof.
(b) The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in the United States in compliance with the Securities Act, and
the declaration or order of effectiveness of such registration statement or
document.
(c) The term "Registrable Securities" shall mean (i) the shares of
Common Stock issuable upon the conversion of the Preferred Stock, (ii) the
shares of Common Stock issuable upon the exercise of the Warrant, and (iii) any
shares of Common Stock issued as (or issuable upon the conversion or exercise of
any warrant, right or other security that is issued as) a dividend or other
distribution with respect to or in replacement of the Preferred Stock and/or the
Warrant; provided, however, that securities shall only be treated as Registrable
Securities if and only for so long as they (A) have not been disposed of
pursuant to a registration statement declared effective by the Commission, (B)
have not been issued or sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are
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removed upon the consummation of such sale or (C) are held by a Holder or a
permitted transferee of a Holder pursuant to Section III.10.
III.2 Piggy-back Registration Rights. (a) The Company agrees that if, at
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any time, and from time to time, commencing one (1) year after the closing date
of the first public offering of securities of the Company in the United States
(other than a registration statement relating either to the sale of securities
to employees of the Company pursuant to a stock option, stock purchase or
similar plan or a SEC Rule 145 transaction) (the "IPO") and ending on the date
that is five (5) years from the date hereof, the Board of Directors of the
Company shall authorize the filing of a registration statement under the
Securities Act (other than the initial public offering of the Company's Common
Stock, or other than a registration statement on Form X-0, Xxxx X-0 or any other
form that does not include substantially the same information as would be
required in a form for the general registration of securities) in connection
with the proposed offer of any of its securities by it or any of its
stockholders, the Company shall, (A) promptly notify the Holder that such
registration statement will be filed and that the Registrable Securities then
held by the Holder, which such Holder requests in writing within twenty (20)
days of notice by the Company be registered, will be included in such
registration statement at the Holder's request, (B) cause such registration
statement to cover all of such Registrable Securities issued to the Holder
requesting inclusion, (C) use its reasonable best efforts to cause such
registration statement to become effective as soon as practicable, and (D) take
all other action necessary under any Federal or state law or regulation of any
governmental authority to permit all such Registrable Securities that have been
issued to the Holder to be sold or otherwise disposed of, and will maintain such
compliance with each such Federal and state law and regulation of any
governmental authority for the period necessary for the Holder to effect the
proposed sale or other disposition.
(b) Notwithstanding any other provision of this Article III, the
Company may at any time, abandon or delay any registration commenced by the
Company. In the event of such an abandonment by the Company, the Company shall
not be required to continue registration of shares requested by the Holder for
inclusion and the Holder shall retain the right to request inclusion of shares
as set forth above.
(c) The Holder shall have the right to request inclusion of any of
their Registrable Securities in a registration statement as described in this
Section III.2 up to two (2) times.
III.3 Obligations of the Company. Whenever required under this Article
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III to include Registrable Securities in a Company registration statement, the
Company shall, as expeditiously as reasonably possible:
(a) Use its reasonable best efforts to cause such registration
statement to become effective, and, upon the request of the Holders of a
majority of the Registrable Securities registered thereunder, keep such
registration statement effective for the shorter of a period of up to one
hundred twenty (120) days or until the distribution contemplated in the
Registration Statement has been completed (the "Effective Period"); provided,
however, that such 120-day
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period shall be extended for a period of time equal to the period that the
Holder refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company,
and provided further that if applicable rules under the Securities Act governing
the obligation to file a post-effective amendment permits, in lieu of filing a
post-effective amendment that (i) includes any prospectus required by Section
10(a)(3) of the Securities Act or (ii) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the Company may incorporate by reference information required to be
included in (i) and (ii) above to the extent such information is contained in
periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in
the registration statement.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement, and the prospectus used in connection with such
registration statement, as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other federal or
state securities laws of such jurisdictions as shall be reason-ably requested by
the Holders; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Cause all such Registrable Securities registered hereunder to be
listed on each securities exchange or quotation service on which similar
securities issued by the Company are then listed or quoted.
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(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
III.4 Furnish Information. It shall be a condition precedent to the
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obligation of the Company to take any action pursuant to this Article III with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding the Holder, the
Registrable Securities held by the Holder, and the intended method of
disposition of such securities as shall be reasonably required by the Company to
effect the registration of such Holder's Registrable Securities, including,
without limitation, as may be required by the applicable rules and regulations
of the SEC and applicable state or foreign securities laws concerning the
proposed method of sale or other disposition of the Securities and the identity
of, and compensation to be paid to, any proposed underwriter or brokers to be
employed by the Holder in connection therewith, and the Holder shall deliver to
the Company upon request any written undertakings reasonably requested by the
Company to assure full compliance with applicable laws.
III.5 Expenses of Company Registration. The Company shall bear and pay
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all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section III.2 for each Holder, including (without limitation) all
registration, filing, and qualification fees, printers and accounting fees
relating or apportionable thereto, but excluding underwriting discounts and
commissions relating to Registrable Securities; provided, however, that the
Company shall not bear the cost of any professional fees or costs of accounting,
financial or legal advisors to any of the Holders. Notwithstanding the
foregoing, each Holder shall pay all registration expenses which such Holder is
required to pay under applicable law.
III.6 Underwriting Requirements. In connection with any offering
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involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Article III.2 to include any of the Holders'
Registrable Securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters), and then only in
such quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included there-in owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders). For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder who is a holder of
Registrable Securities and is a partnership or corporation, the partners,
retired partners and stockholders of such holder, or the estates and
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family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
stockholder", and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder", as defined in this sentence.
III.7 Delay of Registration. No Holder shall have any right to obtain or
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seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Article III.
III.8 Indemnification. In the event that any Registrable Securities are
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included in a registration statement under this Article III:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless 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, or the Exchange Act, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, or any rule or
regulation promulgated under the Securities Act, or the Exchange Act, and the
Company will reimburse each such Holder, underwriter 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 Article 3.8(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person; provided, that, in no event shall any
indemnity under this Article 5.3(b) exceed the gross proceeds from the offering
received by such Holder.
(b) To the extent permitted by law, each Holder registering its
Registrable Securities will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, any underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or
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other Holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Securities Act, or the Exchange Act, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration
or arises out of a Violation; and each such Holder will pay, as incurred, any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this Article III.8(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Article III.8(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, that, in no
event shall any indemnity under this Article III.8(b) exceed the gross proceeds
from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Article
III.8 of notice of the commencement of any action (including any governmental
action), such indemnified party shall, if a claim in respect thereof is to be
made against any indemnifying party under this Article III.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel selected by the
indemnifying party and approved by the indemnified party (whose approval shall
not be unreasonably withheld); provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate 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 prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Article
III.8, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Article III.8.
(d) If the indemnification provided for in this Article III.8 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or pay-able 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 statements 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
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untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this Article
III.8 shall survive the completion of any offering of Registrable Securities in
a registration statement under this Article III, and otherwise.
III.9 Reports Under Securities Exchange Act of 1934. With a view to
---------------------------------------------
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, and provided that the
Company's Common Stock is otherwise registered pursuant to the Securities Act,
the Company agrees to:
(a) make and keep public information avail-able, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the registration statement filed in connection with
an IPO by the Company;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (ii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
III.10 Assignment of Registration Rights. The rights to cause the Company
---------------------------------
to register Registrable Securities granted to the Holders by the Company under
this Article III may be assigned in full by a Holder in connection with a
transfer by such Holder of its Registrable Securities if: (a) such Holder gives
prior written notice to the Company; and (b) such transferee agrees for the
benefit of the Company, to comply with the terms and provisions of this
Agreement, and such transfer is otherwise in compliance with this Agreement;
provided, however, that such transfer may otherwise be effected in accordance
with applicable securities laws. Except as specifically permitted by this
Section III.10, the rights of a Holder with respect to Registrable Securities as
set out herein shall not be transferable to any other Person, and any attempted
transfer shall cause all rights of such Holder therein to be forfeited.
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III.11 Termination of Registration Rights. In addition, notwithstanding
----------------------------------
Section 3.2(a), the right of any Holder to request inclusion in any registration
pursuant to Section 5.2 shall terminate if all shares of Registrable Securities
held by such Holder may be sold under Rule 144 during any 90-day period.
IV. MISCELLANEOUS
-------------
IV.1 No Fractional Shares. No fractional shares or scrip representing
--------------------
fractional shares of Preferred Stock shall be issued upon the contribution of
the Note. Instead of any fractional share of Preferred Stock which would
otherwise be issuable upon the contribution of the Note, the Company shall pay a
cash adjustment in respect of such fractional interest in an amount equal to the
same fraction of Preferred Stock to be issued multiplied by $100.
IV.2 Notices. Any notice or other communication given hereunder shall
-------
be deemed sufficient if in writing and sent by registered or certified mail,
return receipt requested, or delivered by hand against written receipt therefor,
addressed to the Company at 000 Xxxxx Xxxx, Xxxxxxxxx 00000 Israel, Attn:
General Counsel, with a copy to x/x Xxxxxxxxx Xxxxxxx, Inc. 000 Xxxxxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxx X. Xxxxx, and to the
Noteholder at his address indicated on the signature page of this Agreement.
Notices shall be deemed to have been given or delivered on the date of mailing,
except notices of change of address, which shall be deemed to have been given or
delivered when received.
IV.3 Amendment. Except as otherwise provided herein, this Agreement
---------
shall not be changed, modified or amended except by a writing signed by the
parties to be charged, and this Agreement may not be discharged except by
performance in accordance with its terms or by a writing signed by the party to
be charged.
IV.4 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and assigns. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
IV.5 Binding Obligation. Upon the execution and delivery of this
------------------
Agreement by the Noteholder, this Agreement shall become a binding obligation of
the Noteholder, subject, however, to the right hereby reserved by the Company to
enter into the same agreements with other Noteholders and to add and/or delete
other persons as Noteholders.
IV.6 Governing Law; Jurisdiction. NOTWITHSTANDING THE PLACE WHERE THIS
---------------------------
AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY
AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. IN THE EVENT THAT A JUDICIAL PROCEEDING IS
NECESSARY, THE SOLE FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO
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THIS AGREEMENT IS THE APPROPRIATE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF NEW YORK, AND ALL RELATED APPELLATE COURTS, THE PARTIES HEREBY IRREVOCABLY
CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.
IV.7 Attorney Fees. In order to discourage frivolous claims the parties
-------------
agree that unless a claimant in any proceeding arising out of this Agreement
succeeds in establishing his claim and recovering a judgment against another
party (regardless of whether such claimant succeeds against one of the other
parties to the action), then the other party shall be entitled to recover from
such claimant all of its/their reasonable legal costs and expenses relating to
such proceeding and/or incurred in preparation therefor.
IV.8 Severability. The holding of any provision of this Agreement to be
------------
invalid or unenforceable by a court of competent jurisdiction shall not affect
any other provision of this Agreement, which shall remain in full force and
effect. If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid-id, illegal or incapable of being enforced
in whole or in part, such provision shall be interpreted so as to remain
enforceable to the maximum extent permissible consistent with applicable law and
the remaining conditions and provisions or portions thereof shall nevertheless
remain in full force and effect and enforceable to the extent they are valid,
legal and enforceable, and no provisions shall be deemed dependent upon any
other covenant or provision unless so expressed herein.
IV.9 Waiver. It is agreed that a waiver by either party of a breach of
------
any provision of this Agreement shall not operate, or be construed, as a waiver
of any subsequent breach by that same party.
IV.10 Further Obligations. The parties agree to execute and deliver all
-------------------
such further documents, agreements and instruments and take such other and
further action as may be necessary or appropriate to carry out the purposes and
intent of this Agreement.
IV.11 Counterparts. This Agreement may be executed in two or more
------------
counterparts each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
IV.12 Publicity. The Noteholder agrees not to issue any public statement
---------
with respect to his investment or proposed investment in the Company or the
terms of any agreement or covenant between him and the Company without the
Company's prior written consent, except such disclosures as may be required
under applicable law or under any applicable order, rule or regulation, in which
case the Noteholder shall give reasonable advance notice to the Company of such
required disclosure.
IV.13 No Brokers. The Noteholder represents and warrants that it has not
----------
engaged, consented to or authorized any broker, finder or intermediary to act on
its behalf, directly or indirectly, as a broker, finder or intermediary in
connection with the transactions contemplated by this Agreement. The Noteholder
agrees to indemnify and hold harmless the Company from
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and against all fees, commissions or other payments owing to any such person or
firm acting on behalf of the Noteholder hereunder.
IV.14 No Rights. Nothing in this Agreement shall create or be deemed to
---------
create any rights in any person or entity not a party to this Agreement.
IV.15 Interpretation. The terms "it", "his" and "he" when used herein,
--------------
are intended to be gender neutral and, depending on the nature of the
Noteholder, shall be deemed to mean "his", "her," "their," or "its" or, as the
case may be, "he," "she," "they," or "it."
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[SIGNATURE PAGE]
PRINCIPAL AMOUNT OF NOTE BEING CONTRIBUTED: __________________________
AMOUNT OF ACCRUED INTERSET (AS OF 11/23/99): ________________________
TOTAL NOTE AMOUNT BEING CONTRIBUTED: _________________________________
Name in which the Preferred Stock, the Warrant and a check for any fractional
interest should be issued:
____________________________________________________
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the date written below.
Dated as of November 18, 1999
PARTNERSHIP, CORPORATION, LIMITED
INDIVIDUAL NOTEHOLDER: LIABILITY COMPANY, OR TRUST NOTEHOLDER:
______________________________________ ______________________________________
(Signature) (Name of Entity)
______________________________________ By:___________________________________
(Print Name) (Signature of Authorized Person)
______________________________________
(Print Name and Title of Authorized
Person)
______________________________________ ______________________________________
______________________________________ ______________________________________
(Address) (Address of Entity)
______________________________________ ______________________________________
(Social Security Number) (Taxpayer I.D. Number)
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ACCEPTANCE OF CONTRIBUTION
Name of Noteholder: ______________________________
The above is hereby agreed, and a contribution of $____________ face amount of
12% convertible note(s) of Partec, Ltd. is hereby accepted in exchange for (i)
_______ shares of Series A Preferred Stock, (ii) a Warrant to purchase
____________ shares of Common Stock, and (iii) $________ for the fractional
interest in Preferred Shares.
LAKARO BIOPHARMACEUTICALS, INC.
By: ___________________________________
Name: Xxxxxx Xxxxxx, M.D.
Title: Chief Executive Officer
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