EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is dated as of December
20, 2002, by and among Alteon Inc., a corporation organized under the laws of
the State of Delaware (the "Company,") and each of the Purchasers whose names
are set forth on Exhibit A hereto (individually, a "Purchaser" and collectively,
the "Purchasers").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Purchasers
and the Purchasers shall purchase an aggregate of 1,714,285 shares of the
Company's common stock, $0.01 par value per share (the "Common Stock"); and
WHEREAS, such purchase and sale will be made pursuant to a registration
statement (No. 333-56512), including a prospectus, relating to $50,000,000 of
the Common Stock which the Company has filed with the Securities and Exchange
Commission (the "Commission").
The parties hereto agree as follows:
1. Purchase, Sale and Delivery of the Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to
each of the Purchasers and each of the Purchasers agrees to purchase from the
Company the number of shares of Common Stock set forth opposite such Purchaser's
name on Exhibit A hereto (the aggregate of such shares being referred to herein
as the "Shares"). The purchase price for each Share shall be $1.75 per share.
The Shares will be delivered by the Company to the Purchasers against payment of
the purchase price therefor by same day funds payable to the order of the
Company at the offices of Smith, Stratton, Wise, Xxxxx & Xxxxxxx, LLP, 000
Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 or such other location as may be
mutually acceptable, at 10:00 a.m. Eastern Standard Time on or about December
24, 2002 or at such other time and date as the Purchasers and the Company
determine, such time and date of delivery being herein referred to as the
"Closing Date."
2. Representations and Warranties of the Company.
(a) The Company represents and warrants, and agrees with, each Purchaser
as follows:
(i) The above-referenced registration statement has been
declared effective by the Commission and no stop order suspending the
effectiveness of such registration statement has been issued and no
proceeding for that purpose has been instituted or overtly threatened by
the Commission. Such registration statement, as amended or supplemented at
the time of this Agreement and including all material incorporated by
reference therein as of the date of this Agreement, is hereinafter
referred to as the "Registration Statement", and the prospectus included
in the Registration Statement, as supplemented as contemplated by Section
3(a) hereof to reflect the terms of the offering of the Shares, as first
filed with the Commission pursuant to and in accordance with Rule 424(b)
("Rule 424(b)") or Rule 430A ("Rule 430A") under the Securities Act of
1933, as amended (the "Act"), including all material incorporated by
reference therein as of the date of such filing, is hereinafter referred
to as the
"Prospectus". On the effective date of the Registration Statement, the
Registration Statement conformed in all material respects to the
requirements of the Act and the rules and regulations promulgated
thereunder (the "Rules and Regulations"), except to the extent of the
information permitted to be omitted pursuant to Rule 430A, and did not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and, on the date of this Agreement, the
Registration Statement conforms and, on the date of the filing of the
Prospectus, the Registration Statement and the Prospectus will conform in
all material respects to the requirements of the Act and the Rules and
Regulations, and neither of such documents includes or will include any
untrue statement of a material fact or omits or will omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, except that the foregoing does not
apply to statements in or omissions from any of such documents based upon
written information furnished to the Company by the Purchasers, if any,
specifically for use therein.
(ii) The financial statements of the Company, together with
the notes thereto, set forth in the Registration Statement and Prospectus
comply in all material respects with the requirements of the Act and
fairly present the financial condition of the Company as of the dates
indicated and the results of operations and changes in cash flows for the
periods therein specified in conformity with accounting principles
generally accepted in the United States consistently applied throughout
the periods involved (except as otherwise stated therein); and the
supporting schedules included in the Registration Statement present fairly
the information required to be stated therein. No other financial
statements or schedules are required to be included in the Registration
Statement or Prospectus except such financial statements or schedules that
are disclosed therein. Xxxxxx Xxxxxxxx LLP, which expressed its opinion
with respect to the audited financial statements of the Company filed as a
part of the Registration Statement and included in the Registration
Statement and Prospectus, were independent public accountants as required
by the Act and the Rules and Regulations.
(iii) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; and
the Company is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or lease
of property or the conduct of its business requires such qualification and
in which the failure to so qualify would have or would be reasonably
likely to have a material adverse effect on the condition (financial or
other), business, properties, prospects or results of operations of the
Company ("Material Adverse Effect").
(iv) The Shares and all of the outstanding shares of capital
stock of the Company have been duly authorized; all outstanding shares of
capital stock of the Company are, and, when the Shares have been delivered
and paid for in accordance with this Agreement on the Closing Date, such
Shares will be validly issued, fully paid and nonassessable and the
delivery of the Shares to the Purchaser shall vest in it good and
marketable title thereto, free and clear of any and all liens, options,
encumbrances, charges, third-party rights or claims of any nature
whatsoever and will conform to the
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description thereof contained in the Prospectus. Except as set forth in
the Registration Statement or as contemplated or required by any document
contained or incorporated by reference therein, there are no preemptive
rights or other rights to subscribe for or to purchase, or any restriction
upon the voting or transfer of, any shares of Common Stock pursuant to the
Company's charter, by-laws or any agreement or other instrument to which
the Company is a party or by which the Company is bound.
(v) Except as set forth in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person
that would give rise to a valid claim against the Company for a brokerage
commission, finder's fee or other like payment in connection with the
transactions contemplated by this Agreement. There are no contracts,
agreements or understandings between the Company and any person that would
give rise to a valid claim against any Purchaser for a brokerage
commission, finder's fee or other like payment in connection with the
transaction contemplated by this Agreement.
(vi) The outstanding shares of Common Stock are listed on The
American Stock Exchange ("AMEX").
(vii) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required for
the consummation of the transactions contemplated by this Agreement in
connection with the issuance and sale of the Shares by the Company, except
such as may be required under the Act and under state securities laws.
(viii) Except as disclosed in the Prospectus, the Company has
good and marketable title to all real properties and all other properties
and assets owned by it, in each case free from liens, encumbrances and
defects that would materially affect the value thereof or materially
interfere with the use made or to be made thereof by it; and except as
disclosed in the Prospectus, the Company holds any leased real or personal
property under valid and enforceable leases with no exceptions that would
materially interfere with the use made or to be made thereof by it.
(ix) The Company is not in violation of its articles of
incorporation, or by-laws, or other organizational documents, or of any
law, ordinance, administrative or governmental rule or regulation
applicable to the Company or of any decree of any court or governmental
agency or body having jurisdiction over the Company, which violation
would, if continued, have a Material Adverse Effect.
(x) The Company is not in breach, default or violation in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
material agreement, indenture, lease or other instrument to which the
Company is a party or by which any of the Company's properties may be
bound (a "Company Contract") which breach, default or violation would, if
continued, have a Material Adverse Effect. To the Company's knowledge, all
of the parties to Company Contracts have complied in all material respects
with the provisions thereof, and no party is in material default
thereunder.
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(xi) To the Company's knowledge, no party to a Company
Contract (a "Third Party") is a party to any other agreement, lease or
other instrument (a "Third Party Contract") under which the failure by the
Third Party to perform under such Third Party Contract would adversely
affect the Company's rights under the express terms of any of the Company
Contracts.
(xii) The Company possesses adequate certificates, authorities
or permits issued by appropriate governmental agencies or bodies necessary
to conduct the business now operated by it (except for any such
certificate, authority or permit with respect to which the failure to
obtain would not individually or in the aggregate have a Material Adverse
Effect) and has not received any notice of proceedings relating to the
revocation or modification of any such certificate, authority or permit
that, if determined adversely to the Company, would individually or in the
aggregate have a Material Adverse Effect.
(xiii) No labor dispute with the employees of the Company
exists or, to the knowledge of the Company, is imminent that might have a
Material Adverse Effect.
(xiv) Except as disclosed in the Prospectus, the Company is
not in violation of any statute, any rule, regulation, decision or order
of any governmental agency or body or any court, domestic or foreign,
relating to the use, disposal or release of hazardous or toxic substances
or relating to the protection or restoration of the environment or human
exposure to hazardous or toxic substances (collectively, "environmental
laws"), does not own or, to its knowledge, operate any real property
contaminated with any substance that is subject to any environmental laws,
is not liable for any off-site disposal or contamination pursuant to any
environmental laws, and is not subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate have a Material Adverse Effect; and
the Company is not aware of any pending investigation which might lead to
such a claim.
(xv) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting the Company or
any of its properties that, if determined adversely to the Company, would
individually or in the aggregate have a Material Adverse Effect, or would
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement, or which are otherwise material in the
context of the sale of the Shares; and no such actions, suits or
proceedings are threatened or, to the Company's knowledge, contemplated.
(xvi) Except as disclosed in the Prospectus, since the date of
the latest audited financial statements included in the Prospectus there
has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company.
(xvii) Except as set forth in the Registration Statement or as
contemplated or required by any document contained or incorporated by
reference
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therein, subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the Company has
not incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, made any direct or
indirect redemption, purchase or other acquisition of its capital stock
declared, set aside or paid any dividends or made any distribution of any
kind with respect to its capital stock; and there has not been any change
in the capital stock (other than a change in the number of outstanding
shares of Common Stock due to the issuance of shares upon the exercise of
outstanding options or warrants or the conversion of outstanding
convertible securities), or any material change in the short-term or
long-term debt, or any issuance by the Company of options (other than
options granted pursuant to the Company's Amended and Restated 1987 Stock
Option Plan and the Company's Amended 1995 Stock Option Plan
(collectively, the "Stock Option Plans")), warrants, convertible
securities or other rights to purchase the capital stock of the Company,
or any material adverse change, or any development involving a prospective
material adverse change, in the general affairs, condition (financial or
otherwise), business, key personnel, property, net worth or results of
operations of the Company.
(xviii) There are no contracts or documents of the Company
that are required to be filed as exhibits to the Registration Statement by
the Act or by the Rules and Regulations that have not been so filed.
(xix) This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding
obligation of the Company, enforceable in accordance with its terms,
except as rights to indemnity hereunder may be limited by federal or state
securities laws and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of equity.
The execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions herein
contemplated will not result in a breach or violation of any of the terms
and provisions of, or constitute a default under, any statute, agreement
or instrument to which the Company is a party or by which it is bound or
to which any of its property is subject, the Company's charter or by-laws,
or any order, rule, regulation or decree of any court or governmental
agency or body having jurisdiction over the Company or any of its
properties; no consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required for the
execution, delivery and performance of this Agreement by the Company or
for the consummation by the Company of the transactions contemplated
hereby, including the issuance or sale of the Shares by the Company,
except such as may be required under the Act or state securities or blue
sky laws; and the Company has full power and authority to enter into this
Agreement and to authorize, issue and sell the Shares as contemplated by
this Agreement.
(xx) The Company owns or possesses or has licenses to use all
patents, patent applications, trademarks, service marks, tradenames,
trademark registrations, service xxxx registrations, copyrights, licenses,
inventions, trade secrets and other similar rights (such patents referred
to herein as the "Patents" and all of such intellectual property referred
to collectively as the "Intellectual Property") necessary for the conduct
of the
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business of the Company as currently carried on and as described in the
Registration Statement and Prospectus; except as stated in the
Registration Statement and Prospectus, to the Company's knowledge, no name
which the Company uses and no other aspect of the business of the Company
as conducted on the date hereof involves or gives rise to any infringement
of, or license or similar fees for, any patents, patent applications,
trademarks, service marks, tradenames, trademark registrations, service
xxxx registrations, copyrights, licenses, inventions, trade secrets or
other similar rights of others material to the business of the Company and
the Company has not received any notice alleging any such infringement or
fee. The Company or the licensor has duly and properly filed or caused to
be filed with the U.S. Patent and Trademark Office (the "PTO") and
applicable foreign and international patent authorities all patent
applications described in the Registration Statement and the Prospectus
(the "Patent Applications"); in connection with the filing of the Patent
Applications, the Company or the licensor has conducted reasonable
investigations of the published literature and patent references relating
to the inventions claimed in such applications; to the best of the
Company's knowledge, it has complied with the PTO's duty of candor and
disclosure for the Patent Applications and has made no misrepresentation
in the Patent Applications; the Company is not aware of any facts material
to a determination of patentability regarding the Patent Applications not
called to the attention of the PTO which would preclude the grant of a
patent for the Patent Applications; and the Company has no knowledge of
any facts which would preclude it from having an enforceable license or
clear title to the Patent Applications.
(xxi) The Company has filed all federal, state, local and
foreign income and franchise tax returns required to be filed and is not
in default in the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto, other than any which the
Company is contesting in good faith or which could result in a material
adverse effect on the financial condition of the Company.
(xxii) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the offering
and sale of the Shares other than the Prospectus or other materials
permitted by the Act to be distributed by the Company.
(xxiii) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (A) transactions
are executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (C)
access to assets is permitted only in accordance with management's general
or specific authorization; and (D) the recorded accountability for assets
is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xxiv) Except as disclosed in the Registration Statement and
the documents referred to and incorporated therein by reference, there are
no contracts, agreements or understandings between the Company and any
person granting such
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person the right to require the Company to file a registration statement
under the Act with respect to any securities of the Company or to require
the Company to include such securities with the Common Stock registered
pursuant to the Registration Statement.
(xxv) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as are prudent and customary in the businesses in which they are engaged;
the Company has not been refused any insurance coverage sought or applied
for; and, except for the potential effect of conditions in the insurance
industry and markets generally, the Company has no reason to believe that
it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have
a material adverse effect on the Company, except as described in the
Prospectus.
(b) Any certificate signed by any officer of the Company and delivered to
the Purchasers shall be deemed a representation and warranty by the Company to
the Purchasers as to the matters covered thereby.
3. Covenants. The Company covenants and agrees with each Purchaser as follows:
(a) The Company will file the Prospectus with the Commission pursuant to
and in accordance with Rule 424(b)(2) (or, if applicable and if consented to by
the Purchaser, subparagraph (5) thereto) not later than the second business day
following the execution and delivery of this Agreement by all parties hereto.
(b) The Company will not take, directly or indirectly, any action designed
to or that would constitute or that might reasonably be expected to cause or
result in, under the Exchange Act or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Common Stock.
(c) If, at any time when a prospectus relating to the Shares is required
to be delivered under the Act in connection with sales by the Purchaser, any
event occurs as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
at any time to amend the Prospectus to comply with the Act, the Company promptly
will notify each Purchaser of such event and will promptly prepare and file with
the Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance.
(d) The Company will furnish to each Purchaser copies of the Registration
Statement, including all exhibits, any related preliminary prospectus, any
related preliminary prospectus supplement, the Prospectus and all amendments and
supplements to such documents, in each case as soon as available and in such
quantities as such Purchaser reasonably requests. The Company will pay the
expenses of printing and distributing all such documents.
(e) The Company will use commercially reasonable efforts to ensure its
continued inclusion in, and the continued eligibility of the Common Stock for
trading on, AMEX, or, in the
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alternative, the Company will use commercially reasonable efforts to have the
Common Stock included in, and ensure that it is eligible for trading on, the
Nasdaq National Market, under all applicable inclusion requirements prior to and
after the Closing Date.
4. Conditions of Purchasers' Obligations. The obligations of the Purchasers
hereunder are subject to the accuracy, as of the date hereof and at the Closing
Date (as if made at the Closing Date), of and compliance with all
representations, warranties and agreements of the Company contained herein, to
the performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) The Prospectus shall have been filed with the Commission in accordance
with the Rules and Regulations and Section 3(a) of this Agreement. No stop order
suspending the effectiveness of the Registration Statement or of any part
thereof shall have been issued and no proceedings for that purpose shall have
been instituted or, to the knowledge of the Company or the Purchasers, shall be
contemplated by the Commission.
(b) No Purchaser shall have advised the Company that the Registration
Statement or the Prospectus, or any amendment thereof or supplement thereto,
contains an untrue statement of fact which, in such Purchaser's opinion, is
material, or omits to state a fact which, in such Purchaser's opinion, is
material and is required to be stated therein or necessary to make the
statements therein not misleading.
(c) Except as set forth in the Registration Statement or as contemplated
or required by any document contained or incorporated by reference therein,
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus:
(i) the Company shall not have incurred any material
liabilities or obligations, direct or contingent, or entered into any
material transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock; and there
shall not have been any change in the capital stock (other than a change
in the number of outstanding shares of Common Stock due to the issuance of
shares upon the exercise of outstanding options or warrants or the
conversion of outstanding convertible securities), or any material change
in the short-term or long-term debt of the Company, or any issuance of
options (other than options granted pursuant to the Stock Option Plans),
warrants, convertible securities or other rights to purchase the capital
stock of the Company or any material adverse change or any development
involving a prospective material adverse change (whether or not arising in
the ordinary course of business), in the general affairs, condition
(financial or otherwise), business, key personnel, property, net worth or
results of operations of the Company that, in a Purchaser's judgment,
makes it impractical or inadvisable to purchase the Shares on the terms
and in the manner contemplated in the Prospectus;
(ii) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction of
the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
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organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(iii) there shall not have occurred any major disruption of
settlements of securities or clearance services in the United States; and
(iv) there shall not have occurred any attack on, outbreak or
escalation of hostilities or act of terrorism involving the United States,
any declaration of war by Congress or any other national or international
calamity or emergency if, in the judgment of a Purchaser, the effect of
any such attack, outbreak, escalation, act, declaration, calamity or
emergency makes it impractical or inadvisable to proceed with completion
of the purchase and sale of and payment for the Shares.
(d) Each Purchaser shall have received an opinion substantially in the
form attached as Exhibit B hereto, dated the Closing Date, of Smith, Stratton,
Wise, Xxxxx & Xxxxxxx, LLP, counsel for the Company.
(e) On the Closing Date, there shall have been furnished to each Purchaser
a certificate, dated such Closing Date and addressed to such Purchaser, signed
by the chief executive officer and by the principal accounting officer of the
Company, to the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct, in all material respects, as if made at
and as of such Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date;
(ii) No stop order or other order suspending the effectiveness
of the Registration Statement or any amendment thereof or the
qualification of the Shares for offering or sale has been issued, and no
proceeding for that purpose has been instituted or, to the best of their
knowledge, is contemplated by the Commission or any state or regulatory
body; and
(iii) The signers of said certificate have carefully examined
the Registration Statement and the Prospectus, and any amendments thereof
or supplements thereto, and (A) such documents contain all statements and
information required to be included therein, the Registration Statement,
or any amendment thereof, does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
the Prospectus, as amended or supplemented, does not include any untrue
statement of material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading, (B) since the effective date of the
Registration Statement, there has occurred no event required to be set
forth in an amended or supplemented prospectus which has not been so set
forth, (C) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set
forth in the Registration Statement or as contemplated or required by any
document contained or incorporated by reference therein, the Company has
not incurred any material liabilities or obligations, direct or
9
contingent, or entered into any material transactions, not in the ordinary
course of business, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock, and except as
disclosed in the Prospectus, there has not been any change in the capital
stock (other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding
options or warrants or the conversion of outstanding convertible
securities), or any material change in the short-term or long-term debt,
or any issuance of options (other than options granted pursuant to the
Stock Option Plans), warrants, convertible securities or other rights to
purchase the capital stock, of the Company, or any of its subsidiaries, or
any material adverse change or any development involving a prospective
material adverse change (whether or not arising in the ordinary course of
business) in the general affairs, condition (financial or otherwise),
business, key personnel, property, net worth or results of operations of
the Company and its subsidiaries, taken as a whole, and (D) except as
stated in the Registration Statement and the Prospectus, there is not
pending, or, to the knowledge of the Company, threatened or contemplated,
any action, suit or proceeding to which the Company or any of its
subsidiaries is a party before or by any court or governmental agency,
authority or body, or any arbitrator, which might result in any material
adverse change in the condition (financial or otherwise), business or
results of operations of the Company and its subsidiaries, taken as a
whole.
(f) The Company shall have furnished to the Purchasers such additional
documents, certificates and evidence as they may have reasonably requested.
(g) All necessary filings shall have been made as required and all filing
fees shall have been paid to effect the listing of the Shares on AMEX.
5. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
such Purchaser may become subject, under the Act or otherwise (including in
settlement of any litigation if such settlement is effected with the written
consent of the Company) insofar as such losses, claims, damages, liabilities,
charges, actions, proceedings, demands, judgments, settlements, costs and
expenses of any nature whatsoever (or actions in respect thereof) arise out of
or are based upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, 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 or result from any breach of a representation, warranty or covenant
of the Company or any violation in connection with the transactions contemplated
hereby by the Company of the Securities Act or any rule or regulation
promulgated thereunder applicable to the Company or of any Blue Sky or other
state securities laws or any rule or regulation promulgated thereunder
applicable to the Company, and will reimburse such Purchaser for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, the Prospectus, or any such
amendment or supplement, in reliance
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upon and in conformity with written information furnished to the Company by the
Purchasers specifically for use in the preparation thereof.
(b) Each Purchaser, severally and not jointly, will indemnify and hold
harmless the Company against any losses, claims, damages or liabilities to which
the Company may become subject, under the Act or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Purchaser), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus, 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 the Registration Statement, the Prospectus, or any
such amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by such Purchaser specifically for use in
the preparation thereof, and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending against any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve the indemnifying party from any liability that it may have to any
indemnified party. In case any such action shall be brought against any
indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of the indemnifying party's election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
if, in the judgment of a majority-in-interest of the Purchasers seeking
indemnification, it is advisable for the Purchasers to be represented by
separate counsel, the Purchasers shall have the right to employ a single counsel
in which event the reasonable fees and expenses of such separate counsel shall
be borne by the indemnifying party or parties and reimbursed to the Purchasers
as incurred (in accordance with the provisions of the second paragraph in
subsection (a) above). An indemnifying party shall not be obligated under any
settlement agreement relating to any action under this Section 5 to which it has
not agreed in writing.
(d) If the indemnification provided for in this Section 5 is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Purchaser on the other from the offering of the Shares or
(ii) if the allocation
11
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Purchaser on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Purchaser on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the excess of the proceeds
received by a Purchaser upon resale of the Shares over the purchase price paid
hereunder for the Shares. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Purchaser and the parties'
relevant intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and the Purchasers agree
that it would not be just and equitable if contributions pursuant to this
subsection (d) were to be determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the first sentence of this subsection (d). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending against any action or claim
which is the subject of this subsection (d).
(e) The obligations of the Company under this Section 5 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls a
Purchaser within the meaning of the Act; and the obligations of the Purchasers
under this Section 5 shall be in addition to any liability that the Purchasers
may otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company (including any person who, with his consent, is named in
the Registration Statement as about to become a director of the Company), to
each officer of the Company who has signed the Registration Statement and to
each person, if any, who controls the Company within the meaning of the Act.
6. Information Furnished by Purchasers. The statements set forth in the second
paragraph of text under the caption "Plan of Distribution" concerning the terms
of the offering by the Purchasers in the prospectus supplement prepared in
connection with the transactions contemplated hereby constitute, to the extent
such statements relate to the Purchasers, the written information furnished by
or on behalf of the Purchasers referred to in Section 5 hereof.
7. Notices. Except as otherwise provided herein, all communications hereunder
shall be in writing and shall be deemed to have been given on the date delivered
by hand, sent by facsimile transmission, or mailed certified mail, return
receipt requested, if to the Purchasers to the addresses set forth on Exhibit A
hereto, and if to the Company to 000 Xxxxxxxx Xxxxx, Xxxxxx, XX 00000,
Attention: Xxxxxxx X. Xxxx, with a copy to Xxxxxxx X. Xxxxx, Smith, Stratton,
Wise, Xxxxx & Xxxxxxx, LLP, 000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000
which copies shall not constitute notice. Any party to this Agreement may change
such address for notices by sending to the parties to this Agreement written
notice of a new address for such purpose.
12
8. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns and the controlling persons, officers and directors
referred to in Section 5. Nothing in this Agreement is intended or shall be
construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
10. Fees and Expenses. Each party shall pay the fees and expenses of its
advisors, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.
11. Entire Agreement; Amendment. This Agreement contains the entire
understanding and agreement of the parties with respect to the matters covered
hereby and, except as specifically set forth herein, neither the Company nor any
of the Purchasers makes any representations, warranty, covenant or undertaking
with respect to such matters, and this Agreement supersedes all prior
understandings and agreements with respect to said subject matter, all of which
are merged herein. No provision of this Agreement may be waived or amended other
than by a written instrument signed by the Company and all of the Purchasers.
12. Headings. The article, section and subsection headings in this Agreement are
for convenience only and shall not constitute a part of this Agreement for any
other purpose and shall not be deemed to limit or affect any of the provisions
hereof.
13. Counterparts. This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and
shall become effective when counterparts have been signed by each party and
delivered to the other parties hereto, it being understood that all parties need
not sign the same counterpart. A signature on a counterpart of this Agreement
delivered by facsimile transmission shall be deemed to be the original
signature.
14. Representations and Agreements to Survive Delivery. All representations,
warranties, covenants and agreements of the Company herein or in certificates
delivered pursuant hereto shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Purchasers or any
controlling person thereof, and shall survive delivery of, and payment for, the
Shares to and by the Purchasers hereunder for a period of one (1) year,
provided, however, that such one (1) year period shall not be applicable to the
Company's obligations set forth in Section 5 hereof.
[Signature Pages Follow]
13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorize officers as of the date first above
written.
Alteon Inc.
By:/s/ Xxxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President and Chief Executive Officer
14
Merlin BioMed Private Equity Fund
By: /s/ Xxxxxxxxx Xxxxx
-----------------------------------------
Name: Xxxxxxxxx Xxxxx
Title: Fund Manager
Vertical Ventures Investments, LLC
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Partner
DMG Legacy Fund LLC
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
DMG Legacy Institutional Fund LLC
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
DMG Legacy International Ltd.
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Financial Officer
WHI Growth Fund, LP
By: Xxxxxxx Xxxxxx Investments, Inc.,
General Partner
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
WHI Select Fund, LP
By: Xxxxxxx Xxxxxx Investments, Inc.,
General Partner
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
EXHIBIT A
THE PURCHASERS
Number of Shares
Name and Address to be Purchased Aggregate Purchase Price
---------------- --------------- ------------------------
Merlin BioMed Private Equity Fund 150,000 $ 262,500
c/o Merlin BioMed Group
000 Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Vertical Ventures Investments, LLC 85,714 $ 150,000
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
DMG Legacy Fund LLC 20,000 $35,000
c/o DMG Advisors LLC
00 Xxxxxx Xxx., Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
DMG Legacy Institutional Fund LLC 200,000 $ 350,000
c/o DMG Advisors LLC
00 Xxxxxx Xxx., Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
DMG Legacy International Ltd. 208,571 $ 365,000
c/o DMG Advisors LLC
00 Xxxxxx Xxx., Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
WHI Growth Fund, LP 620,000 $1,085,000
c/o Xxxxxxx Xxxxxx Investors, Inc.
Xxx Xxxxx XxXxxxx Xx., Xxxxx 000
Xxxxxxx, XX 00000
WHI Select Fund, LP 430,000 $ 752,500
c/o Xxxxxxx Xxxxxx Investors, Inc.
Xxx Xxxxx XxXxxxx Xx., Xxxxx 000
Xxxxxxx, XX 00000
TOTAL 1,714,285 $3,000,000
EXHIBIT B
FORM OF OPINION OF COUNSEL
December ___, 2002
TO THE PURCHASERS NAMED ON SCHEDULE A HERETO
Ladies and Gentlemen:
We have acted as counsel to Alteon Inc., a Delaware corporation (the
"Company"), in connection with the sale by the Company of 1,714,285 shares of
the Company's common stock, $0.01 par value (the "Shares"), pursuant to a Stock
Purchase Agreement dated as of December 20, 2002 (the "Agreement"), between the
Company and you. This opinion is being delivered to you pursuant to Section 4(d)
of the Agreement. Capitalized terms used but not otherwise defined herein have
the meanings ascribed to them in the Agreement.
In rendering this opinion, we have examined originals, or copies certified
or otherwise identified to our satisfaction as being true copies, of such
corporate records of the Company, certificates of public officials and of
officers of the Company and others, and the Registration Statement and the
Prospectus and other documents, including those relating to the issuance and
sale of the Shares by the Company to you and the authorization, execution and
delivery of the Agreement, as we have deemed necessary for the purpose of this
opinion.
In rendering this opinion, we have assumed the genuineness and
authenticity of all signatures on all documents submitted to us for examination;
the completeness, genuineness and authenticity of all documents submitted to us
as originals; the conformity to originals of all documents submitted to us as
facsimile or photostatic copies; the accuracy, completeness and authenticity of
certificates of public officials; and the accuracy and completeness of all
public records examined by us. As to factual matters relevant to our opinions,
we have relied on the representations and warranties contained in the Agreement
and on a certificate of an officer of the Company.
On the basis of such examinations and our consideration of such questions
of law as we have deemed relevant in the circumstances and subject to the
foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is an existing corporation
in good standing under the laws of the State of Delaware, with corporate power
and authority to own its properties and conduct its business as described in the
Prospectus; and the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such qualification.
2. The outstanding shares of the Common Stock of the Company have been
duly authorized and validly issued, are fully paid and nonassessable and conform
to the description thereof contained in the Prospectus. The Shares to be
delivered on the Closing Date conform to the description thereof contained in
the Prospectus, have been duly authorized and upon delivery and payment
therefore as contemplated by the Agreement will be validly issued, fully paid
and nonassessable. The stockholders of the Company have no preemptive rights
with respect to its Common Stock pursuant to the Company's certificate of
incorporation or bylaws or, to our knowledge, pursuant to any contract or
agreement to which the Company is a party.
3. No consent, approval, authorization or order of, or filing with, any
governmental agency or body or any court is required for the consummation of the
transactions contemplated by the Agreement in connection with the issuance or
sale of the Shares by the Company, except such as have been obtained and made
under the Act and such as may be required under state securities laws.
4. The execution, delivery and performance of the Agreement and the
issuance and sale of the Shares will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any statute, any
rule, regulation or, to our knowledge, order of any governmental agency or body
or any court having jurisdiction over the Company or any of its properties or,
to our knowledge, any agreement or instrument to which the Company is a party or
by which the Company is bound or to which any of the properties of the Company
is subject, or the charter or by-laws of the Company, and the Company has full
power and authority to authorize, issue and sell the Shares as contemplated by
the Agreement.
5. The Registration Statement has been declared effective by the
Commission under the Act, the Prospectus was filed with the Commission pursuant
to Rule 424(b) on July 25, 2001 and December __, 2002, and, to our knowledge, no
stop order suspending the effectiveness of the Registration Statement or any
part thereof has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act. The Registration
Statement, as of its effective date, and the Registration Statement and the
Prospectus, as of the dates of the Agreement and as of the Closing Date, and any
amendment or supplement thereto as of its date and the Closing Date (except for
the financial statements, the notes thereto and the related schedules and other
statistical or financial data included or incorporated by reference therein as
to which we express no opinion), complied as to form in all material respects
with the requirements of the Act and the Rules and Regulations.
6. To our knowledge, there is no pending or threatened action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or its property of a character required to
be disclosed in the Registration Statement which is not adequately disclosed in
the Prospectus.
7. The Agreement has been duly authorized, executed and delivered by the
Company.
We have participated in conferences with certain officers and
representatives of the Company at which the contents of the Registration
Statement and the Prospectus and related matters were discussed and, although we
do not pass upon, nor assume any responsibility for, the accuracy, completeness
or fairness of any statement contained in the Registration Statement or the
Prospectus and we have made no independent check or verification thereof, based
upon the foregoing, no facts
have come to our attention which would lead us to believe that either the
Registration Statement as of its effective date, the Registration Statement and
Prospectus as of the dates of the Agreement and as of the Closing Date or any
amendment or supplement thereto, as of its date and as of the Closing Date,
contained an untrue statement of a material fact or omitted 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 (it
being understood that we express no belief or opinion which respect to the
financial statements, including the notes and schedules thereto and other
financial and statistical data).
Where the phrase "to our knowledge" is used in this letter, such phrase
refers to the current awareness of the attorneys in this firm who are actively
involved in the representation of the Company as to matters with respect to
which we have been consulted and does not imply knowledge as to any other
matters.
The opinions expressed herein are subject to the effects and limitations imposed
by further legislation, administrative regulation and judicial decisions, which
effects may be prospective or retroactive. Our opinion in paragraph (4) is
limited to laws which normally apply to transactions of the type contemplated by
the Agreement. Our opinion in paragraph (1) as to the good standing of the
Company is based solely on certificates of good standing dated December 18, 2002
and December 19, 2002, issued by the Secretary of State of Delaware and the
Treasurer of the State of New Jersey, respectively.
With respect to the opinions expressed herein, we further advise you that
we express no opinion as to any law or regulation except for laws or regulations
of the State of New Jersey and the United States and the Delaware General
Corporation Law.
This opinion is issued as of the date hereof and is provided by us as
counsel for the Company to you at your request and for your exclusive use only
and is not to be made available to or relied upon by any other persons or
entities, except for counsel to you, which may rely on this opinion in rendering
its opinion to you, without our prior written consent. We undertake no
obligation to update you with respect to any changes herein.
Very truly yours,
