1
EXHIBIT 2
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
FOCAL, INC.
AND
GENZYME CORPORATION
------------------------------------
October 21, 1999
------------------------------------
2
TABLE OF CONTENTS
PAGE
ARTICLE I SALE OF THE SHARES..........................................................................1
1.1. Initial Sale and Purchase of the Shares........................................................1
1.2. Options to Sell Additional Shares of Common Stock..............................................1
ARTICLE II CLOSING AND FUNDING.........................................................................6
2.1. The Closings...................................................................................6
2.2. Initial Closing Funding........................................................................6
2.3. Delivery of Shares.............................................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................................7
3.1. Organization...................................................................................7
3.2. Authority to Execute and Perform Agreement.....................................................7
3.3. Capitalization.................................................................................7
3.4. Subsidiaries...................................................................................8
3.5. SEC Reports....................................................................................8
3.6. Financial Statements...........................................................................9
3.7. Absence of Undisclosed Company Liabilities.....................................................9
3.8. No Material Adverse Effect.....................................................................9
3.9. Actions and Proceedings........................................................................9
3.10. No Breach.....................................................................................10
3.11. Registration Rights...........................................................................10
3.12. Brokers or Finders............................................................................10
3.13. Patents, Trademarks, Etc......................................................................10
3.14. Anti-Takeover Laws............................................................................11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER............................................11
4.1. Authorization of Agreement....................................................................11
4.2. Litigation....................................................................................11
4.3. Investment Intention..........................................................................11
4.4. Due Diligence.................................................................................12
4.5. Brokers or Finders............................................................................12
ARTICLE V CONDITIONS TO CLOSING AND FUNDING..........................................................12
5.1. Conditions Precedent to Obligations of Purchaser at any Closing...............................12
-i-
3
5.2. Additional Conditions Precedent to the Obligations of the Purchaser at Option Closings........13
5.3. Conditions Precedent to Obligations of the Company at any Closing.............................15
5.4. Conditions Precedent to Obligations of the Purchaser at the Initial Closing Funding...........15
ARTICLE VI DOCUMENTS TO BE DELIVERED..................................................................16
6.1. Deliveries by the Company to the Purchaser at each Closing....................................16
6.2. Deliveries by the Company and the Purchaser at the Initial Closing............................16
6.3. Deliveries by the Company to the Purchaser at the Initial Closing Funding.....................16
6.4. Deliveries by the Purchaser to the Company at the Initial Closing Funding and each Closing....17
ARTICLE VII CERTAIN COVENANTS OF THE COMPANY...........................................................17
7.1. Participation Rights of Purchaser in Future Issuances.........................................17
7.2. Reservation of Common Stock and Other Securities..............................................18
7.3. Corporate Existence; Conduct of Business......................................................18
7.4. No Impairment.................................................................................18
7.5. Integration...................................................................................18
7.6. Provision of Information......................................................................19
7.7. Rights Agreement..............................................................................19
ARTICLE VIII STANDSTILL AGREEMENT AND RIGHT OF FIRST REFUSAL............................................19
8.1. Certain Definitions...........................................................................19
8.2. Prohibited Activities.........................................................................19
8.3. Exceptions....................................................................................20
8.4. Change of Control Notice and Agreement to Negotiate...........................................20
ARTICLE IX RESTRICTIONS ON TRANSFER...................................................................21
9.1. Restricted Shares.............................................................................21
9.2. Requirements for Transfer.....................................................................21
9.3. Legends.......................................................................................22
ARTICLE X MISCELLANEOUS..............................................................................22
10.1. Survival of Representations and Warranties....................................................22
10.2. Fees and Expenses.............................................................................22
-ii-
4
10.3. Further Assurances............................................................................22
10.4. Dispute Resolution............................................................................22
10.5. Entire Agreement; Amendments and Waivers......................................................23
10.6. Governing Law.................................................................................23
10.7. Table of Contents and Headings................................................................23
10.8. Notices.......................................................................................23
10.9. Section Headings, Construction................................................................24
10.10. Counterparts..................................................................................24
10.11. Rules of Construction.........................................................................24
10.12. Severability..................................................................................24
10.13. Binding Effect; Assignment....................................................................25
10.14. Limitation of Liability.......................................................................25
10.15. Use of Names..................................................................................25
-iii-
5
COMPANY DISCLOSURE SCHEDULES
Schedule 3.4 - Subsidiaries and Other Investments
Schedule 3.5(b) - Terminated Contract
Schedule 3.11 - Holders of Registration Rights
Schedule 3.13 - Intellectual Property Agreements
EXHIBITS
Exhibit A - Form of Registration Rights Agreement`
Exhibit B - Form of Company Board Resolutions
Exhibit C - Form of Opinion of Company's Counsel
Exhibit D - ADR Procedures
-iv-
6
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of October 21, 1999 (this
"AGREEMENT"), by and between FOCAL, INC., a Delaware corporation (the
"COMPANY"), and GENZYME CORPORATION, a Massachusetts corporation (the
"PURCHASER").
WITNESSETH:
WHEREAS, the Company proposes to issue and sell, and the Purchaser wishes
to purchase, shares of the Company's common stock, par value $.01 per share (the
"COMMON STOCK"), upon the terms and conditions set forth in this Agreement; and
WHEREAS, the Purchaser proposes to grant to the Company options to require
the Purchaser, subject to certain conditions, to purchase additional shares of
Common Stock;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements hereinafter contained, the parties hereby agree as follows:
ARTICLE I
SALE OF THE SHARES
1.1. INITIAL SALE AND PURCHASE OF THE SHARES. Upon the terms and subject
to the conditions contained herein, on the date hereof (the "INITIAL CLOSING
DATE"), the Company shall agree to sell to the Purchaser, and the Purchaser
shall agree to purchase from the Company, for $5,000,000 in cash (the "INITIAL
CLOSING FUNDING AMOUNT"), a number (rounded down to the nearest whole number) of
newly issued shares of Common Stock (the "INITIAL SHARES") obtained by dividing
$5,000,000 by the Initial Closing Purchase Price. The "INITIAL CLOSING PURCHASE
PRICE," subject to adjustment in accordance with Section 1.2(c) hereof, shall
mean the lesser of (a) the product obtained by multiplying (i) 1.25 by (ii) the
average of the per share closing prices of the Common Stock as reported by on
the Nasdaq National Market (the "NASDAQ") for the ten trading days immediately
following the date of the first public announcement by the Company of the
execution of this Agreement (the "ANNOUNCEMENT DATE"), which Announcement Date
shall occur within one trading day of the date of this Agreement, or (b) $8.00
(in each case, subject to equitable adjustment to reflect any stock split, stock
contribution, stock dividend or similar recapitalization event affecting the
Common Stock which becomes effective after the date hereof and on or before the
Initial Closing Funding Date (as hereinafter defined)).
1.2. OPTIONS TO SELL ADDITIONAL SHARES OF COMMON STOCK.
(a) Upon the terms and subject to the conditions set forth herein,
the Purchaser hereby grants to the Company the right and option, exercisable at
the Company's sole and absolute discretion:
(i) To sell to the Purchaser (the "FIRST OPTION") as soon as
practicable after the date upon which all applicable closing conditions set
forth in Article V and Article VI hereof have been fulfilled or waived (the
"FIRST OPTION CLOSING DATE"), at a per share sale price equal to the First
Option Purchase Price, a number (rounded down to the nearest whole number)
7
of newly issued shares of Common Stock (the "First Option Shares") not to exceed
the number obtained by dividing (A) $5,000,000 by (B) the First Option Purchase
Price. The "First Option Purchase Price," subject to adjustment in accordance
with Sections 1.2(c), Section 1.2(d) and 1.2(e)(ii) hereof, shall mean:
(1) if the average of the per share closing prices of the
Common Stock as reported by the Nasdaq or (or if the Common Stock is listed on
the New York Stock Exchange (the "NYSE") and the NYSE is the principal exchange
upon which the Common Stock is traded, then as reported by the NYSE) for the 20
trading days immediately preceding the date that the Exercise Notice (as defined
in Section 1.2(g) applicable to the First Option is delivered (such average
price is hereinafter referred to as the "FIRST OPTION SHARE VALUE") is less than
or equal to $6.40 per share (subject to equitable adjustment to reflect on any
stock split, stock combination, stock dividend or similar recapitalization event
affecting the Common Stock which becomes effective after the date hereof and on
or before the First Option Closing Date), the product obtained by multiplying
(A) 1.25 by (B) the First Option Share Value;
(2) if the First Option Share Value is greater than $6.40
per share (subject to equitable adjustment in the same manner as described in
clause (1) above) but less than or equal to $8.00 per share (subject to
equitable adjustment in the same manner as described in clause (1) above), then
$8.00 (subject to equitable adjustment in the same manner as described in clause
(1) above); or
(3) if the First Option Share Value is greater than $8.00
per share (subject to equitable adjustment in the same manner as described in
clause (1) above), then the First Option Share Value.
(ii) If the Company has obtained final marketing authorization
from the U.S. Food and Drug Administration for its FocalSeal(R)-L for the
indications and subject to the labeling restrictions set forth in the Premarket
Approval Application initially filed with the FDA in June 1999 with respect
thereto (the "REQUIRED FDA APPROVAL") on or before March 31, 2001, to sell to
the Purchaser (the "SECOND OPTION"), as soon as practicable after the date upon
which all applicable closing conditions set forth in Article V and Article VI
hereof have been fulfilled or waived (the "SECOND OPTION CLOSING DATE"), at a
per share sale price equal to the Second Option Purchase Price, a number of
newly issued shares (the "SECOND OPTION SHARES") not to exceed the number
(rounded down to the nearest whole number) obtained by dividing (A) $5,000,000
by (B) the Second Option Purchase Price. The "SECOND OPTION PURCHASE PRICE,"
subject to adjustment in accordance with Section 1.2(c), Section 1.2(d) and
Section 1.2(e)(ii) hereof shall mean an amount equal to the average of the per
share closing prices of the Common Stock as reported by the Nasdaq (or if the
Common Stock is listed on the NYSE and the NYSE is the principal exchange upon
which the Common Stock is traded, then as reported by the NYSE) for the 20
trading days immediately preceding the date that the Exercise Notice applicable
to the Second Option is delivered.
(iii) If the Company has obtained the Required FDA Approval
on or before March 31, 2001, to sell to the Purchaser (the "THIRD OPTION" and,
together with the First Option and the Second Option, the "OPTIONS"), as soon as
practicable after the date upon which all applicable closing conditions set
forth in Article V and Article VI hereof have been fulfilled
2
8
or waived (the "THIRD OPTION CLOSING DATE"), a number (rounded down to the
nearest whole number) of newly issued shares of Common Stock (the "THIRD OPTION
SHARES") not to exceed the number obtained by dividing (A) $5,000,000 by (B) the
Third Option Purchase Price. The "THIRD OPTION PURCHASE PRICE," subject to
adjustment in accordance with Section 1.2(c), Section 1.2(d) and Section
1.2(e)(ii) hereof, shall mean the average of the per share closing prices of the
Common Stock as reported by the Nasdaq (or if the Common Stock is listed on the
NYSE and the NYSE is the principal exchange upon which the Common Stock is
traded, then as reported by the NYSE) for the 20 trading days immediately
preceding the date that the Exercise Notice applicable to the Third Option is
delivered.
(b) The First Option Closing Date, the Second Option Closing Date and
the Third Option Closing Date are referred to herein collectively as the "OPTION
CLOSING DATES", and together with the Initial Closing Date, as the "CLOSING
DATES". The Initial Shares, the First Option Shares, the Second Option Shares
and the Third Option Shares are referred to collectively herein as the "SHARES".
The Initial Closing Purchase Price, the First Option Purchase Price, the Second
Option Purchase Price and the Third Option Purchase Price, in each case subject
to adjustment in accordance with Section 1.2(c), Section 1.2(d) and Section
1.2(e)(ii) hereof, are referred to collectively herein as the "PER SHARE
PURCHASE PRICES".
(c) In the event that a Material Event (as hereinafter defined)
occurs (i) within 135 days prior to commencement of the Price Determination
Period (as hereinafter defined) and such Material Event has not been disclosed
by a public announcement made by or in a Company SEC Report (as hereinafter
defined) filed by the Company in each case not fewer than three trading days
prior to the commencement of the Price Determination Period or (ii) during the
Price Determination Period, regardless of whether such Material Event has been
disclosed in any public announcement made by or Company SEC Report filed by the
Company then, notwithstanding the provisions of Section 1.2(a), the Per Share
Purchase Price shall be subject to adjustment as provided in this Section 1.2(c)
(a "PRICE ADJUSTMENT EVENT"). For purposes of this Section 1.2(c), "MATERIAL
EVENT" shall mean any event or occurrence (other than the entering into of this
Agreement) which is reasonably likely to materially affect (either adversely or
positively) (1) the business, properties, results of operations or financial
condition of the Company or (2) the ability of the Company to perform its
obligations under this Agreement. For purposes of this Agreement, the "PRICE
DETERMINATION PERIOD" shall mean the period of trading days during which the
closing prices of the Common Stock are averaged to calculate the Per Share
Purchase Price payable for Shares to be purchased at a Closing. In the event
that a Price Adjustment Event shall have occurred, then: (i) unless the Material
Event has not already been announced or disclosed, the Company shall promptly
publicly announce or file a Company SEC Report disclosing such Material Event;
(ii) the Price Determination Period with respect to such purchase shall be
delayed and shall commence on the third trading day following the date of the
public announcement or disclosure of such Material Event; and (iii) such Closing
shall take place as soon as practicable following the termination of the
applicable Price Determination Period.
(d) In the event that an Option Closing has been delayed in
accordance with Section 5.2(a)(v) as a result of a Suspension Event (as defined
in Section 5.2(a)(v)) then, notwithstanding the provisions of Section 1.2(a) but
subject to any further adjustment required pursuant to Section 1.2(c), the Price
Determination Period with respect to such Option Closing
3
9
shall mean the period of 20 trading days immediately preceding the last trading
day prior to the delayed Option Closing Date.
(e) Notwithstanding anything to the contrary herein, and regardless
of whether an Exercise Notice with respect to such Option has previously been
delivered, the Options set forth in Section 1.2(a) shall immediately terminate
and shall have no further force or effect upon the occurrence of the following
events on or prior to the applicable Option Closing Date:
(i) the effectiveness of any reclassification of, or
recapitalization affecting, the Common Stock other than (A) a change in par
value, or from par value to no par value, or from no par value to par value, (B)
a subdivision or combination of shares of Common Stock, (C) a stock dividend
payable in shares of Common Stock, or (D) any reclassification, recapitalization
or other change in the Common Stock if the Board of Directors of the Company,
acting in good faith, concludes, after comparing the rights, characteristics and
privileges of the Common Stock prior to such event with the rights,
characteristics and privileges of the securities issued in exchange for, in
replacement of or otherwise in respect of shares of Common Stock in connection
with such reclassification, recapitalization or other change in the Common
Stock, that the Common Stock prior to such event and the securities issued in
connection with such event, taken together, would all constitute securities of
the same class for all purposes under the Securities Act of 1933, as amended
(the "SECURITIES ACT") and the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT");
(ii) the closing of any consolidation or merger of the Company
with or into another corporation, other than: (A) a merger with another
corporation in which the Company is the continuing corporation and which does
not result in any reclassification of, or recapitalization affecting, the Common
Stock and in which the stockholders of the Company immediately prior to the
merger own in excess of 50% of the Common Stock immediately following the merger
or (B) a merger with another corporation in which the continuing corporation
following the merger (1) is a company with publicly-traded common stock listed
on the Nasdaq or the NYSE and with an aggregate market capitalization
immediately following the consummation of such merger of less than or equal to
$2,000,000,000 and (2) the continuing corporation is the permitted assignee or
transferee of and has assumed all of the Company's obligations under the
Distribution and Marketing Collaboration Agreement dated the date hereof between
the Company and the Purchaser (the "DISTRIBUTION AND MARKETING AGREEMENT");
PROVIDED, HOWEVER, that, following the occurrence of any merger described in
clause (B) of this paragraph, then, notwithstanding any other provisions of this
Agreement, (x) "Common Stock" shall mean the publicly traded common stock of the
continuing corporation and "Shares" shall mean the shares of Common Stock
issuable upon exercise of the Options and (y) the Per Share Purchase Price for
Shares purchased upon the exercise of any Option thereafter exercised shall,
subject to adjustment in accordance with Sections 1.2(c) and 1.2(d), equal the
average of the per share closing prices of the Shares as reported by the Nasdaq,
or, if the Common Stock is listed on the NYSE and the NYSE is the principal
exchange upon which the Common Stock is traded, then as reported by the NYSE,
for the 20 trading days immediately preceding the date upon which the Exercise
Notice applicable to such Option is delivered;
4
10
(iii) the closing of any sale of all or substantially all of the
assets of the Company; or
(iv) the termination of the Distribution and Marketing Agreement
by the Purchaser pursuant to Sections 11.3(b) or 11.4(d) thereof.
(f) The agreement between the Company and the Purchaser with respect
to each of the First Option, the Second Option and the Third Option are separate
agreements, and the right of the Company to sell Shares, and the obligation of
the Purchaser to purchase Shares, on each Option Closing Date are separate
rights and obligations. If either (i) the Company does not exercise any Option
within the applicable exercise period or (ii) the Company exercises such Option
but the Option Closing does not occur because the applicable closing conditions
to be fulfilled by the Company have not been fulfilled due to reasons other than
bad faith actions of the Purchaser, or willful misconduct or a breach of this
Agreement by the Purchaser, then such Option shall terminate and shall be of no
further force and effect but such termination shall not have any other effect on
the other Options.
(g) The Company may exercise the First Option, the Second Option or
the Third Option, as the case may be, in whole or in part, by delivering to the
Purchaser at any time during the applicable period specified below a written
notice setting forth the number of Shares that the Company is requiring the
Purchaser to purchase at the Per Share Purchase Price and the aggregate purchase
price (not to exceed $5,000,000) (any such notice being an "EXERCISE NOTICE"):
(i) in the case of the First Option, to be effective the
Exercise Notice must be delivered during the 20-day period commencing on April
1, 2000 and ending at 5:00 p.m., Boston time, on April 20, 2000;
(ii) in the case of the Second Option, to be effective the
Exercise Notice must be delivered during the 20-day period commencing on October
1, 2000 and ending at 5:00 p.m., Boston time, on October 20, 2000; PROVIDED,
HOWEVER that, if the Required FDA Approval has not been obtained by March 31,
2000 but is obtained on or before March 31, 2001, then the commencement of the
20-day period for the exercise of the Second Option shall be delayed so that
such 20-day period shall commence on the date which is a number of days after
October 1, 2000 equal to the number of days after March 31, 2000 that the
Required FDA Approval is obtained (or if such commencement date is not a trading
day, then on the next trading day thereafter) and shall end at 5:00 p.m., Boston
time, on the 20th day thereafter (or if such day is not a trading day, then at
5:00 p.m., Boston time, on the next trading day thereafter); and
(iii) in the case of the Third Option, to be effective the
Exercise Notice must be delivered during the 20-day period commencing on April
1, 2001 and ending at 5:00 p.m., Boston time, on April 20, 2001; PROVIDED,
HOWEVER that, if the Required FDA Approval has not been obtained by March 31,
2000 but is obtained on or before March 31, 2001, then the commencement of the
20-day period for the exercise of the Third Option shall be delayed so that such
20-day period shall commence on the date which is a number of days after April
1, 2001 equal to the number of days after March 31, 2000 that the Required FDA
Approval is obtained
5
11
(or if such commencement date is not a trading day, then on the next trading day
thereafter) and shall end at 5:00 p.m., Boston time, on the 20th day thereafter
(or, if such day is not a trading day, then the next trading day thereafter).
ARTICLE II
CLOSING AND FUNDING
2.1. THE CLOSINGS. The closing (the "INITIAL CLOSING") of the sale and
purchase of the Initial Shares shall take place at the offices of Xxxx and Xxxx
LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, at 10:00 a.m., Boston time, on the
Initial Closing Date. The closing of any sale and purchase of Shares pursuant to
the First Option is referred to herein as the "FIRST OPTION CLOSING" and shall
occur on the First Option Closing Date. The closing of any sale and purchase of
Shares pursuant to the Second Option is referred to herein as the "SECOND OPTION
CLOSING" and shall occur on the Second Option Closing Date. The closing of any
sale and purchase of Shares pursuant to the Third Option is referred to herein
as the "THIRD OPTION CLOSING" and shall occur on the Third Option Closing Date.
The Initial Closing, the First Option Closing, the Second Option Closing and the
Third Option Closing are referred to herein individually as a "CLOSING" and
collectively as the "CLOSINGS." The First Option Closing, the Second Option
Closing and the Third Option Closing (each an "OPTION CLOSING") shall take place
at the offices of Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, or
at such other place as shall be mutually agreed upon by the parties, at 10:00
a.m., Boston time, on the applicable Option Closing Date.
2.2. INITIAL CLOSING FUNDING. Subject to the fulfillment or waiver of the
conditions set forth in Section 5.4 and Section 6.3 hereof, the payment of the
Initial Closing Funding Amount (the "INITIAL CLOSING FUNDING") shall occur on
the next trading day following the completion of the Price Determination Period
applicable to the Initial Closing (the "INITIAL CLOSING FUNDING DATE").
2.3. DELIVERY OF SHARES. At the Initial Closing Funding and at each Option
Closing, (a) the Company shall deliver to the Purchaser a certificate or
certificates evidencing the Shares being purchased by the Purchaser at such
Initial Closing Funding or Option Closing, against payment by wire transfer of
immediately available funds of an amount equal to the applicable Per Share
Purchase Price multiplied by the number of Shares being purchased at such
Initial Closing Funding or Closing to an account designated in writing by the
Company two business days prior to the Initial Closing Funding Date or the
Option Closing Date, as applicable and (b) the parties shall make the other
deliveries specified in Article VI hereof. The Shares delivered to the Purchaser
at such Initial Closing Funding Date or the Option Closing shall be free and
clear of any Liens, except for the restrictions of transfer provided in the
Registration Rights Agreement dated the date hereof between the Company and the
Purchaser substantially in the form attached hereto as EXHIBIT A (the
"REGISTRATION RIGHTS AGREEMENT"). For purposes of this Agreement, "LIEN" means
any lien, pledge, mortgage, deed of trust, security interest, claim, lease,
charge, option, right of first refusal, easement, servitude, transfer
restriction under any shareholder or similar agreement, encumbrance or any other
restriction or limitation whatsoever.
6
12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to and agrees with the Purchaser, as of
the Initial Closing Date, and as of each Option Closing Date, that:
3.1. ORGANIZATION. The Company is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has corporate or similar power and authority to own, lease and
operate its assets and to carry on its business as now being and as heretofore
conducted. The Company is qualified or otherwise authorized to transact business
as a foreign corporation or other organization in all jurisdictions in which
such qualification or authorization is required by law, except for jurisdictions
in which the failure to be so qualified or authorized could not reasonably be
expected to have a Material Adverse Effect. For purposes of this Agreement,
"MATERIAL ADVERSE EFFECT" means any event or occurrence which is reasonably
likely to materially adversely affect (i) the business, properties, results of
operations or financial condition of the Company or (ii) the ability of the
Company to perform its obligations under this Agreement.
3.2. AUTHORITY TO EXECUTE AND PERFORM AGREEMENT. The Company has the
corporate power and authority to enter into, execute and deliver this Agreement
and the Registration Rights Agreement and to carry out the transactions
contemplated by this Agreement and the Registration Rights Agreement. The
execution and delivery of each of this Agreement and the Registration Rights
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of the Company. This Agreement has been, and the Registration Rights Agreement
when executed at the Initial Closing will be, duly executed and delivered by the
Company and constitute valid and binding obligations of the Company, enforceable
in accordance with their respective terms; subject as to enforcement of remedies
to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting generally the enforcement of creditor's rights and subject to a
court's discretionary authority with respect to the granting of a decree
ordering specific performance or other equitable remedies. No approval of the
stockholders of the Company is required for the Company to enter into this
Agreement or to consummate the transactions contemplated hereby.
3.3. CAPITALIZATION.
(a) The authorized capital of the Company consists of 55,000,000
shares of capital stock, consisting of (1) 50,000,000 shares of Common Stock, of
which there are 13,445,432 shares issued and outstanding as of September 30,
1999, 1,878,745 shares reserved for issuance upon the exercise of certain
options issued pursuant to the Company's 1992 Equity Incentive Plan, 1999 Stock
Incentive Plan and 1997 Non-Employee Director Option Plan, 123,753 shares
reserved for issuance pursuant to the Company's 1997 Employee Stock Purchase
Plan, and 43,782 shares reserved for issuance upon the exercise of certain
outstanding warrants to purchase Common Stock and (2) 5,000,000 shares of
preferred stock, per value $.01 per share ("Preferred Stock"), none of which are
issued and outstanding; and all shares of Common Stock
7
13
and Preferred Stock have the rights, privileges, restrictions and conditions
specified in the Company's Certificate of Incorporation.
(b) All of the issued and outstanding shares of Common Stock have
been duly authorized for issuance and are validly issued, fully paid and
non-assessable.
(c) The Shares to be issued pursuant to this Agreement, upon delivery
to the Purchaser of certificates therefor against payment in accordance with the
terms of this Agreement: (i) will be validly issued, fully paid and
nonassessable; (ii) except for the restrictions on transfer provided in this
Agreement and in the Registration Rights Agreement, will be free and clear of
all Liens, other than any Liens that may be granted by the Purchaser; and (iii)
assuming that the representations of the Purchaser in Article IV hereof are true
and correct, will be exempt from the registration requirements of the Securities
Act.
3.4. SUBSIDIARIES. Except as disclosed in SECTION 3.4 of the Disclosure
Schedule, the Company has no Subsidiaries and, does not own, directly or
indirectly, any shares of capital stock or other security of any other entity or
any other investment in any other entity. For purposes of this Agreement,
"SUBSIDIARY" means any Person of which 50% or more of the outstanding voting
securities or other voting equity interests are owned, directly or indirectly,
by the Company, and "PERSON" means any individual, corporation, partnership,
limited liability company, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, governmental or regulatory body or
other entity, as applicable.
3.5. SEC REPORTS. (a) The Company has timely filed with the U.S.
Securities and Exchange Commission (the "SEC") under the Exchange Act all
documents required to be filed under Sections 13, 14 or 15(d) of the Exchange
Act since December 31, 1997. Prior to each Closing Date, the Company shall have
previously delivered to the Purchaser (a) each Annual Report on Form 10-K of the
Company filed with the SEC since December 31, 1998 (the Annual Report on Form
10-K most recently filed prior to a given Closing Date is referred to herein as
the "COMPANY 10-K" relating to such Closing Date), (b) all proxy statements
relating to the Company's meetings of stockholders held since December 31, 1998
and (c) all other documents filed by the Company with the SEC since December 31,
1998, in each case as filed with the SEC (collectively, the "COMPANY SEC
REPORTS"). As of their respective dates, such documents complied in all material
respects with applicable SEC requirements and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) Neither the Company nor any Subsidiary of the Company, if any, is a
party to or bound by, and neither they nor their properties are subject to, any
contract or other agreement, or any amendment thereto, required to be disclosed
in a Form 10-K, Form 10-Q or Form 8-K of the Company which is not disclosed in
the Company SEC Reports. Except as disclosed in the Company SEC Reports or as
disclosed on Schedule 3.5(b) attached hereto, all of such contracts and other
agreements are valid, subsisting, in full force and effect, binding upon the
Company or the applicable subsidiary of the Company, if any, and, to the best
knowledge of the Company, binding upon the other parties thereto in accordance
with their terms, and the Company or the applicable subsidiary of the Company,
if any, have paid in full or accrued all
8
14
amounts now due from them thereunder, and have satisfied in full or provided for
their liabilities and obligations thereunder which are presently required to be
satisfied or provided for and are not in default under any of them, nor, to the
best knowledge of the Company, is any other party to any such contract or other
agreement in default thereunder, nor does any condition exist that with notice
or lapse of time or both would constitute a default thereunder, other than any
such breaches or defaults which would not, either individually or in the
aggregate, have a Material Adverse Effect. True and complete copies of all of
the contracts and other agreements referred to in this Section 3.5 have been
provided previously to the Purchaser.
3.6. FINANCIAL STATEMENTS. The financial statements (the "FINANCIAL
STATEMENTS") contained in the Company 10-K and each of the Company's Quarterly
Reports on Form 10-Q for each quarter ended after the end of the most recent
fiscal year covered by the Company 10-K (the "COMPANY 10-Qs") have been prepared
from, and are in accordance with, the books and records of the Company and
fairly present the financial condition, results of operations and cash flows of
the Company as of and for the periods presented therein, all in accordance with
generally accepted accounting principles applied on a consistent basis, except
as otherwise indicated therein and subject, in the case of the unaudited
Financial Statements included in the Company 10-Qs, to normal year-end and audit
adjustments, which in the aggregate are not material, and the absence of
footnote disclosures.
3.7. ABSENCE OF UNDISCLOSED COMPANY LIABILITIES. Except as otherwise
disclosed in the Company's SEC Reports, as at the end of the most recent fiscal
year covered by the Company 10-K, the Company had no material liabilities of any
nature, whether accrued, absolute, contingent or otherwise (including, without
limitation, liabilities as guarantor or otherwise with respect to obligations of
others or liabilities for taxes due or then accrued or to become due) that were
not adequately reflected or reserved against on the balance sheet dated the date
of the end of the most recent fiscal year (or the notes thereto) included in
such Company 10-K (the "AUDITED BALANCE SHEET"). The Company has no such
liabilities, other than liabilities (i) adequately reflected or reserved against
on such Audited Balance Sheet, or as otherwise disclosed in the Company's SEC
Reports, (ii) reflected in the Company's unaudited consolidated balance sheet
contained in the unaudited Financial Statements included in the Company 10-Qs,
(iii) incurred since the date of the unaudited balance dated the date of the end
of the most recent quarter included in the Company's most recently filed 10-Q
(the "UNAUDITED BALANCE SHEET DATE") in the ordinary course of business or (iv)
that would not, in the aggregate, have a Material Adverse Effect.
3.8. NO MATERIAL ADVERSE EFFECT. Since the Unaudited Balance Sheet Date,
except as disclosed in the Company SEC Reports, there has occurred no event
which could have a Material Adverse Effect.
3.9. ACTIONS AND PROCEEDINGS. Except as set forth in the Company SEC
Reports, there are no actions, suits or claims or legal, administrative or
arbitration proceedings ("LEGAL PROCEEDINGS") pending or, to the best knowledge
of the Company, threatened against the Company that individually or in the
aggregate could have a Material Adverse Effect.
9
15
3.10. NO BREACH. Except for (a) filings required under the Exchange Act
and (b) any required filing of a Notification and Report form under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and (c) subject to filing a notice of sale on Form D pursuant to Rule 506
under the Securities Act, if applicable, the delivery and performance of this
Agreement by the Company and consummation by it of the transactions contemplated
hereby will not (i) violate any provision of the charter or by-laws of the
Company, (ii) violate, conflict with or result in the breach of any of the terms
or conditions of, result in modification of, or otherwise give any other
contracting party the right to terminate or accelerate obligations under, or
constitute (or with notice or lapse of time or both constitute) a default under,
any material instrument, contract or other agreement to which the Company or any
Subsidiary of the Company, if any, is party or to which any of them or any of
their assets or properties is bound or subject, (iii) violate any law, ordinance
or regulation or any order, judgment, injunction, decree or requirement (each an
"ORDER") of any court, arbitrator or governmental or regulatory body applicable
to the Company or any Subsidiary of the Company, if any, or by which any of
their assets or properties is bound, (iv) require on the part of the Company or
any Subsidiary of the Company, if any, any filing with, notice to, or permit,
consent or approval of, any governmental or regulatory body or (v) result in the
creation of any Lien on the assets or properties of the Company or any
Subsidiary of the Company, if any, excluding from the foregoing clauses (ii),
(iii), (iv) and (v) violations, breaches and defaults which, and filings,
notices, permits, consents and approvals the absence of which, in the aggregate,
would not have a Material Adverse Effect.
3.11. REGISTRATION RIGHTS. Except as set forth in the Company SEC Reports
or on SCHEDULE 3.11 hereto, no Person has demand or other rights to cause the
Company to file any registration statement under the Securities Act relating to
any securities of the Company or any right to participate in such registration
statement.
3.12. BROKERS OR FINDERS. No Person has acted, directly or indirectly, as
a broker, finder or financial advisor for the Company or its Affiliates in
connection with the transactions contemplated by this Agreement, and no Person
is entitled to any fee or commission or like payment in respect thereof. As used
in this Agreement, "AFFILIATE" means, with respect to any Person, any other
Person controlling, controlled by or under common control with such Person.
3.13. PATENTS, TRADEMARKS, ETC. As used herein, "INTELLECTUAL PROPERTY"
shall mean patents, patent applications, patent rights, biological materials,
information, manufacturing techniques, data, designs, concepts, technical
information, inventions, developments, discoveries, software, know-how, methods,
techniques, formulae, processes and other proprietary ideas. The Company has
licensed from third parties the Intellectual Property covered by the license
agreements listed on SCHEDULE 3.13 (the "INTELLECTUAL PROPERTY AGREEMENTS"). The
Company possesses or has valid and sufficient rights to use the Intellectual
Property used in its business as currently conducted or as proposed to be
conducted. The Company has not received notice from a third party that the
Company's operations infringe upon or conflict with the intellectual property
rights of such third party and, to the Company's knowledge, there is no basis
for any third party to do so. No claim is pending or, to the Company's
knowledge, threatened to the effect that any such Intellectual Property of the
Company or any Intellectual Property Agreements are invalid or unenforceable by
the Company. The Company has taken reasonable precautions to maintain as
confidential all material and protectable technical or other proprietary
10
16
information developed by and belonging to the Company which has not been
patented and, to the Company's knowledge, such information has been kept
confidential pursuant to appropriate arrangements for confidentiality. Except as
set forth on SCHEDULE 3.13 hereto, the Company has not granted or assigned to
any other Person any right to manufacture, have manufactured, assemble or sell
the products or proposed products or to provide the services or proposed
services of the Company (other than agreements to provide services to the
Company) which is not terminable on notice by the Company without cost or other
liability to the Company.
3.14. ANTI-TAKEOVER LAWS. Seller has taken all action necessary such that
no "fair price," "control share acquisition," "business combination,"
"anti-takeover" or similar statute (including, without limitation Section 203 of
the Delaware General Corporation Law and Chapters 110C, 110D, 110E or 110F of
the General Laws of the Commonwealth of Massachusetts) will apply to (i) the
execution or delivery of this Agreement, (ii) the purchase of the Shares at the
Initial Closing or at any Option at any Option Closing, (iii) the exercise by
the Purchaser of its rights pursuant to Section 7.1 hereof, (iv) the acquisition
by the Purchaser of Voting Stock (as hereinafter defined) of the Company to the
extent permitted pursuant to Sections 8.2 and 8.3 or (v) the consummation of the
transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company, as of the date
hereof and as of each Option Closing Date, that:
4.1. AUTHORIZATION OF AGREEMENT. The Purchaser has the corporate power and
authority to execute and deliver this Agreement and the Registration Rights
Agreement and to carry out the transactions contemplated by this Agreement and
the Registration Rights Agreement. The execution and delivery of each of this
Agreement and the Registration Rights Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on behalf of the Purchaser. This Agreement has been,
and the Registration Rights Agreement when executed at the Initial Closing will
be, duly executed by the Purchaser and constitute valid and binding obligations
of the Purchaser, enforceable against the Purchaser in accordance with their
respective terms; subject as to enforcement of remedies to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
generally the enforcement of creditor's rights and subject to a court's
discretionary authority with respect to the granting of a decree ordering
specific performance or other equitable remedies.
4.2. LITIGATION. There are no Legal Proceedings pending or, to the best
knowledge of the Purchaser, threatened that are reasonably likely to prohibit or
restrain the ability of the Purchaser to enter into this Agreement or consummate
the transactions contemplated hereby.
4.3. INVESTMENT INTENTION. The Purchaser is acquiring the Initial Shares,
and will acquire any additional Shares at any Option Closing, for its own
account without a view to the distribution (as such term is used in Section
2(11) of the Securities Act) thereof in violation of applicable law; PROVIDED,
HOWEVER, that in making the representation, such Purchaser does not
11
17
agree to hold the Shares for any minimum or specific term and reserves the right
to sell, transfer or otherwise dispose of the Shares at any time in accordance
with the provisions of this Agreement and the Registration Rights Agreement and
in compliance with Federal and state securities laws applicable to such sale,
transfer or disposition. The Purchaser is an "accredited investor" within the
meaning of Regulation D under the Securities Act. The Purchaser understands that
the Shares have not been registered under the Securities Act and cannot be sold
unless subsequently registered under the Securities Act or an exemption from
such registration is available. The Purchaser understands that certificates
representing the Shares will be issued with a legend substantially in the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ACCORDINGLY NEITHER SUCH SECURITIES
NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT AND THE RULES AND REGULATIONS THEREUNDER.
The Purchaser further acknowledges that in making the representation and
warranty contained in Section 3.3(c)(iii) hereof, the Company is relying on the
accuracy of the representations and warranties of the Purchasers contained in
this Section 4.3 and Section 4.4.
4.4. DUE DILIGENCE. The Purchaser acknowledges that it has been given a
full opportunity to ask questions of the Company concerning the Company's
business and financial affairs and the terms and conditions of the transactions
contemplated by this Agreement and to obtain any additional information as it
desired in order to evaluate its investment, and that such questions have been
answered to the satisfaction of the Purchaser.
4.5. BROKERS OR FINDERS. No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for the Purchaser or its Affiliates in
connection with the transactions contemplated by this Agreement, and no Person
is entitled to any fee or commission or like payment in respect thereof.
ARTICLE V
CONDITIONS TO CLOSING AND FUNDING
5.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AT ANY CLOSING. The
obligation of the Purchaser to purchase Shares from the Company pursuant to this
Agreement at any Closing is subject to the fulfillment, on or prior to the
applicable Closing Date, of each of the following conditions (any or all of
which may be waived by the Purchaser in whole or in part to the extent permitted
by applicable law):
(a) all representations and warranties of the Company shall be true
and correct at and as of such Closing Date, except to the extent expressly made
as of an earlier date;
(b) the Company shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with
12
18
by the Company on or prior to such Closing Date, including delivery, or causing
the delivery of, the documents indicated in Article VI; and
(c) no Legal Proceedings shall have been instituted or threatened or
claim or demand made against the Company or the Purchaser seeking to restrain or
prohibit or to obtain substantial damages with respect to the consummation of
the transactions contemplated hereby, and there shall not be in effect any order
by a court, arbitrator, or governmental or regulatory body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby.
5.2. ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASER
AT OPTION CLOSINGS. The obligations of the Purchaser to purchase the Shares from
the Company pursuant to this Agreement at any Option Closing is subject to the
fulfillment, on or prior to the applicable Option Closing Date, of each of the
following conditions (any or all of which may be waived by the Purchaser in
whole or in part to the extent permitted by applicable law):
(a) With respect to any Option Closing, the following conditions:
(i) The Company shall not have entered into an agreement
relating to or have publicly announced its intention to effect any transaction
of the type described in Section 1.2(e) hereof.
(ii) The applicable Exercise Notice shall have been timely
delivered by the Company within the applicable time periods set forth in Section
1.2(g) and shall have been received by the Purchaser.
(iii) None of the following events shall have occurred prior to
or after the delivery of the applicable Exercise Notice and not have been
resolved to the satisfaction of the Purchaser prior to the applicable Closing
Date:
(1) the Common Stock ceases to be quoted on the Nasdaq (or,
if the principal exchange on which the Common Stock is then listed and traded is
the NYSE rather than the Nasdaq, then the NYSE);
(2) the Company ceases to be a reporting company under the
Exchange Act;
(3) the Company has made an assignment for the benefit of
creditors, or has admitted in writing its inability to pay or generally fails to
pay its debts as they mature or become due, or has petitioned or applied for the
appointment of a trustee or other custodian, liquidator or receiver of the
Company or any Subsidiary of the Company which is a "significant subsidiary" of
the Company within the meaning of Rule 1-02(w) of Regulation S-X (a "SIGNIFICANT
SUBSIDIARY"), if any, or of any substantial part of the assets of the Company or
any Significant Subsidiary of the Company, if any, or has commenced any case or
other proceeding relating to the Company or any Significant Subsidiary of the
Company, if any, under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or has taken any action to authorize
or in furtherance of any of the foregoing, or if any such petition or
application has
13
19
been filed or any such case or other proceeding has been commenced against the
Company or any Significant Subsidiary of the Company, if any, and the Company or
any Significant Subsidiary of the Company, if any, has indicated its approval
thereof, consent thereto or acquiescence therein or such petition or application
has not been dismissed within 45 days following the filing thereof; or
(4) a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the Company or any
Significant Subsidiary of the Company, if any, bankrupt or insolvent, or
approving a petition in any such case or other proceeding, or a decree or order
for relief is entered in respect of the Company or any Significant Subsidiary of
the Company, if any, in an involuntary case under federal bankruptcy laws as now
or hereafter constituted.
(iv) No Material Event shall have occurred which would constitute
a Price Adjustment Event for which the required adjustment in the applicable Per
Share Purchase Price has not been made in accordance with Section 1.2(c).
(v) No Suspension Event shall have occurred which has not been
denied, dismissed with prejudice or rescinded. For purposes of this Agreement, a
"SUSPENSION EVENT" shall be deemed to have occurred if: (1) a third party has
made or filed a written claim (a "SUSPENSION REQUEST") requesting a court or
arbitrator to prohibit, restrain or enjoin the performance by the Company or the
Purchaser of their respective obligations under the Distribution and Marketing
Agreement, which Suspension Request is based upon or arises out of a claim
which, if substantiated, would constitute a breach by the Company of its
representations and warranties set forth in clause (iv) or (v) of Section 13.1
of the Distribution and Marketing Agreement or (2) a court or arbitrator has
granted an award, order, injunction or decision enforcing such Suspension
Request. With respect to any Option, (1) if such Suspension Event is rescinded,
denied or dismissed with prejudice on or prior to the 90th day following the
delivery date of the applicable Exercise Notice for the First Option, the Second
Option or the Third Option, as the case may be, then, subject to the fulfillment
or waiver of the other applicable conditions set forth in Sections 5.1 and 5.2,
the Option Closing with respect to such Option shall occur as soon as
practicable following the resolution of such Suspension Event or (2) if such
Suspension Event is not rescinded, denied or dismissed with prejudice on or
before the 90th day following the delivery date of the applicable Exercise
Notice, but is subsequently rescinded, denied or dismissed with prejudice then,
subject to the fulfillment or waiver of the other applicable conditions set
forth in Sections 5.1 and 5.2, the Option Closing with respect to such Option
shall, at the option of the Company, occur on the earlier of: (A) the next
subsequent Option Closing Date, if any, or (B) as soon as practicable following
the resolution of such Suspension Event.
(vi) The conditions set forth in Section 5.1 and the other
provisions of this Section 5.2 shall have been satisfied or waived on or prior
to the 90th day following the delivery date of the applicable Exercise Notice;
PROVIDED, HOWEVER, that in the event that a Closing is delayed in accordance
with Section 1.2(c) due to the occurrence of a Material Event, such 90-day
period shall be extended by the number of days that the commencement of the
Price Determination Period is so delayed, but in no event shall such extension
be for more than 45 days; PROVIDED, FURTHER, that in the event that an Option
Closing is delayed in accordance with
14
20
Section 5.2(a)(v) due to the occurrence of a Suspension Event which is
subsequently resolved prior to the termination of such Option, then such 90-day
period shall be extended until the occurrence of such Option Closing (subject to
further extension pursuant to Section 1.2(c) on account of a Material Event),
but in no event shall such period be extended beyond the 135th day following the
latest date upon which the Exercise Notice for the Third Option could be timely
delivered in accordance with Section 1.2(g)(iii).
(b) With respect to the Second Option Closing and the Third Option
Closing, the Required FDA Approval shall not have been suspended, rescinded, or
modified in any materially adverse respect.
5.3. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AT ANY CLOSING.
The obligations of the Company to consummate the transactions contemplated by
this Agreement at any Closing are subject to the fulfillment, prior to or on the
applicable Closing Date, of each of the following conditions (any or all of
which may be waived by the Company in whole or in part to the extent permitted
by applicable law):
(a) all representations and warranties of the Purchaser contained
herein shall be true and correct; and
(b) the Purchaser shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by the Purchaser on or prior to such Closing Date,
including delivery, or causing the delivery of, the documents indicated in
Article VI; and
(c) there shall not be in effect any Order by a court, arbitrator or
governmental or regulatory body of competent jurisdiction restraining, enjoining
or otherwise prohibiting the consummation of the transactions contemplated
hereby.
5.4. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER AT THE INITIAL
CLOSING FUNDING. The obligation of the Purchaser to pay the Initial Closing
Funding Amount to the Company at the Initial Closing Funding is subject to the
fulfillment on the Initial Closing Funding Date of each of the following
conditions (any or all of which may be waived by the Purchaser in whole or in
part to the extent permitted by applicable law):
(a) No Material Event shall have occurred which would constitute a
Price Adjustment Event for which the required adjustment in the Initial Closing
Purchase Price has not been made in accordance with Section 1.2(c); and
(b) Except as disclosed in any Company SEC Report filed prior to the
Initial Closing Funding, the representations and warranties set forth in
Sections 3.8 and 3.9 hereof shall be true and correct as if made on and as of
the Initial Closing Funding Date.
15
21
ARTICLE VI
DOCUMENTS TO BE DELIVERED
6.1. DELIVERIES BY THE COMPANY TO THE PURCHASER AT EACH CLOSING. At each
Closing, the Company shall deliver, or shall cause to be delivered, to the
Purchaser the following (PROVIDED THAT, in the case of the Initial Closing the
Company shall not be required to deliver the stock certificate specified in
Section 6.1(b) or the receipt specified in Section 6.1(f) until the Initial
Closing Funding Date):
(a) a certificate (dated the applicable Closing Date and in form and
substance reasonably satisfactory to the Purchaser) executed on behalf of the
Company certifying as to the fulfillment of the conditions in Sections 5.1 and
5.2 applicable to such Closing Date;
(b) except in the case of the Initial Closing, certificate(s)
representing the Shares being purchased at the Closing which shall be validly
delivered and transferred to the Purchaser, free and clear of any and all Liens;
(c) a certificate of the Secretary of the Company, certifying as to
the adoption by the Board of Directors of the Company of resolutions
substantially in the form attached as EXHIBIT B;
(d) an opinion of Xxxx and Xxxx LLP, counsel to the Company, dated
the Closing Date, substantially in the form attached hereto as EXHIBIT C;
(e) a certificate of good standing with respect to the Company issued
by the Secretary of State of the State of Delaware dated as soon as practicable
prior to the Closing Date; and
(f) except in the case of the Initial Closing, a receipt for the
purchase price paid for the Shares purchased at the Closing.
6.2. DELIVERIES BY THE COMPANY AND THE PURCHASER AT THE INITIAL CLOSING.
At the Initial Closing, the Company and the Purchaser shall execute and deliver
the Registration Rights Agreement.
6.3. DELIVERIES BY THE COMPANY TO THE PURCHASER AT THE INITIAL CLOSING
FUNDING. At the Initial Closing Funding, the Company shall deliver, or cause to
be delivered, to the Purchaser the following:
(a) certificate(s) representing the Shares being purchased at the
Initial Closing;
(b) a certificate dated the Initial Closing Funding Date and in form
and substance reasonably satisfactory to the Purchaser executed on behalf of the
Company certifying as to the fulfillment of the conditions set forth in Section
5.4; and
16
22
(c) a receipt for the Initial Closing Funding Amount paid at Initial
Funding Closing.
6.4. DELIVERIES BY THE PURCHASER TO THE COMPANY AT THE INITIAL CLOSING
FUNDING AND EACH OPTION CLOSING. At the Initial Closing Funding and each Option
Closing, as applicable, the Purchaser shall deliver, by wire transfer of
immediately available funds to an account specified by the Company in accordance
with Section 2.2 hereof, to the Company the aggregate purchase price payable for
the Shares purchased at such Initial Closing Funding or Option Closing.
ARTICLE VII
CERTAIN COVENANTS OF THE COMPANY
The Company covenants and agrees that, so long as the Purchaser holds of
record or beneficially at least 25% of the aggregate Shares purchased hereunder
(or shares of capital stock or other securities of the Company issued in
replacement of, in exchange for, or otherwise in respect of the Shares), it will
perform and observe the following covenants and provisions:
7.1. PARTICIPATION RIGHTS OF PURCHASER IN FUTURE ISSUANCES.
(a) Except with respect to "EXEMPT ISSUANCES" as defined in Section
7.1(c) below, in the event that the Company proposes to issue any Common Stock
or options, warrants, purchase rights or other securities which by their terms
are directly or indirectly exercisable for, convertible into or exchangeable for
shares of Common Stock (such shares of Common Stock or any such securities are
referred to herein as "EQUITY SECURITIES"), the Company will deliver to the
Purchaser a notice of such proposed issuance (the "NOTICE OF PROPOSED
ISSUANCE"), which shall specify (i) the type and number of Equity Securities
proposed to be issued, (ii) the purchase price per security (or where such price
is not known, the manner in which such price will be determined) of Equity
Securities proposed to be issued, (iii) the use to which the proceeds of such
Equity Securities are intended to be put and (iv) the material terms and
conditions of such proposed issuance (or where such terms and conditions are not
known, the manner in which they will be determined).
(b) Except with respect to an Exempt Issuance, the Purchaser shall
have the right to purchase all (or any portion) of its Pro Rata Portion of such
Equity Securities as are proposed to be issued, at the price and on the terms
and conditions contained in the Notice of Proposed Issuance; PROVIDED, HOWEVER,
that the Purchaser shall not have the right to purchase such Equity Securities
if, at the time of such proposed purchase, the Purchaser (i) has failed to
purchase Shares pursuant to the exercise of an Option on the applicable Option
Closing Date (unless such failure resulted from the failure of the Company to
fulfill any conditions set forth in Article V or Article VI hereof required to
be fulfilled by the Company on such Option Closing Date) or (ii) has committed
an uncured, material breach of the Distribution and Marketing Agreement which
would give rise to a right on the part of the Company to terminate the
Distribution and Marketing Agreement pursuant to Sections 11.3(a), 11.3(b) or
11.5 thereof. The Purchaser's "PRO RATA PORTION" shall equal a fraction, the
numerator of which is the number of shares of Common Stock then held by the
Purchaser, and the denominator of which is the total number of shares of Common
Stock then outstanding. The rights set forth in this Section 7.1
17
23
shall be exercised by the Purchaser, if at all, by written notice to the Company
delivered not later than 20 days after the receipt by the Purchaser of the
Notice of Proposed Issuance in accordance with the terms and conditions stated
therein.
(c) As used in this Section 7.1, "EXEMPT ISSUANCES" shall include the
issuance of any Equity Securities (i) to employees, directors or consultants of
the Company as compensation for services, (ii) as a dividend or distribution
payable PRO RATA to all holders of Common Stock, (iii) upon a stock split,
subdivision, reclassification or exchange of shares of Common Stock, (iv) in
connection with the conversion or exercise of any outstanding Equity Securities
which were outstanding as of the date of this Agreement or were issued in
compliance with this Section 7.1 after the date of this Agreement, (v) to any
corporate partner or academic institution as consideration for an agreement
relating to the licensing of intellectual property rights of the Company to such
corporate partner or academic institution or the licensing of intellectual
property rights by such corporate partner or academic institution to the
Company, or (vi) to any seller as consideration in connection with any asset or
stock purchase, merger, consolidation or other business combination transaction.
7.2. RESERVATION OF COMMON STOCK AND OTHER SECURITIES. The Company shall
take any and all actions necessary or appropriate to ensure that at all times
there shall be a sufficient number of authorized and unissued shares of Common
Stock reserved and available for issuance to the Purchaser upon the exercise of
the Options. If the Common Stock is reclassified into a different class or
series of capital stock of the Company other than in a transaction as a result
of which the Options are terminated in accordance with Section 1.2(e), then the
Company shall take any and all actions necessary or appropriate to ensure that
there shall be a sufficient number of authorized and unissued shares of such
capital stock reserved and available for issuance to the Purchaser upon the
exercise of the Options.
7.3. CORPORATE EXISTENCE; CONDUCT OF BUSINESS. The Company will continue
to engage principally in the business now conducted by the Company. The Company
will keep in full force and effect its corporate existence and any patents and
other intellectual property rights used or useful in its business (except such
rights as the Board of Directors, in its reasonable business judgment, has
determined are not material to the Company's continuing operations).
7.4. NO IMPAIRMENT. The Company will not, by amendment of its Certificate
of Incorporation or By-Laws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all of the provisions of this
Agreement.
7.5. INTEGRATION. Neither the Company nor any affiliate (as defined in
Rule 501(b) of the Securities Act) of the Company will offer, sell or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
the Securities Act) that will be integrated with the sale of the Shares in a
manner that would require the registration of the Shares sold hereunder under
the Securities Act.
18
24
7.6. PROVISION OF INFORMATION. The Company shall furnish to the Purchaser
such information regarding the Company and its business as the Purchaser may
reasonably request from time to time in connection with any Option Closing.
7.7. RIGHTS AGREEMENT. The Board of Directors of the Company shall approve
an amendment (the "RIGHTS AMENDMENT") to the Rights Agreement dated as of
December 17, 1997 between the Company and Norwest Bank Minnesota, N.A. (the
"RIGHTS PLAN") so as to provide that (a) the Purchaser will not become an
"Acquiring Person" and (b) no "Triggering Event" or "Distribution Date" (as such
terms are defined in the Company's Rights Plan) will occur in each case as a
result of (i) the approval, execution and delivery of this Agreement, (ii) the
purchase of the Shares at the Initial Closing or at any Option Closing; (iii)
the exercise by the Purchaser of its rights under Section 7.1 hereof and (iv)
the acquisition by the Purchaser of Voting Stock (as hereinafter defined) of the
Company to the extent permitted pursuant to Sections 8.2 and 8.3 hereof.
Promptly following the execution and delivery of this Agreement, Company shall
take all action necessary to make the Rights Amendment effective.
ARTICLE VIII
STANDSTILL AGREEMENT AND RIGHT OF FIRST REFUSAL
8.1. CERTAIN DEFINITIONS. Unless the context otherwise requires, the
following terms, for all purposes of this Article VIII, shall have the meanings
specified in this Section 8.1:
(a) "VOTING STOCK" shall mean the Common Stock, any securities
convertible into or exercisable or exchangeable for Common Stock and any other
securities issued by the Company having the power to vote in the election of
directors of the Company, other than securities having such power only upon the
happening of a contingency which has not yet occurred.
(b) "CHANGE OF CONTROL" shall mean (i) the acquisition by any
"person" as such term is used in Sections 13(d) and 14(d) of the Exchange Act
including any such person's "affiliates" and "associates" as such terms are used
in the Exchange Act (other than a Subsidiary, any employee benefit plan of the
Company, or any entity organized, appointed or established by the Company to
hold securities of the Company pursuant to such benefit plan), directly or
indirectly, of Voting Stock representing 50% or more of the combined voting
power of the Voting Stock then outstanding; or (ii) a merger or consolidation of
the Company with any other corporation (other than a merger or consolidation
which would result in the Voting Stock outstanding immediately prior thereto
continuing to represent, either by remaining outstanding or by being converted
into voting securities of the surviving entity, at least 50% of the combined
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation) or (iii) the sale of all or
substantially all of the assets of the Company.
8.2. PROHIBITED ACTIVITIES. The Purchaser agrees that, during the period
commencing on the Initial Closing Date and ending on the earlier of (a) the date
which is five years after the Initial Closing Date or (b) the date which is one
year after the termination of the Distribution and Marketing Agreement, unless
it has obtained the prior written consent of the Company, or, except as set
forth in Section 8.3 below, it will not, directly or indirectly, alone or as a
member of
19
25
a "group" (as such term is used in Section 13(d)(3) of the Exchange Act) (i)
acquire beneficial ownership as determined pursuant to Rule 13d-3 under the
Exchange Act of any Voting Stock, other than pursuant to the exercise of
Options, pursuant to Section 7.1 of this Agreement or by way of stock dividend,
stock split or recapitalization effected by the Company, or other distributions
or offerings made available to holders of Voting Stock generally, (ii) make a
tender or exchange offer for Voting Stock if, after such acquisition, the
Purchaser would beneficially own 20% of more of the total combined voting power
of the Voting Stock then outstanding or (iii) engage in any solicitation of
proxies for the purpose of obtaining stockholder approval for any transaction
that would result in the Purchaser acquiring Voting Stock, if, after such
acquisition, the Purchaser would beneficially own 20% or more of the total
combined voting power of the Voting Stock then outstanding (iv) take any action
which could reasonably be expected to force the Company to make a public
announcement regarding any of the types of matters set forth in clauses (ii) or
(iii) above; or provided that it will not be a violation of this Section 8.2 if
the Purchaser acquires the Voting Stock as a result of any action taken by the
Company or its Affiliates.
8.3. EXCEPTIONS. The parties agree that the restrictions set forth in
Section 8.2 above shall not apply if (a) the Company's Board of Directors
determines to solicit proposals to engage in a bona fide Change of Control
transaction; (b) the Company notifies the Purchaser that it has received a
proposal from a third party that could result in a Change of Control transaction
and that the Company's Board of Directors has determined to consider such
proposal; (c) the Company enters into a definitive agreement to engage in a
Change of Control Transaction with either the Purchaser or any third party; or
(d) a public announcement of the commencement or making of, or the intention to
commence or make, a tender or exchange offer by any person other than the
Company or the Purchaser for Voting Stock representing 20% or more of the
combined voting power of Voting Stock then outstanding; PROVIDED, HOWEVER, the
restrictions shall be reinstated if (i) the Board of Directors of the Company
subsequently notifies Purchaser in writing that it has determined to cease
entertaining proposals to negotiate a Change of Control transaction pursuant to
either (a) or (b) above and is neither then engaged in negotiations or
discussions relating to nor has entered into a definite agreement with any third
party for such Change of Control transaction; (ii) any merger agreement or other
definitive agreement entered into under clause (a), (b) or (c) above is
subsequently terminated or expires before the transaction contemplated thereby
is consummated; or (iii) such tender or exchange offer referred to in clause (d)
above is withdrawn or terminated without such person acquiring such 20%
ownership level; and FURTHER PROVIDED THAT, if Purchaser has acquired any
additional securities of the Company during the time such restriction was not in
effect and such limitation is reinstated as a consequence of the foregoing
proviso, then from and after the reinstatement of such limitation, Purchaser
shall not, except as otherwise permitted under Section 8.2(b)(i), acquire
beneficial ownership of any additional securities of the Company or authorize or
make a tender, exchange or other offer therefor, if the effect of such
acquisition would be to increase the percentage of the Voting Stock then owned
by Purchaser to an amount equal to the greater of (1) 20% or (2) the percentage
of the Voting Stock then owned by Purchaser (as such percentage may decrease
over time as a result of dispositions of securities by Purchaser).
8.4. CHANGE OF CONTROL NOTICE AND AGREEMENT TO NEGOTIATE. The Company
agrees that during the period commencing on the Initial Closing Date and ending
on the earlier of (i) the date on which the Distribution and Marketing Agreement
is terminated and (ii) the date on which
20
26
the Purchaser ceases to hold an aggregate of at least 25% of the Shares
purchased hereunder (or shares of capital stock or other securities of the
Company issued in replacement of, in exchange for, or otherwise in respect of
the Shares), the Company shall promptly notify the Purchaser in writing not
later than one trading day following the receipt of any written proposal (a
"CHANGE OF CONTROL OFFER") from a third party (the "ACQUIRING PARTY") that could
result in a Change of Control transaction (unless Company's Board of Directors
has determined not to consider such proposal). Such notice (the "CHANGE OF
CONTROL NOTICE") shall describe in reasonable detail the terms and conditions of
the Change of Control Offer and shall offer the Purchaser the opportunity to
enter into good faith negotiations with the Company to enter into a Change of
Control transaction on terms no less favorable to the Purchaser than the terms
set forth in the Change of Control Notice. The Purchaser shall inform the
Company within two business days after receipt of the Change of Control Notice
if it wishes to negotiate with the Company with respect to a Change of Control
transaction on terms no less favorable to the Company than the terms set forth
in the Change of Control Notice (an "EQUIVALENT TRANSACTION"). If the Purchaser
either fails to respond in writing within such two business day period, or
responds that it does not wish to negotiate such an Equivalent Transaction, the
Company shall have no further obligations to the Purchaser with respect to a
Change of Control transaction with such Acquiring Party. If the Purchaser
responds in writing within such two business day period that it wishes to
negotiate with the Company for an Equivalent Transaction, then the Company,
subject to the Board of Directors' fiduciary duties under applicable law, shall
negotiate in good faith with the Purchaser with respect to a Change of Control
transaction with the Purchaser on terms no less favorable to the Purchaser than
the terms offered by the Acquiring Party.
ARTICLE IX
RESTRICTIONS ON TRANSFER
9.1. RESTRICTED SHARES. "RESTRICTED SHARES" means (i) the Shares and (ii)
any other shares of capital stock of the Company issued in respect of such
shares (as a result of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events); PROVIDED, HOWEVER, that the Shares shall
cease to be Restricted Shares (x) upon any sale pursuant to a registration
statement under the Securities Act, Section 4(l) of the Securities Act or Rule
144 under the Securities Act or (y) at such time as they become eligible for
sale under Rule 144(k) under the Securities Act.
9.2. REQUIREMENTS FOR TRANSFER.
(a) Restricted Shares shall not be sold or transferred unless either
(i) they first shall have been registered under the Securities Act, or (ii) the
Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale or transfer
is exempt from the registration requirements of the Securities Act.
(b) Notwithstanding the foregoing, no registration or opinion of
counsel shall be required for (i) a transfer by the Purchaser to a wholly owned
subsidiary; provided that the transferee agrees in writing to be subject to the
terms of this Agreement, or (ii) a transfer made in accordance with Rule 144
under the Securities Act.
21
27
9.3. LEGENDS. Each certificate representing Restricted Shares shall bear a
legend substantially in the form set forth in Section 4.3 hereof, which legend
shall be removed from the certificates representing any Restricted Shares, at
the request of the holder thereof, at such time as they become eligible for
resale pursuant to Rule 144(k) under the Securities Act.
ARTICLE X
MISCELLANEOUS
10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties hereto hereby
agree that the representations and warranties contained in this Agreement or in
any certificate, document or instrument delivered in connection herewith, shall
survive the execution and delivery of this Agreement, and each Closing
hereunder, regardless of any investigation made by the parties hereto. The
parties hereto agree that the agreements and covenants of each of the parties
contained in this Agreement shall survive the execution and delivery of this
Agreement, and each Closing hereunder.
10.2. FEES AND EXPENSES. Except as otherwise provided in this Agreement,
the Company and the Purchaser shall each bear its own expenses incurred in
connection with the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the
consummation of the transactions contemplated hereby and thereby.
10.3. FURTHER ASSURANCES. The Company and the Purchaser each agrees to
execute and deliver such other documents or agreements and to take such other
action as may be reasonably necessary or desirable for the implementation of
this Agreement and the consummation of the transactions contemplated hereby.
10.4. DISPUTE RESOLUTION.
(a) Any matter or dispute that cannot be resolved by the parties
hereto, and any other dispute, controversy or claim arising out of or relating
to this Agreement, or the breach, termination, or invalidity of this Agreement,
shall be submitted in the first instance to the most senior officer of the Focal
and Genzyme business unit responsible for the performance of each party's
obligations under this Agreement.
(b) If the matter or dispute cannot be resolved by the senior
officers of the relevant business units pursuant to Section 10.4(a) within 20
days after submission, either party may submit such matter or dispute to the
Chief Executive Officer of Focal and the Chief Executive Officer of Genzyme.
(c) If the matter of dispute cannot be resolved by the individuals
designated in Section 10.4(b) within 30 days after such submission, either party
may submit such matter or dispute to arbitration alternative dispute resolution
("ADR"), as provided in EXHIBIT D attached hereto.
(d) The arbitration decision shall be binding upon the parties. The
decision of the arbitrators shall be executory, and the prevailing party may
enter such decision in any court
22
28
having competent jurisdiction. Each party shall have the right to institute
judicial proceedings against the other party or anyone acting by, through or
under such other party (including the right to seek and to obtain injunctive
relief) solely to enforce the instituting party's arbitration rights or the
decision of the arbitrators.
10.5. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement (including
the schedules and exhibits hereto) represents the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and can be amended, supplemented or changed, and any provision hereof can be
waived, only by written instrument making specific reference to this Agreement
signed by the party against whom enforcement of any such amendment, supplement,
modification or waiver is sought. No action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach. No failure on the
part of any party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
10.6. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
10.7. TABLE OF CONTENTS AND HEADINGS. The table of contents and section
headings of this Agreement are for reference purposes only and are to be given
no effect in the construction or interpretation of this Agreement.
10.8. NOTICES. Any notice, demand, request or delivery required or
permitted to be given by the Company or the Purchaser pursuant to the terms of
this Agreement shall be in writing and shall be deemed given (i) when delivered
personally or when sent by verifiable facsimile transmission (with a hard copy
to follow), (ii) on the next business day after timely delivery to an overnight
courier and (iii) on the third business day after deposit in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid),
addressed to the parties as follows:
If to the Company, to:
Focal, Inc.
0 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: President
Telecopier: (000) 000-0000
23
29
With a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
If to a Purchaser, to:
Genzyme Corporation
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Corporate Counsel
Telecopier: (000) 000-0000
With a copy to:
Xxxxxx & Dodge LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
Any party may by notice given in accordance with this Section 10.8 to the other
parties designate another address or person for receipt of notices hereunder.
10.9. SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
10.10. COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, and both of which together shall
constitute one and the same instrument.
10.11. RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or ruling
of construction providing that ambiguities in an agreement or other document
will be construed against the party drafting such agreement or document.
10.12. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement shall remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part
24
30
or degree will remain in full force and effect to the extent not held invalid or
unenforceable. The parties further agree to replace such invalid or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such invalid or unenforceable provision.
10.13. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity not a party to this
Agreement. No assignment of this Agreement or of any rights or obligations
hereunder may be made by either the Company or the Purchaser (by operation of
law or otherwise) without the prior written consent of the other parties hereto
and any attempted assignment without the required consents shall be void;
PROVIDED, HOWEVER, that the Purchaser may assign this Agreement and any or all
rights or obligations hereunder (including, without limitation, the Purchaser's
obligation to purchase the Shares) to any Affiliate of the Purchaser. Upon any
such permitted assignment, the references in this Agreement to the Purchaser
shall also apply to any such assignee unless the context otherwise requires.
10.14. LIMITATION OF LIABILITY. (a) The Purchaser's liability to the
Company and its officers, employees and stockholders for any claim arising under
this Agreement, or otherwise arising from the transactions contemplated herein,
regardless of the form of action (including, but not limited to, actions for
breach of contract, negligence, strict liability and rescission) will not exceed
the lesser of (i) the total amount invested or required to be invested by the
Purchaser in the Company pursuant to this Agreement prior to the event giving
rise to such claim, or (ii) the actual damages sustained by the affected party.
(b) In no event shall either party be liable to the other party, or
the officers, employees or stockholders of the other party for any special,
indirect, incidental or consequential damages, including, but not limited to,
loss of revenues and loss of profits, even if such party has been advised of the
possibility of such damages.
10.15. USE OF NAMES. Except as required by applicable law, neither the
Company nor the Purchaser shall use, directly or indirectly, the other party's
name in any advertisement, announcement, press release or other similar
communication unless it has received the prior written consent of the other
party for the specific use contemplated.
25
31
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first written above.
THE COMPANY:
FOCAL, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Chief Executive Officer
THE PURCHASER:
GENZYME CORPORATION
By: /s/ Xxxx X. Xxxxxxx, Xx.
-------------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
26
32
SCHEDULE 3.4
SUBSIDIARIES AND OTHER INVESTMENTS
None
27
33
SCHEDULE 3.5(B)
The Company has entered into a Letter Agreement dated July 28, 1998 (the
"Letter Agreement") with Ethicon, Inc. ("Ethicon"), which amends in part the
Distribution License and Supply Agreement dated January 2, 1997 between Ethicon
and the Company. The Company has not filed the Letter Agreement as an exhibit to
any of the Company SEC reports.
28
34
SCHEDULE 3.11
HOLDERS OF REGISTRATION RIGHTS
The Company is party to a Restated Investors Rights Agreement dated April
12, 1996 among the Company and certain of its stockholders pursuant to which the
Company has granted to such stockholders certain rights to register their shares
of Common Stock of the Company.
29
35
SCHEDULE 3.13
The Company has licensed from third parties the Intellectual Property
covered by the license agreements set forth below:
1. Patent and Technology License Agreement dated June 11, 1992 between
the Company and the University of Texas.
2. Exclusive License Agreement dated August 7, 1992 by and among the
Company, Xxxxxx Xxxxxxx, M.D. and Endoluminal Therapeutics, Inc.
30
36
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
31
37
EXHIBIT B
FORM OF COMPANY BOARD RESOLUTIONS
32
38
EXHIBIT C
FORM OF OPINION OF COMPANY'S COUNSEL
33
39
EXHIBIT D
ADR PROCEDURES
1. To begin an ADR proceeding, a Party shall provide written notice
to the other Party of the issues to be resolved by ADR. Within fourteen (14)
days after its receipt of such notice, the other Party may, by written notice to
the Party initiating the ADR, add additional issues subject to ADR pursuant to
Section 9.1 to be resolved within the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR
notice, the Parties shall select a mutually acceptable neutral party to preside
in the resolution of any disputes in this ADR proceeding. If the Parties are
unable to agree on a mutually acceptable neutral party within such period, a
Party may request the President of the CPR Institute for Dispute Resolution
("CPR"), 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, to select a
neutral party pursuant to the following procedures:
(1) The CPR shall submit to the Parties a list of not less than
five (5) candidates within fourteen (14) days after receipt of the request,
along with a Curriculum Vitae for each candidate. No candidate shall be an
employee, director or shareholder of a Party or any of their Affiliates.
(2) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her impartiality.
(3) Each Party shall number the candidates in order of
preference (with the number one (1) signifying the greatest preference) and
shall deliver the list to the CPR within seven (7) days following receipt
of the list of candidates. If a Party believes a conflict of interest
exists regarding any of the candidates, that Party shall provide a written
explanation of the conflict to the CPR along with its list showing its
order of preference for the candidates. Any Party failing to return a list
of preferences on time shall be deemed to have no order of preference.
(4) If the Parties collectively have identified fewer than three
(3) candidates deemed to have conflicts, the CPR immediately shall
designate as the neutral party the candidate for whom Focal on the one
hand, and Genzyme on the other hand, have indicated the greatest
preference. If a tie should result between two candidates, the CPR may
designate either candidate. If the Parties collectively have identified
three (3) or more candidates deemed to have conflicts, the CPR shall review
the explanations regarding conflicts and, in its sole discretion, may
either (i) immediately designate as the neutral party the candidate for
whom the Parties collectively have indicated the greatest preference, or
(ii) issue a new list of not less than five (5) candidates, in which case
the procedures set forth in subsection b(i)-(iv) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six
(56) days after selection, the neutral party shall hold a hearing to resolve
each of the issues identified by the Parties. The ADR proceeding shall take
place at a location agreed upon by the Parties. If the
34
40
Parties cannot agree, the neutral party shall designate a location other than
the principal place of business of either Party or any of their Affiliates.
4. At least seven (7) days prior to the hearing, each Party shall
submit the following to the other Party and the neutral party:
(1) a copy of all exhibits on which such Party intends to rely
in any oral or written presentation to the neutral party;
(2) a list of any witnesses such Party intends to call at the
hearing, and a short summary of the anticipated testimony of each witness;
(3) a proposed ruling on each issue to be resolved, together
with a request for a specific damage award or other remedy for each issue.
The proposed rulings and remedies shall not contain any recitation of the
facts or any legal arguments and shall not exceed one (1) page per issue.
(4) a brief in support of such Party's proposed rulings and
remedies, provided that the brief shall not exceed twenty (20) pages. This
page limitation shall apply regardless of the number of issues raised in
the ADR proceeding.
5. Consistent with subsections d(i)-(iv), the neutral party shall
establish the rules for, and resolve any disputes concerning, any discovery to
be conducted prior to the ADR proceeding, including but not necessarily limited
to depositions, interrogatories, requests for admissions, or production of
documents.
6. The hearing shall be conducted on two (2) consecutive days and
shall be governed by the following rules:
(1) Each Party shall be entitled to five (5) hours of hearing
time to present its case. The neutral party shall determine whether each
Party has had the five (5) hours to which it is entitled.
(2) Each Party shall be entitled, but not required, to make an
opening statement, to present regular and rebuttal testimony, documents or
other evidence, to cross-examine witnesses, and to make a closing argument.
Cross-examination of witnesses shall occur immediately after their direct
testimony (unless a witness affiliated with a party has been called by the
other party in that party's case, in which event the party with which the
witness is affiliated may examine the witness either immediately after the
direct examination or as part of that party's case), and cross-examination
time shall be charged against the party conducting the cross-examination.
(3) The Party initiating the ADR shall begin the hearing and, if
it chooses to make an opening statement, shall address not only issues it
raised but also any issues raised by the responding Party. The responding
Party, if it chooses to make an opening statement, also shall address all
issues raised in the ADR. Thereafter, the presentation of regular and
rebuttal testimony and documents, other evidence, and closing arguments
shall proceed in the same sequence.
35
41
(4) Settlement negotiations, including any statements made
therein, shall not be admitted or referred to in the ADR hearing under any
circumstances. Affidavits prepared for purposes of the ADR hearing also
shall not be admissible. As to all other matters, the neutral party shall
have sole discretion regarding the admissibility of any evidence.
7. Within seven (7) days following completion of the hearing, each
Party may submit to the other Party and the neutral party a post-hearing brief
in support of its proposed rulings and remedies, provided that such brief shall
not contain or discuss any new evidence and shall not exceed ten (10) pages.
This page limitation shall apply regardless of the number of issues raised in
the ADR proceeding.
8. The neutral party shall rule on each disputed issue within
fourteen (14) days following completion of the hearing. In making his/her
ruling, the neutral party shall apply the governing law provisions of the
Agreement. Such ruling shall adopt in its entirety the proposed ruling and
remedy of one of the Parties on each disputed issue but may adopt one Party's
proposed rulings and remedies on some issues and the other Party's proposed
rulings and remedies on other issues. The neutral party may but need not, issue
a written opinion or otherwise explain the basis of the ruling.
9. The neutral party shall be paid a reasonable fee plus expenses.
These fees and expenses, along with the reasonable legal fees and expenses of
the prevailing Party (including all reasonable expert witness fees and
expenses), the fees and expenses of a court reporter, if any, and any expenses
for a hearing room, shall be paid as follows:
(1) If the neutral party rules in favor of one Party on all
disputed issues in the ADR, the losing Party shall pay 100% of such fees
and expenses.
(2) If the neutral party rules in favor of one Party on some
issues and the other Party on other issues, the neutral party shall issue
with the rulings a written determination as to how such fees and expenses
shall be allocated between the parties. The neutral party shall allocate
fees and expenses in a way that bears a reasonable relationship to the
outcome of the ADR, with the Party prevailing on more issues, or on issues
of greater value or gravity, recovering a relatively larger share of its
legal fees and expenses.
10. The rulings of the neutral party and the allocation of fees and
expenses shall be binding, non-reviewable, and non-appealable, and may be
entered as a final judgment in any court having jurisdiction.
11. Except as provided in subsection (i) or as required by law, the
existence of the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings, and briefs), and
the rulings and any written opinion of the neutral party shall be deemed
Confidential Information. The neutral party shall have the authority to impose
sanctions for unauthorized disclosure of Proprietary Information.
12. No ADR proceeding between the Parties shall include, by
consolidation, joint or otherwise, any third party, without the consent of both
Parties.
36
