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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
COMMISSION FILE NUMBER 0-3390
UNIMED PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
22-1685346
(I.R.S. Employer
Identification Number)
2150 E. LAKE COOK RD.,
BUFFALO GROVE, ILLINOIS
(Address of principal executive offices)
60089
(Zip Code)
Registrant's telephone number, including area code: (847) 541-2525
Securities registered pursuant to Section 12(b) of the Act:
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TITLE OF EACH CLASS ON WHICH REGISTERED NAME OF EACH EXCHANGE
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None None
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.25 PAR VALUE
(TITLE OF CLASS)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS: YES /X/ NO / /
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. / /
THE NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK, AS OF
MARCH 8, 1996 -- 8,570,886.
THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT, BASED UPON THE CLOSING PRICE ON MARCH 8, 1996,
WAS $61,067,563.
DOCUMENTS INCORPORATED BY REFERENCE
THE DEFINITIVE PROXY STATEMENT (TO BE FILED PURSUANT TO REGULATION 14A) FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 2, 1996, IS INCORPORATED BY
REFERENCE IN PART III.
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9
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PART I
ITEM 1. BUSINESS.
Unimed Pharmaceuticals, Inc. and its consolidated subsidiaries (the
Company) develops and markets prescription pharmaceutical products. Currently
the Company promotes one approved drug and is developing others targeted for the
HIV/AIDS, endocrinology, and urology markets. The Company developed and promotes
Marinol(R) through a specialty sales force in the U.S. to AIDS-treating
physicians. Marinol is sold in international markets through the Company's
foreign licensees. The Company is a Delaware corporation and is successor to a
firm incorporated in 1948.
The Company's business strategy is to in-license and develop drugs that
have, at a minimum, successfully completed milestones required to begin human
clinical testing. The Company expects to acquire a diversified portfolio of
late-stage development products in several therapeutic classes. During 1995, the
Company licensed development and marketing rights to an anti-parasitic drug and
two hormone replacement drugs that meet these criteria.
The Company expects to actively pursue new late-stage development
in-licensing opportunities in the foreseeable future. In addition, the Company
intends to acquire approved products that are or can be marketed in the U.S.
After the close of 1995, the Company completed a private placement of its common
stock, generating funds to be used primarily to accelerate product acquisition
activities.
The Company believes that its focus on serving "niche" markets in which
relatively few physicians treat affected patients, allows a small specialty
sales force to reach the targeted physicians. The Company expects to expand its
sales force as products are approved and new business opportunities arise.
The Company's products and clinical development supplies are manufactured
through contractors, using specialized equipment, which in one case is owned
by the Company. The Company believes that well qualified contract manufacturers
are available to produce both currently marketed drugs and those now under
development. Consequently, the Company expects to continue to utilize contract
manufacturing in the foreseeable future.
In 1994, a new President and Chief Executive Officer was hired and a new
business strategy was developed. In 1995, the Company stopped distributing
several over-the-counter (OTC) nutritional and palliative care products, in
order to concentrate on the prescription pharmaceutical market. For the same
reason, the Company also converted its equity interest in Medisperse L.P. into a
product royalty agreement.
In connection with the Company's in-licensing program, it entered into
agreements in which the licensors provided the Company with non-refundable
research and development payments.
MARINOL (DRONABINOL)
Marinol was first approved for marketing by the Food and Drug
Administration (FDA) in 1985 for treating nausea and vomiting associated with
cancer chemotherapy in patients failing to respond adequately to conventional
antiemetic treatments. In 1992, the FDA approved for marketing a second
indication for Marinol: treating anorexia associated with weight-loss in
patients with AIDS.
Marinol is given orally in a round soft gelatin capsule. The active
ingredient, dronabinol, is a naturally occurring chemical found in Cannabis
Sativa L. (marijuana). However, Marinol is chemically synthesized to maximize
purity and consistency. Cannabinoid plants were among the first medicinals used
by man, believed to be used over the last 5,000 years as stimulants,
antidepressants and analgesics. Cannabinoids have been used as muscle relaxants
to counter spasms, convulsions and insomnia. The Company began systematic study
of the therapeutic properties of Marinol in the 1980s.
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Use of Marinol in Cancer
Marinol has been shown to be an effective oral anti-emetic (relieving
drug-induced nausea and vomiting) in numerous clinical studies involving large
patient populations. The drug is believed to exert psychoactive effects through
binding with cannabinol neural receptor sites in the brain. Marinol has been
shown effective when used as a single agent or in combination with other
anti-emetic therapies.
Use of Marinol in AIDS
A number of pharmaceuticals are being used to improve the nutritional
status of the HIV-infected patient. Use of appetite stimulants to manage
anorexia has expanded. Two pharmacologic agents are approved for marketing in
this indication, Marinol and the progestational agent, Megace(R) Oral
Suspension.
Infection from the human immunodeficiency virus (HIV) has a largely
irreversible and progressive effect on the nutritional status of the patient.
Eventually the compromised status of the patient leads to profound weight-loss,
known as HIV wasting syndrome. Studies of people with AIDS have shown a high
correlation between weight-loss and death. Patients who have lost more than 34%
of normal body mass have a high probability of death. Other studies have shown
that malnutrition can impair T-cell immune function, gastrointestinal absorption
and the body's response to infection. AIDS-treating physicians are becoming
increasingly aware of the importance of monitoring and treating nutritional
deficiencies.
Weight-loss observed in AIDS is due to one or more of four known
mechanisms: poor intestinal absorption, abnormal cellular utilization, increased
energy requirements due to HIV and opportunistic infections, and inadequate
dietary intake. In addition, recent studies suggest a high correlation between
endocrine dysfunction (low testosterone serum levels) and weight-loss.
Low serum levels of testosterone, known as hypogonadism, is the most common
endocrine abnormality found in AIDS, affecting approximately 50% of male
patients. This condition is believed to be associated with reduced protein
biosynthesis or a slowdown in the body's replacement of muscle mass.
Malnutrition is caused by inadequate caloric intake and affects as many as
80% of AIDS patients. It is observed clinically in response to anorexia (loss of
appetite), intestinal malabsorption and starvation. The patient's metabolic rate
also is reduced as a result of insufficient caloric intake. Usually, fat
reserves and extracellular water are expended by the body before the loss of LBM
(lean body mass). However, HIV infection, secondary infections and drug
interactions deplete the body's reserves in AIDS patients. Abnormally low
protein synthesis and cytokine production occur and immune parameters also are
suppressed in malnourished individuals.
In 1987, the Company initiated clinical development of Marinol in treatment
of weight-loss in cancer patients. The emerging AIDS pandemic led the Company to
expand the clinical program and then concentrate on an AIDS application. A
subsequent Phase III multi-center double-blind, placebo-controlled trial in AIDS
patients with anorexia and weight-loss of at least five pounds demonstrated
statistically significant improvement in patient's appetite by the fourth week
of therapy. Patients in the study were permitted to continue treatment in an
open-label study, in which there was sustained improvement in appetite.
Treatment was well tolerated by most patients. The incidence of side-effects was
decreased by dose reduction. This pivotal study also demonstrated clinical
trends toward improvement in the patients' weight, mood and reduced nausea. The
Company completed the multi-center Phase III clinical trial in early 1992, filed
a New Drug Application in August 1992, and received approval to market from the
FDA in December 1992.
In 1993, Megace Oral Suspension (megestrol acetate), a synthetic,
antineoplastic and progestational drug, first used to treat advanced carcinoma
of the breast, was approved for marketing as an appetite stimulant. Recently,
recombinant human growth hormone has been tested as an agent to increase LBM.
Thalidomide also is being tested in HIV wasting, due to its anti-TNF activity.
TNF (tumor necrosis factor) may play a role in the pathogenesis of AIDS wasting.
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With a growing potential arsenal of pharmacologic agents, AIDS-treating
physicians increasingly monitor and treat patients with nutritional and hormonal
imbalances. The patient's caloric intake has an impact on the effectiveness of
anabolic agents used to treat endocrine dysfunction and HIV wasting syndrome.
The Company believes that Marinol may be used successfully in combination with
these agents. Combination clinical trials are planned.
PRODUCT DEVELOPMENT
NITAZOXANIDE
In June 1995, the Company entered into a licensing agreement with Romark
Laboratories, L.C. (Romark), for the rights to Romark's know-how and patent
rights covering certain products containing an anti-parasitic drug,
Nitazoxanide, in the U.S., Canada, Australia and New Zealand (NTZ). The
agreement with Romark provides for rights to oral and intravenous routes of
administration for treatment of cryptosporidiosis. In addition, the Company has
marketing rights to oral uses of NTZ for all indications and is investigating
other therapeutic applications of the drug.
Preliminary human clinical trials conducted outside the United States and
sponsored by Romark demonstrated that NTZ showed effectiveness in treating
patients with cryptosporidiosis. A Phase III clinical trial sponsored by a
Romark licensee is under way in Mexico.
It is estimated that 15-20% of people with AIDS in the United States are
infected with a single cell microscopic parasite, Cryptosporidium parvum (C.
parvum). This protozoan inhabits the respiratory and gastrointestinal tracts of
animals and, increasingly, humans. The first case in the U.S. was not reported
in humans until 1976. In 1982, according to the Centers for Disease Control
(CDC), the number of cases of C. parvum began to increase dramatically as part
of the AIDS epidemic. The parasite is highly contagious through contact with
infected humans. C. parvum has been found in the public water supply throughout
the U.S., further exposing at-risk individuals.
Symptoms of cryptosporidiosis include diarrhea, nausea, vomiting and
weight-loss. The severity of symptoms varies with the degree of
immunosuppression. In healthy people, the infection is self-limiting, lasting
for a few days to four or more weeks. Patients with AIDS can be affected for
months or even years. Currently there is no FDA approved drug to treat
cryptosporidiosis.
A Company-sponsored Phase II clinical trial is underway at Cornell Medical
Center, in New York City, investigating the use of NTZ to treat
cryptosporidiosis in 28 patients with AIDS. The purpose of the trial is to
demonstrate safety and efficacy and identify the optimal dose. Enrollment is
dependent upon patients meeting clinical entry criteria. These criteria include
clinically defined AIDS, cryptosporidiosis and the absence of other
gastrointestinal infections. Assuming safety and efficacy are demonstrated in
the Phase II trial, the Company will initiate a multi-center Phase III clinical
trial.
The FDA initially approved NTZ for Compassionate Use in up to 30 AIDS
patients not meeting the clinical entry criteria for the Cornell Study, or not
in geographical proximity to participate in the trial. The full 30 patient
enrollment of the Compassionate Use program was completed and FDA subsequently
authorized expanding enrollment to 100 patients.
ANDROGEL(TM) AND ANDROGEL(TM)-DHT
During 1995, the Company acquired exclusive rights in the U.S., Canada and
Mexico to develop and market topical gel formulations of testosterone and
dihydrotestosterone (DHT), the principal active metabolite of testosterone in
the human body. The gel formulations are applied to the arms or abdomen and
absorbed through the skin into the blood stream. One of these drugs, DHT, is
currently marketed in France and Belgium as treatment for low levels of
testosterone (hypogonadism). This deficiency has been associated with
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a variety of adverse effects, such as: impotence, lack of sex drive, muscle
weakness, low bone density and HIV wasting syndrome (in AIDS patients).
Hypogonadism can be caused by a number of factors. They include: congenital
abnormalities (e.g., Klinefelter's syndrome -- a condition in male newborns
having an extra X chromosome); disease or injuries affecting the pituitary
gland, hypothalamus, or testes; chronic illnesses (e.g., diabetes, kidney
failure, AIDS); or declining testosterone production associated with aging
(geriatric hypogonadism).
While not as abrupt as the decline in estrogen levels women experience
during menopause, studies suggest that testosterone levels may decline 30-40% in
men from their late 40s to their early 70s. This hormonal change correlates with
physical changes commonly observed in middle-aged men -- decreased bone and
muscle mass; an increase in body fat; diminished energy, virility, fertility;
and decreased sexual function.
The Company intends to initially focus clinical development on geriatric
hypogonadal men and in AIDS patients with HIV wasting syndrome. The Company has
begun this program in 1996.
SERC(R)
SERC (betahistine HCl) was developed by the Company in the 1960s. It is
widely used around the world and supplied by several manufacturers. SERC
generates an estimated $80 million in sales by these manufacturers. The majority
of international sales come from Solvay-Duphar of the Netherlands. Through
December 1995, the Company also generated sales of SERC through distributors in
Canada, Australia and South Africa. SERC is not approved for sale in the United
States.
Subsequent to year-end 1995, the Company agreed to sell the SERC trademark
in Canada, Australia and South Africa and to assign the Company's Canadian Serc
approval and all of the Company's international distribution agreements to
Solvay-Duphar. In return, the Company received a cash payment and access to
certain clinical data, technical information and know-how that may be useful in
obtaining marketing approval from FDA in the United States.
SERC is a histamine analogue, given orally. It has two principal effects in
the body: increasing blood supply to the brain and inner ear and a neurological
effect in the brain. Animal studies have shown that capillary size increases
three-fold and the speed of blood flow increases by 50% with use of the drug.
Neurological research has demonstrated that SERC stops histamine binding to H3
receptors in pre-synaptic nerves, stimulating production of H1 receptors. This
process is believed to regulate vasodilation (widening of blood vessels) and to
increase permeability of minute capillaries in the inner ear.
The vascular and neural effects produced by SERC have been shown to reduce
symptoms in vertigo. Vertigo is an unpleasant sensation of imbalance, spinning
and disorientation. Nausea and vomiting are common and, during an acute attack,
people experience feelings of panic and are emotionally traumatized. Patients
may experience visual disorientation, ringing in the ears or hearing loss (which
can be progressive).
Acute recurrent vertigo can be caused by migraine, hypoglycemia (an
abnormal decrease of sugar in the blood), head injuries, tumors and surgical
trauma, but is more common in Meniere's disease, a degenerative nerve disorder
of the inner ear. Vertigo also is associated with dizziness or giddiness,
feelings of faintness, light-headedness or being unsteady on the feet.
Approximately 44 million patients have used SERC outside the United States
since 1976. Less than 200 cases of adverse events have been reported during this
time, indicating SERC's excellent safety profile. The Company estimates that
approximately three million people suffer from vertigo in the United States. In
the U.S., vertigo and Meniere's disease are treated with vasodilators,
anti-emetics and various sedatives. The Company believes there is a significant
unmet need for a better therapeutic agent in this market.
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The Company intends to use clinical data and expertise available from
Solvay-Duphar to develop SERC in the United States. Solvay-Duphar has provided
research and development funds to assist in the U.S. development program.
MEDISPERSE
In November 1995, the Company exchanged its equity ownership in Medisperse,
L.P. for rights to receive royalties on compounds developed using the
proprietary Medisperse drug delivery technology in an amount at least as
attractive as if Unimed remained in the partnership. The Company entered into
the Medisperse limited partnership in 1988 with Sterilization Technical Services
(STS) to commercialize a novel drug formulation and delivery technology that may
allow for drug compounds with low solubility. The Company will make no further
equity contributions. The Company is aiding in the search for licensees for
further development of the Medisperse technology.
MARKETING AND DISTRIBUTION
The Company's sales force details Marinol to AIDS-treating physicians in
the United States, subject to the terms of a co-promotional agreement with
Roxane Laboratories, Inc. (Roxane), a member of the Boehringer Ingelheim group
of companies. Salespeople are located in territories throughout the U.S. with a
high incidence of AIDS.
The Company's business strategy is to develop drugs for niche markets --
therapeutic areas such as HIV/AIDS and endocrinology where fewer than 10,000
physicians manage the majority of patients. The Company hopes to leverage its
presence in the HIV/AIDS medical market with new FDA approvals from current
clinical development programs. The Company intends to expand its sales and
marketing resources as new products and new indications for current products
become available. The Company plans to focus sales and marketing resources on
U.S. markets and to pursue partnerships and corporate alliances to market its
products abroad.
MANUFACTURING
Manufacture of the Company's marketed product and drugs under development
is done on a contract basis by third parties.
The NORAC Company, Inc. (NORAC) supplies Delta-9 tetrahydrocannabinol, the
active ingredient in Marinol, to the Company. The Company owns the principal
equipment used by NORAC to manufacture Delta-9. Delta-9 is synthesized and
purified through a complex and time-consuming process. The loss of NORAC as a
supplier could have a material adverse effect on the Company. Currently, the
Company maintains a three-year supply of Delta-9.
The Company has supply agreements with Romark for NTZ, Besins for Androgel
and Androgel-DHT, and Solvay-Duphar for SERC. Under these agreements, the
Company purchases clinical supplies, and after approval by the FDA, finished
drug products in accordance with the Company's specifications.
COMPETITION
There are many companies, both public and private, including well-known
pharmaceutical companies, chemical companies and specialized genetic engineering
companies, engaged in developing pharmaceuticals and biotechnology compounds for
human therapeutic applications. Many of these companies have substantially
greater financial, research and development, manufacturing, marketing and human
resources than the Company, and represent significant competition. Such
companies may succeed in developing products that are more effective or less
costly than any developed by the Company and may also prove to be more
successful in
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manufacturing and marketing. The Company does not have a significant position in
the pharmaceutical market.
GOVERNMENT REGULATION
The FDA and comparable agencies in other countries impose substantial
requirements on the introduction of therapeutic pharmaceutical products through
lengthy and detailed laboratory and clinical testing procedures and other costly
and time-consuming procedures. Satisfaction of these requirements typically
takes a number of years and varies substantially based upon the type, complexity
and novelty of the product. In general, the FDA approval process for
pharmaceuticals involves the submission of an Investigational New Drug (IND)
application following preclinical studies, clinical trials in humans to
demonstrate the safety and efficacy of the product under the protocols set forth
in the IND, and submission of preclinical and clinical data as well as other
information to the FDA in an New Drug Application (NDA). The conduct of clinical
trials requires substantial time and expense, and there is no assurance that the
results of the trials will be sufficient to support the submission or the
approval of an NDA. The failure of Unimed to receive FDA approval for its
products under development would preclude the Company from marketing and selling
newly developed products in the United States.
Pharmaceutical manufacturers are subject to extensive regulation by federal
and state regulatory agencies. The Federal Food, Drug and Cosmetic Act, the
Controlled Substance Act, and other federal statutes and regulations govern or
influence the testing, manufacture, safety, labeling, storage, record-keeping,
approval, advertising and promotion of pharmaceutical products. Noncompliance
with applicable requirements can result in fines, recall and seizure of
products, total or partial suspension of production, and governmental refusal to
approve new products or indications. The manufacture and sale of Marinol also is
regulated by the Drug Enforcement Agency (DEA) and by statutes and regulations
promulgated by a number of states and foreign countries.
PATENTS AND PROPRIETARY RIGHTS
In 1991, Marinol was designated as an Orphan Drug by the FDA for use as an
appetite stimulant in patients with AIDS. Under the Orphan Drug Act of 1983, the
Company has seven years of marketing exclusivity for this use in the U.S. The
seven-year period began with receipt of marketing approval from the FDA in
December 1992.
Nitazoxanide, when combined with a wetting agent, and optionally, a starch
derivative, in an oral composition, is the subject of a patent and patent
application. Unimed has certain rights with respect to those patents under its
license agreement; however, Unimed does not now hold any patents directly, nor
is there any other patent protection available for Unimed's other products. The
Company has obtained an Orphan Drug Designation for the use of NTZ in the
treatment of cryptosporidiosis in patients with AIDS.
The Company owns the Marinol and SERC trademarks in the U.S.
EMPLOYEES
The Company has 16 full-time employees and one part-time employee. Unimed
expects to add technical, sales and marketing, and administration staff to
support development of the business. The Company believes employee relations are
satisfactory and that it will be able to attract additional personnel as needed.
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ITEM 2. PROPERTIES.
The Company leases approximately 5,000 square feet of executive office
space in Buffalo Grove, Illinois, at an annualized cost of approximately
$165,000, under a lease that expires in 1998. The Company also leased
approximately 1,900 square feet of laboratory space in Mundelein, Illinois, at
an annualized cost of $18,000 under a lease that expired December 31, 1995.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock is traded on the over-the-counter market. Its
Common Stock is quoted on the NASDAQ National Market System (NMS) under the
symbol UMED. The following table lists the high and low closing prices of the
Common Stock for the two most recent fiscal years.
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HIGH LOW
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1994 (January 1 -- December 31)
First Quarter.................................................................. 5 1/4 2 1/4
Second Quarter................................................................. 3 1/4 2 1/4
Third Quarter.................................................................. 3 3/4 2
Fourth Quarter................................................................. 3 7/8 2 1/8
1995 (January 1 -- December 31)
First Quarter.................................................................. 4 3/8 2 3/8
Second Quarter................................................................. 6 3 1/2
Third Quarter.................................................................. 6 3/4 4 3/4
Fourth Quarter................................................................. 7 5/8 5 1/8
</TABLE>
The Company had approximately 1,225 holders of record of Common Stock on
March 8, 1996. Unimed's Board of Directors anticipates the retention of all
available earnings to support expected growth and does not anticipate payment of
dividends in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA.
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YEAR ENDED
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12/31/95 12/31/94 12/31/93 9/30/92 9/30/91
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RESULTS OF OPERATIONS:
Gross sales.................... $ 9,723,720 $ 8,647,041 $ 8,059,119 $ 4,126,408 $2,678,668
Rebates and allowances......... 2,403,668 1,259,181 1,183,441 511,027 241,681
Net sales...................... 7,320,052 7,387,860 6,875,678 3,615,381 2,436,987
Income (Loss) from continuing
operations................... 312,664 40,708 (852,294) (3,829,177) (556,646)
(Loss) Income from discontinued
operations................... -- -- -- (380,634) 39,487
Net income (loss).............. 625,062 40,708 (852,294) (4,209,811) (517,159)
Total assets................... 16,305,181 11,804,781 11,662,035 12,174,796 7,188,990
Long-term debt, excluding
current installments......... -- -- -- -- 357,549
----------- ----------- ----------- ----------- ----------
PER SHARE COMMON STOCK DATA:
Income (Loss) from continuing
operations................... $.09 $.01 $(0.14) $(0.72) $(0.14)
Net income (loss).............. $.09 $.01 $(0.14) $(0.79) $(0.13)
Dividends paid................. $ -- $ -- $ -- $ -- $ --
</TABLE>
Selected financial data for all periods prior to December 31, 1995, have
been restated to conform to the 1995 presentation. These restatements had no
effect on net income (loss).
Results for the fiscal year ended September 30, 1992, include a $2.5
million restructuring charge.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
INTRODUCTION
In late 1994, a new President and Chief Executive Officer was hired and a
new business strategy was developed. Fiscal 1995 marks the first full year of
Unimed operations under this strategy. The strategy includes increasing sales of
Unimed's principal product, Marinol(R), implementation of cost control programs,
and using the resulting positive cash flow as a foundation to purchase or
acquire rights to additional pharmaceutical products under late-stage
development or already on the market. In 1995, Unimed's gross sales increased to
$9.7 million, a 12% increase over 1994 gross sales of $8.6 million. In addition,
in 1995 the Company increased Marinol(R) gross sales by 19% over 1994, decreased
total operating expenses 18% compared with 1994, and acquired rights to three
late-stage development products.
The Company reported net income of $.09 per share in 1995 compared to net
income of $.01 per share in 1994 and a net loss of $.14 per share in 1993.
The Company generated cash flow from operations of $1,640,000 and reported
year-end cash, cash equivalents and short-term investments of $8,401,000. In
1996, the Company expects to concentrate on further commercializing Marinol(R)
and to continue implementation of the Company's new business strategy, focusing
on acquiring and developing new products that enhance the Company's total
product portfolio.
REVENUES
Fiscal 1995 Marinol(R) gross sales, marketed during the year as a
refractory antiemetic in cancer chemotherapy and as an appetite stimulant in
anorexia associated with weight loss in AIDS, increased 19% over 1994 levels,
ending the year at $8,395,000. This compares with a 13% increase in sales growth
for 1994 to $7,054,000. For the year ended December 31, 1995 and for all periods
presented, the Company reclassified, for financial reporting purposes, a
normally recurring provision for estimated Medicaid rebates on Marinol(R) sales.
This provision for Medicaid rebates, previously reported as a cost of sales, has
been reclassified as a reduction to gross sales. This change had no effect on
gross profit or net income. Marinol(R) is marketed by the Company's licensee,
Roxane Laboratories, Inc. Roxane maintains an approximately 55-person sales
force engaged in both multi-source product distribution and ethical detailing
activities. The Company maintains an eight-person specialty sales force
detailing Marinol(R) only to AIDS-treating physicians. The Company reports the
royalty income it receives from Roxane as revenues from Marinol(R) sales. Unimed
continues to pursue opportunities to form international alliances to sell
Marinol(R) outside of the U.S. During 1994, Marinol(R) was re-introduced in
Canada for use as an antiemetic. Marinol(R) is currently under regulatory review
in South Africa for use as an appetite stimulant and as an anti-emetic. Other
regulatory submissions are expected in 1996. During 1995, Marinol(R) sales to
countries outside the United States totaled approximately $134,000.
Serc(R) is marketed by others in Canada and other international markets to
treat recurrent vertigo. In early 1993, the Company entered into a new
distribution agreement with Sanofi Winthrop Canada (Sanofi). In addition to
Serc(R), the agreement provides for distribution of Marinol(R), as an
antiemetic, and for registration of Marinol(R) as an appetite stimulant in
patients with AIDS with the Health Protection Branch (Canadian equivalent of the
FDA) and post-approval marketing rights in Canada. During 1995, Serc(R) sales
decreased slightly to $1,049,000 from $1,060,000 in 1994. The Company believes
Serc(R) to be a mature product in Canada. In January 1996, Unimed entered into
an agreement with Solvay Duphar whereby Unimed licensed the rights to
proprietary know-how and manufacturing for the drug SERC(R) in the U.S. As part
of the agreement, the Company received a $1.4 million payment to help fund
product development and for Unimed's product and trademark rights to SERC(R) in
Canada, Australia and South Africa.
During 1994, after analyzing market research results that suggested
significant new resources would be required to build market share in the
over-the-counter (OTC) business, the Company concluded that better opportunities
exist in proprietary prescription drug development and marketing. Unimed ended
active promotion of these products and stopped taking orders for these products
in late December 1995. The OTC products, consisting of ONDROX and the MouthKote
product line, generated gross sales of $279,000 during 1995. 1994 sales were
$579,000.
18
<PAGE> 11
Other income (net of other expenses) increased 28% in 1995 because of
growth in interest income. Interest income increased 70% to $430,000 due to
higher cash balances and higher interest rates on short-term holdings. Other
income increased 7% during fiscal 1994 relative to 1993, largely due to a slight
growth in interest income. To reflect conversion of the Company's equity
interest in the Medisperse partnership into the right to receive royalties on
products developed using the Medisperse technologies, the Company reduced the
Medisperse investment by $106,000. This was a noncash transaction.
COSTS AND EXPENSES
Cost of sales increased 8% from $2,958,000 in 1994 to $3,201,000 in 1995.
The higher cost of sales was due to revenue growth from the Company's
pharmaceutical products. 1994 cost of sales was slightly lower than 1993 cost of
sales due to changes in product mix.
Total expenses in 1995 were $3.8 million, representing an 18% decrease from
1994 total expenses of $4.6 million. This was due primarily to a 50% reduction
in sales and marketing expenses. Sales and marketing expenses also decreased
between 1994 and 1993, lowering total expenses by 6%. Marinol promotional
programs were unaffected by these reductions.
Operating and administrative expenses for 1995 were approximately
$2,129,000, a decrease of 3% from 1994. This decrease resulted in part from
strong cost control programs introduced by management in late 1994, but also
from the termination of active promotion of the OTC portfolio. Operating and
administrative expenses were 17% higher in 1994 than in 1993. Part of the
increase reflected having a full-time Chief Executive Officer in 1994 compared
with 1993, when the Company's Chairman of the Board served as CEO without
receiving cash compensation. Operating and administrative expenses as a percent
of net sales were 29% in 1995 compared with 30% in 1994.
Sales and marketing expenses were $1,059,000 in 1995, compared to
$2,113,000 in 1994. This decline in spending was primarily the result of ending
aggressive promotion of the OTC product line and reducing the number of Unimed
sales representatives.
Net research and development expenses increased from $328,000 in 1994 to
$618,000 in 1995. The increase was due to further development activities of
Marinol(R) and new pharmaceutical development programs, including hiring
additional personnel to manage these programs. This expense category increased
by $35,000 from 1993 to 1994.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995, the Company had cash, cash equivalents and short-term
investments of $8,401,000, compared with $6,612,000 at December 31, 1994. During
1995, Unimed generated cash from operations of $1,640,000. The Company's working
capital remained essentially unchanged from 1994. The Company expects to
increase research and development expenditures in 1996, partially offsetting
this increase with licensor's research and development payments.
During 1995, the Company obtained approximately $250,000 from the exercise
of stock options. In addition, in 1995 Unimed invested $600,000 for a 6% equity
interest in Romark Laboratories, L.C.(Romark). Romark is the licensor of NTZ,
used in the treatment of a broad spectrum of parasitic infections,
including a potentially life-threatening infection in AIDS patients.
Inventories increased by $894,000, which includes $81,000 of inventory
depreciation, at December 31, 1995 over 1994 levels, as the Company accepted
annual delivery of Delta-9 tetrahydrocannabinol, the active component in
Marinol(R), from its contract manufacturer. Marinol(R) inventories normally are
depleted throughout the year until the delivery of the new annual production
lot. The Company's distributor, Roxane, advances funds to Unimed required to
maintain Marinol(R) inventories. The current liability, due to Roxane, is
relieved on a quarterly basis from royalties remitted to the Company. The
reduction in the quarter's royalty payment corresponds to the cost of Marinol(R)
inventory sold during the quarter.
On February 29, 1996, the Company completed a private placement of 1.4
million unregistered shares of Common Stock at $6 per share, for $8.4 million.
The Company anticipates that all of the net proceeds of
19
<PAGE> 12
approximately $7.5 million will be used to acquire currently marketed niche
pharmaceutical products and acquire and further develop pharmaceutical products
in late stages of clinical development.
In February 1996, The John N. Kapoor Trust exercised warrants to purchase
800,000 shares of the Company's Common Stock at an exercise price of $2.125,
yielding $1.7 million to the Company.
The Company maintains adequate cash reserves and short-term investments to
meet anticipated working capital, capital expenditure and business investment
requirements.
BACKLOG, SEASONALITY AND IMPACT OF INFLATION
Sales orders are typically filled shortly after receipt and, normally, do
not result in a backlog. In general, the Company's products experience minor
seasonal fluctuations. While raw material inputs to certain products are subject
to price escalation, due to a limited number of suppliers, the complexity of
manufacturing processes and regulatory procedures, the Company does not
attribute this to inflation and does not anticipate inflation to have a
significant impact on costs in the near future.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements and supplementary data are listed
under Item 14 in this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
None.
20
<PAGE> 13
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
<TABLE>
<CAPTION>
TERM OF
NAME AGE POSITION OFFICE BUSINESS EXPERIENCE
- ---------------------------- ---- ------------------- ------- --------------------------------
<S> <C> <C> <C> <C>
John N. Kapoor Ph.D......... 52 Chairman 1997 Chairman of the Board of Unimed
Pharmaceuticals, Inc. since May
1992; Chairman since October
1990 and Chief Executive Officer
since August 1993 of Option
Care, Inc., a franchisor of home
infusion therapy businesses;
President of EJ Financial
Enterprises, Inc., a consulting
and private investment firm,
since 1990; Chairman of
Lyphomed, Inc., a phar-
maceutical company, from 1983 to
1990; Director of Lunar Corp., a
manufacturer and marketer of
X-ray and ultrasound systems;
Director of Akorn, Inc., an
ophthalmic company and NeoPharm,
Inc., an oncology company.
Stephen M. Simes............ 44 President, CEO, 1996 President and CEO of Unimed
Director Pharmaceuticals, Inc. since
October 1994; Director from
August 1993 to June 1995 and
Senior Vice President of
Bio-Technology General Corp., a
biotechnology company, from
August 1993 through October
1994; Chairman of the Board from
1992 through August 1993 and
President, Chief Executive
Officer and Director of Gynex
Pharmaceuticals, Inc., a
pharmaceutical company, from May
1989 through August 1993.
Fred Holubow................ 57 Director 1998 Founder and Vice-President of
Pegasus Associates, investment
advisors, since 1982; Director
of Jefferson State Bank, an
Illinois State Bank; Director of
ThermoRemediation, an
environmental remediation
company; Director of
Bio-Technology General Corp., a
biotechnology company, from 1993
through 1996.
Robert D. Hunter............ 71 Director 1997 Founding and Executive Partner
of R.D. Hunter & Company,
Certified Public Accountants,
since 1956. Mr. Hunter has
announced his retirement from
the Unimed board effective at
the May 2, 1996 annual meeting.
</TABLE>
21
<PAGE> 14
<TABLE>
<CAPTION>
TERM OF
NAME AGE POSITION OFFICE BUSINESS EXPERIENCE
- ---------------------------- ---- ------------------- ------- --------------------------------
<S> <C> <C> <C> <C>
James J. Lempenau........... 66 Director 1998 Chartered Financial Analyst;
President and Director since
1981 of The Income Builder,
Inc., investment advisors.
Roland Weiser............... 65 Director 1996 President of Intervista, an
international pharmaceutical
consulting group, since 1985;
Senior Vice President of
Schering-Plough Corp. (In-
ternational) from 1980 to 1984;
Director, Gam Funds Inc., a
diversified open end management
investment company.
Robert E. Dudley Ph.D....... 41 Vice President 1996 Vice President of Clinical and
Clinical and Regulatory Affairs of Unimed
Regulatory Affairs Pharmaceuticals, Inc. since
December 1994; Vice President of
Clinical Development of
Bio-Technology General Corp., a
biotechnology company, from
August 1993 through November
1994; Vice President of Research
and Development of Gynex
Pharmaceuticals, Inc., a
pharmaceutical company, from May
1989 through August 1993.
David E. Riggs.............. 44 Senior Vice 1996 Senior Vice President since
President, CFO, October 1994 and Vice President,
Secretary, CFO, Secretary and Treasurer of
Treasurer Unimed Pharmaceuticals, Inc.
since May 1992; CFO of NeoPharm,
Inc. since October 1995; CFO and
Secretary of VideoCart, Inc., a
micro-marketing media company,
from 1990 through 1991;
Treasurer and Director of Fi-
nancial Planning for Lyphomed,
Inc., a pharmaceutical company,
from 1986 through 1990.
</TABLE>
22
<PAGE> 15
ITEM 11. EXECUTIVE COMPENSATION.
The following table summarizes the compensation for services to the Company
for the fiscal year ended December 31, 1995, by the Chief Executive Officer and
two highly compensated senior executive officers.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION AWARDS
-------------------------------- ----------
OTHER SECURITIES PAYOUTS
ANNUAL RESTRICTED UNDERLYING ---------- ALL OTHER
NAME AND COMPENSA- STOCK OPTIONS LTIP COMPENSA-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) TION($)(4) AWARDS($) SARS(#) PAYOUTS(#) TION($)(5)
- -------------------------- ---- --------- -------- --------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stephen M. Simes(1)....... 1995 200,000 80,000 9,890 0 360,000 0 10,570
President and Chief 1994 37,712 0 1,700 0 300,000 0 0
Executive Officer
David E. Riggs(2)......... 1995 114,583 42,917 6,600 0 90,000 0 4,620
Senior Vice President, 1994 112,984 0 7,200 0 80,000 0 0
CFO, Secretary and 1993 105,333 13,333 7,200 0 0 0 0
Treasurer
Robert E. Dudley(3)....... 1995 140,000 42,000 7,200 0 100,000 0 51,765
Vice President of 1994 8,227 0 300 0 0 0 0
Clinical and Regulatory
Affairs
</TABLE>
- -------------------------
(1) Mr. Simes joined the Company on October 25, 1994. The 360,000 option shares
granted in 1995 represents a new grant of 60,000 options on September 22,
1995, and a repricing of the 300,000 options granted in 1994. An employment
agreement entered into between Mr. Simes and the Company provides for
severance payments, upon termination, equal to his annual salary.
(2) Mr. Riggs joined the Company on May 1, 1992. Effective November 1, 1995, Mr.
Riggs began devoting 50% of his time to the Company. The 90,000 option
shares granted in 1995 represents a new grant of 10,000 options on September
22, 1995, and a repricing of the 80,000 options granted in 1994.
(3) Dr. Dudley joined the Company on December 12, 1994. An employment agreement
entered into between Dr. Dudley and the Company provides for severance
payments, upon termination, equal to 75% of his annual salary.
(4) Represents the compensation portion of car allowances advanced to the
executive officers listed above.
(5) Represents the matching contribution ($4,620 per officer) made by the
Company to the Unimed Pharmaceuticals, Inc. 401(k) Plan for each of the
executive officers listed above. In addition to the Company 401(k) matching
contribution, for Mr. Simes this amount represents insurance premiums paid
($4,018) by the Company for Mr. Simes, and the taxes ($1,932) associated
with these premiums. For Dr. Dudley, this number represents the Company
401(k) matching contribution, expenses paid by the Company related to Dr.
Dudley's relocation ($35,469), and the taxes associated with these
relocation expenses ($11,676).
23
<PAGE> 16
The following table sets forth information with respect to grants of
options to purchase Common Stock granted to the Named Executive Officers during
the fiscal year ended December 31, 1995:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
PERCENT OF STOCK
TOTAL PRICE APPRECIATION
OPTIONS FOR
GRANTED TO OPTION TERM
EMPLOYEES EXERCISE --------------------
OPTIONS IN FISCAL PRICE EXPIRATION 5% 10%
NAME GRANTED YEAR $/SHARE DATE $ $
- ------------------------------------ ------- ---------- -------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Stephen M. Simes.................... 300,000 38.03 2.75 1/19/05 518,838 1,314,838
60,000 7.61 5.25 9/22/05 348,102 652,029
David E. Riggs...................... 80,000 10.14 2.75 1/19/05 138,357 350,623
10,000 1.27 5.25 9/22/05 58,017 108,671
Robert E. Dudley.................... 60,000 7.61 2.75 1/19/05 103,768 262,968
40,000 5.07 5.25 9/22/05 232,068 434,686
</TABLE>
The following table sets forth information with respect to stock options
exercised during the fiscal year ended December 31, 1995 and the value at
December 31, 1995 of unexercised stock options held by the Named Executive
Officers:
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED OPTIONS
OPTIONS IN-THE-MONEY
AT FISCAL AT FISCAL
SHARES YEAR-END YEAR-END*
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
ON EXERCISE RECEIVED UNEXERCISABLE UNEXERCISABLE
NAME # $ # $
- ---------------------------------------- ----------- -------- --------------- ---------------
<S> <C> <C> <C> <C>
Stephen M. Simes........................ 0 0 112,500/247,500 435,938/809,063
David E. Riggs.......................... 0 0 45,000/ 45,000 174,375/149,375
Robert E. Dudley........................ 0 0 0/100,000 0/287,500
</TABLE>
- -------------------------
* Represents the fair market value at December 31, 1995, of the Common Stock
underlying the options minus the exercise price.
The following table shows stock options granted to the Named Executive
Officers where the exercise price was adjusted (repriced) during the fiscal year
ended December 31, 1995:
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET ORIGINAL
SECURITIES PRICE OF EXERCISE OPTION TERM
UNDERLYING STOCK AT PRICE AT NEW REMAINING
OPTIONS TIME OF TIME OF EXERCISE AT DATE
NAME DATE REPRICED(#) REPRICE($) REPRICE($) PRICE($) OF REPRICING
- --------------------------------- ------- ----------- ---------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Stephen M. Simes................. 1/19/95 300,000 2.75 3.38 2.75 9.75 Years
David E. Riggs................... 1/19/95 80,000 2.75 3.38 2.75 9.75 Years
</TABLE>
Directors who are not officers of the Company receive an annual stipend of
$6,000 for serving on the Board and its committees, and additional $1,000 for
each directors meeting they attend (excluding meetings held by telephone), $500
for each committee meeting they attend (excluding meetings held by telephone),
and reimbursement of out-of-pocket expenses in connection with their attendance
at directors meetings. The 1991 Stock Option Plan provides for a grant of
options to purchase 10,000 shares of Common Stock to each new director who is
not an officer on the date this person first becomes a director. The 1991 Stock
Option Plan also provides for annual option grants of 7,500 shares of Common
Stock to directors who are not officers.
24
<PAGE> 17
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- -------------- ------------------------------------------------------- ---------- --------
<C> <S> <C> <C>
Common John N. Kapoor Ph.D.................................... 2,332,429 (1)(2) 25.7%
Common Stephen M. Simes....................................... 112,500 (1) --
Common James J. Lempenau...................................... 57,328 (1) --
Common Robert D. Hunter....................................... 47,528 (1)(3) --
Common Roland Weiser.......................................... 45,950 (1) --
Common David E. Riggs......................................... 45,000 (1) --
Common Fred Holubow........................................... 27,500 (1) --
Common Robert E. Dudley....................................... 15,000 (1) --
All Directors and Officers as a group (8
Common individuals)........................................... 2,683,235 (4) 29.5%
</TABLE>
- -------------------------
(1) Includes incentive stock options and non-qualified stock options exercisable
within 60 days to purchase 160,000, 112,500, 42,328, 42,328, 41,170, 45,000,
17,500, and 15,000 shares of Common Stock held by Kapoor, Simes, Lempenau,
Hunter, Weiser, Riggs, Holubow, and Dudley, respectively.
(2) Includes 1,667,429 shares of Common Stock beneficially owned by the John N.
Kapoor Trust, an "affiliate" of Dr. Kapoor. Includes 505,000 shares of
Common Stock held by a limited partnership created for the benefit of Dr.
Kapoor's family members, of which Dr. Kapoor is the General Partner.
(3) Includes 2,100 shares of Common Stock owned of record by Mr. Hunter's wife.
(4) See Footnotes 1 through 3.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See "Note 13 -- Related Parties" in the Notes to Consolidated Financial
Statements included herein.
25
<PAGE> 18
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K.
(a) and (d) Financial Statements
See Index to Consolidated Financial Statements and Schedules on page 28.
(b) Reports on Form 8-K
None
(c) Exhibits
<TABLE>
<C> <C> <S>
3-A -- Certificate of Incorporation of the Registrant, as amended (filed by reference
to Exhibits 3[a] through 3[c] to Registration Statement No. 2-19352, Exhibit
3[c][i] to Registration Statement No. 2-21680, Exhibit 3[a][i] to Registration
Statement No. 2-42398, Exhibit 3[a] to Current Report on Form 8-K, dated
January 27, 1981, Exhibit 3-A[ii] to Annual Report on Form 10-K for the fiscal
year ended September 30, 1985 and Exhibit 3.1 to Registration Statement No.
33-10975).
3-B(i) -- Amendment to Certificate of Incorporation, dated March 27, 1991 (filed by
reference to Exhibit 3-B to Post-Effective Amendment No. 3 to Registration
Statement No. 33-10975).
3-B(ii) -- Amendment to Certificate of Incorporation, adopted by stockholders on May 2,
1994 (filed by reference to Exhibit 3-B[ii] to Annual Report on Form 10-K for
the fiscal year ended December 31, 1994).
3-C -- By-laws of the Registrant, as amended (filed by reference to Exhibit 3-B to
Annual Report on Form 10-K for fiscal year ended September 30, 1989).
3-D -- Amendment to the By-laws of the Company, dated May 5, 1991 (filed by reference
to Exhibit 3-D to the Post-Effective Amendment No. 3 to Registration Statement
No. 33-10975).
4-A -- Specimen Common Stock Certificates (filed by reference to Exhibit 4 to the
Annual Report on Form 10-K for the fiscal year ended September 30, 1991).
4-B -- Stock Purchase Agreement, dated February 15, 1991, between the John N. Kapoor
Trust and the Company (filed by reference to Exhibit 4-D to Post-Effective
Amendment No. 3 to Registration Statement No. 33-10975).
4-C -- Stock Registration Rights Agreement, dated March 27, 1991, between the John N.
Kapoor Trust and the Company (filed by reference to Post-Effective Amendment
No. 3 to Registration Statement No. 33-10975).
*4-D -- Stock and Warrant Agreement, dated as of August 11, 1995, between the Company
and Laboratoires Besins Iscovesco S.A.
*4-E -- Warrant, dated August 11, 1995, for 72,550 shares of Common Stock, issued to
Laboratoires Besins Iscovesco S.A.
*4-F -- Registration Rights Agreement, dated August 11, 1995, between the Company and
Laboratoires Besins Iscovesco S.A.
*4-G -- Warrant, dated February 29, 1996, for 140,000 shares of Common Stock, issued to
Sunrise Securities Corp.
*4-H -- Registration Rights Agreement, dated February 29, 1996, between the Company and
certain holders of Common Stock.
10-B(i) -- Agreement between Roxane Laboratories, Inc. and the Company, dated February 12,
1986 (filed as Exhibit 10 to the Company's Current Report on Form 8-K dated
February 12, 1986).
10-B(ii) -- Agreement between Roxane Laboratories, Inc. and the Company, dated April 1,
1987 (filed as Exhibit 28.1 to the Company's Current Report on Form 8-K dated
April 28, 1987).
</TABLE>
26
<PAGE> 19
<TABLE>
<C> <C> <S>
*10-B(iii) -- Agreement between Roxane Laboratories, Inc. and the Company, dated January 20,
1995 and letter amendment, dated November 22, 1995.
10-D(i) -- Forms of Graduated Vesting Non-qualified Stock Option Agreement (filed by
reference to Exhibit 10-G[iv] to Registration Statement No. 33-43838).
10-D(ii) -- Form of Immediate Vesting Non-qualified Stock Option Agreement (filed by
reference to Exhibit 10-G[v] to Registration Statement No. 33-43838).
10-D(iii) -- Form of Incentive Stock Option Agreement (filed by reference to Exhibit
10-G[vi] to Registration Statement No. 33-43838).
*10-K -- Unimed Pharmaceuticals, Inc. 1991 Stock Option Plan, as amended through March 29,
1996.
10-L -- Agreement for Manufacture and Sale of THC, dated September 9, 1992, by and
between The NORAC Company, Inc. and the Company (filed as Exhibit [c] 1 to the
Company's Current Report on Form 8-K dated September 9, 1992).
*10-M -- Employment Agreement, dated as of October 11, 1994, between the Company and
Stephen M. Simes.
*10-N -- Employment Agreement, dated as of November 3, 1994, between the Company and
Robert E. Dudley.
*10-Q -- Sales Agency Agreement, dated January 22, 1996, between Sunrise Securities
Corp. and the Company.
*11 -- Computation of Income (Loss) per Share
*24(a) -- Consent of Coopers & Lybrand L.L.P.
</TABLE>
- -------------------------
* Filed herewith.
27
<PAGE> 20
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants.................................................... 29
Financial Statements:
Consolidated Statements of Operations for the years ended December 31, 1995, 1994
and 1993........................................................................ 30
Consolidated Balance Sheets at December 31, 1995 and December 31, 1994............. 31
Consolidated Statements of Stockholders' Equity for the years ended December 31,
1995, 1994 and 1993............................................................. 32
Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1994
and 1993........................................................................ 33
Notes to Consolidated Financial Statements......................................... 34
Report of Independent Accountants on Financial Statement Schedule.................... 44
Financial Statement Schedule:
Valuation and Qualifying Accounts (Schedule II).................................... 45
</TABLE>
28
<PAGE> 21
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
Unimed Pharmaceuticals, Inc.
We have audited the accompanying consolidated balance sheets of Unimed
Pharmaceuticals, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years ended December 31, 1995, 1994 and 1993. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Unimed
Pharmaceuticals, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations, stockholders' equity and cash flows
for the years ended December 31, 1995, 1994 and 1993, in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
February 13, 1996, except for Note 14, as to which the date is February 29, 1996
29
<PAGE> 22
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Gross sales.............................................. $9,723,720 $8,647,041 $8,059,119
Rebates and allowances................................... 2,403,668 1,259,181 1,183,441
---------- ---------- ----------
Net sales................................................ 7,320,052 7,387,860 6,875,678
Cost of sales............................................ 3,201,014 2,957,602 3,007,855
---------- ---------- ----------
Gross profit............................................. 4,119,038 4,430,258 3,867,823
---------- ---------- ----------
Operating and administrative............................. 2,129,140 2,195,829 1,879,966
Sales and marketing...................................... 1,059,215 2,112,826 2,780,289
Research and development, net............................ 618,019 328,367 292,724
---------- ---------- ----------
Total expenses........................................... 3,806,374 4,637,022 4,952,979
---------- ---------- ----------
Income (Loss) from operations............................ 312,664 (206,764) (1,085,156)
Interest income.......................................... 430,098 253,624 222,462
Other, net............................................... (106,000) -- 15,000
---------- ---------- ----------
Income (Loss) before income taxes........................ 636,762 46,860 (847,694)
Income tax provision..................................... 11,700 6,152 4,600
---------- ---------- ----------
Net income (loss)........................................ $ 625,062 $ 40,708 $ (852,294)
========== ========== ==========
Net Income (loss) per share:
Primary................................................ $ .09 $ .01 $ (.14)
========== ========== ==========
Fully diluted.......................................... $ .09 $ -- $ --
========== ========== ==========
Weighted average number of common and common equivalent
shares outstanding:
Primary................................................ 7,030,553 6,401,066 6,040,606
========== ========== ==========
Fully Diluted.......................................... 7,300,921 -- --
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements
30
<PAGE> 23
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................... $ 7,011,843 $ 6,101,093
Short-term investments............................................. 1,388,756 511,363
Receivables:
Trade, less allowances of $43,000 in 1995 and $28,000 in 1994...... 1,548,148 1,086,298
Other.............................................................. 535,104 61,947
----------- -----------
Total receivables........................................... 2,083,252 1,148,245
Inventories........................................................ 3,327,939 2,433,561
Prepaid expenses................................................... 276,043 338,412
----------- -----------
Total current assets........................................ 14,087,833 10,532,674
----------- -----------
Leasehold improvements and equipment, at cost...................... 1,922,006 2,032,546
Less accumulated depreciation and amortization................ 1,050,866 934,916
----------- -----------
Net........................................................... 871,140 1,097,630
----------- -----------
Investment, at cost................................................ 600,000 --
Other assets....................................................... 746,208 174,477
----------- -----------
Total assets................................................ $16,305,181 $11,804,781
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................... $ 416,705 $ 90,107
Accrued liabilities................................................ 511,446 352,234
Income taxes payable............................................... 20,000 9,963
Due to Roxane...................................................... 3,716,633 1,881,916
Deferred research and development revenues......................... 1,000,000 --
----------- -----------
Total current liabilities..................................... 5,664,784 2,334,220
----------- -----------
Commitments and contingencies (Notes 11 and 12)
Stockholders' equity:
Common stock, $.25 par value; authorized 12,000,000 shares; issued
and outstanding: 6,270,886 and 6,127,161......................... 1,567,722 1,531,790
Additional paid-in capital......................................... 17,559,861 17,052,661
Accumulated deficit................................................ (8,527,869) (9,152,931)
Accumulated foreign currency translation adjustment................ 40,683 39,041
----------- -----------
Total stockholders' equity.................................. 10,640,397 9,470,561
----------- -----------
Total liabilities and stockholders' equity.................. $16,305,181 $11,804,781
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
31
<PAGE> 24
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
ACCUMULATED
FOREIGN
COMMON STOCK ADDITIONAL CURRENCY
--------------------- PAID-IN ACCUMULATED TRANSLATION
SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT TOTAL
--------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992....... 5,891,316 $1,472,829 $16,399,644 $(8,341,345) $38,579 $ 9,569,707
Net loss........................... -- -- -- (852,294) -- (852,294)
Exercise of common stock options... 235,845 58,961 625,957 -- -- 684,918
Amortization of restricted stock
options.......................... -- -- 27,060 -- -- 27,060
Foreign currency translation
gain............................. -- -- -- -- 16 16
--------- ---------- ----------- ----------- ------- -----------
Balance at December 31, 1993....... 6,127,161 1,531,790 17,052,661 (9,193,639) 38,595 9,429,407
Net income......................... -- -- -- 40,708 -- 40,708
Foreign currency translation
gain............................. -- -- -- -- 446 446
--------- ---------- ----------- ----------- ------- -----------
Balance at December 31, 1994....... 6,127,161 1,531,790 17,052,661 (9,152,931) 39,041 9,470,561
Net income......................... -- -- -- 625,062 -- 625,062
Exercise of common stock options... 71,125 17,782 232,681 -- -- 250,463
Issuance of common stock for
product licenses................. 72,600 18,150 274,519 -- -- 292,669
Foreign currency translation
gain............................. -- -- -- -- 1,642 1,642
--------- ---------- ----------- ----------- ------- -----------
Balance at December 31, 1995....... 6,270,886 $1,567,722 $17,559,861 $(8,527,869) $40,683 $10,640,397
========= ========== =========== =========== ======= ===========
</TABLE>
See accompanying notes to consolidated financial statements
32
<PAGE> 25
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- -----------
<S> <C> <C> <C>
Cash flows provided by (used in) operations:
Net income (loss)...................................... $ 625,062 $ 40,708 $ (852,294)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operations:
Depreciation and amortization........................ 108,012 105,537 161,814
Compensation related to restricted stock and stock
options........................................... -- -- 27,060
Writedown of other assets............................ 106,000 -- --
Other................................................ 1,601 366 38
(Increase) Decrease in receivables................... (435,007) (85,392) 12,693
Decrease in notes receivable......................... -- 35,032 39,968
(Increase) Decrease in inventories................... (812,994) 220,769 (605,270)
Decrease (Increase) in prepaid expenses and other
assets............................................ 9,028 175,334 (107,916)
Increase (Decrease) in accounts payable and accrued
liabilities....................................... 203,582 126,779 (61,321)
(Decrease) in accrued restructuring costs............ -- -- (1,079,680)
Increase (Decrease) in due to Roxane................. 1,834,717 (25,187) 274,972
---------- ---------- ----------
Net cash flows provided by (used in) operating
activities................................... 1,640,001 593,946 (2,189,936)
Cash flows (used in) provided by investing activities:
Proceeds on disposition of equipment................. 63,063 -- --
Purchases of equipment............................... (25,969) (36,409) (395,050)
Net (purchase) sale of short-term investments........ (877,393) 256,258 (567,333)
Investment in Medisperse............................. (39,456) (40,927) 48,001
Investment in Romark Laboratories, L.C............... (600,000) -- --
---------- ---------- ----------
Net cash (used in) provided by investing
activities................................... (1,479,755) 178,922 (914,382)
Cash flows provided by financing activities:
Proceeds from exercise of stock options.............. 250,463 -- 684,918
Deferred research and development revenues-net....... 500,000 -- --
---------- ---------- ----------
Net cash flows provided by financing
activities................................... 750,463 -- 684,918
Effect of exchange rate changes on cash.............. 41 80 33
---------- ---------- ----------
Net change in cash and cash equivalents................ 910,750 772,948 (2,419,367)
Cash and cash equivalents at beginning of year......... 6,101,093 5,328,145 7,747,512
---------- ---------- ----------
Cash and cash equivalents at end of year............... $ 7,011,843 $6,101,093 $ 5,328,145
========== ========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes......................................... $ 1,663 $ 1,605 $ 1,600
Supplemental disclosures of non-cash financing and
investing activities:
In 1995, the Company entered into an agreement to exchange 145,100 shares of the Company's
Common Stock for licensing rights to two products. The fair value of the licensing rights
was determined to be approximately $585,000 based on the market value of the Company's
Common Stock on the date the agreement was entered into.
</TABLE>
See accompanying notes to consolidated financial statements
33
<PAGE> 26
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unimed Pharmaceuticals, Inc. (the Company) and its subsidiaries develop and
market proprietary ethical pharmaceutical products in niche medical markets.
(A) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries after elimination of intercompany balances and
transactions.
(B) TRANSLATION OF FOREIGN CURRENCY AND RELATED MATTERS
The financial statements of the Company's foreign subsidiaries have been
translated into U.S. dollars. Assets and liabilities of the subsidiaries have
been translated using exchange rates in effect at the balance sheet date. The
statements of operations have been translated using the average rates of
exchange for the year. Adjustments resulting from the translations are
accumulated in the stockholders' equity section of the consolidated balance
sheets. Exchange gains or losses arising from the settlement of foreign currency
transactions during the year are reflected in the consolidated statements of
operations.
(C) CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash and cash equivalents include liquid instruments purchased with
original maturities of 90 or fewer days.
The Company has investments in short-term debt securities that have been
classified under the provisions of SFAS No. 115 as held-to-maturity.
Accordingly, these investments are measured at amortized cost and temporary
unrealized gains or losses are not recognized.
(D) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market.
(E) LEASEHOLD IMPROVEMENTS AND EQUIPMENT
Depreciation is provided on a straight-line basis over the estimated useful
lives of the applicable assets. Amortization of leasehold improvements is
provided on a straight-line basis over the lesser of the estimated useful lives
of improvements or the terms of the related leases. Expenditures for repairs and
maintenance are charged to operations; replacements, renewals and betterments
are capitalized. The cost and accumulated depreciation of assets retired or
otherwise disposed of are eliminated from the accounts and any gains or losses
on such dispositions are reflected in operations.
34
<PAGE> 27
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(F) INCOME TAXES
Deferred tax liabilities and assets at the end of each period are
determined using the tax rate expected to be in effect when taxes actually are
paid or recovered. Accordingly, income tax expense will increase or decrease in
the same period in which a change in the tax rates is enacted.
(G) REVENUE RECOGNITION
Revenues are recognized as earned in accordance with specific terms of each
distribution, royalty and licensing agreement.
(H) INCOME (LOSS) PER SHARE
Primary net income per share is computed by dividing net income by the
weighted average number of common stock and common stock equivalents (when
dilutive). Common stock equivalents include unexercised stock options and
warrants. Fully diluted net income per share is computed based on the weighted
average number of shares of common stock and common stock equivalents
outstanding during the period, as if the common stock equivalents were converted
into common stock at the beginning of the period.
(I) MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates.
(J) ACCOUNTING FOR STOCK OPTIONS
The Company applies the provisions of Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees", for its stock-based
compensation program, and does not intend to adopt the fair value accounting
rules as permitted by Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation"(SFAS 123) which becomes effective for
1996. The Company intends to adopt the disclosure provision of SFAS 123
beginning in 1996.
(K) RECLASSIFICATIONS
Certain 1994 and 1993 amounts have been reclassified to conform to the 1995
presentation. These reclassifications had no effect on gross profit or net
income (loss) for such periods.
(2) INVENTORIES
A summary of inventory components at December 31 follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Finished products..................................... $ 368,636 $ 844,778
Raw materials......................................... 2,959,303 1,588,783
---------- ----------
$3,327,939 $2,433,561
========== ==========
</TABLE>
35
<PAGE> 28
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(3) LEASEHOLD IMPROVEMENTS AND EQUIPMENT
A summary of leasehold improvements and equipment at December 31 follows:
<TABLE>
<CAPTION>
ESTIMATED
1995 1994 USEFUL LIFE
---------- ---------- -----------
<S> <C> <C> <C>
Equipment, furniture and fixtures.......... $1,884,087 $2,001,647 5-10 years
Leasehold improvements..................... 37,919 30,899 10 years
---------- ----------
$1,922,006 $2,032,546
========== ==========
</TABLE>
The Company has purchased and retains title to the majority of the
equipment used by The NORAC Company, Inc. (NORAC) to manufacture Marinol
(dronabinol). As of December 31, 1995 and 1994, the equipment had a net book
value of $490,285 and $571,668, respectively.
(4) PRODUCT DEVELOPMENT AND LICENSING AGREEMENTS
Romark Laboratories, L.C.
In June 1995, the Company entered into a license agreement with Romark for
the rights to develop and market NTZ, which treats a broad spectrum of parasitic
infections, including a potentially life-threatening infection in AIDS patients.
The agreement grants Unimed exclusive marketing rights to NTZ for all
therapeutic indications for oral use in the United States, Canada, Australia and
New Zealand. The Company also received rights to the IV formulations for use in
treating cryptosporidiosos. In exchange for these exclusive marketing rights,
Unimed will pay Romark royalties if Unimed receives regulatory approval to
market NTZ. Romark will manufacture NTZ exclusively for Unimed in Unimed
countries. To date, Unimed has invested $600,000 in Romark in exchange for a 6%
equity interest in Romark. The Company will invest another $400,000 for an
additional 4% equity interest in Romark as certain development milestones are
met.
Besins Iscovesco
In August 1995, Unimed entered into a licensing agreement with Besins
Iscovesco (Besins) of Paris, France, for two products to treat testosterone
deficiency in men. The products are gel formulations of testosterone, the
natural male hormone, and dihydrotestosterone (DHT), which is the active
metabolite of testosterone in the human body. Unimed acquired exclusive
marketing rights to the testosterone products for all therapeutic indications in
the United States, Canada and Mexico. In exchange for the license to the two
testosterone products, Unimed issued Besins 72,600 Common shares and warrants to
purchase 72,550 shares of Unimed Common Stock at $8.00 per share in 1995 and
will issue Besins 72,500 Common shares in 1996. These rights have been included
in other assets and will be amortized over 10 years after the products become
available in the market. Besins will manufacture the products for Unimed, which
will pay royalties to Besins if the products are approved for marketing. Besins
was required to make two $500,000 payments to Unimed, to be applied to product
development classified as deferred revenues as of December 31, 1995.
Simultaneous to the signing of the Besins agreement, the Company recognized
an other asset of approximately $585,000 in marketing/property rights, which
included a $280,000 payable that was paid through the issuance of the Company's
Common Stock in January 1996.
36
<PAGE> 29
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Medisperse Restructure Agreement
In November 1995, Unimed entered into a restructuring and royalty agreement
relative to the Medisperse partnership. While Unimed withdrew (through its
wholly owned subsidiary) as a general partner and also transferred its limited
partnership interest, its financial investment in the partnership remains
protected. It will receive royalties on any products that result from the
Medisperse partnership in an amount at least as attractive as if Unimed remained
in the partnership. The Company is aiding in the search for a licensee for
further development of the Medisperse technology. Unimed has no future funding
obligations associated with the partnership. As of December 31, 1995, the
Company's investment in Medisperse was reduced by $106,000 to its net realizable
value.
(5) SHORT-TERM INVESTMENTS
Short-term investments in debt securities, were as follows:
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS
HELD-TO-MATURITY
-----------------------
1995 1994
---------- --------
<S> <C> <C>
Obligations of corporations............................ $1,138,756 $261,363
Obligations of U.S. government agencies................ 250,000 250,000
---------- --------
$1,388,756 $511,363
========= ========
</TABLE>
(6) INCOME TAXES
The provision for income taxes is comprised of the following:
<TABLE>
<CAPTION>
CURRENT 1995 1994 1993
-------------------------------------------------- ------- ------ ------
<S> <C> <C> <C>
Federal........................................... $ -- $ -- $ --
State............................................. 11,700 6,152 4,600
Foreign........................................... -- -- --
------- ------ ------
Total...................................... $11,700 $6,152 $4,600
======= ====== ======
</TABLE>
Income tax provisions from continuing operations differed from the taxes
calculated at the statutory federal rate as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- -------- ---------
<S> <C> <C> <C>
Taxes at the statutory rate................... $ 216,500 $ 16,400 $(296,700)
Utilization of tax loss carryforward.......... (217,100) (17,000) --
State income taxes............................ 11,700 6,152 4,600
Foreign loss.................................. 600 600 --
Valuation allowance........................... -- -- 296,700
--------- -------- ---------
Totals................................... $ 11,700 $ 6,152 $ 4,600
========= ======== =========
</TABLE>
At December 31, 1995, the Company has a tax loss carryforward of
approximately $10,033,000 for federal income tax purposes, which expires in the
years 2001 through 2010. The Company had a capital loss carryforward of
approximately $380,000 that expired in 1995. The Company has available a
research and development credit carryforward at December 31, 1995, of
approximately $430,000, which expires in the years 2003 through 2010. Management
has recorded a 100% valuation allowance against deferred tax assets as a result
of unexpected future taxable income.
37
<PAGE> 30
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The effect of the components of net deferred taxes are as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward................... $ 4,013,000 $ 4,104,400
Research tax credit carryforward.................. 430,000 420,000
Capital loss carryforward......................... -- 152,000
Sales returns and allowances...................... 16,000 10,000
Inventory......................................... 22,000 100,000
Accrued liabilities............................... 32,000 72,500
Other............................................. 1,000 1,200
Valuation allowance............................... (4,342,000) (4,715,300)
----------- -----------
Total.......................................... $ 172,000 $ 144,800
----------- -----------
Deferred tax liabilities:
Depreciation...................................... 172,000 144,800
----------- -----------
Net............................................ $ 0 $ 0
=========== ===========
</TABLE>
(7) DISTRIBUTION, RESEARCH, ROYALTY AND LICENSING AGREEMENTS
In February 1986, the Company entered into a distribution agreement with
Roxane, making Roxane the Company's exclusive distributor of Marinol in the
United States. The Company and Roxane subsequently agreed that Puerto Rico is
not part of the United States territory. Roxane distribution of Marinol began in
July 1986 in the United States. From October 1991 through March 1993, Boehringer
Ingelheim distributed Marinol in Canada. In March 1993, Sanofi Winthrop started
to distribute Marinol in Canada under a separate agreement. The Roxane Marinol
agreement sets forth a formula for the royalties paid on net sales of Marinol on
an equal basis. The Sanofi agreement pays a royalty-based commission on net
sales of 55% to Sanofi Winthrop and 45% to Unimed. Marinol gross sales were
$8,395,292 (1995), $7,054,417 (1994) and $6,229,202 (1993). As of December 31,
1995 and 1994, trade receivables included $1,468,040 and $969,278, respectively,
due from Roxane. Under a separate contract, Roxane has agreed to reimburse the
Company for half of the external research costs incurred in further clinical
development of Marinol. Roxane and Unimed have agreed to fund additional Marinol
clinical trials for which budgeted costs have been mutually agreed upon. Such
reimbursements shall not exceed $3 million without prior written approval by the
parties. Roxane paid $92,334 (1995), $33,889 (1994) and $48,990 (1993) of these
costs, which is netted against research and development expenses.
In November 1990, the Company entered into an inventory agreement with
Roxane, under which Roxane will advance funds at no interest to the Company for
the purpose of producing and maintaining a three-year raw material inventory of
Marinol. Roxane advances funds to the Company for the Marinol encapsulation
process as capsules are produced. Advances are offset as inventory is sold by
Roxane.
The Company has various other licensing, marketing and distribution
agreements typical to its business.
(8) WARRANTS
In March 1991, The John N. Kapoor Trust (the Trust) purchased for $1.5
million, 1.2 million shares of the Company's Common Stock and warrants to
purchase 800,000 shares of the Company's Common Stock at an exercise price of
$2.125. These warrants, which would have expired March 31, 1996, contained
certain antidilution provisions for adjustment of the exercise price and the
number of warrants. If the Company were
38
<PAGE> 31
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
to issue Common Stock or securities convertible into Common Stock, the Trust,
with certain specified exceptions, would have had the right to maintain its
percentage ownership of the Common Stock of the Company and/or a right of first
refusal on all or any portion of the Common Stock proposed to be sold. These
rights could not be exercised if this would cause the Trust and its affiliates
to own more than 38% of Unimed's Common Stock, assuming exercise of the Trust
Warrant. As of December 31, 1995, the 800,000 share warrant had not been
exercised. The Trust had an option expiring February 24, 1993, to purchase
153,529 shares of Common Stock at a purchase price of $2.35 in satisfaction of
its right to maintain ownership. The Trust exercised this option and shares were
issued in April 1993. See "Note 14 -- Subsequent Events" in Notes to
Consolidated Financial Statements.
In April 1992, the Company granted to LifeScience Corporation warrants to
purchase 50,000 shares of Common Stock at an exercise price of $8.375 per share,
with an expiration date of April 1, 1997. As of December 31, 1995, the 50,000
share warrant had not been exercised.
(9) STOCK OPTIONS
(A) INCENTIVE STOCK OPTION PLAN
The following summarizes transactions under the 1981 Incentive Stock Option
Plan for the periods ended December 31, 1993, 1994 and 1995:
<TABLE>
<CAPTION>
NUMBER OF SHARES
----------------
<S> <C>
Outstanding at December 31, 1992.............................. 60,125
Exercised................................................... (33,750)
Canceled.................................................... (13,875)
-------
Outstanding at December 31, 1993.............................. 12,500
Canceled.................................................... (3,750)
-------
Outstanding at December 31, 1994.............................. 8,750
Canceled.................................................... (8,750)
-------
Outstanding at December 31, 1995.............................. --
=======
</TABLE>
As of December 31, 1995, there were no stock options exercisable under the
Plan.
(B) 1991 STOCK OPTION PLAN
Under the 1991 Stock Option Plan (the Plan), 1,000,000 shares of the
Company's Common Stock were reserved for granting stock options to directors,
officers, and key employees and consultants of the Company and its subsidiaries.
The holder of the option must remain in the continuous employ of the Company for
at least one year from the date the option is granted before exercising any part
of the option. Options expire 10 years from the date of grant or 90 days after
termination of employment.
39
<PAGE> 32
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following summarizes transactions under the Plan for the three years
ended December 31, 1995:
<TABLE>
<CAPTION>
NUMBER OF SHARES
----------------
<S> <C>
Outstanding at December 31, 1992.............................. 186,250
Granted..................................................... 391,750
Canceled.................................................... (78,312)
--------
Outstanding at December 31, 1993.............................. 499,688
Granted..................................................... 440,500
Canceled.................................................... (420,438)
--------
Outstanding at December 31, 1994.............................. 519,750
Granted..................................................... 854,754
Exercised................................................... (12,125)
Canceled.................................................... (457,875)
--------
Outstanding at December 31, 1995.............................. 904,504
========
</TABLE>
Through December 31, 1995, options issued had an exercise price ranging
from $2.75 to $9.25 per share, and as of December 31, 1995, there were 309,504
stock options exercisable. The Company repriced certain options to current
market levels in 1994 and 1995.
(C) OTHER STOCK OPTIONS
In November 1986, reflecting employment contracts with certain executives,
the Company granted to these executives nonqualified options to purchase 220,000
shares of Common Stock through March 1999 at $15.00 per share as adjusted and
amended. In January 1988, the exercise price of these options was changed to
$5.38. In March 1991, the exercise price of those options was changed to $4.36,
and the number of options was adjusted to 271,216 shares of Common Stock
pursuant to certain antidilution provisions discussed below. In addition during
March 1991, the Board of Directors extended the expiration date of the
outstanding options to March 1999. Through December 31, 1995, 29,500 options had
been exercised, none had been canceled, and 241,716 options were outstanding.
In March 1987, the Company granted to non-officer members of the Board of
Directors nonqualified options to purchase an aggregate of 50,000 shares of
Common Stock at $8.50 per share. In January 1988, the exercise price of these
options was changed to $5.38. During fiscal 1991 and fiscal 1990, the options to
purchase 10,000 and 20,000 of these shares, respectively, were canceled. In
March 1991, the exercise price of those options remaining was changed to $4.36
and the number of options was adjusted to 24,656 shares of Common Stock,
reflecting certain antidilution provisions discussed below. In addition, during
March 1991, the Board of Directors extended the expiration date of the
outstanding options to March 1999. There were no exercises or cancellations
during 1993, 1994, or 1995.
In November 1989, additional nonqualified options to purchase 20,000 shares
of Common Stock at $2.63 per share were granted to non-officer members of the
Board. During fiscal 1991, the option to purchase 10,000 of these shares was
canceled. In March 1991, the exercise price of the remaining options was changed
to $2.35 and the number of options remaining was adjusted to 11,170 shares of
Common Stock pursuant to certain antidilution provisions discussed below. In
addition, during March 1991, the Board extended the expiration date of the
outstanding options to March 1999. There were no exercises or cancellations
during 1993, 1994, or 1995.
40
<PAGE> 33
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In March 1991, the Company granted to employees nonqualified options to
purchase 120,000 shares of Common Stock at $3.00 per share. A majority of these
options vest over four years. The option price was below the market price at the
date of grant, and the Company has recognized the pro rata compensation expense
representing the difference between the option price and fair market value at
the date of grant of approximately $27,000 in 1993. As of December 31, 1995,
60,000 options had been exercised, 51,500 had been canceled and 8,500 options
were outstanding.
In March 1991, the Company granted to past and present members of the Board
nonqualified options to purchase 20,000 shares of Common Stock at $3.00 per
share for prior years of service. The grant price was below the market price.
The Company recognized a compensation expense at the date of grant of $35,000.
There were no exercises or cancellations during 1993, 1994, or 1995.
In March 1991, the Company granted to non-officer members of the Board
nonqualified options to purchase 20,000 shares of Common Stock at $4.75 per
share. There were no exercises or cancellations during 1993, 1994, or 1995.
In addition during April, May and October 1991, the Company granted to
employees nonqualified options to purchase 26,000 shares of Common Stock with
exercise prices ranging from $4.25 to $7.75. As of December 31, 1995, 8,750
options had been exercised, 15,000 had been canceled and 2,250 options were
outstanding.
In August 1992, the Company granted to John Kapoor, Chairman of the Board,
nonqualified options to purchase 200,000 shares of Common Stock at $7.75 per
share. There were no exercises or cancellations during 1993, 1994, or 1995.
The exercise price and number of shares of Common Stock which can be
purchased upon the exercise of the nonqualified stock options are adjusted in
the event of stock dividends, split-ups, combinations or exchanges of shares by
recapitalization or reclassification. The exercise price and number of shares of
Common Stock purchasable upon the exercise of certain nonqualified stock options
also are adjusted in the case of the issuance of Common Stock by the Company
(other than pursuant to the grant of stock options and restricted stock grants)
below the then existing exercise price.
There are 528,292 shares of the Company's Common Stock reserved for these
arrangements as of December 31, 1995.
(10) RETIREMENT PLAN
The Company offers a discretionary 401(k)Plan (the Plan) to its employees.
Under the Plan, employees may defer income on a tax exempt basis, subject to IRS
limitation. All employees are eligible to participate in the Plan. Under the
Plan, the Company may make discretionary matching contributions. Company
contributions paid and expensed in 1995 totaled $42,901. There were no Company
contributions to the Plan in 1994 or 1993.
(11) COMMITMENTS
The Company is obligated for rental expense under a noncancellable
operating lease relating to an office facility. Real estate taxes, insurance and
maintenance expenses generally are Company obligations. Rental
41
<PAGE> 34
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
expenses charged to operations were approximately $193,000 in 1995, $225,000 in
1994, and $155,000 in 1993. At December 31, 1995, approximate amounts committed
for future fiscal years are as follows:
<TABLE>
<S> <C>
1996............................................................... $140,000
1997............................................................... 145,000
1998............................................................... 61,000
</TABLE>
Management expects that in the normal course of business, leases that
expire will be renewed or replaced by other leases.
The Company has an agreement with NORAC to purchase Delta-9, the raw
material in Marinol. The Company has come to terms on a five-year extension to
the agreement to December 31, 1999. Delta-9 is synthesized and purified through
a complex and time-consuming process. NORAC is the Company's sole supplier of
Delta-9. Currently, the Company maintains a three-year supply of Delta-9.
(12) CONTINGENCIES
The pharmaceutical industry has traditionally experienced difficulty in
maintaining product liability insurance coverage at desired levels. To date, no
significant product liability suit has ever been filed against the Company.
However, if a suit were filed and a judgment entered against the Company that
significantly exceeded the policy limits, it could have a material adverse
effect upon the Company's operations and financial condition.
(13) RELATED PARTIES
EJ Financial Enterprises, Inc. (EJ) is a healthcare investment and
consulting company owned by the Company's chairman, an indirect majority
stockholder. In addition to the distribution, research, royalty and licensing
agreements discussed in Note 7 which were terminated, the Company and EJ
currently have a consulting agreement, ending in 1996, which provides for EJ's
assistance in the Company's product licensing, development and marketing
efforts. The agreement can be cancelled by either party upon 30 days prior
written notice. Expenditures under this agreement totaled approximately $50,000
(1995), $106,250 (1994) and $150,000 (1993).
The Company has an interest-bearing note of approximately $132,000 from one
of the Company's officers. The note bears interest at a rate of 6% and is
included in other assets.
(14) SUBSEQUENT EVENTS
(A) SERC(R) LICENSE AGREEMENT; SALE OF PRODUCT AND TRADEMARK RIGHTS
The Company entered into an agreement in January 1996 with Solvay Duphar of
The Netherlands. Unimed licensed the rights to proprietary know-how and
manufacturing for the drug SERC(R) (betahistine hydrochloride) in the United
States. As part of the agreement, the Company received a $1.4 million payment to
help fund product development and for Unimed's product and trademark rights to
SERC(R) in Canada, Australia and South Africa. The Company will buy all
requirements of Serc(R) from Solvay Duphar, and will pay a royalty on sales of
Serc(R) in the United States, if the drug is approved for marketing.
42
<PAGE> 35
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(B) WARRANT EXERCISE
In February 1996, The John N. Kapoor Trust exercised warrants to purchase
800,000 shares of the Company's common stock at an exercise price of $2.125.
These warrants, which yielded $1.7 million to the Company, were issued in March
1991 and were to expire March 31, 1996.
(C) PRIVATE PLACEMENT OF COMMON STOCK
On February 29, 1996, the Company completed a private placement of 1.4
million unregistered shares of common stock at $6 per share, for $8.4 million.
The Company will use its best efforts to file, within 30 days of the final
closing, a registration statement with the Securities and Exchange Commission on
Form S-3 covering the resale of the shares of Common Stock.
43
<PAGE> 36
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Stockholders and Board of Directors
Unimed Pharmaceuticals, Inc.
Our report on the consolidated financial statements of Unimed
Pharmaceuticals, Inc. and Subsidiaries is included on page F-2 of this Form
10-K. In connection with our audits of such financial statements, we have also
audited the related financial statement schedule listed in the index on page F-1
of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
February 13, 1996
44
<PAGE> 37
SCHEDULE II
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
- ------------------------------------------------ ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts and returns:
1993.......................................... $ 280,000 $ 18,000 $ 298,000
========= ========= ========
1994.......................................... $ 298,000 $ 270,000 $ 28,000
========= ========= ========
1995.......................................... $ 28,000 $ 15,000 $ 43,000
========= ========= ========
Reserve for inventory obsolescence:
1993.......................................... $ -- $ 250,000 $ 250,000
========= ========= ========
1994.......................................... $ 250,000 $ 250,000
========= ========
1995.......................................... $ 250,000 $ 195,298 $ 54,702
========= ========= ========
Accrued restructuring costs:
1993.......................................... $1,079,680 $1,079,680 $ --
========= ========= ========
Reserve for Medicaid rebates:
1993.......................................... $ -- $ 326,887 $ 326,887 $ --
========= ========= ========= ========
1994.......................................... $ -- $ 604,364 $ 604,364 $ --
========= ========= ========= ========
1995.......................................... $ -- $1,645,352 $ 938,536 $ 706,816
========= ========= ========= ========
</TABLE>
45
<PAGE> 38
EXHIBIT 11
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
COMPUTATION OF INCOME (LOSS) PER SHARE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995
---------------------- 1994(1) 1993(1)
FULLY --------- ----------
PRIMARY DILUTED PRIMARY PRIMARY
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Common and equivalent shares:
Weighted average shares outstanding............. 6,178,453 6,226,729 6,127,161 6,040,606
Additional shares assuming exercise of dilutive
stock options................................ 499,226 637,761 33,040 --
Additional shares assuming exercise of dilutive
stock warrants............................... 352,874 436,431 240,865 --
--------- --------- --------- ---------
Average number of common and common equivalent
shares.......................................... 7,030,553 7,300,921 6,401,066 6,040,606
========= ========= ========= =========
Net income (loss):
Net income (loss)............................... $625,062 $625,062 $40,708 $(852,294)
========= ========= ========= ==========
Net income (loss) per common and common equivalent
share(1):....................................... $0.09 $0.09 $0.01 $(0.14)
========= ========= ========= =========
</TABLE>
- -------------------------
Note:
(1) The fully diluted calculation is not presented in the 1994 and 1993
computations since they would have been antidilutive, as the resultant net
income (loss) per share is the same as for primary net income (loss) per
share.
46
<PAGE> 39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the Undersigned, thereunder duly authorized.
UNIMED PHARMACEUTICALS, INC.
By: /s/ STEPHEN M. SIMES
------------------------------------
Stephen M. Simes
President and Chief Executive
Officer
April 1, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME CAPACITY(IES) DATE
- ---------------------------------------- ----------------------------------- ---------------
<C> <S> <C>
/s/ DR. JOHN N. KAPOOR Chairman and Director April 1, 1996
- ----------------------------------------
Dr. John N. Kapoor
/s/ STEPHEN M. SIMES President, Chief Executive Officer April 1, 1996
- ---------------------------------------- and Director
Stephen M. Simes
/s/ DAVID E. RIGGS Senior Vice President, Chief April 1, 1996
- ---------------------------------------- Financial Officer, Secretary and
David E. Riggs Treasurer
/s/ FRED HOLUBOW Director April 1, 1996
- ----------------------------------------
Fred Holubow
/s/ ROBERT D. HUNTER Director April 1, 1996
- ----------------------------------------
Robert D. Hunter
/s/ JAMES J. LEMPENAU Director April 1, 1996
- ----------------------------------------
James J. Lempenau
/s/ ROLAND WEISER Director April 1, 1996
- ----------------------------------------
Roland Weiser
</TABLE>
47
<PAGE> 40
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER
- ---------------
<S> <C>
4-D Stock and Warrant Agreement, dated as of August 11, 1995,
between the Company and Laboratoires Besins Iscovesco S.A.
4-E Warrant, dated August 11, 1995, for 72,550 shares of Common
Stock, issued to Laboratoires Besins Iscovesco S.A.
4-F Registration Rights Agreement, dated August 11, 1995,
between the Company and Laboratoires Besins Iscovesco S.A.
4-G Warrant, dated February 29, 1996, for 140,000 shares of
Common Stock, issued to Sunrise Securities Corp.
4-H Registration Rights Agreement, dated February 29, 1996,
between the Company and certain holders of Common Stock.
10-B(iii) Agreement between Roxane Laboratories, Inc. and the
Company, dated January 20, 1995 and letter amendment dated November 22, 1995.
10-K Unimed Pharmaceuticals, Inc. 1991 Stock Option Plan, as
amended through March 29, 1996.
10-M Employment Agreement, dated as of October 11, 1994, between
the Company and Stephen M. Simes.
10-N Employment Agreement, dated as of November 3, 1994, between
the Company and Robert E. Dudley.
10-Q Sales Agency Agreement, dated January 22, 1996, between
Sunrise Securities Corp. and the Company.
11 Computation of Income (Loss) per Share
24(a) Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 4-D
--------------------------------------------
STOCK AND WARRANT AGREEMENT
Dated as of August 11, 1995
between
Unimed Pharmaceuticals, Inc.
and
Laboratoires Besins Iscovesco, S. A.
--------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
(not part of this Agreement)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1
DEFINITIONS 1
ARTICLE 2
ISSUANCE OF SHARES 2
2.1 Issuance of Shares............................................... 2
2.2 Closing.......................................................... 2
ARTICLE 3
AMOUNT AND TERMS OF THE WARRANT 2
3.1 Issuance of Warrant.............................................. 2
3.2 Exercise Price................................................... 2
3.3 Expiration....................................................... 2
ARTICLE 4
CONDITIONS TO CLOSING 3
4.1 Conditions to Investor's Obligations at Closing.................. 3
(a) Documents and Instruments Delivered at Closing............ 3
(b) Representations and Warranties True....................... 3
(c) Effect of Breach of Warranty or Failure of Condition...... 3
4.2 Conditions to Company's Obligations at Closing................... 3
(a) Delivery.................................................. 3
(b) Representations and Warranties True....................... 3
(c) Consents Obtained......................................... 4
(d) No Material Adverse Change................................ 4
(e) Absence of Litigation, Etc. .............................. 4
ARTICLE 5
REPRESENTATIONS AND WARRANTIES 4
5.1 Representations and Warranties of the Company at Closing......... 4
(a) Existence and Power....................................... 4
(b) Subsidiaries.............................................. 4
(c) Authority, Execution, Delivery and Enforceability......... 4
(d) Capital Stock............................................. 4
(e) Valid Issuance of Shares.................................. 5
(f) No Conflicts.............................................. 5
(g) No Consents Required...................................... 5
(h) Compliance with Laws...................................... 5
(i) No Material Adverse Change................................ 5
(j) Litigation and Adverse Facts.............................. 5
(k) Exemption From Federal and State Securities Laws.......... 5
(l) Absence of Default on Material Contracts.................. 6
(m) Broker's Fees............................................. 6
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
(n) Registration Rights....................................... 6
5.2 Representations and Warranties of The Investor................... 6
(a) Power, Authority and Authorization........................ 6
(b) Purchase Entirely for Own Account......................... 6
(c) Disclosure of Information................................. 6
(d) Investment Experience..................................... 6
(e) Accredited Investor....................................... 7
(f) Restricted Securities..................................... 7
(g) Further Limitations on Disposition........................ 7
(h) Legends................................................... 7
(i) Broker's Fees............................................. 7
ARTICLE 6
COVENANTS 7
6.1 Maintain Exchange Act Registration and Listing................... 7
6.2 Perfect Securities Act and Blue Sky Exemptions................... 8
6.3 Limitation on Other Registration Rights.......................... 8
ARTICLE 7
MISCELLANEOUS 8
7.1 Assignments...................................................... 8
7.2 Notices.......................................................... 8
7.3 Execution in Counterparts........................................ 9
7.4 Headings......................................................... 9
7.5 Exhibit and Schedule References.................................. 9
7.6 Publicity........................................................ 9
7.7 Binding Effect; Governing Law.................................... 9
7.8 Severability..................................................... 9
7.9 Submission to Jurisdiction....................................... 9
SIGNATURES ................................................................. 10
</TABLE>
EXHIBITS:
Exhibit A -- Form of Warrant
Exhibit B -- Registration Rights Agreement
(ii)
<PAGE> 4
STOCK AND WARRANT AGREEMENT
THIS STOCK AND WARRANT AGREEMENT (the "Agreement") is made and entered
into as of this 11th day of August, 1995, between UNIMED PHARMACEUTICALS, INC.,
a Delaware corporation (the "Company") and LABORATOIRES BESINS ISCOVESCO,
S.A., a corporation organized under the laws of France (the "Investor").
R E C I T A L S:
WHEREAS, the Company and the Investor intend to enter into an agreement
relating to the research, development and licensing of certain pharmaceutical
products owned by Investor; and
WHEREAS, Investor desires to acquire an equity interest in the Company;
and
WHEREAS, the Company is willing to issue shares of its common stock to the
Investor, and to issue a warrant to purchase additional shares of common stock,
subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, Investor and the Company
hereby agree as follows:
ARTICLE 1
DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the
following terms shall have the meanings indicated for purposes of this
Agreement:
Affiliate as applied to any Person means (a) any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person or (b) any other Person that owns or controls 5% or more of any class of
equity securities of that Person or any of its Affiliates.
Closing is defined in Section 2.2.
Closing Date means August 11, 1995, or such other date as the parties
shall agree shall be the date on which the Closing shall occur.
Governmental Authority means any federal, state, local, foreign or other
governmental administrative body, instrumentality, department agency, court,
tribunal, administrative hearing body, arbitration panel, commission or other
similar dispute-resolving panel or body.
License Agreement means that certain License Agreement dated the date
hereof, between the Company and the Investor.
Material Adverse Effect means, with respect to the Company or any of its
Subsidiaries, any material adverse change (after giving effect to the
transactions contemplated hereby) in the business, operations, prospects,
condition (financial or otherwise), properties or assets of the Company and its
Subsidiaries, taken as a whole, when any such material adverse change is taken
individually or in the aggregate with all other instances in which the
definition of "Material Adverse Effect" is applicable.
<PAGE> 5
Person means an individual, partnership, corporation (including business
trust), joint stock company, trust, unincorporated association, financial
institution, joint venture or other entity, or a government or any political
subdivision or agency thereof.
Registration Rights Agreement shall mean that certain Registration Rights
Agreement between the Investor and the Company, in substantially the form of
Exhibit A attached hereto.
Securities means the Shares and Warrant to be issued to the Investor at
the Closing and the Shares issuable upon exercise of the Warrant.
Securities Act means the Securities Act of 1933, as amended.
Shares means the shares of common stock, par value $0.25 per share, of the
Company.
Subsidiary of any Person means any corporation of which more than 50% of
the outstanding capital stock having ordinary voting power to elect a majority
of the Board of Directors of such corporation (irrespective of whether at the
time stock of any other class or classes of such corporation shall or might
have voting power upon the occurrence of any contingency) is at the time
directly or indirectly owned by such Person, by such Person and one or more of
such Person's other Subsidiaries or by one or more of such Person's other
Subsidiaries.
Warrant means a warrant of the Company to purchase Shares, in
substantially the form of Exhibit B attached hereto.
ARTICLE 2
ISSUANCE OF SHARES
2.1 Issuance of Shares. Subject to the terms and conditions of this
Agreement, and in partial consideration of the grant by the Investor of the
license under the License Agreement, the Company agrees to issue to the
Investor, 145,100 Shares, of which 72,600 Shares shall be issued and delivered
five (5) business days after the date hereof, and 72,500 Shares shall be issued
and delivered on January 15, 1996.
2.2 Closing. The Closing shall take place at the offices of the Company,
2150 East Lake Cook Road, Buffalo Grove, IL at 10:00 am on the Closing Date, or
at such other time and place as the Company and Investor mutually agree upon
orally or in writing (which time and place are designated as the "Closing").
At the Closing, the Company shall deliver to the Investor a certificate
representing the Shares issued, against delivery of the License Agreement and
the satisfaction by the Investor to all of its obligations which occur at
closing thereunder.
ARTICLE 3
AMOUNT AND TERMS OF THE WARRANT
3.1 Issuance of Warrant. At the Closing, the Company shall issue to the
Investor a Warrant to purchase 72,550 Shares.
3.2 Exercise Price. The exercise price for the Warrant shall be $8.00 per
Share, subject to antidilution and other provisions as set forth in the
Warrant.
3.3 Expiration. The Warrant shall expire ten (10) years after the date of
issue.
2
<PAGE> 6
ARTICLE 4
CONDITIONS TO CLOSING
4.1 Conditions to Investor's Obligations at Closing. The obligation of
Investor to close the transactions contemplated hereby is subject to the
satisfaction of each of the following conditions precedent:
(a) Documents and Instruments Delivered at Closing. Investor shall
have received (except as noted or waived by Investor in writing) the
following documents and instruments:
(i) The Shares to be issued at the Closing Date in the name of
the Investor;
(ii) The Warrant, issued in the name of the Investor;
(iii) Fully executed counterparts of the Registration Rights
Agreement;
(iv) Fully executed counterparts of the License Agreement.
(v) A certificate of the Company, signed by the Secretary on
behalf of the Company, as to resolutions of the Company, adopting
and approving this Agreement and the exhibits hereto, and the
transactions contemplated hereby and thereby; and
(vi) A certificate signed by the Chief Executive Officer and
Chief Financial Officer of the Company, with respect to the matters
set forth in Section 4.1(b).
(b) Representations and Warranties True. (i) The representations
and warranties made by the Company herein, in the Registration Rights
Agreement and the Warrant shall be true and correct in all material
respects on the Closing Date and (ii) all covenants contained herein and
in such other agreements to be performed by the Company prior to the
Closing Date shall have been performed or waived in writing by the
Investor.
(c) Effect of Breach of Warranty or Failure of Condition. In the
event of any breach of representation or warranty by the Company prior to
the Closing, of which the Investor has knowledge, or in the event of a
failure to satisfy any condition to Investor's obligation to the Closing,
Investor shall have the option of waiving such breach or failure of
condition and closing the transactions contemplated hereby, or
terminating this Agreement. If Investor chooses to terminate this
Agreement, then no person shall have any rights or obligations hereunder,
under the Registration Rights Agreement or the Warrant. If the Investor
elects to close notwithstanding such breach of warranty or failure of
condition, then Investor shall not have any claim against the Company for
breach hereunder with respect to the matter so waived.
4.2 Conditions to Company's Obligations at Closing. The obligation of the
Company to close the transactions contemplated by the Closing is subject to the
satisfaction of each of the following conditions precedent:
(a) Delivery. The Company shall have received on or prior to the
Closing Date, a counterpart of the Registration Rights Agreement, License
Agreement and Supply Agreement, executed by the Investor;
(b) Representations and Warranties True. (i) The representations
and warranties made by the Investor herein and in the Registration Rights
Agreement shall be true and correct in all material respects on the
Closing Date and (ii) all covenants contained herein and in the
Registration Rights Agreement to be performed by the Investor prior to
the Closing Date shall have been performed the Investor.
3
<PAGE> 7
(c) Consents Obtained. All consents required to be obtained as a
condition to the Closing shall have been obtained.
(d) No Material Adverse Change. Since March 31, 1995, unless
otherwise disclosed in the Company's filings with the Securities and
Exchange Commission (the "SEC"), in this Agreement or in a Schedule
hereto, no event shall have occurred which would have a Material Adverse
Effect.
(e) Absence of Litigation, Etc. No action, suit, investigation,
proceeding or counterclaim of or before any Governmental Authority or
other Person is pending or threatened against the Company challenging
this Agreement or the transactions contemplated hereby or seeking any
material damages in connection herewith or any judgment, order or
injunction that would restrain, prohibit or impose materially adverse
conditions on the transactions contemplated hereby.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of the Company at Closing. The Company
represents and warrants to Investor that on the date hereof and at the Closing:
(a) Existence and Power. The Company is (i) a corporation duly
formed, validly existing and in good standing in the jurisdiction of its
formation, and has all powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business
as now conducted and as proposed to be conducted, except where the
failure to do any of the above would not have a Material Adverse Effect
and (ii) duly qualified and authorized to do business and in good
standing in all jurisdictions where the failure to do so would have a
Material Adverse Effect.
(b) Subsidiaries. Except as set forth in Schedule 5.1(b), each
material Subsidiary of the Company is a corporation duly organized,
validly existing, and in good standing under the laws of the state of its
respective incorporation; and each Subsidiary is duly qualified and in
good standing as a foreign corporation authorized to do business in each
jurisdiction where the failure to so qualify would have a Material
Adverse Effect.
(c) Authority, Execution, Delivery and Enforceability. The Company
has the necessary corporate authority to execute, deliver and perform its
obligations under this Agreement, the Registration Rights Agreement and
to consummate the Closing. The Company has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement, Registration Rights Agreement and the Warrant and any other
documents related thereto. This Agreement, the Registration Rights
Agreement and the Warrant are, or when executed and delivered by the
Company will constitute, the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their
respective terms.
(d) Capital Stock. The capital stock of the Company consists of
12,000,000 shares of authorized common stock, par value $0.25 per share,
of which 6,151,911 shares are duly and validly issued, fully paid and
nonassessable. The Company has issued options, warrants and convertible
securities covering an additional 1,415,292 shares of common stock, and
has reserved for issuance to officers, directors, employees and
consultants a total of 1,000,000 shares pursuant to stock option plans
(which number of reserved shares under stock option plans includes
options issued and which may be issued in the future under such plans).
Except with respect to such options, warrants and convertible securities
and antidilution provisions in such options, warrants and convertible
securities (including options covering such shares so reserved), the
Company has no agreement or commitments to issue any additional shares of
common stock.
4
<PAGE> 8
(e) Valid Issuance of Shares. The Shares to be issued at the
Closing, and those Shares which may be issued upon exercise of the
Warrant, when issued, sold and delivered in accordance with the
provisions of this Agreement and the Warrant, will be duly and validly
issued, fully paid and nonassessable. The Shares to be issued upon
exercise of the Warrant has been duly and validly reserved for issuance.
(f) No Conflicts. Except as set forth on Schedule 5.1(f), neither
the execution, delivery or performance by the Company of this Agreement,
the Registration Rights Agreement and the Warrant nor the compliance by
the Company with any of its obligations hereunder or thereunder, nor the
consummation of any of the transactions contemplated hereby or thereby
will (i) conflict with the Company's Certificate of Incorporation or
By-laws or (ii) conflict with or result in a breach of, or constitute a
default under, or result in the creation or imposition of, any Lien upon
any of the Company's or its Subsidiaries' property or assets under (A)
any indenture, mortgage, deed of trust or other instrument or agreement
to which the Company or its Subsidiaries may be or become bound or to
which any of the Company's property or assets may be or become subject or
(B) any applicable law, rule, regulation, judgment, writ, order or decree
of any Governmental Authority having jurisdiction over the Company's or
its Subsidiaries' properties or assets.
(g) No Consents Required. Except as set forth on Schedule 5.1(g),
no order, license, consent, authorization or approval of, or exception
by, or notice to or registration with, any Governmental Authority or any
other Person, and no filing, recording, publication or registration of
any kind, other than those which shall have been obtained or given at or
prior to the Closing, is necessary or advisable in connection with the
execution, delivery and performance by the Company of this Agreement, the
Registration Rights Agreement or the Warrant or for the legality,
validity, binding effect or enforceability thereof.
(h) Compliance with Laws. Except as set forth in Schedule 5.1(h),
neither the Company nor any of its material Subsidiaries is in violation
of any law, ordinance, rule, regulation, order, policy, guideline or
other requirement of any Governmental Authority, which violation would
have a Material Adverse Effect and no such violation has been alleged and
the Company and the Subsidiaries (i) have filed in a timely manner all
reports, documents and other materials required to be filed by it with
any Governmental Authority and the information contained in each of such
filings is true, correct and complete in all material respects, except
where failure to make such filings would not have a Material Adverse
Effect and (ii) have retained all records and documentary evidence
required to be retained by it pursuant to any law, ordinance, rule,
regulation, order, policy, guideline or other requirement of any
Governmental Authority, except where failure to retain such records would
not have a Material Adverse Effect.
(i) No Material Adverse Change. Since December 31, 1994, there has
been no adverse change in the Company's financial condition, business,
operations or properties which would have a Material Adverse Effect,
except as disclosed in the Company's Quarterly Report on Form 10-Q for
its quarter ended March 31, 1995, in this Agreement or in a Schedule
hereto.
(j) Litigation and Adverse Facts. Except as set forth on Schedule
5.1(j), there is no action, suit, proceeding, investigation or
administrative proceeding or arbitration by any Governmental Authority or
other Person (including, without limitation, derivative actions) pending
or known by the Company to be threatened with respect to the Company or
any of its Subsidiaries or assets of any of the foregoing or any of the
transactions contemplated hereby as to which there is a reasonable
likelihood of a Material Adverse Effect.
(k) Exemption From Federal and State Securities Laws. Based upon
the representations of the Investor, the offer, sale and issuance of the
Shares to be issued at the Closing and the Warrant are exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), by virtue of Section 4(2) thereof, are exempt from
the qualification provisions of the state securities laws of the State of
Illinois (the "Blue Sky Laws") by virtue of sections 4C, 4G and 4Q
thereof, and assuming
5
<PAGE> 9
no change in the Securities Act or Blue Sky Laws between the
date hereof and the date of exercise of the Warrants, the issuance and
sale of those Shares which may be issued upon exercise of the Warrant,
shall also be exempt from the Securities Act and such Blue Sky Laws under
such sections.
(l) Absence of Default on Material Contracts. Neither the Company
nor its Subsidiaries is in material default under any material contract
or contracts which in the aggregate would have a Material Adverse Effect.
(m) Broker's Fees. No agent, broker, investment banker, Person, or
firm acting on behalf of the Company is or will be entitled to any
broker's or finder's fee or any other similar commission or similar fee,
directly or indirectly, from any of the parties hereto in connection with
any of the transactions contemplated herein; provided, however, that the
Company may issue options under the Company's existing stock option plan
to consultants for their assistance in connection with obtaining the
rights under the License Agreement and the Supply Agreement.
(n) Registration Rights. Except as set forth on Schedule 5.1(n),
the Company has not granted or agreed to grant any registration rights,
including piggyback rights, to any Person other than to Investor.
5.2 Representations and Warranties of The Investor. The Investor
represents and warrants that on the date hereof and at Closing:
(a) Power, Authority and Authorization. Investor has full power and
authority to enter into this Agreement, the Registration Rights
Agreement, to purchase and acquire the Securities, and to perform all of
its obligations hereunder. All corporate action on the part of the
Investor, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and the
Registration Rights Agreement and the performance of all obligations of
the Investor hereunder and thereunder, have been taken, and this
Agreement constitutes, and at Closing the Registration Rights Agreement
will constitute, valid and legally binding obligations, enforceable in
accordance with their terms.
(b) Purchase Entirely for Own Account. This Agreement is made with
Investor in reliance upon the Investor's representation to the Company,
which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Securities will be acquired for investment for the
Investor's own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof, and that the Investor has
no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, Investor
further represents that Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any
of the Securities; provided, however that Investor may transfer the
Securities, or any part thereof, subject to the provisions of this
Agreement, to any wholly-owned subsidiary, and such transfer shall not be
deemed to be a distribution by Investor, or a violation of its
representations set forth herein.
(c) Disclosure of Information. Investor believes it received all
the information it considers necessary or appropriate for deciding
whether to acquire the Securities. Investor further represents that it
has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the acquisition by it of
the Securities.
(d) Investment Experience. Investor can bear the economic risk of
its investment in the Company and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits
and risks of the investment in the Securities. Investor also represents
it has not been organized for the purpose of acquiring the Securities.
6
<PAGE> 10
(e) Accredited Investor. Investor is an "accredited investor"
within the meaning of SEC Rule 501 of Regulation D, as presently in
effect.
(f) Restricted Securities. Investor understands that the Securities
are characterized as "restricted securities" under the Federal securities
laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration
under the Securities Act of 1933, as amended (the "Act"), only in certain
limited circumstances. In this connection, Investor represents that it
is familiar with SEC Rule 144, as presently in effect, and understands
the resale limitations imposed thereby and by the Act.
(g) Further Limitations on Disposition. Without in any way limiting
the representations set forth above, Investor further agrees not to make
any transfer of all or any portion of the Shares (including any transfer
to any wholly-owned subsidiary) unless and until the transferee has
agreed in writing for the benefit of the Company to be bound by the
provisions of this Agreement applicable to such Shares, and any
applicable agreement to which Investor is a party, including, without
limitation, the Registration Rights Agreement and except with respect to
any transfer other than to a wholly-owned subsidiary of Investor:
(i) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(ii) A. Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed
disposition, and B. if reasonably requested by the Company,
Investor shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the
Act.
(h) Legends. The certificates evidencing the Shares to be issued at
Closing and the Shares issuable upon exercise of the Warrant may bear one
or all of the following legends:
(i) "The securities represented hereby have not been
registered under the Securities Act of 1933, as amended. They may
not be sold, offered for sale, pledged, hypothecated or transferred
in the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required
or unless sold pursuant to Rule 144 of such Act."
(ii) Any legend which, in the opinion of counsel for the
Company, is required or appropriate under any state or Federal
securities laws, rules or regulations.
(i) Broker's Fees. No agent, broker, investment banker, Person, or
firm acting on behalf of the Investor is or will be entitled to any
broker's or finder's fee or any other similar commission or similar fee,
directly or indirectly, from any of the parties hereto in connection with
any of the transactions contemplated herein.
ARTICLE 6
COVENANTS
6.1 Maintain Exchange Act Registration and Listing. At all times when the
Investor is holding Shares which it received under this Agreement, the Warrant
or Shares it received upon exercise of the Warrant, the
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<PAGE> 11
Company shall maintain its registration of such Shares under the
Securities Exchange Act of 1934 (the "Exchange Act"), shall make all filings
required under the Exchange Act and shall use its best efforts to have the
Shares continue to be listed on the NASDAQ national market list, or on some
other comparable exchange. The Company shall not voluntarily withdraw its
Shares from registration under the Exchange Act or withdraw the Shares from such
listing.
6.2 Perfect Securities Act and Blue Sky Exemptions. The Company will make
all filings required under the Securities Act and the Blue Sky Laws, if any, to
obtain, secure or perfect applicable exemptions for the issuance of the Shares
to be issued at Closing hereunder, the Warrant and the Shares to be issued upon
exercise of the Warrant.
6.3 Limitation on Other Registration Rights. The Company will not grant to
any Person any registration rights, the effect of which is to restrict,
prohibit, limit or make subordinate the registration rights granted to the
Investor under the Registration Rights Agreement, except pursuant to the grant
of rights to Persons which rights are pari passu with the rights of the
Investor, based upon either the total number of shares of Common Stock owned
(including those subject to exercisable warrants or convertible securities) or
the number of shares of Common Stock proposed to be sold by each such party
holding registration rights.
ARTICLE 7
MISCELLANEOUS
7.1 Assignments. The Investor shall not assign this Agreement, or any of
its rights hereunder, other than to a party to whom it could assign the Shares
directly under Section 5.2(g). Upon any permitted assignment of this
Agreement, the Investor and the assignee shall satisfy the requirements of
Section 5.2(g), as though such assignment were a direct assignment of the
Shares. The assignment of this Agreement shall not release the Investor from
its obligaitons hereunder.
7.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given at the time it is received if delivered
personally or by facsimile transmission, mailed by registered or certified mail
(return receipt requested, postage prepaid) or sent by overnight courier
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
If to the Company:
Unimed Pharmaceuticals, Inc.
2150 East Lake Cook Road
Buffalo Grove, Illinois 60089-1862
U.S.A.
Attention: Stephen M. Simes, President
Telecopier No.: (708) 541-2533
If to the Investor:
Laboratoires Besins Iscovesco, S.A.
5, Rue du Bourg l'Abbe
75003 Paris
France
Attention: Antoine Besins
Telecopier No.: 33,1,42,77,14,62
8
<PAGE> 12
with a copy to:
Besins Iscovesco U.S. Inc.
620 Herndon Parkway
Suite 200
Herndon, Virginia 22073-3840
Attention: Jay Bua
Telecopier No.: (703) 478-0959
7.3 Execution in Counterparts. This Agreement may be executed in
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
7.4 Headings. The Article, Section and subsection headings are inserted
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
7.5 Exhibit and Schedule References. Any item or matter disclosed in one
Section, Exhibit or Schedule to this Agreement shall be deemed disclosed in any
other Section, Exhibit or Schedule where such disclosure is relevant, even if
there is no express cross-reference, provided that the relevance of the
disclosure is reasonably apparent. Disclosure of items that may or may not be
required to be disclosed by this Agreement does not mean that such items are
material or create a standard of materiality.
7.6 Publicity. If either party wishes to make a public disclosure
concerning this Agreement and such disclosure mentions the other party by name
or description, such other party will be provided with an advance copy of the
disclosure and will have three (3) business days within which to approve or
disapprove such use of its name or description. Approval shall not be
unreasonably withheld by either party. Absent approval, no public disclosure
shall use the name of or otherwise describe such party except to the extent
required by law.
7.7 Binding Effect; Governing Law. This Agreement shall be binding upon
and inure to the benefit of the Company and the Investor and their respective
successors and assigns. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Illinois, without giving effect to
its conflicts of laws principles.
7.8 Severability. The invalidity of any provision of this Agreement or
portion of a provision shall not affect the validity of any other portion of
this Agreement or the remaining portion of the applicable provision.
7.9 Submission to Jurisdiction. The Company and the Investor hereby
irrevocably submit to the jurisdiction and exclusive venue of any state or
Federal court located in the State of Illinois over any action or proceeding to
enforce or defend any right under this Agreement, the Registration Rights
Agreement and the Warrant, or under any amendment, instrument, document, or
agreement delivered, or that may in the future be delivered, in connection
herewith or therewith, and the Company and the Investor hereby irrevocably
agree that all claims in respect of any such action or proceeding may be heard
and determined in such state or Federal court. The Company and the Investor
hereby irrevocably waive, to the fullest extent they may effectively do so, the
defense of an inconvenient forum to the maintenance of any such action or
proceeding. The Company and the Investor agree that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
The Company and the Investor agree not to institute any legal action or
proceeding against the Company, the Investor or any of their directors,
officers, employees, agents or properties, arising out of or relating to this
agreement or any of the documents referred to above, in any court other than
one hereinabove specified in this Section 7.9. Nothing in this Section 7.9
shall affect the right of the Company or the Investor to serve legal process in
any other manner permitted by law, or the right of any the Company or the
Investor to bring any action or proceeding against the property of the Company
or the Investor in the courts of any other jurisdictions.
9
<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their respective officers thereunto duly
authorized, as the case may be, as of the date first above written.
THE COMPANY:
UNIMED PHARMACEUTICALS, INC.
By:________________________________
Name and Title:____________________
INVESTOR:
LABORATOIRES BESINS ISCOVESCO, S.A.
By:_________________________________
Name and Title:_____________________
10
<PAGE> 14
SCHEDULES
<TABLE>
<S> <C>
Schedule 5.1(b) Exceptions to due organization, qualification of Subsidiaries
Schedule 5.1(f) Conflicts with corporate documents, loans, etc. resulting from
this Agreement
Schedule 5.1(g) Consents required
Schedule 5.1(h) Violations of law, failure to file reports, failure to retain
required records.
Schedule 5.1(l) Defaults under contracts.
Schedule 5.1(n) Registration rights granted to other parties
</TABLE>
<PAGE> 15
Schedule 5.1(b)
Exceptions to due organization, qualification of Subsidiaries
None
12
<PAGE> 16
Schedule 5.1(f)
Conflicts with corporate documents, loans, etc. resulting from this Agreement
None
13
<PAGE> 17
Schedule 5.1(g)
Consents required
None
14
<PAGE> 18
Schedule 5.1(h)
Violations of law, failure to file reports, failure to retain required records.
None
15
<PAGE> 19
Schedule 5.1(l)
Defaults under contracts.
None
16
<PAGE> 20
Schedule 5.1(n)
Registration rights granted to other parties
The Company has granted registration rights to John Kapoor and The John N.
Kapoor Trust with respect to the shares of common stock, warrants and options
held by them.
The Company has granted registration rights to Life Sciences Corporation with
respect to its warrant for 50,000 shares.
17
<PAGE> 1
EXHIBIT 4-E
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
UNIMED PHARMACEUTICALS, INC.
WARRANT
TO
PURCHASE COMMON STOCK
August 11, 1995
Not Transferable or Exercisable
Except Upon Conditions Herein Specified
__________________
THIS CERTIFIES that, for value received, LABORATOIRES BESINS ISCOVESCO,
S.A., a corporation organized under the laws of France (the "Holder"), is
entitled to purchase from UNIMED PHARMACEUTICALS, INC, a Delaware corporation,
SEVENTY TWO THOUSAND FIVE HUNDRED FIFTY (72,550) shares of the Company's Common
Stock, par value $0.25 per share (subject to adjustment as set forth herein) at
the Exercise Price (as hereinafter defined).
1. Definitions. As used herein, the following terms shall have the
following respective meanings:
(a) "Common Stock" means the Company's common stock, par value $0.25
per share, and any stock into which such common stock may hereafter be changed.
(b) "Company" means Unimed Pharmaceuticals, Inc., a Delaware
corporation, and all successor corporations thereto.
(c) "Exercise Shares" means the shares of the Company's Common Stock
issuable upon exercise of this Warrant at the time of determination.
(d) "Exercise Period" means the period commencing on the day after
the date hereof, and ending on August 11, 2005, subject to earlier termination
as provided in Section 3.
(e) "Exercise Price" means $8.00 per share, subject to adjustment as
provided in Section 5.
(f) "Holder" means the person to whom this Warrant is issued.
(g) "License Agreement" means that certain License Agreement, dated
the date of this Warrant, between the Company and the Holder.
(h) "Stock and Warrant Agreement" means that certain Stock and
Warrant Agreement, dated as of August 11, 1995, between the Company and the
Holder.
<PAGE> 2
2. Exercise of Warrant.
(a) The rights represented by this Warrant may be exercised during
the Exercise Period in whole at any time, or in part from time to time,
by delivery of the following to the Company at the office for notice as
set forth in Section 10 (or at such other office of the Company as it may
designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company):
(i) An executed Notice of Exercise in the form attached
hereto;
(ii) Payment of the Exercise Price in cash or by good funds in
Chicago, Illinois, by received and acknowledged wire transfer; and
(iii) This Warrant.
(b) In the event of any exercise of the rights represented by this
Warrant, a certificate or certificates for the Exercise Shares so
purchased, registered in the name of the person entitled to receive the
same, shall be delivered to the Holder within a reasonable time, not
exceeding ten (10) days, after the rights represented by this Warrant
shall have been so exercised; and, unless this Warrant has expired, a new
warrant representing the number of Exercise Shares, if any, with respect
to which this Warrant shall not then have been exercised shall also be
issued to Holder within such time.
(c) The person in whose name any certificate or certificates for
Exercise Shares are to be issued upon exercise of this Warrant shall for
all purposes be deemed to have become the holder of record of such shares
on the date on which this Warrant was surrendered and payment of the
Exercise Price was made, irrespective of the date of delivery of such
certificate or certificates, except that, if the date of such surrender
and payment is a date when the stock transfer books of the Company are
closed, such person shall be deemed to have become the holder of record
of such shares at the close of business on the next succeeding date on
which the stock transfer books are open.
3. Termination of Warrant. This Warrant shall be automatically cancelled,
and shall be of no further force or effect, upon the tenth (10th) anniversary
of the date of issuance.
4. Covenants of Company.
(a) Covenants as to Exercise Shares. The Company covenants and
agrees that all Exercise Shares which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance thereof and
payment therefor in accordance with the terms hereof, be validly issued
and outstanding, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof, and free from all taxes, liens and
charges with respect to the issuance thereof. The Company further
covenants and agrees that the Company will at all times have authorized
and reserved, free from preemptive rights, a sufficient number of shares
of its Common Stock to provide for the exercise of the rights represented
by this Warrant. If at any time the number of authorized but unissued
shares of Common Stock or other securities shall not be sufficient to
effect the exercise of this Warrant, the Company will take such corporate
action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock or other securities to
such number of shares as shall be sufficient for such purposes.
(i) No Impairment. Except and to the extent as waived or consented
to by the Holder, the Company will not, by amendment of its Certificate
of Incorporation 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
2
<PAGE> 3
the provisions of this Warrant and in the taking of all such action as
may be necessary or appropriate in order to protect the exercise rights
of the Holder against impairment.
(ii) Notices of Record Date. In the event of any taking by the
Company of a record of the holders or any class of securities for the
purpose of determining the holders thereof who are entitled to receive
any dividend (other than a cash dividend which is the same as cash
dividends paid in previous quarters) or other distribution, the Company
shall mail to the Holder, at least ten (10) days prior to the record date
specified herein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend or distribution.
5. Antidilution Provisions.
(a) Adjustment of Exercise Price. The Exercise Price and the
Exercise Shares shall be subject to adjustment from time to time as
follows:
(i) Subdivision or Combination of Shares. If, at any time
during the Exercise Period, the number of shares of Common Stock
outstanding is increased by a subdivision or split-up of such
outstanding shares, then, concurrently with the effectiveness of
such subdivision or split-up, the Exercise Price shall be
proportionately decreased. If, at any time during the Exercise
Period, the number of shares of Common Stock outstanding is
decreased by a combination of such outstanding shares, then,
concurrently with the effectiveness of such combination, the
Exercise Price shall be proportionately increased. Upon each
adjustment of the Exercise Price as provided herein, the Holder
shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of Exercise Shares
(calculated to the nearest whole share) obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by
the number of shares purchasable pursuant hereto immediately prior
to such adjustment and dividing the product thereof by the Exercise
Price resulting from such adjustment.
(ii) Reclassification, Consolidation or Merger. In case of
any reclassification or change of outstanding Common Stock issuable
upon the exercise of this Warrant (other than a change in par
value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation
in which the Company is the surviving corporation and which does
not result in any reclassification or change, other than a change
in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination,
of Common Stock issuable upon the exercise of this Warrant) the
rights of the Holder of this Warrant shall be adjusted in the
manner described below:
(A) In the event that the Company is the surviving
corporation, this Warrant shall, without payment of
additional consideration therefor, be deemed modified so as
to provide that upon the exercise of this Warrant the Holder
of this Warrant shall receive, in lieu of each share of
Common Stock theretofore issuable upon such exercise, the
kind and amount of shares of stock, other securities, money
and property receivable upon such reclassification, change,
consolidation or merger by a stockholder of one share of
Common Stock outstanding immediately prior to such
reclassification, change, consolidation or merger. Such
Warrant shall be deemed to provide for adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 5. The provisions
of this Section 5.(a)(ii)(A) shall similar apply to
successive reclassifications, changes, consolidations and
mergers.
3
<PAGE> 4
(B) In the event that the Company is not the surviving
corporation, the surviving corporation shall, without payment
of any additional consideration therefor, issue to the Holder
a new Warrant, providing that upon exercise of the purchase
right thereof, the Holder thereof shall receive, in lieu of
each share of Common Stock theretofore issuable upon such
exercise, the kind and amount of shares of stock, other
securities, money and property receivable upon such
reclassification, change, consolidation or merger by a
stockholder of one share of Common Stock outstanding
immediately prior to such reclassification, change,
consolidation or merger. Such new Warrant shall provide for
adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section
5. The provisions of this Section 5.(a)(ii)(B) shall
similarly apply to successive reclassifications, changes,
consolidations and mergers.
(b) Certain Dividends and Distribution. If the Company, at any time
while this Warrant is outstanding, shall:
(i) Stock Dividends. Pay a dividend payable in Common Stock,
then the Exercise Price shall be adjusted, as of the date the
Company shall take a record of the stockholders of its Common
Stock, for the purpose of receiving such dividend (or if no such
record is taken, as of the date of such payment), to that price
determined by multiplying the Exercise Price in effect immediately
prior to such record date (or if not such record is taken, then
immediately prior to such payment) by a fraction (i) the numerator
of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend, and (ii) the
denominator of which shall be the total number of shares of Common
Stock outstanding immediately after such dividend (plus, in the
event that the Company paid cash for fractional shares, the number
of additional shares which would have been outstanding had the
Company issued fractional shares in connection with said dividend);
or
(ii) Liquidating Dividends, etc. Make a distribution of its
assets to the stockholders of its Common Stock as a dividend in
liquidation or partial liquidation or by way of return of capital
or other than as a dividend payable out of earnings or surplus
legally available for dividends, the Holder of this warrant shall,
upon exercise of this warrant, be entitled to receive, in addition
to the number of shares of Common Stock receivable thereupon, and
without payment of any additional consideration therefor, a sum
equal to the amount of such assets as would have been payable to
such Holder as owner of that number of shares of Common Stock of
the Company receivable by exercise of such warrant had such holder
been the Holder of record of such Common Stock on the record date
for such distribution.
(iii) Distributions of Securities. Make any distribution of
any securities on or with respect to Common Stock, other than a
dividend or distribution of Common Stock, the Holder of this
warrant shall, upon exercise of this warrant, be entitled to
receive, in addition to the number of shares of Common Stock
receivable thereupon (and without payment of any additional
consideration therefor other than any consideration, if any,
required to be paid by the holders of Common Stock as a condition
to the receipt of such securities), an amount of such securities
equal to the amount of such securities as would have been
distributed to such Holder as owner of that number of shares of
Common Stock of the Company receivable by exercise of such warrant
had such holder been the Holder of record of such Common Stock on
the record date for such distribution.
(iv) Certificates as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Exercise Price or the number
of Exercise Shares or other securities issuable upon
exercise of this Warrant, the Company at its expense shall compute
such adjustment or readjustment in accordance with the terms hereof
and furnish to the Holder a certificate setting
4
<PAGE> 5
forth each adjustment or readjustment and showing in detail the
facts upon which such adjustment or readjustment is based. Each
such certificate shall be certified by the Chief Financial Officer
of the Company. The Company shall, upon the written request at any
time of the Holder, furnish or cause to be furnished to such Holder
a like certificate setting forth (A) such adjustments and
readjustment, (B) the Exercise Price for the Warrant held by such
Holder at the time in effect, and (C) the number of shares of
Exercise Shares and the amount, if any, of other property which at
the time would be received upon the exercise of this Warrant held
by such Holder.
(c) No Change Necessary. The form of this Warrant need not be
changed because of any adjustment in the exercise Price or in the number
of Exercise Shares issuable upon its exercise.
(d) Fractional Shares. No fractional shares shall be issued upon
the exercise of this Warrant in whole or in part as a consequence of any
adjustment of the Exercise Price pursuant hereto. All Exercise Shares
(including fractions) issuable upon exercise of this Warrant shall be
aggregated for purposes of determining whether the exercise would result
in the issuance of any fractional share. If, after aggregation, the
exercise would result in the issuance of a fractional share, the Company
shall, in lieu of issuing any fractional share, pay the Holder otherwise
entitled to such fraction a sum in cash equal to the product resulting
from multiplying the then current fair market value of an Exercise Share
by such fraction.
6. No Stockholder Rights. This Warrant shall not entitle the Holder to
any voting rights or other rights as a stockholder of the Company.
7. No Transfer of Warrant. This Warrant is transferable only to a party
to whom the Holder could transfer its rights under the Stock and Warrant
Agreement, and upon any such transfer, the transferee shall be subject to the
terms and conditions hereof.
8. Restriction on Transfer of Exercise Shares. The Holder agrees that if
the Holder exercises this Warrant, it shall not sell, assign, transfer or
convey the Exercise Shares, or any right or interest in the Exercise Shares, to
any person other than a person to whom it would transfer the Shares it received
under the Stock and Warrant Agreement, and upon such transfer, the Exercise
Shares shall be subject to the same restrictions, if any, to which such Shares
received under the Stock and Warrant Agreement would be subject if they were
also transferred.
9. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost,
stolen, mutilated or destroyed, the Company may, on such terms as to indemnity
or otherwise as it may in its discretion impose (which shall, in the case of a
mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.
10. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given at the time it is received if delivered
personally or by facsimile transmission, mailed by registered or certified mail
(return receipt requested, postage prepaid) or sent by overnight courier
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
5
<PAGE> 6
If to the Company:
Unimed Pharmaceuticals, Inc.
2150 East Lake Cook Road
Buffalo Grove, Illinois 60089-1862
U.S.A.
Attention: Stephen M. Simes, President
Telecopier No.: (708) 541-2533
If to the Holder:
Laboratoires Besins Iscovesco, S.A.
5, Rue du Bourg l'Abbe
75003 Paris
France
Attention: Antoine Besins
Telecopier No.: 33,1,42,77,14,62
with a copy to:
Besins Iscovesco U.S. Inc.
620 Herndon Parkway
Suite 200
Herndon, Virginia 22073-3840
Attention: Jay Bua
Telecopier No.: (703) 478-0959
11. Subject to Stock and Warrant Agreement. This Warrant is issued under,
and is subject to, the terms and conditions of the Stock and Warrant Agreement.
In the event of any inconsistency between this Warrant and the Stock and
Warrant Agreement, the terms of the Stock and Warrant Agreement shall govern.
Capitalized terms used herein which are not defined herein shall have the
definitions ascribed to them in the Stock and Warrant Agreement.
IN WITNESS WHEREOF, UNIMED PHARMACEUTICALS, INC. has caused this Warrant
to be executed by its duly authorized office all as of the day and year first
above written.
UNIMED PHARMACEUTICALS, INC., a Delaware
corporation
By: _________________________________
Stephen M. Simes, President
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<PAGE> 7
NOTICE OF EXERCISE OF WARRANT
[To be signed only upon exercise of Warrant]
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the right of purchase represented by such Warrant for, and
to purchase thereunder, _________________________Exercise Shares, as that term
is defined in the Warrant, and hereby makes payment of $___________________in
full payment of the aggregate purchase price for such shares. The undersigned
requests that the certificates for such shares be issued in the name of, and be
delivered to, _________________________, whose address is
_______________________________.
Dated:____________________
____________________________________________
(Signature)
____________________________________________
(Address)
7
<PAGE> 1
EXHIBIT 4-F
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the 11th day of August,
1995, by and between UNIMED PHARMACEUTICALS, INC, a Delaware corporation (the
"Company") and LABORATOIRES BESINS ISCOVESCO, S.A., a corporation organized
under the laws of France (the "Holder").
RECITALS
WHEREAS, the Company and the Holder have entered into an agreement
providing for the purchase by the Holder of shares of common stock of the
Company; and
WHEREAS, in connection with such equity interest, the Holder agreed to
acquire an equity interest in the Company in the form of Common Stock and a
Warrant for Common Stock; and
WHEREAS, the Holder wishes to have the right to require the Company to
register the shares of common stock which it has agreed to purchase, and which
it may receive upon exercise of the Warrant; and
WHEREAS, the Company is willing to grant those rights, subject to certain
terms and conditions;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1 Definitions. For purposes of this Agreement:
(a) The term "Stock and Warrant Agreement" means that certain Stock
and Warrant Agreement, dated August 11, 1995, between the Company and the
Holder.
(b) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as
amended (the "Act"), and the declaration or ordering of effectiveness of
such registration statement or document;
(c) The term "Registrable Securities" means the Common Stock
purchased by the Holder pursuant to the Agreement, issuable or issued to
the Holder upon the exercise of the Warrant, and any additional shares of
Common Stock issued as a dividend or other distribution with respect to,
or in exchange for or in replacement of, such Common Stock, excluding in
all cases, however, any Registrable Securities sold by a person in a
transaction in which his rights under Section 2 are not assigned.
(d) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to the then exercisable Warrant which are, Registrable
Securities.
(e) The term "Warrant" means a warrant dated the date hereof, issued
to the Holder pursuant to the Stock and Warrant Agreement.
2 Registration Rights. The Company covenants and agrees as follows:
2.1 Request for Registration.
(a) If the Company shall receive at any time after the second
anniversary of the date hereof and (i) within sixty (60) days of the end
of any of its first three fiscal quarters of each fiscal year or (ii)
within one hundred twenty (120) days of the end of any fiscal year, a
written request from the Holder that the Company file a registration
statement under the Act covering the registration of at least fifty
percent
<PAGE> 2
(50%) of the Registrable Securities then outstanding and which
represents an amount of Registrable Securities that would result in a
sale by the Holder of the lesser of all Registrable Securities received
by the Holder under the Stock and Warrant Agreement or an aggregate
offering price in excess of $1,000,000, then the Company shall, subject
to the limitations of subsection 2.1(d), effect as soon as practicable,
and in any event shall use its best efforts to file with the SEC within
45 days of the receipt of such request, the registration under the Act of
all Registrable Securities which the Holder requests to be registered,
and after such filing use its best efforts to cause such registration to
be declared effective as soon as practicable; provided, however, that the
rights of the Holder under this Section 2 shall be temporarily suspended
during any period following a notice from the Company to such Holder
under Section 2.2 with respect to a firm commitment underwriting, until
such proposed registration shall have become effective, or shall be
abandoned.
(b) If the Holder intends to distribute the Registrable Securities
covered by its request by means of an underwriting, it shall so advise
the Company as a part of its request made pursuant to this Section 2.1.
The underwriter will be selected by the Holder and shall be acceptable to
the Company, but the Company shall not unreasonably withhold such
acceptance. The Holder shall (together with the Company as provided in
subsection 2.3(e)) enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting by
the Holder.
(c) The Company is obligated to effect only one (1) such
registration pursuant to this Section 2.1 (counting for these purposes
only a registration which has been declared effective and pursuant to
which all Registrable Securities included in such registration have been
sold).
(d) Notwithstanding the foregoing, if the Company shall furnish to
the Holder a certificate signed by an appropriate officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be detrimental to the Company and its stockholders for
such registration statement to be filed and it is therefore appropriate
to defer the filing of such registration statement, the Company shall
have the right to defer such filing for a period of not more than 60 days
after receipt of the request of the Holder, and during such 60 day
period, the Holder shall not request any additional registration;
provided, however, that the Company may not utilize this right more than
once in any twelve month period.
2.2 The Company Registration. If (but without any obligation to do
so) at any time after the second anniversary of the date hereof the Company
proposes to register (including for this purpose a registration effected by the
Company for stockholders other than the Holder) any of its stock or other
securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a stock plan of the Company, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, at such
time, promptly give the Holder written notice of such registration. Upon the
written request of the Holder given within twenty (20) days after mailing of
such notice by the Company, the Company shall, subject to the provisions of
Sections 2.7 and 3.1 and the rights of such other stockholders, cause to be
registered under the Act all of the Registrable Securities that such Holder has
requested to be registered.
2.3 Obligations of the Company. Whenever required under this Section
2 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of
the Holder, keep such registration statement effective for up to one
hundred eighty (180) days.
2
<PAGE> 3
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holder such numbers of conformed copies of such
registration statement and each amendment and supplement thereto
(together with all exhibits filed therewith), such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities
owned by it.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Holder, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file
a general consent to service of process in any such states or
jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. The
Holder shall also enter into and perform its obligations under such an
agreement. The Holder may require that any and all representations given
for the benefit of the underwriters also be given to the Holder.
(f) Notify the Holder at any time when a prospectus relating thereto
is required to be delivered under the Act of the happening of any event
as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing.
(g) Furnish, at the request of the Holder, on the date that such
Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to Section 2 , if such securities
are being sold through underwriters, or, if such securities are not being
sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an opinion, dated
such date, of the counsel representing the Company for the purposes of
such registration, in form and substance the Holders or underwriters may
reasonably request, addressed to the underwriters, if any, and to the
Holder and (ii) a letter dated such date, from the independent public
accountants of the Company, in form and substance as is customarily given
by independent public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the
Holder.
2.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 2 with
respect to the Registrable Securities that the Holder shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be
required to effect the registration of the Holder's Registrable Securities.
2.5 Expenses of Demand Registration. All expenses, other than legal fees
and expenses of counsel for the Holder and underwriting discounts and
commissions incurred in connection with registrations, filings or
qualifications pursuant to Section 2.1, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees,
fees and disbursements of counsel for the Company shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 2.1 if
the registration request is subsequently withdrawn at the request of the
Holder, unless the Holder agrees to forfeit its right to such demand
registration pursuant to Section 2.1; provided further, however, that if at the
time of such withdrawal, the Holder has learned of a material adverse change in
the condition,
3
<PAGE> 4
business, or prospects of the Company from that known to the Holder at
the time of its request and has withdrawn the request with reasonable
promptness following disclosure by the Company of such material adverse change,
then the Holder shall not be required to pay any of such expenses and shall
retain its rights pursuant to Section 2.1.
2.6 Expenses of the Company Registration. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 2.2 for the Holder, including (without limitation) all
registration, filing, and qualification fees, printers and accounting fees
relating or apportionable thereto, but excluding legal fees and expenses of
counsel for the Holder, underwriting discounts and commissions relating to
Registrable Securities, and those fees, if any, which are required by
applicable Blue Sky laws or regulations to be borne by Holder as a condition to
qualification.
2.7 Underwriting Requirements. In connection with any offering involving
an underwriting of shares of the Company's capital stock, the Company shall not
be required under Section 2.2 to include any of the Holder's securities in such
underwriting unless it accepts the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such quantity as the
underwriters determine in their sole discretion will not, jeopardize the
success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by stockholders to be included in
such offering exceeds the amount of securities to be sold, other than by the
Company, the underwriters determine in their sole discretion is compatible with
the success of the offering, then the Company shall be required to include in
the offering only that number of such securities, including Registrable
Securities, which the underwriters determine in their sole discretion will not
jeopardize the success of the offering of the securities so included to be
apportioned, subject to the prior rights, if any, of the stockholders other
than the Holder, pro rata among the selling stockholders according to the total
amount of securities entitled to be included therein owned by each selling
stockholder or in such other proportions as shall mutually be agreed to by such
selling stockholders). For purposes of the preceding parenthetical concerning
apportionment, for any selling stockholder which is a Holder of Registrable
Securities and which is a partnership or corporation, the partners, retired
partners and stockholders of such holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "selling stockholder", and
any pro-rata reduction with respect to such "selling stockholder" shall be
based upon the aggregate amount of shares carrying registration rights owned by
all entities and individuals included in such "selling stockholder", as defined
in this sentence.
2.8 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of Section 2.
2.9 Indemnification. In the event any Registrable Securities are included
in a registration statement under Section 2:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless the Holder, any underwriter (as defined in the Act) for
such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the Securities Exchange Act
of 1934, as amended (the "1934 Act"), against any losses, claims,
damages, or liabilities (joint or several) to which they may become
subject under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities for actions in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained
in such registration statement, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements
thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities
law or any rule or regulation promulgated under the Act, the 1934 Act or
any state securities law, and the Company will pay to the Holder,
underwriter or controlling person, as incurred, any
4
<PAGE> 5
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
subsection 2.9(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is
effected without the consent of the Company, nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or
action to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by any
such Holder, underwriter or controlling person, or in a situation in
which the Violation was caused by the intentional act or omission of such
Holder acting either in his individual capacity, or in the capacity as an
officer of the Company.
(b) To the extent permitted by law, the Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers
who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any
other person selling securities in such registration statement and any
controlling person of any such underwriter or other person, against any
losses, claims, damages, or liabilities (joint or several) to which any
of the foregoing persons may become subject, under the Act, the 1934 Act
or other Federal or state law, insofar as such losses, claims, damages,
or liabilities for actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in
connection with such registration; and the Holder will pay, as incurred,
any legal or other expenses reasonably incurred by any person intended to
be indemnified pursuant to this subsection 2.9(b), in connection with
investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
subsection 2.9(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 2.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this
Section 2.9, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in (at participant's own expense), and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain one
separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve
an indemnifying party of liability for indemnification hereunder, except
to the extent that the indemnifying party is actually prejudiced by such
failure, but in any event the omission so to deliver written notice to
the indemnifying party will not relieve it of any liability that it may
have to any indemnified party otherwise than under this Section 2.9.
(d) If the indemnification provided for in this Section 2.9 is held
by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying
such indemnified party hereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim, damage, or
expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party
shall be determined by reference to, among other things, whether the
untrue or alleged
5
<PAGE> 6
untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or
omission.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in
the underwriting agreement shall control.
(f) No person shall be entitled to indemnification or contribution
hereunder if such person shall have been finally determined to have been
guilty of fraudulent misrepresentation under Section 11(f) of the Act.
(g) The obligations of the Company and Holder under this Section 2.9
shall survive the completion of any offering of Registrable Securities in
a registration statement under Section 2, and otherwise.
2.10 Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holder the benefits of Rule 144 promulgated under the Act and
any other rule or regulation of the SEC that may at any time permit the Holder
to sell securities of the Company to the public without registration, the
Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of SEC
Rule 144, the Act and the 1934 Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be
reasonably requested in availing the Holder of any rule or regulation of
the SEC which permits the selling of any such securities without
registration or pursuant to such form, but only if such information is
necessary in order to determine whether the exemption is available, or in
order to utilize the exemption.
2.11 "Market Stand-Off" Agreement. The Holder hereby agrees that, during
the period of duration, not to exceed 90 days, specified by the Company and an
underwriter of common stock or other securities of the Company, following the
effective date of a registration statement of the Company filed under the Act,
it shall not, to the extent requested by the Company and such underwriter,
directly or indirectly sell, offer to sell, contract to sell (including,
without limitation, any short sale), grant any option to purchase or otherwise
transfer or dispose of (other than to donees who agree to be similarly bound)
any securities of the Company held by it at any time during such period except
common stock included in such registration; provided, however, that the period
of duration specified above may be shortened with the prior written consent of
the underwriter and the Company. In order to enforce the foregoing covenant,
the Company may impose stop-transfer instructions with respect to the
Registrable Securities of the Holder (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such
period.
2.12 Withdrawal Rights and Reallocation. If the Holder disapproves of the
terms of any such underwriting, it may elect to withdraw therefrom by written
notice to the Company and the underwriters.
6
<PAGE> 7
3 Miscellaneous.
3.1 Limitation of Registration Rights. Any provision herein to the
contrary notwithstanding, the Holder shall not have any registration rights
hereunder (including rights under Sections 2.1 and 2.2), and all rights to
registration hereunder shall terminate and shall be of no further force or
effect if (a) the Holder is permitted to sell all of its Registrable Securities
at the same time without restriction under Rule 144 and (b) the average weekly
trading volume of shares of the same class as the Registrable Securities during
the three month period immediately prior to the date on which the Holder wishes
to exercise its registration rights is equal to or greater than the number of
Registerable Securities owned by such Holder.
3.2 Coordination With Other Rights. This Agreement, and the rights of the
Holder, are subject to the rights of other holders of securities of the Company
in effect on the date hereof, which are described on a Schedule to the Stock
and Warrant Agreement. Without limitation of the foregoing, the rights of the
Holder to a demand registration and to be included in other registrations may
be superseded by the rights and actions of such other holders to have their
securities registered and to be included in registration statements filed by
the Company at its own initiative or pursuant to demand registration rights of
others. By execution hereof, the Holder consents and agrees to all of such
prior rights. Notwithstanding the foregoing, in no event shall the prior
rights of any person have the effect of depriving the Holder of its one demand
registration right, and if as a result of the exercise of any such prior
rights, the Holder is unable to include in its demand registration all of the
Registrable Securities which it wants to include, its demand registration
rights shall continue, notwithstanding the exercise of such one demand, until
the earlier of the time when all of the Registrable Securities requested to be
included in such demand registration shall have been sold in transactions under
which the purchasers are not further restricted from sales of such securities,
or registration rights are otherwise terminated under the provisions of this
Agreement.
3.3 Successors and Assigns. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. Any provision herein to the
contrary notwithstanding, it the Holder shall transfer any of the Registrable
Securities, then the rights hereunder may also be transferred with such
Registrable Securities, but in such event, the Holder and such assignees shall
have no greater rights, as a group, than the Holder had under this Agreement
prior to such transfer, and the Holder and each such assignee shall appoint one
person who shall act hereunder on behalf of the Holder and all of the
assignees.
3.4 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Illinois, without giving effect to
its conflicts of laws principles.
3.5 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
3.6 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given at the time it is received if delivered
personally or by facsimile transmission, mailed by registered or certified mail
(return receipt requested, postage prepaid) or sent by overnight courier
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
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<PAGE> 8
If to the Company:
Unimed Pharmaceuticals, Inc.
2150 East Lake Cook Road
Buffalo Grove, Illinois 60089-1862
U.S.A.
Attention: Stephen M. Simes, President
Telecopier No.: (708) 541-2533
If to the Holder:
Laboratoires Besins Iscovesco, S.A.
5, Rue du Bourg l'Abbe
75003 Paris
France
Attention: Antoine Besins
Telecopier No.: 33,1,42,77,14,62
with a copy to:
Besins Iscovesco U.S. Inc.
620 Herndon Parkway
Suite 200
Herndon, Virginia 22073-3840
Attention: Jay Bua
Telecopier No.: (703) 478-0959
3.7 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
3.8 Subject to Stock and Warrant Agreement. This Agreement is subject to
the terms and conditions of the Stock and Warrant Agreement. In the event of
any inconsistency between this Agreement and the Stock and Warrant Agreement,
the terms of Stock and Warrant Agreement shall govern. Capitalized terms used
herein which are not defined herein shall have the definitions ascribed to them
in the Stock and Warrant Agreement.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
THE COMPANY:
UNIMED PHARMACEUTICALS, INC.
By:
---------------------------------
Name and Title:
---------------------
HOLDER:
LABORATOIRES BESINS ISCOVESCO, S.A.
By:
---------------------------------
Name and Title:
---------------------
9
<PAGE> 1
EXHIBIT 4-G
Warrant No. ___-___
Warrant to Purchase 140,000 Shares
SHARE PURCHASE WARRANT
To Purchase Shares of Common Stock (par value $0.25)
of
UNIMED Pharmaceuticals, Inc.
(Delaware corporation)
Expires March 1, 2001
<PAGE> 2
Warrant No. ___-___
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF MAY BE TRANSFERRED EXCEPT IN A TRANSACTION REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR WHICH IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THAT ACT.
VOID AFTER 5:00 P.M. NEW YORK TIME, ON March 1, 2001
UNIMED Pharmaceuticals, Inc.
Warrant to Purchase Shares of Common Stock
140,000 Shares
THIS CERTIFIES that, for good and valuable consideration received, Sunrise
Securities Corp. (the "Holder"), is entitled to subscribe for and purchase from
UNIMED Pharmaceuticals, Inc., a Delaware corporation (the "Company"), upon the
terms and conditions set forth herein, at any time or from time to time from
March 1, 1997 until 5:00 P.M. New York City time on March 1, 2001 (the
"Exercise Period"), all or any portion of 140,000 shares of common stock of the
Company, par value $0.25 per share ("Common Stock"), subject to adjustment as
provided herein (the "Warrant Shares"), at a price of $7.20 per share, subject
to adjustment as provided herein (the "Exercise Price"). This Warrant shall
not be redeemable by the Company. This Warrant may be sold, transferred,
assigned or hypothecated at any time and the term the "Holder" as used herein
shall include any transferee to whom this Warrant has been transferred.
1. Method of Exercise. This Warrant may be exercised at any time during
the Exercise Period, as to the whole or any lesser number of Warrant Shares, by
the surrender of this Warrant (with the election at the end hereof duly
executed) to the Company at its office at 2150 East Lake Cook Road, Buffalo
Grove, Illinois 60089-1862 or at such other place as may be designated in
writing by the Company, together with a certified or bank cashier's check
payable to the order of the Company in an amount equal to the Exercise Price
multiplied by the number of Warrant Shares for which this Warrant is being
exercised. In lieu of the payment of the Exercise Price, the Holder shall have
the right (but not the obligation), during the Exercise Period, to require the
Company to convert this Warrant, in whole or in part, into the Warrant Shares
as provided for in this Section (the "Conversion Right"). Upon exercise of the
Conversion Right, the Company shall deliver to the Holder (without payment by
the Holder of the Exercise Price) that number of shares of Common Stock equal
to (i) the number of Warrant Shares issuable upon exercise of the portion of
the Warrant being converted, multiplied by (ii) the quotient obtained by
dividing (x) the value of the Warrant (on a per Warrant Share basis) at the
time the Conversion Right is exercised (determined by subtracting the Exercise
Price from the
<PAGE> 3
Current Market Price (as determined pursuant to Section 5(e) below), for the
shares of Common Stock issuable upon exercise of the Warrant immediately prior
to the exercise of the Conversion Right) by (y) the Current Market Price of one
share of Common Stock immediately prior to the exercise of the Conversion
Right. The Conversion Rights provided under this Section may be exercised in
whole or in part and at any time and from time to time while any Warrants
remain outstanding. In order to exercise the Conversion Right, the Holder
shall surrender to the Company, at its offices, this Warrant accompanied by the
form of Subscription Agreement duly filled in and signed and a duly completed
Conversion Notice in the form attached hereto. The presentation and surrender
shall be deemed a waiver of the Holder's obligation to pay all or any portion
of the aggregate purchase price payable for the Warrant Shares being issued
upon such exercise of this Warrant. This Warrant (or so much thereof as shall
have been surrendered for conversion) shall be deemed to have been converted
immediately prior to the close of business on the day of surrender of this
Warrant for conversion in accordance with the foregoing provisions. As
promptly as practicable on or after the conversion date, the Company shall
issue and shall deliver to the Holder (i) a certificate or certificates
representing the largest number of whole Warrant Shares which the Holder shall
be entitled as a result of the conversion, and (ii) if such Warrant is being
converted in part only, a new Warrant exercisable for the number of Warrant
Shares equal to the unconverted portion of the Warrant. Upon any exercise
(which term, as used herein, shall include any exercise of the Conversion
Right) of this Warrant, in lieu of any fractional Warrant Shares to which the
Holder shall be entitled, the Company shall pay to the Holder cash in
accordance with the provisions of Section 5(d) hereof.
2. Issuance of Certificates. Upon each exercise of the Holder's rights to
purchase Warrant Shares, the Holder shall be deemed to be the holder of record
of the Warrant Shares issuable upon such exercise, notwithstanding that the
transfer books of the Company shall then be closed or certificates representing
such Warrant Shares shall not then have been actually delivered to the Holder.
As soon as practicable after each such exercise of this Warrant, the Company
shall issue and deliver to the Holder a certificate or certificates for the
Warrant Shares issuable upon such exercise, registered in the name of the
Holder or its designee. If this Warrant should be exercised in part only, upon
surrender of this Warrant for cancellation, the Company shall execute and
deliver a new Warrant evidencing the right of the Holder to purchase the
balance of the Warrant Shares (or portions thereof) subject to purchase
hereunder.
3. Recording of Transfer. Any warrants issued upon the transfer or
exercise in part of this Warrant shall be numbered and shall be registered in
an Warrant Register as they are issued. The Company shall be entitled to treat
the registered holder of any Warrant on the Warrant Register as the owner in
fact thereof for all purposes and shall not be bound to recognize any equitable
or other claim to or interest in such Warrant on the part of any other person,
and shall not be liable for any registration or transfer of Warrants which are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or
nominee is committing a breach of trust in requesting such registration or
transfer, or with the knowledge of such facts that its participation therein
amounts
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<PAGE> 4
to bad faith. This Warrant shall be transferable only on the books of the
Company upon delivery thereof duly endorsed by the Holder or by his or its duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. In all cases of transfer by
an attorney, executor, administrator, guardian or other legal representative,
duly authenticated evidence of his or its authority shall be produced. Upon
any registration of transfer, the Company shall deliver a new warrant or
warrants to the person entitled thereto. This Warrant may be exchanged, at the
option of the Holder hereof, for another warrant, or other warrants of
different denominations, of like tenor and representing in the aggregate the
right to purchase a like number of Warrant Shares (or portions thereof), upon
surrender to the Company or its duly authorized agent. Notwithstanding the
foregoing, the Company shall have no obligation to cause this Warrant to be
transferred on its books to any person if, in the written opinion of counsel to
the Company, such transfer does not comply with the provisions of the
Securities Act of 1933 (the "Act"), and the rules and regulations thereunder.
4. Reservation of Shares of Common Stock. The Company shall at all times
reserve and keep available out of its authorized and unissued shares of Common
Stock, solely for the purpose of providing for the exercise of the Warrants,
such number of shares of Common Stock as shall, from time to time, be
sufficient therefor. The Company covenants that all shares of Common Stock
issuable upon exercise of this Warrant, upon receipt by the Company of the full
payment therefor, shall be validly issued, fully paid, nonassessable and free
of preemptive rights.
5. Exercise Price Adjustments. Subject to the provisions of this Section
5, the Exercise Price in effect from time to time shall be subject to
adjustment, as follows:
(a) In case the Company shall at any time after the date hereof (i)
declare a dividend or make a distribution on the outstanding shares of Common
Stock payable in shares of its capital stock, (ii) subdivide the outstanding
shares of Common Stock, (iii) combine the outstanding shares of Common Stock
into a smaller number of shares of Common Stock, or (iv) issue any shares of
Common Stock by reclassification of shares of Common Stock (other than a change
in par value, or from par value to no par value, or from no par value to par
value, but including any such reclassification in connection with the
consolidation or merger of the Company with or into another corporation
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation)), then, in each
case, the Exercise Price in effect at the time of the record date of such
dividend or distribution or of the effective date of such subdivision,
combination, or reclassification shall be adjusted so that it shall equal the
price determined by multiplying the Exercise Price by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to such action and the denominator of which shall be the number of shares
of Common Stock outstanding after giving effect to such action. Such
adjustment shall be made successively whenever any event listed above shall
occur.
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<PAGE> 5
(b) In case the Company shall distribute to all holders of shares of
Common Stock (including any such distribution made to the stockholders of the
Company in connection with a consolidation or merger in which the Company is
the surviving or continuing corporation) evidences of its indebtedness, cash,
or assets (other than distributions and dividends payable in shares of Common
Stock), or rights, options, or warrants to subscribe for or purchase shares of
Common Stock or securities convertible into or exchangeable for shares of
Common Stock, then, in each case, the Exercise Price shall be adjusted by
multiplying the Exercise Price in effect immediately prior to the record date
for the determination of stockholders entitled to receive such distribution by
a fraction, the numerator of which shall be the Current Market Price (as
determined pursuant to Section 5(e) hereof) per share of Common Stock on such
record date, less the fair market value (as determined in good faith by the
board of directors of the Company, whose determination shall be conclusive
absent manifest error) of the portion of the evidences of indebtedness or
assets so to be distributed, or of such rights, options, or warrants or
convertible or exchangeable securities, or the amount of such cash, applicable
to one share of Common Stock, and the denominator of which shall be such
Current Market Price per share of Common Stock. Such adjustment shall become
effective at the close of business on such record date.
(c) Whenever there shall be an adjustment as provided in this Section 5,
the Company shall within 15 days thereafter cause written notice thereof to be
sent by registered mail, postage prepaid, to the Holder, at its address as it
shall appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares issuable
hereunder and the Exercise Price thereof after such adjustment and setting
forth a brief statement of the facts requiring such adjustment and the
computation thereof, which officer's certificate shall be conclusive evidence
of the correctness of any such adjustment absent manifest error.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or other shares of the Company upon the exercise of this Warrant.
If any fraction of a share of Common Stock would be issuable upon the exercise
of this Warrant (or specified portions thereof), the Company may issue a whole
share in lieu of such fraction or the Company may purchase such fraction for an
amount in cash equal to the same fraction of the Current Market Price of such
shares of Common Stock on the date of exercise of this Warrant.
(e) The Current Market Price per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices for the thirty (30)
consecutive trading days immediately preceding the date in question. The
closing price for each day shall be the last reported sales price regular way
or, in case no such reported sale takes place on such day, the closing bid
price regular way, in either case on the principal national securities exchange
on which the Common Stock is listed or admitted to trading or, if the Common
Stock is not listed or admitted to trading on any national securities exchange,
the highest reported bid price for the Common Stock as furnished by the
National Association of Securities Dealers, Inc. through NASDAQ or a similar
organization if NASDAQ is no longer reporting such information. If on
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<PAGE> 6
any such date the Common Stock is not listed or admitted to trading on any
national securities exchange and is not quoted by NASDAQ or any similar
organization, the fair value of a share of Common Stock on such date, as
determined in good faith by the Board of Directors of the Company, whose
determination shall be conclusive absent manifest error, shall be used.
(f) No adjustment in the Exercise Price shall be required if such
adjustment is less than $0.05; provided, however, that any adjustments which by
reason of this Section 5 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under
this Section 5 shall be made to the nearest cent or to the nearest thousandth
of a share, as the case may be.
(g) Upon each adjustment of the Exercise Price as a result of the
calculations made in this Section 5, the Warrants shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of shares of
Common Stock (calculated to the nearest hundredth) obtained by dividing (i) the
product obtained by multiplying the number of shares of Common Stock
purchasable upon exercise of the Warrants prior to adjustment of the number of
shares of Common Stock by the Exercise Price in effect prior to adjustment of
the Exercise Price by (ii) the Exercise Price in effect after such adjustment
of the Exercise Price.
(h) Whenever the Exercise Price is adjusted as provided in this
Section 5, the Company will promptly obtain a certificate of a firm of
independent public accountants of recognized standing selected by the board of
directors of the Company (which may be the regular auditors of the Company)
setting forth the Exercise Price as so adjusted and a brief statement of the
facts accounting for such adjustment, and will make available a brief summary
thereof to the holder of this Warrant, at its address listed on the register
maintained for that purpose (which summary may be included in any notice of
adjustment required by Section 5(c) hereof).
6. (a) Consolidations and Mergers. In case of any consolidation with
or merger of the Company with or into another corporation (other than a merger
or consolidation in which the Company is the surviving or continuing
corporation and which does not result in any reclassification of the
outstanding shares of Common Stock or the conversion of such outstanding shares
of Common Stock into shares of other stock or other securities or property), or
in case of any sale, lease or conveyance to another corporation of the property
and assets of any nature of the Company as an entirety or substantially as an
entirety (such actions being hereinafter collectively referred to as
"Reorganizations"), there shall thereafter be deliverable upon exercise of this
Warrant (in lieu of the number of shares of Common Stock theretofore
deliverable) the kind and amount of shares of stock or other securities, cash
or other property which would otherwise have been deliverable to a holder of
the number of shares of Common Stock upon the exercise of this Warrant upon
such Reorganization if this Warrant had been exercised in full immediately
prior to such Reorganization. In case of any Reorganization, appropriate
adjustment, as determined in good faith by the Board of Directors of the
Company, shall be made in the application of the provisions herein set forth
with respect to the rights and
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<PAGE> 7
interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property thereafter deliverable upon exercise of this Warrant. Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company, or any successor thereto, and the Holder and shall for all
purposes hereof conclusively be deemed to be an appropriate adjustment. The
Company shall not effect any such Reorganization unless upon or prior to the
consummation thereof the successor corporation, or if the Company shall be the
surviving corporation in any such Reorganization and is not the issuer of the
shares of stock or other securities or property to be delivered to holders of
shares of Common Stock outstanding at the effective time thereof, then such
issuer, shall assume by written instrument the obligation to deliver to the
Holder such shares of stock, securities, cash or other property as the Holder
shall be entitled to purchase in accordance with the foregoing provisions.
(b) In case of any reclassification or change of the shares of Common
Stock issuable upon exercise of this Warrant (other than a change in par value
or from no par value to a specified par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), or in case of any consolidation or merger of another
corporation into the Company in which the Company is the continuing corporation
and in which there is a reclassification or change (including a change to the
right to receive cash or other property) of the shares of Common Stock (other
than a change in par value, or from no par value to a specified par value, or
as a result of a subdivision or combination, but including any change in the
shares into two or more classes or series of shares), the Holder shall have
the right thereafter to receive upon exercise of this Warrant solely the kind
and amount of shares of stock and other securities, property, cash or any
combination thereof receivable upon such reclassification, change,
consolidation or merger by a holder of the number of shares of Common Stock for
which this Warrant might have been exercised immediately prior to such
reclassification, change, consolidation or merger. Thereafter, appropriate
provision shall be made for adjustments which shall be as nearly equivalent as
practicable to the adjustments in Section 5.
(c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
7. Notice of Certain Events. In case at any time any of the following
occur:
(a) The Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
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<PAGE> 8
(b) The Company shall offer to all the holders of its shares of Common
Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefor; or
(c) The Company shall take any action to effect any reclassification
or change of outstanding shares of Common Stock or any consolidation, merger,
sale, lease or conveyance of property, described in Section 6; or
(d) The Company shall take any action to effect any liquidation,
dissolution or winding-up of the Company or a sale of all or substantially all
of its property, assets and business;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least
fifteen (15) days prior to (i) the date as of which the holders of record of
shares of Common Stock to be entitled to receive any such dividend,
distribution, rights, warrants or other securities are to be determined, (ii)
the date on which any such offer to holders of shares of Common Stock is made,
or (iii) the date on which any such reclassification, change of outstanding
shares of Common Stock, consolidation, merger, sale, lease, conveyance of
property, liquidation, dissolution or winding-up is expected to become
effective and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
change of outstanding shares, consolidation, merger, sale, lease, conveyance of
property, liquidation, dissolution or winding-up.
8. Registration Rights. (a) If, at any time during the five-year period
commencing on the date hereof the Company shall file a registration statement
(other than on Form S-4, Form S-8, or any successor form) with the Securities
and Exchange Commission (the "Commission") while any Warrants or Warrant Shares
are outstanding, the Company shall give all of the then holders of any Warrants
(the "Eligible Holders") at least 45 days' prior written notice of the filing
of such registration statement. If requested by any Eligible Holder in writing
within 30 days after receipt of any such notice, the Company shall, at the
Company's sole expense (other than the fees and disbursements of counsel for
the Eligible Holders and the underwriting discounts, if any, payable in respect
of the Warrant Shares sold by any Eligible Holder), register or qualify all or,
at each Eligible Holder's option, any portion of the Warrant Shares and/or of
the Warrants of any Eligible Holders who shall have made such request,
concurrently with the registration of such other securities, all to the extent
requisite to permit the public offering and sale of the Warrant Shares
and/or the Warrants through the facilities of all appropriate securities
exchanges and the over-the-counter market, as applicable, and will use its best
efforts through its officers, directors, auditors, and counsel to cause such
registration statement to become effective as promptly as practicable.
Notwithstanding the foregoing, if the
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<PAGE> 9
managing underwriter of any such offering shall advise the Company in writing
that, in its opinion, the distribution of all or a portion of the Warrant
Shares and/or the Warrants requested to be included in the registration
concurrently with the securities being registered by the Company would
materially adversely affect the distribution of such securities by the Company
for its own account, then any Eligible Holder who shall have requested
registration of his or its Warrant Shares and/or the Warrants shall delay the
offering and sale of such securities (or the portions thereof so designated by
such managing underwriter) for such period, not to exceed 90 days, as the
managing underwriter shall request (the "Delay Period"); provided that if any
securities of the Company are included in such registration statement and are
eligible for sale during the Delay Period for the account of any person other
than the Company, a pro rata portion of the securities which were requested to
be included and eligible for sale during the Delay Period shall also be
included in such registration statement and shall be eligible for sale during
the Delay Period. Any provision herein to the contrary notwithstanding, the
rights of the Eligible Holders to have their Shares included in registration
statements filed by others are subject to the rights of the John N. Kapoor
Trust (the "Kapoor Trust") and Laboratoires Besins Iscovesco ("Besins"), which
rights may limit the rights of the holders of Registrable Securities hereunder.
(b) If, on any two occasions during the five-year period commencing on the
date hereof, the Company shall receive a written request from Eligible Holders
who in the aggregate own (or upon exercise of all Warrants then outstanding
would own) a majority of the total number of shares of Common Stock then
included (or upon such exercises would be included) in the Warrant Shares (the
"Majority Holders"), to register the sale of all or part of the Warrant Shares
and/or of the Warrants, the Company shall, as promptly as practicable, prepare
and file with the Commission a registration statement sufficient to permit the
public offering and sale of the Warrant Shares and the Warrants (whether
covered by such request from the Majority Holders or by any other written
request from any Eligible Holder received within 30 days after such Eligible
Holder's receipt of the Company's notice, as described in the last sentence of
this Section 8(b)) through the facilities of all appropriate securities
exchanges and the over-the-counter market, and will use its best efforts
through its officers, directors, auditors, and counsel to cause such
registration statement to become effective as promptly as practicable;
provided, that the Company shall only be obligated to file one such
registration statement for which all expenses incurred in connection with such
registration (other than the fees and disbursements of counsel for the Eligible
Holders and underwriting discounts, if any, payable in respect of the Warrant
Shares and the Warrants sold by the Eligible Holders) shall be borne by the
Company. Within three business days after receiving any request contemplated
by this Section 8(b), the Company shall give written notice to all the other
Eligible Holders, advising each of them that the Company is proceeding with
such registration and offering to include therein all or any portion of any
such other Eligible Holder's Warrant Shares and/or, the Warrants, provided that
the Company receives a written request to do so from such Eligible Holder
within 30 days after receipt by him or it of the Company's notice. The Company
shall not be required to file any registration statement under this
Section 8(b) within six (6) months of the effective date of any
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<PAGE> 10
registration statement covering an underwritten public offering which was not
withdrawn or abandoned, except with the prior consent of the Kapoor Trust.
(c) Notwithstanding anything herein to the contrary, in addition to the
registration rights under Sections 8(a) and 8(b) above, the Eligible Holder
shall be entitled to the same registration rights and all other rights and
benefits as the purchasers of securities of the Company are entitled to
pursuant to the Registration Rights Agreement, dated February 29, 1996, among
the purchasers described therein and the Company; provided, however, that in
the event that such registration rights shall conflict, the rights of such
purchasers shall rank prior to those of the Eligible Holder.
(d) In the event of a registration pursuant to the provisions of this
Section 8, the Company shall use its best efforts to cause the Warrants and/or
the Warrant Shares so registered to be registered or qualified for sale under
the securities or blue sky laws of such jurisdictions as the Holder or such
holders may reasonably request; provided, however, that the Company shall not
be required to qualify to do business in any state by reason of this Section
8(d) in which it is not otherwise required to qualify to do business or
otherwise subject itself to general service of process in any such state.
(e) The Company shall keep effective any registration or qualification
contemplated by this Section 8 and shall from time to time amend or supplement
each applicable registration statement, preliminary prospectus, final
prospectus, application, document and communication for such period of time as
shall be required to permit the Eligible Holders to complete the offer and sale
of the Warrants and/or the Warrant Shares covered thereby. The Company shall
in no event be required to keep any such registration or qualification in
effect for a period in excess of nine months from the date on which the
Eligible Holders are first free to sell such Warrants and/or Warrant Shares;
provided, however, that, if the Company is required to keep any such
registration or qualification in effect with respect to securities other than
the Warrants and/or the Warrant Shares beyond such period, the Company shall
keep such registration or qualification in effect as it relates to the Warrants
and/or the Warrant Shares for so long as such registration or qualification
remains or is required to remain in effect in respect of such other securities.
(f) In the event of a registration pursuant to the provisions of this
Section 8, the Company shall furnish to each Eligible Holder such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of
copies of each prospectus contained in such registration statement and each
supplement or amendment thereto (including each preliminary prospectus), all of
which shall conform to the requirements of the Act and the rules and
regulations thereunder, and such other documents, as any Eligible
Holder may reasonably request to facilitate the disposition of the Warrants
and/or the Warrant Shares included in such registration.
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<PAGE> 11
(g) In the event of a registration pursuant to the provisions of this
Section 8, the Company shall furnish each Eligible Holder of any Warrants
and/or Warrant Shares so registered with an opinion of its counsel (reasonably
acceptable to the Eligible Holders) to the effect that (i) the registration
statement has become effective under the Act and no order suspending the
effectiveness of the registration statement, preventing or suspending the use
of the registration statement, any preliminary prospectus, any final prospectus
or any amendment or supplement thereto has been issued, nor has the Commission
or any securities or blue sky authority of any jurisdiction instituted or
threatened to institute any proceedings with respect to such an order, (ii) the
registration statement and each prospectus forming a part thereof (including
each preliminary prospectus), and any amendment or supplement thereto, complies
as to form with the Act and the rules and regulations thereunder, and (iii)
such counsel has no knowledge of any material misstatement or omission in such
registration statement or any prospectus, as amended or supplemented.
(h) In the event of a registration pursuant to the provision of this
Section 8, the Company shall enter into a cross-indemnity agreement and a
contribution agreement, each in customary form, with each underwriter, if any,
and, if requested, enter into an underwriting agreement containing conventional
representations, warranties, allocation of expenses and customary closing
conditions, including, without limitation, opinions of counsel and accountants'
cold comfort letters, with any underwriter who acquires any Warrants and/or
Warrant Shares.
(i) The Company agrees that until all the Warrants and/or the Warrant
Shares have been sold under a registration statement or pursuant to Rule 144
under the Act, it shall, so long as it is so required by applicable law, timely
file all reports, statements and other materials required to be filed with the
Commission to permit holders of the Warrants and/or the Warrant Shares to sell
such securities under Rule 144.
(j) The Company will not, without the written consent of the Majority
Holders, which such consent shall not be unreasonably withheld, grant to any
persons the right to request the Company to register any securities of the
Company, provided that the Company may grant such registration rights to other
persons so long as such rights are subordinate to the rights of the Eligible
Holders.
(k) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Eligible Holder, its officers, directors,
partners, employees, agents and counsel, and each person, if any, who controls
any such person within the meaning of Section 15 of the Act or Section 20(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any and all loss, liability, charge, claim, damage and expense
whatsoever (which shall include, for all purposes of this Section 8, without
limitation, reasonable attorneys' fees and any and all expense
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), as and when incurred,
arising out
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of, based upon, or in connection with (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any registration
statement, preliminary prospectus or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, relating to
the sale of any of the Warrants and/or the Warrant Shares, or (B) in any
application or other document or communication (in this Section 8 collectively
called an "application") executed by or on behalf of the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to register or qualify any of the Warrants and/or the
Warrant Shares under the securities or blue sky laws thereof or filed with the
Commission or any securities exchange; or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was made
in reliance upon and in conformity with written information furnished to the
Company with respect to such Eligible Holder by or on behalf of such person
expressly for inclusion in any registration statement, preliminary prospectus,
or final prospectus, or any amendment or supplement thereto, or in any
application, as the case may be, or (ii) any breach of any representation,
warranty, covenant or agreement of the Company contained in this Warrant. The
foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this Warrant.
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents or counsel, or any controlling
persons of such person (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of
the institution of such action (but the failure so to notify shall not relieve
the Company from any liability other than pursuant to this Section 8(k) and
shall not relieve the Company from any liability pursuant to this Section 8(k)
except to the extent the Company has been prejudiced in any material respect by
such failure) and the Company shall promptly assume the defense of such action,
including the employment of counsel (reasonably satisfactory to such
indemnified party or parties) and payment of expenses. Such indemnified party
or parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless the employment of such counsel shall have
been authorized in writing by the Company in connection with the defense of
such action or the Company shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties to have charge of the defense
of such action or such indemnified party or parties shall have reasonably
concluded that there may be one or more legal defenses available to it or them
or to other indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses shall
be borne by the Company, and the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties. Anything
in this Section 8 to the contrary notwithstanding, the Company shall not be
liable for any settlement of any such claim or action effected without its
written consent, which shall not be unreasonably withheld. The Company
shall not, without the prior written consent (which shall not be unreasonably
withheld) of each indemnified party that is not released as described in this
sentence, settle or compromise any
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<PAGE> 13
action, or permit a default or consent to the entry of judgment in or otherwise
seek to terminate any pending or threatened action, in respect of which
indemnity may be sought hereunder (whether or not any indemnified party is a
party thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each indemnified party from all liability
in respect of such action. The Company agrees promptly to notify the Eligible
Holders of the commencement of any litigation or proceedings against the
Company or any of its officers or directors in connection with the sale of any
Warrants and/or Warrant Shares or any preliminary prospectus, prospectus,
registration statement or amendment or supplement thereto, or any application
relating to any sale of any Warrants and/or Warrant Shares.
(l) Each of the Holder and any Eligible Holder severally agrees to
indemnify and hold harmless the Company, each director of the Company, each
officer of the Company who shall have signed any registration statement
covering Warrants and/or Warrant Shares held by the Holder and any Eligible
Holder, each other person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, and its or their
respective counsel, to the same extent as the foregoing indemnity from the
Company to the Holder in Section 8(k), but only with respect to statements or
omissions, if any, made in any registration statement or final prospectus, or
any amendment or supplement thereto, or in any application, in reliance upon
and in conformity with written information furnished to the Company with
respect to the Holder by or on behalf of the Holder or with respect to any
Eligible Holder or by or on behalf of such Eligible Holder expressly for
inclusion in any such registration statement or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be;
provided, however, that the Holder and each Eligible Holder shall be liable
only for written information furnished to the Company by it or on its own
behalf for inclusion in a registration statement; and provided, further, that
no Eligible Holder shall be liable in an amount greater than the net proceeds
received by such Eligible Holder in connection with the applicable
registration. If any action shall be brought against the Company or any other
person so indemnified based on any such registration statement or final
prospectus, or any amendment or supplement thereto, or in any application, and
in respect of which indemnity may be sought against the Holder pursuant to this
Section 8(l), the Holder and each Eligible Holder, as the case may be, shall
have the rights and duties given to the Company, and the Company and each other
person so indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 8(k).
(m) To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to Section 8(k) or 8(l)
(subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act or otherwise, then the
Company (including for this purpose any contribution made by or on behalf of
any director of the Company, any officer of the Company who signed any
such registration statement, any controlling person of the Company, and its or
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<PAGE> 14
their respective counsel), as one entity, and the Eligible Holders of the
Warrant Shares included in such registration in the aggregate (including for
this purpose any contribution made by or on behalf of an indemnified party), as
a second entity, shall contribute to the losses, liabilities, claims, damages
and expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
such Eligible Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission or alleged
omission, shall be determined by, among other things, whether such statement,
alleged statement, omission or alleged omission relates to information supplied
by the Company or by such Eligible Holders, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, alleged statement, omission or alleged omission. The Company and
the Holder agree that it would be unjust and inequitable if the respective
obligations of the Company and the Eligible Holders for contribution were
determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages and expenses (even if the Holder and the other
indemnified parties were treated as one entity for such purpose) or by any
other method of allocation that does not reflect the equitable considerations
referred to in this Section 8(m). In no case shall any Eligible Holder be
responsible for a portion of the contribution obligation imposed on all
Eligible Holders in excess of its pro rata share based on the number of shares
of Common Stock owned (or which would be owned upon exercise of all Warrants)
by it and included in such registration as compared to the number of shares of
Common Stock owned (or which would be owned upon exercise of all Warrants) by
all Eligible Holders and included in such registration nor shall any Eligible
Holder be responsible for an amount greater than the net proceeds received by
such Eligible Holder in connection with the applicable registration. No person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who is not guilty
of such fraudulent misrepresentation. For purposes of this Section 8(m), each
person, if any, who controls any Eligible Holder within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act and each officer, director,
partner, employee, agent and counsel of each such Eligible Holder or control
person shall have the same rights to contribution as such Eligible Holder or
control person and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed any such registration statement,
each director of the Company and its or their respective counsel shall have the
same rights to contribution as the Company, subject in each case to the
provisions of this Section 8(m). Anything in this Section 8(m) to the contrary
notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. This
Section 8(m) is intended to supersede any right to contribution under the Act,
the Exchange Act or otherwise.
9. Taxes. The issuance of any shares or other securities upon the
exercise of this Warrant and the delivery of certificates or other instruments
representing such shares or other securities shall be made without
charge to the Holder for any tax or other charge in respect of such issuance.
The Company shall not, however, be required to pay any tax which may be
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<PAGE> 15
payable in respect of any transfer involved in the issue and delivery of any
certificate in a name other than that of the Holder (except for any tax that is
payable in respect of any such transfer and any related exercise of this
Warrant and that would be payable pursuant to the first sentence of this
Section 9 were such certificate to be issued in the name of the Holder) and the
Company shall not be required to issue or deliver any such certificate unless
and until the person or persons requesting the issue thereof shall have paid to
the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
10. Legend. Unless registered pursuant to the provisions of Section 8
hereof, the certificate or certificates evidencing the Warrant Shares, shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR STATE SECURITIES
LAWS. SUCH SHARES MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) A REGISTRATION
STATEMENT UNDER SUCH ACT, OR (ii) AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT."
11. Replacement of Warrants. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any Warrant (and upon
surrender of any Warrant if mutilated), and upon reimbursement of the Company's
reasonable incidental expenses, the Company shall execute and deliver to the
Holder thereof a new Warrant of like date, tenor and denomination.
12. No Rights as Stockholder. The Holder of any Warrant shall not have,
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided in this Warrant.
13. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of this Warrant, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth on the first page of this
Warrant, Attention: Chief Financial Officer or to such other address as the
Company may designate by notice to the Holder.
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<PAGE> 16
14. Successors. All the covenants, agreements, representations and
warranties contained in this Warrant shall bind the parties hereto and their
respective heirs, executors, administrators, distributees, successors and
assigns.
15. Headings. The Article and Section headings in this Warrant are
inserted for purposes of convenience only and shall have no substantive effect.
16. Governing Law. This Warrant shall be construed in accordance with the
laws of the State of New York applicable to contracts made and performed within
such State, without regard to principles of conflicts of law.
17. Modification of Agreement. This Warrant shall not otherwise be
modified, supplemented or amended in any respect unless such modification,
supplement or amendment is in writing and signed by the Company and the Holder
of this Warrant and Holders of any portion of the Warrant subsequently assigned
or transferred in accordance with the terms of this Warrant.
18. Consent to Jurisdiction. The Company and the Holder irrevocably
consent to the jurisdiction of the courts of the State of New York and of any
federal court located in such State in connection with any action or proceeding
arising out of or relating to this Warrant, any document or instrument
delivered pursuant to, in connection with or simultaneously with this Warrant,
or a breach of this Warrant or any such document or instrument. In any such
action or proceeding, the Company waives personal service of any summons,
complaint or other process and agrees that service thereof may be made in
accordance with Section 13 hereof. Within 30 days after such service, or such
other time as may be mutually agreed upon in writing by the attorneys for the
parties to such action or proceeding, the Company shall appear to answer such
summons, complaint, or other process. Should the Company so served fail to
appear or answer within such 30-day period or such extended period, as the case
may be, the Company shall be deemed in default and judgment may be entered
against the Company for the amount as demanded in any summons, complaint, or
other process so served.
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<PAGE> 17
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the
date set forth below.
Dated: February 29, 1996
UNIMED PHARMACEUTICALS, INC.
By:
Name: ________________
Title: _______________
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<PAGE> 18
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the attached Warrant.)
FOR VALUE RECEIVED, _______________________ hereby sells, assigns, and
transfers unto _________________, having an address at
______________________________ _______________________, the attached Warrant to
the extent of the right to purchase ____________ shares of Common Stock of
$0.25 par value per share, of UNIMED Pharmaceuticals, Inc. (the "Company"),
together with all right, title, and interest therein, and does hereby
irrevocably constitute and appoint _________________ as attorney to transfer
such Warrant on the books of the Company, with full power of substitution.
Dated: _______________, 199_
_____________________________
Print name of holder of Warrant
By:
Name:
Title:
NOTICE
The signature on the foregoing Assignment must correspond to the name as
written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
<PAGE> 19
To:
The undersigned hereby exercises its rights to purchase _________ Warrant
Shares covered by the within Warrant and tenders payment herewith in the amount
of $_____________ in accordance with the terms thereof, and requests that
certificates for such securities be issued in the name of, and delivered to:
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the
Warrant Shares covered by the within Warrant be registered in the name of, and
delivered to, the undersigned at the address stated below.
Dated: _________________________ Name:____________________________
(Print)
______________________________
(Signature)
(Signature must conform to the
name of the Warrant Holder
specified on the face of the
Warrant)
Address:
<PAGE> 1
EXHIBIT 4-H
UNIMED PHARMACEUTICALS, INC.
REGISTRATION RIGHTS AGREEMENT
FOR 1996 PRIVATE PLACEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made by UNIMED
Pharmaceuticals, Inc., a corporation formed under the laws of the State of
Delaware (the "Company"), for the benefit of the investors listed on Schedule I
hereto (collectively, the "Investors" and, individually, an "Investor").
RECITALS
A. The Investors desire to purchase from the Company, and the
Company desires to issue and sell to the Investors, a minimum of
1,000,000 and a maximum of 1,400,000 shares of Common Stock, par
value $0.25 (the "Shares") in a private placement (the "Private
Placement") conducted in accordance with the Securities Act of 1933,
as amended, and the rules and regulations thereunder (collectively,
the "Securities Act"). The Shares referenced in this Recital A are
herein called the "Shares".
B. As further inducement for the Investors to purchase the
Shares from the Company, the Company desires to undertake to
register under the Securities Act, the Shares, in accordance with
the terms hereof.
AGREEMENTS
The Company and the Investors covenant and agree as follows:
1. Definitions. For the purposes of this Agreement:
(a) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
statements or similar documents in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement or
document by the Securities and Exchange Commission (the "SEC").
(b) The term "Registrable Securities" means (i) the Investors' Shares
and (ii) any Shares issued as (or issuable upon the conversion or exercise of
any convertible security, warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for
or in replacement of the Shares, excluding in all cases, however, any
Registrable Securities sold by an Investor in a transaction in which its
registration rights under this Agreement are not assigned pursuant to Section 9
of this Agreement.
(c) The term "Investor" includes (i) each Investor (as defined above)
and (ii) each person who is a permitted transferee or assignee of the
Registrable Securities pursuant to Section 9 of this Agreement.
<PAGE> 2
(d) The term "Participating Holders" with respect to any registration
statement means the holders of Registerable Securities who shall have elected
to have their shares of Common Stock included in such registration statement.
2. Demand Registration.
(a) Request for Registration on Form Other than Form S-3. Subject to
the terms of this Agreement, in the event that the Company shall receive from
the holders of at least fifty percent (50%) of the Registrable Securities (the
"Initiating Holders"), at any time prior to the end of the five (5) year period
after the final closing date of the Private Placement, a written request that
the Company effect any registration with respect to all or a part of the
Registrable Securities on an applicable Securities Act form other than Form S-3
for an offering covering the registration of Registrable Securities having a
reasonably anticipated aggregate offering price to the public in excess of five
million dollars ($5,000,000), the Company shall (A) promptly give written
notice of the proposed registration to all other holders of the Registrable
Securities, and (B) as soon as practicable, and in any event within ninety (90)
days after such request, use its best efforts to effect registration of the
Registrable Securities specified in such request, together with any Registrable
Securities of any holder thereof joining in such request as are specified in a
written request given within twenty (20) days after written notice from the
Company. The Company shall not be obligated to take any action to effect any
such registration pursuant to this Section 2(a): (i) within six (6) months
after the effective date of a registration of the Shares initiated by the
Company; or (ii) except as provided in Section 2(h), after the Company has
effected two such registrations pursuant to this Section 2(a) and such
registrations have been declared effective by the SEC and, if underwritten,
have closed. The Company shall not be required to file any registration
statement under this Section 2(a) within six (6) months of the effective date
of any registration statement covering an underwritten public offering which
was not withdrawn or abandoned, except with the prior consent of the John N.
Kapoor Trust (the "Kapoor Trust"),
(b) Right of Deferral of Registration on Form Other Than Form S-3.
If the Company shall furnish to Participating Holders with respect to a request
under Section 2(a) a certificate signed by the President of the Company stating
that, in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company for any registration to be
effected as requested under Section 2(a), then the Company shall have the right
to defer the filing of a registration statement under the Securities Act with
respect to such requested offering for a period of not more than ninety (90)
days from delivery of the request of the Initiating Holders; provided, however,
that the Company may not utilize this right more than once in any twelve-month
period.
(c) Request for Registration on Form S-3. Subject to the terms of
this Agreement, if the Company receives from holders of Registrable Securities
whose securities are not then covered by an effective underwritten registration
statement, at a time when the Company is eligible to register securities for a
secondary offering by its stockholders on SEC Securities Act Form S-3 (or any
successor form to Form S-3, regardless of its designation), a written request
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<PAGE> 3
that the Company effect any registration on Form S-3 (or any successor form to
Form S-3, regardless of its designation) for an offering of Registrable
Securities the reasonably anticipated aggregate offering price to the public of
which would exceed $500,000, then the Company will promptly give written notice
of the proposed registration to all the holders of Registrable Securities and
will, as soon as practicable, use its best efforts to effect registration of
the Registrable Securities specified in such request, together with all or such
portion of the Registrable Securities of any holder joining in such request as
are specified in a written request delivered to the Company within twenty (20)
days after written notice from the Company of the proposed registration. The
Company shall not be required to file any registration statement under this
Section 2(c) within six (6) months of the effective date of any registration
statement covering an underwritten public offering which was not withdrawn or
abandoned, except with the prior consent of the Kapoor Trust,
(d) Registration of Other Securities in Demand Registration. Any
registration statement filed pursuant to the request of the Initiating Holders
under this Section 2 may, subject to the provisions of Sections 2(e), (f), (g),
(h) and (i), include securities of the Company other than Registrable
Securities.
(e) Notice of Underwriting. If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to this Section 2, and the Company shall include such information in
the written notice referred to in Section 2(a). The right of any holder to
registration pursuant to Section 2(a) shall be conditioned upon such holder's
agreement to participate in such underwriting and the inclusion of such
holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such holder with
respect to such participation and inclusion).
(f) Inclusion of Other Holders in Demand Registration. If the Company,
officers or directors of the Company holding the Shares other than Registrable
Securities or holders of securities of the Company other than Registrable
Securities, shall request inclusion in such registration, then, on behalf of
all holders of Registrable Securities, the Initiating Holders shall offer (but
with respect to persons other than the Kapoor Trust and Laboratoires Besins
Iscovesco ("Besins"), only to the extent they deem advisable and consistent
with the goals of such registration and subject to the allocation provisions of
Section 2(h) below) to any or all of the Company, such officers or directors
and such holders of other securities, to include such securities held thereby
in the underwriting. The Initiating Holders may condition such offer on the
acceptance by such persons of the terms of this Section 2.
(g) Selection of Underwriter in Demand Registration. The Company shall
(together with all holders proposing to distribute their securities through
such underwriting) enter into and perform its obligations under an underwriting
agreement in usual and customary form with the representative of the
underwriter or underwriters (the "Underwriter's Representative") selected for
such underwriting by the holders of a majority of the Registrable Securities
being registered by the Initiating Holders and consented to by the Company
(which consent shall not be unreasonably withheld).
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<PAGE> 4
(h) Marketing Limitation in Demand Registration. In the event the
Underwriter's Representative advises the Participating Holders in writing that
market factors (including, without limitation, the aggregate number of Shares
requested to be registered, the general condition of the market, and the status
of the persons proposing to sell securities pursuant to the registration)
require a limitation of the number of shares to be underwritten, then the
Underwriter's Representative may limit the number of shares of Registrable
Securities to be included in such registration and underwriting (an
"Underwriter Cutback"). In such event, the Underwriter's Representative shall
so advise all holders of the number of shares to be offered that may be
included in the registration and underwriting (the "Permissible Number of
Shares"). The number of shares of Registrable Securities to be included in
such underwriting shall not be reduced unless all other securities (other than
those proposed to be included by the by the Company, and by the Kapoor Trust
and Besins, if they have rights at such time to participate in such
underwriting) are first entirely excluded from the underwriting. If the total
of the Registrable Securities proposed to be included in such registration
statement, together with the number of shares proposed to be included by the
Kapoor Trust and Besins is more than the Permissible Number of Shares, then the
Permissible Number of Shares shall be allocated as follows: the Participating
Holders and Besins shall be entitled to include therein a percentage of the
Permissible Number of Shares equal to the percentage that the number of
Registerable Securities intended to be registered bears to the Permissible
Number of Shares (and as between the Participating Holders and Besins, pro
rata) and the Kapoor Trust shall be entitled to include therein the remaining
Permissible Number of Shares. If as a result of this Section 2(h), the number
of shares which may be included by the Participating Holders is less than the
number of shares which such Participating Holders desire to include, then such
demand registration statement by the Initiating Holders shall not count as one
of the two demand registration statements to which the holders of Registerable
Securities are entitled. No Registrable Securities or other securities
excluded from the underwriting by reason of this Section 2(h) shall be included
in such Registration Statement.
(i) Right of Withdrawal in Demand Registration. If any holder of
Registrable Securities, or a holder of other securities entitled (upon request)
to be included in such registration, disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the underwriter and the Initiating Holders delivered at least
seven (7) days prior to the effective date of the registration statement. The
securities so withdrawn shall also be withdrawn from the Registration
Statement.
3. Piggyback Registration.
(a) Notice of Piggyback Registration and Inclusion of Registrable
Securities. Subject to the terms of this Agreement, in the event the Company
decides to register any of its Shares (either for its own account or the
account of a security holder or holders (other than in connection with a
registration being effected pursuant to Section 2 hereof)) on an SEC form that
would be suitable for a registration involving solely Registrable Securities,
the Company will: (i) promptly give each holder of Registrable Securities
written notice thereof (which shall include a list of the jurisdictions in
which the Company
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<PAGE> 5
intends to qualify such securities under the applicable Blue
Sky or other state securities laws) and (ii) include in such registration (and
in any related qualification under Blue Sky laws or other state securities
laws), and in any underwriting involved therein, all the Registrable Securities
specified in a written request delivered to the Company by any holder of
Registrable Securities within twenty (20) days after delivery of such written
notice from the Company.
(b) Notice of Underwriting in Piggyback Registration. If the registration
of which the Company gives notice pursuant to Section 3(a) is for a registered
public offering involving an underwriting, then the Company shall so advise the
holders of Registrable Securities as a part of the written notice given
pursuant to Section 3(a). In such event, the right of any such holder to
registration shall be conditioned upon such underwriting and the inclusion of
such holder's Registrable Securities in such underwriting to the extent
provided in this Section 3. All holders of Registrable Securities proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement with the Underwriter's
Representative for such offering; provided that such holders of Registrable
Securities shall have no right to participate in the selection of the
underwriters for an offering pursuant to this Section 3.
(c) Marketing Limitation in Piggyback Registration.
(i) In the event of an Underwriter Cutback pursuant to a
registration statement covered by this Section 3, the Underwriter's
Representative shall notify all persons proposing to participate in such
underwriting of the Permissible Number of Shares. The number of shares of
Registrable Securities to be so included shall not be reduced unless all
other securities (other than those to be sold by the Company) are first
entirely excluded from the underwriting, other than those shares held by the
Kapoor Trust and Besins, to the extent that they have rights to be included
therein at such time.
(ii) Any provision herein to the contrary notwithstanding, the
rights of the holders of Registrable Securities to have their Shares
included in registration statements filed by others are subject to the
rights of the Kapoor Trust and Besins, which rights may limit the rights of
the holders of Registrable Securities hereunder.
No Registrable Securities or other securities excluded from the underwriting by
reason of this Section 3(c) shall be included in the applicable Registration
Statement.
(d) Withdrawal in Piggyback Registration. If any holder of Registrable
Securities, or a holder of other securities entitled (upon request) to be
included in such registration, disapproves of the terms of any such
underwriting, then such holder may elect to withdraw therefrom by written
notice to the Company and the underwriter delivered at least seven (7) days
prior to the effective date of the registration statement. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
-5-
<PAGE> 6
4. Obligations of the Company. In connection with the registration of the
Registrable Securities pursuant to this Agreement, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC, within thirty (30) days after the
close of the Company's Private Placement, a registration statement or
registration statements on Form S-3 (the "Registration Statement") with respect
to all Registrable Securities included therein, and use its best efforts to
cause the Registration Statement to become effective as soon as
reasonably possible after such filing, and, with respect to any registration
that does not involve an underwriting, to keep the Registration Statement
effective pursuant to Rule 415 under the Securities Act for a period of at
least two years after the close of the Company's Private Placement, or such
shorter period as prescribed by Rule 144 promulgated under the Securities Act,
which Registration Statement (including any amendments or supplements thereto
and prospectuses contained therein) shall 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 in
which they were made, not misleading.
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and
any prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective (i) for such period as
may be required by the Securities Act with respect to an underwritten offering
and (ii) for at least two years after the close of the Company's Private
Placement, or such shorter period as prescribed by Rule 144, with respect to a
non-underwritten offering, and during such periods to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by the Registration Statement
(c) Furnish promptly to each Investor whose Registrable Securities are
included in the Registration Statement such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto,
and of such other documents as such Investor may reasonably request in order to
facilitate the disposition of Registrable Securities owned by such Investor.
(d) Use its reasonable efforts to register and qualify the Registrable
Securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdiction as shall be reasonably requested by the
Investors who hold a majority in interest of the Registrable Securities covered
by the Registration Statement and, with respect to a non-underwritten offering,
prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements and to take such other actions as
may be necessary to maintain such registration and qualification in effect at
all times for a period of at least two years after the close of the Company's
Private Placement, or such shorter period as prescribed by Rule 144, and to
take all other actions necessary or advisable to enable the disposition of such
securities in such jurisdictions; provided, however, that the Company shall not
be required in connection therewith or as a condition thereto to (i) qualify to
do business, file a general consent to service of process or subject itself to
general
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<PAGE> 7
taxation in any such states or jurisdictions or (ii) provide any
undertaking or make any change in its Certificate of Incorporation or bylaws.
(e) If the Registration Statement relates to an underwritten offering,
enter into and perform its obligations under an underwriting agreement, in
usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the Underwriter's
Representative.
(f) Notify the Investors who hold Registrable Securities being sold (or
in the event of an underwritten offering, the Underwriter's Representative), at
any time when a prospectus relating to Registrable Securities covered by the
Registration Statement is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing. The Company shall use its best efforts
promptly to amend or supplement the Registration Statement to correct any such
untrue statement or omission.
(g) Notify the Investors who hold Registrable Securities being sold (or
in the event of an underwritten offering, the Underwriter's Representative) of
the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose.
The Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible time.
(h) Permit a single firm of counsel, designated as selling shareholders'
counsel by the holders of a majority in interest of the Registrable Securities
being sold, to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing, and
shall not file any document in a form to which such counsel reasonably objects.
(i) Make generally available to its security holders as soon as
practicable, but not later than forty five (45) days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the Securities Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.
(j) At the request of the Investors who hold a majority in interest of
the Registrable Securities being sold, furnish to the underwriters, if any, on
the date that Registrable Securities are delivered to the underwriters for
sale in connection with a registration pursuant to this Agreement (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
and (ii) a letter, dated such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public
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<PAGE> 8
public accountants to underwriters in an underwritten public offering,
addressed to the underwriters.
(k) Make available for inspection by any underwriters participating in
the offering and the counsel, accountants or other agents retained by such
underwriter, all pertinent financial and other records, corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by such underwriters
in connection with the Registration Statement.
(l) If the Shares are then listed on a national securities exchange, use
its best efforts to cause the Registrable Securities to be listed on such
exchange if the listing of such Registrable Securities is then permitted under
the rules of such exchange, or if the Shares are not then listed on a national
securities exchange, use its best efforts to facilitate the quotation of the
Shares on NASDAQ, and use its best efforts to cause continued listing of the
Shares so long as the Registration Statement is in effect under the Securities
Act.
(m) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement.
(n) Take all actions reasonably necessary to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities sold pursuant to the Registration
Statement and to enable such certificates to be in such denominations and
registered in such names as the Investors or any underwriters may reasonably
request.
(o) Take all other actions reasonably necessary to expedite and
facilitate disposition by the Investors of the Registrable Securities pursuant
to the Registration Statement.
(p) Notwithstanding anything contained in this Section 4 to the
contrary, the Company shall have no obligation pursuant to Sections 2 or 3 for
the registration of Registrable Securities held by any Investor (i) where
such Investor would then be entitled to sell under Rule 144 within any
three-month period (or such other unitary period prescribed under Rule 144 as
may be provided by amendment thereof) all of the Registrable Securities then
held by such Investor, and (ii) where the number of Registrable Securities held
by such Investor is within the volume limitations under paragraph (e) of Rule
144 (calculated as if such Investor were an affiliate of the Company within the
meaning of Rule 144).
5. Obligations of the Investors. In connection with the registration of
the Registrable Securities pursuant to this Agreement, the Investors shall have
the following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Agreement with respect to each
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<PAGE> 9
Investor that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the intended
methods of disposition of such securities as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least thirty (30) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify each
Investor of the information the Company requires from each such Investor (the
"Requested Information") if it elects to have any of his Registrable Securities
included in the Registration Statement. If within seven (7) business days of
the filing date the Company has not received the Requested Information from an
Investor (a "Non-Responsive Investor"), then the Company may file the
Registration Statement without including Registrable Securities of such
Non-Responsive Investor.
(b) Each Investor by his acceptance of the Registrable Securities agrees
to cooperate with the Company in connection with the preparation and filing of
any Registration Statement hereunder, unless such Investor has notified the
Company in writing of its election to exclude all of its Registrable Securities
from the Registration Statement.
(c) In the event Investors holding a majority in interest of the
Registrable Securities select underwriters for the offering, each Investor
agrees to enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation,
customary indemnification and contribution obligations and market stand-off
obligations, with the managing underwriter of such offering and to take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified
the Company in writing of its election to exclude all of his Registrable
Securities from the Registration Statement.
(d) Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 4(f), such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 4(f) and, if so desired by the
Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of such
destruction) all copies, other than the permanent file copies then in such
Investor's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
(e) No Investor may participate in any underwritten registration hereunder
unless such Investor (i) agrees to sell such Investor's Registrable Securities
on the basis provided in any underwriting arrangements approved by the
Investors entitled hereunder to approve such arrangements, (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay such Investor's pro rata
portion of all underwriting discounts and commissions.
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<PAGE> 10
6. Expenses of Registration. All expenses other than underwriting
discounts and commissions incurred in connection with registration, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing, filing and qualification fees, printers and accounting
fees, the fees and disbursements of counsel for the Company and the reasonable
fees and disbursements of one firm of counsel for the Investors shall be borne
by the Company.
7. Indemnification. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor, the directors, if any, of such Investor, the officers,
if any, of such Investor who sign the Registration Statement, each person, if
any, who controls such Investor, any underwriter (as defined in the Securities
Act) for the Investors and each person, if any, who controls any such
underwriter within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), against any losses, claims,
damages, expenses or liabilities, joint or several) to which any of them may
become subject under the Securities Act, the Exchange Act, other federal or
state law or otherwise, insofar as such losses, claims, damages, expenses or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof, arise out of or are based upon any of the following
statements, omissions or violations (collectively, a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law.
Subject to the restrictions set forth in Section 7(c) with respect to the
number of legal counsel, the Company will reimburse the Investors and each such
underwriter or controlling person, promptly as such expenses are incurred, for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding. Notwithstanding anything contained in this Agreement to the
contrary, the indemnity agreement contained above in this Section 7(a): (I)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld, (II)
shall not apply to any such case for any such loss, claim, damage, liability or
action arising out of or based upon a Violation which occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by the Investors or any such underwriter or
controlling person, as the case may be, and (III) with respect to any
preliminary prospectus, shall not inure to the benefit of any person from whom
the person asserting any such claim purchased the Registrable Securities that
are the subject thereof (or to the benefit of any person controlling such
person) if the untrue statement or omission of material fact contained the
preliminary
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<PAGE> 11
prospectus was corrected in the prospectus, as then amended or supplemented.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Investors or any such underwriter or
controlling person and shall survive the transfer of the Registrable Securities
by an Investor pursuant to Section 9.
(b) To the extent permitted by law, each Investor, severally and not
jointly, will indemnify and hold harmless, to the same extent and in the same
manner set forth in Section 7(a), the Company, each of its directors, each of
its officers who have signed the Registration Statement, each person, if any,
who controls the Company within the meaning of the Securities Act or the
Exchange Act, any underwriter and any other stockholder selling securities
pursuant to the Registration Statement or any of its directors or officers or
any person who controls such holder or underwriter, against any losses, claims,
damages or liabilities, joint or several) to which any of them may become
subject, under the Securities Act, the Exchange Act, other federal or state law
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Investor expressly for use in connection with such registration; and such
Investor will reimburse any legal or other expenses reasonably incurred by any
of them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Investor shall be
liable under this Section 7(b) for only that amount of losses, claims, damages
and liabilities as does not exceed the proceeds to such Investor as a result of
the sale of Registrable Securities pursuant to such registration. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such indemnified party and shall survive the transfer
of the Registrable Securities by the Investors pursuant to Section 9. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above, with
respect to information about such persons so furnished in writing by such
persons expressly for inclusion in the Registration Statement
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 7, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
satisfactory to the indemnifying party; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and
expenses to be paid by the indemnifying party, if, in the reasonable opinion of
counsel for the indemnifying party, representation of such indemnified party by
the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding. The Company shall
pay for only one legal counsel for the Investors. Such legal counsel shall be
selected by the Investors holding a
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<PAGE> 12
majority in interest of the Registrable Securities. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of
any liability to the indemnified party under this Section 7 only to the extent
prejudicial to its ability to defend such action, but the omission so to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under
Section 7. The indemnification required by this Section 7 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, promptly as such expense, loss, damage or liability is incurred and
is due and payable.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under this Section 7 to the extent permitted by law; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
this Section 7, (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11 of the Securities Act)
shall be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation, and (iii) contribution by
any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.
8. Reports Under Securities Exchange Act of 1934. With a view to making
available to the Investors the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration, the Company
agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after ninety (90) days after
the effective date of the first registration statement filed by the Company for
the offering of its securities to the general public.
(b) File with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act.
(c) Furnish to each Investor, so long as such Investor owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144 (at
any time after 90 days after the effective date of the first registration
statement filed by the Company), the Securities Act and the Exchange Act (at
any time after it has become subject to such reporting requirements), (ii) a
copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing the Investors of any
rule or regulation of the SEC which permits the selling of any such securities
without registration.
9. Assignments of Registration Rights. The rights to have the Company
register securities pursuant to this Agreement may be assigned by the Investors
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<PAGE> 13
to transferees or assignees of such securities provided that (i) the Company
is, within a reasonable time after such transfer, furnished with written notice
of the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned, (ii) such
assignment is in accordance with and permitted by all other agreements between
the Company and the transferor or assignor, and (iii) such assignments shall be
effective only if immediately following such transfer the further disposition
of such securities by the transferee or assignee is restricted under the
Securities Act. The term "Investors" as used in this Agreement shall include
permitted assignees.
10. Miscellaneous.
(a) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
or sent by registered mail, return receipt requested, addressed (i) if to the
Company, UNIMED Pharmaceuticals, Inc., 2150 East Lake Cook Road, Buffalo Grove,
Illinois 60089, Attention: President, and (ii) if to an Investor, at the
address set forth under his or her name in the subscription agreement executed
by such Investor in connection with its investment, or at such other address as
each such party furnishes by notice given in accordance with this Section
10(a).
(b) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
will not operate as a waiver thereof. No waiver will be effective unless and
until it is in writing and signed by the party giving the waiver.
(c) This Agreement shall be enforced, governed and construed in all
respects in accordance with the laws of the State of New York, as such laws are
applied by New York courts to agreements entered into and to be performed in
New York by and between residents of New York. This Agreement shall be binding
upon each Investor and its heirs, estate, legal representatives, successors and
permitted assignees and shall inure to the benefit of the Company and its
successors and assigns. In the event that any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other provision
hereof.
(d) This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by a writing executed by the Company and Investors who
hold a majority in interest of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 10(d) shall be binding upon all
of the Investors and the Company.
(e) Any such person is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable
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Securities. If the Company receives conflicting instructions, notices
or elections from two or more persons or entities with respect to the same
Registrable Securities, then the Company shall be entitled to act upon the
basis of the instructions, notice or election received from the registered
owner of such Registrable Securities.
Dated this ___ day of January, 1996.
UNIMED PHARMACEUTICALS, INC.
By: _______________________
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EXHIBIT 10-B(iii)
AGREEMENT
THIS AGREEMENT is made as of the 20th day of January, 1995, by and between
UNIMED PHARMACEUTICALS, INC., a Delaware corporation with its principal office
at 2150 East Lake Cook Road, Buffalo Grove, Illinois 60089 (hereinafter
referred to as "UNIMED") and ROXANE LABORATORIES, INC., a Delaware corporation
with its principal office at 1809 North Wilson Road, Columbus, Ohio 43228
(hereinafter referred to as "ROXANE").
WITNESSETH
WHEREAS, UNIMED is the owner of the approved new drug application for
MARINOL(R) (dronabinol), and
WHEREAS, ROXANE is the exclusive distributor of MARINOL(R) in the United
States, and
WHEREAS, the parties desire to jointly fund certain clinical research to: (i)
fulfill Phase IV study obligations as requested by the FDA upon approval of the
SNDA for MARINOL(R) for treatment of anorexia associated with weight loss in
patients with AIDS; (ii) evaluate other indications, dosages, and delivery
methods; and (iii) maximize the clinical usefulness of MARINOL(R) and its
marketing potential;
NOW, THEREFORE, in consideration of these premises and the mutual covenants
contained herein, the parties agree as follows:
1.0 DEFINITIONS
1.1 "Product" as used herein shall mean MARINOL(R) (dronabinol).
1.2 "FDA" as used herein shall mean the Food and Drug Administration of
the U.S. Department of Health and Human Services.
1.3 "Program" as used herein shall mean the research program involving
clinical investigations to study the effects of the Product in order to fulfill
Phase IV study obligations as requested by the FDA, and evaluate other
indications, dosages, and uses of Product, as it may be amended by the parties
from time to time.
1.4 "IND" as used herein shall mean an investigational new drug
application.
1.5 "SNDA" as used herein shall mean a supplemental new drug application.
<PAGE> 2
2.0 MUTUAL OBLIGATIONS
2.1 UNIMED and ROXANE shall mutually agree on the Program, including each
clinical study, protocol, publication, or other undertaking thereunder and the
schedules, budgets and funding requirements therefor. The Program shall first
be approved in writing by the parties before implementation. No material
deviation from the approved Program or a protocol may be made without the
specific prior written authorization or subsequent written ratification and
approval of each party.
2.2 UNIMED and ROXANE shall equally share (i) the costs incurred in
retaining third party services for the conduct and analysis of the clinical
investigation and laboratory work required by the Program, and (ii)
out-of-pocket expenses incurred in furtherance of the Program, including costs
incurred in holding investigator meetings, exclusive of those expenses incurred
by UNIMED and ROXANE personnel in attending such meetings. Unless expressly
approved by both UNIMED and ROXANE as part of the Program, expenses incurred by
one of them in furtherance of Product shall not be subject to sharing, unless
otherwise provided herein.
2.3 The parties agree that the total cost of the Program shall not exceed
$3,000,000 unless agreed to in writing in advance by each party.
2.4 Representatives of the parties shall confer no less than once every
two (2) weeks to discuss the work performed and to be performed under the
Program.
2.5 With the exception of Securities and Exchange Commission or other
financial exchange requirements (i.e. Annual Reports, Quarterly Reports,
10-K's, 10-Q's, etc.), all public announcements or publications, including but
not limited to press releases, abstracts, clinical papers or other forms of
communication regarding the Program must be approved by both parties except as
otherwise required by law. Equal recognition of the joint efforts of the
parties shall be given in all such public announcements or communications.
Authorship of all publications arising from the research performed for the
Program will represent both UNIMED and ROXANE employees working on the Program.
2.6 If either UNIMED or ROXANE is required by law to make a public
disclosure concerning this Agreement, the other will be provided with an
advance copy of the disclosure, marked as "Required By Law", and will have one
(1) business day within which to comment. Comments, or the failure to comment,
shall not be deemed to be disapproval or approval of the disclosure. If either
UNIMED or ROXANE wishes to make a public disclosure concerning this Agreement
other than as required by law, the other will be provided with an advance copy
of the disclosure and will have two (2) business days within which to approve
or disapprove such. Approval shall not be unreasonably withheld by either
party. Failure to respond within such two (2) business days shall be deemed to
be approval.
2.7 The parties shall amicably discuss and negotiate any matters which
arise under this Agreement which are not specifically set forth herein. If any
dispute should arise between the
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<PAGE> 3
parties with respect to this Agreement, the parties shall negotiate in good
faith to resolve such dispute.
3.0 UNIMED'S OBLIGATION
3.1 UNIMED shall prepare and submit an IND to the FDA for the conduct of
the clinical investigations under the Program.
3.2 UNIMED may enter into agreements in its own name with contract
research organizations for clinical program management, data services,
statistical support, and other services for the conduct and analysis of the
clinical investigation and laboratory work to be performed under the Program.
Alternatively, UNIMED may, at its option, elect to manage parts of the Program,
and/or provide such other additional services as described above with its own
in-house personnel. In such event, fifty percent (50%) of UNIMED's costs,
defined as salaries and wages of UNIMED employees, allocable to such services
will be billed to ROXANE. UNIMED shall advise such third party contractors of
ROXANE's role as a "consultant" to UNIMED with respect to the services
provided.
3.3 UNIMED shall designate in writing an employee as its representative
with respect to the administration of this Agreement. The UNIMED
representative shall confer with ROXANE as provided in Paragraph 2.4 and shall
otherwise act for UNIMED for any matter arising out of this Agreement. ROXANE
may rely upon the advice, information and decisions of such representative
without any requirement of independent authentication by ROXANE.
3.4 UNIMED shall bill ROXANE for fifty percent (50%) of the costs as
outlined in Paragraph 2.2 incurred in the implementation of the Program and for
amounts incurred under Paragraph 3.2 above. The billing must relate to the
mutually agreed upon budget and schedule as provided in Paragraph 2.1 hereof.
All invoices from UNIMED to ROXANE, in order to receive payment, must be
accompanied by (i) copies of original third party billings to UNIMED, (ii)
agreements with third parties for services rendered or to be rendered; (iii)
reasonably detailed descriptions of services provided by UNIMED employees
pursuant to Paragraph 3.2 above; or (iv) in the case of out-of-pocket expenses,
receipts evidencing such expense in reasonable detail.
3.5 Upon satisfactory completion of the Program, UNIMED shall prepare and
file the results of the Phase IV studies with thee FDA and file a SNDA with the
FDA to supplement NDA 18-651, if indicated, to approve new indications for use
of the Product.
4.0 ROXANE'S OBLIGATION
4.1 ROXANE shall review and approve the plans, budgets, schedules,
protocols and proposed publications resulting from the research studies for the
Program. The review and approval of the above shall be performed in a
reasonable time period, but in no event longer than thirty (30) days after
receipt.
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<PAGE> 4
4.2 ROXANE shall serve as a consultant to UNIMED with respect to the
conduct and analysis of the clinical investigation and laboratory work to be
performed under the Program. UNIMED shall advise such third party contractors
of ROXANE's role as a "consultant" to UNIMED with respect to the services to be
provided.
4.3 ROXANE shall designate in writing an employee as its representative
with respect to the administration of this Agreement. The ROXANE
representative shall confer with UNIMED as provided in Paragraph 2.4 and shall
otherwise act for ROXANE for any matter arising out of this Agreement. UNIMED
may rely upon the advice, information and decisions of such representative
without any requirement of independent authentication by UNIMED.
4.4 ROXANE shall pay invoices referenced in Paragraph 3.4 above, within
thirty (30) days of receipt of UNIMED's invoices.
5.0 TERM
5.1 This Agreement shall commence as of the date hereof and shall
continue until the earlier of (i) the completion of the Program, or (ii)
December 31, 1995.
5.2 Prior to November 30, 1995, UNIMED and ROXANE shall amicably discuss
continuing this Agreement with identical or modified terms beyond December 31,
1995.
5.3 Termination of this Agreement shall not relieve either party from
liabilities or obligations accrued prior to the date of termination including
any obligation to pay its share of the expenses of approved plans or protocols
as provided in Article 2.0.
6.0 ASSIGNMENT
6.1 Without the prior written consent of the other party hereto, this
Agreement shall not be assigned by a party hereto to any third party other than
(i) a successor by merger or (ii) the transferee of substantially all the
assigning party's assets affecting this Agreement.
7.0 DISCLAIMER OF AGENCY
7.1 Except as expressly provided herein, this Agreement shall not
authorize any party to be the legal representative or agent of the other party
hereto, nor shall any party have the right or authority to assume, create or
incur any liability or any obligation of any kind, express or implied, against
or in the name of or on behalf of the other party hereto.
8.0 INDEMNIFICATION
8.1 UNIMED shall defend, indemnify and hold ROXANE harmless from and
against any and all liability, damage, loss, cost or expense arising from any
third party claim made or suit
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<PAGE> 5
brought against ROXANE to the extent such is caused by or results from (i) the
negligent acts or willful misconduct of UNIMED or (ii) the breach of this
Agreement by UNIMED.
8.2 ROXANE shall defend, indemnify and hold UNIMED harmless from and
against any and all liability, damage, loss, cost or expense arising from any
third party claim made or suit brought against UNIMED to the extent such is
caused by or results from (i) the negligent acts or willful misconduct of
ROXANE or (ii) the breach of this Agreement by ROXANE.
9.0 NON-WAIVER OF RIGHTS
9.1 Failure of either party hereto to enforce any of the provisions of
this Agreement or any rights with respect thereto shall in no way be considered
a waiver of such provisions or rights or in any way affect the validity of this
Agreement. The failure of either party to enforce any of the said provisions
or rights shall not preclude or prejudice such party from later enforcing or
exercising the same or any other provisions or rights which it may have under
this Agreement.
10.0 ENTIRE AGREEMENT AND AMENDMENTS
10.1 This Agreement contains the entire agreement and understanding of the
parties with respect to the matters contained herein and supersedes all
previous agreements whether written or oral. The parties hereto may, from time
to time during the continuance of this Agreement, modify, vary or alter any of
the provisions of this Agreement, but only by an instrument duly executed by
each of the parties hereto.
11.0 GOVERNING LAW
11.1 This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
UNIMED PHARMACEUTICALS, INC. ROXANE LABORATORIES, INC.
By: /s/ Stephen M. Simes By: W. Fred Duy
-------------------------------- ----------------------------------
Name: Stephen M. Simes Name: W. Fred Duy
------------------------------ --------------------------------
Title: President & CEO Title: Vice President
----------------------------- -------------------------------
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<PAGE> 6
UNIMED Pharmaceuticals, Inc.
2150 East Lake Cook Road
Buffalo Grove, IL 60089-1862
708-541-2525
Fax 708-541-2569
Direct Fax 708-541-2533
Stephen M. Simes
President & CEO
[UNIMED LETTERHEAD]
November 22, 1995
Mr. W. Fred Duy
Vice President
Roxane Laboratories, Inc.
1809 North Wilson Road
Columbus, Ohio 43228
Re: Agreement Dated As Of January 20, 1995
Dear Fred:
We refer to that certain Agreement entered into between us dated as of
January 20, 1995 regarding our agreement to jointly fund certain clinical
research, all as further described therein (the "Agreement"). (All capitalized
terms used herein and not otherwise defined shall have the meanings ascribed
thereto in the Agreement.)
Pursuant to Paragraph 5.1 of the Agreement, such Agreement will terminate on
the earlier of (i) the completion of the Program, or (ii) December 31, 1995.
This will document our desire and mutual understanding to amend the Agreement,
specifically, Paragraphs 5.1 and 5.2 thereof, to provide that the Agreement
shall continue until the earlier of (i) the completion of the Program, or (ii)
December 31, 1996.
If you are in agreement with the foregoing, please so indicate by signing both
copies of this letter in the space provided below and returning one of them to
me.
Sincerely,
/s/ Stephen M. Simes
Stephen M. Simes
President and CEO
Accepted and Agreed as of date written above:
ROXANE LABORATORIES, INC.
By: /s/ W. Fred Duy
-------------------------
Its: VICE PRESIDENT
------------------------
<PAGE> 1
EXHIBIT 10-K
UNIMED PHARMACEUTICALS, INC.
1991 STOCK OPTION PLAN
(as amended through March 29, 1996)
1. Purpose.
The purpose of the 1991 Stock Option Plan (the "Plan") is to induce
employees and directors (each an "Outside Director") of Unimed Pharmaceuticals,
Inc. (the "Company") who are not employees of the Company or its present and
future subsidiary corporations (each a "Subsidiary"), as defined in Section
425(f) of the Internal Revenue Code of 1986, as amended (the "Code"), to remain
in the employ or service of the Company and its Subsidiaries, to attract new
employees and Outside Directors and to encourage such employees and Outside
Directors to secure or increase on reasonable terms their stock ownership in
the Company. The Board of Directors of the Company (the "Board") believes that
the granting of stock options (the "Options") under the Plan will promote
continuity of management and increased incentive and personal interest in the
welfare of the Company by those who are or may become primarily responsible for
shaping and carrying out the long range plans of the Company and securing its
continued growth and financial success. Options granted hereunder are intended
to be either (a) "incentive stock options" (which term, when used herein, shall
have the meaning ascribed thereto by the provisions of Section 422(b) of the
Code) or (b) options which are not incentive stock options ("non-incentive
stock options") or (c) a combination thereof, as determined by the Committee
(the "Committee") referred to in Section 5 hereof at the time of the grant
thereof.
2. Effective Date of the Plan.
The Plan became effective on November l, 1991, by resolution of the Board,
subject to ratification of the Plan by the vote of the holders of a majority of
all of the outstanding shares of the common stock of the Company (the "Common
Stock") present in person or by proxy at the 1992 Annual Meeting of the
Stockholders of the Company, and the Plan was ratified by the Stockholders at
that meeting.
3. Stock Subject to Plan.
1,800,000 of the authorized but unissued shares of the Common Stock are
hereby reserved for issue upon the exercise of Options granted under the Plan;
Provided, however, that the number of
<PAGE> 2
shares so reserved may from time to time be reduced to the extent that
a corresponding number of issued and outstanding shares of the Common Stock
are purchased by the Company and set aside for issue upon the exercise of
Options; Provided, further, however, that the number of shares issued upon the
exercise of Options granted under the Plan shall be determined without giving
effect to the use by a Participant of the right set forth in paragraph C of
Section 10 hereof to deliver shares of the Common Stock in payment of up to 50%
of the option price with respect to an Option. If any Options expire or
terminate for any reason without having been exercised in full, the unpurchased
shares subject thereto shall again be available for the purposes of the Plan.
4. Administration.
The Plan shall be administered by the Committee referred to in Section 5
hereof. Subject to the express provisions of the Plan, the Committee shall
have complete authority, in its discretion, to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the terms and provisions of the respective option agreements or certificates
(which need not be identical), to determine the individuals (each a
"Participant") to whom and the times and the prices at which Options shall be
granted, the periods during which each Option shall be exercisable, the number
of shares of the Common Stock to be subject to each Option and whether such
Option shall be an incentive stock option or a non-incentive stock option and
to make all other determinations necessary or advisable for the administration
of the Plan. In making such determinations, the Committee may take into
account the nature of the services rendered by the respective employees, their
present and potential contributions to the success of the Company and the
Subsidiaries and such other factors as the Committee in its discretion shall
deem relevant. The Committee's determination on the matters referred to in
this Section 4 shall be conclusive. Any dispute or disagreement which may arise
under or as a result of or with respect to any Option shall be determined by
the Committee, in its sole discretion, and any interpretations by the Committee
of the terms of any Option shall be final, binding and conclusive.
5. Committee.
The Committee shall consist of two or more members of the Board both or
all of whom shall be "disinterested persons" within the meaning of Rule
16b-3(c)(2)(i) promulgated under the Securities Exchange Act of 1934, as
amended. The Committee shall be appointed annually by the Board, which may at
any time and from time to time remove any members of the Committee, with or
without cause, appoint additional members to the Committee and fill vacancies,
however caused, in the Committee. A majority of the members of the Committee
shall constitute a quorum. All determinations of the Committee shall be made
by a majority of its members present at a
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<PAGE> 3
meeting duly called and held except that the Committee may delegate to
any one of its members the authority of the Committee with respect to the grant
of Options to persons who shall not be officers and/or directors of the
Company. Any decision or determination of the Committee reduced to writing and
signed by all of the members of the Committee (or by the member of the
Committee to whom authority has been delegated) shall be fully as effective as
if it had been made at a meeting duly called and held.
6. Eligibility.
An Option may be granted only to an employee of the Company or a
Subsidiary or an Outside Director of the Company. The term "employee" as used
herein shall include consultants to the Company, provided bona fide services
are rendered by such consultants to the Company, and such services are not in
connection with the offer or sale of securities in a capital-raising
transaction.
7. Option Prices.
A. The initial per share option price of any Option which is an incentive
stock option shall not be less than the fair market value of a share of the
Common Stock on the date of grant; provided, however, that, in the case of a
Participant who owns more than 10% of the total combined voting power of the
Common Stock at the time an Option which is an incentive stock option is
granted to him, the initial per share option price shall not be less than 110%
of the fair market value of a share of the Common Stock on the date of grant.
B. The initial per share option price of any Option which is a
non-incentive stock option shall not be less than 85% of the fair market value
of a share of the Common Stock on the date of grant; provided, however, that, in
the case of a Participant who is an Outside Director, the initial per share
option price shall be 100% of the fair market value of a share of the Common
Stock on the date of the grant.
C. For all purposes of the Plan, the fair market value of share of the
Common Stock on any date shall be equal to (i) the closing price, as reported by
NASDAQ, of the Common Stock on such date or (ii) if the Common Stock shall be
listed on a national securities exchange other than the NASDAQ national market
list, or any other exchange maintained by or as a part of NASDAQ, the mean
between the high and low sales prices of the Common Stock on such exchange on
such date. If a date is a date for which no trading is so reported, the fair
market value of a share of the Common Stock on such date shall be determined as
of the next preceding date for which trading is so reported.
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<PAGE> 4
8. Option Term.
A. Except as otherwise provided in paragraph A of this Section 8,
Participants shall be granted options for such term as the Committee shall
determine, not in excess of ten years from the date of the granting thereof;
provided, however, that, in the case of a Participant who owns more than 10% of
the total combined voting power of the Common Stock at the time an Option which
is an incentive stock option is granted to him, the term with respect to such
Option shall not be in excess of five years from the date of the granting
thereof.
B. The term of each Option granted to an Outside Director shall be ten
years from the date of the granting thereof.
C. On the date of the first meeting of the Board on or after the date on
which an Outside Director has been elected to the Board for the first time,
such Outside Director shall be granted an Option to purchase 10,000 shares of
the Common Stock.
D. Each Outside Director also shall be granted an Option to purchase 7,500
shares of Common Stock on August 6, 1992, and shall be granted, on the date of
the meeting of the Board of Directors next following the Annual Meeting of
Stockholders each year commencing in 1993 and until the expiration date of the
Plan, an Option to purchase an additional 7,500 shares of Common Stock.
9. Limitation on Amount of Incentive Stock Options Granted.
The aggregate fair market value of the shares of the Common Stock for
which any Participant may be granted Options which are incentive stock options
which are exercisable for the first time in any calendar year (whether under
the terms of the Plan or any other stock option plan of the Company) shall not
exceed $100,000.
10. Exercise of Options.
A. Unless otherwise determined by the Committee at the time of the grant of
any Option or subsequent to the date of any grant, a Participant may not
exercise an Option during the period commencing on the date of the granting of
such Option to him and ending on the day next preceding the first anniversary
of such date, except as otherwise provided in Sections 10D, 10E and 12C.
Subject to the foregoing, a Participant may (i) during the period commencing on
the first anniversary of the date of the granting of an Option to him and
ending on the day next preceding the second anniversary of such date, exercise
such Option with respect to one-quarter of the shares granted thereby minus the
number of shares with respect to which such Option shall have theretofore been
exercised, (ii) during the period commencing on such second anniversary and
ending on the day next preceding the third anniversary of the date of the
granting of such Option, exercise
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<PAGE> 5
such Option with respect to one-half of the shares granted thereby minus the
number of shares with respect to which such Option shall have theretofore been
exercised, (iii) during the period commencing on such third anniversary and
ending on the day next preceding the fourth anniversary of the date of the
granting of such Option, exercise such Option with respect to three quarters of
the shares granted thereby minus the number of shares with respect to which
such Option shall have theretofore been exercised, and (iv) during the period
commencing on such fourth anniversary, exercise such Option with respect to all
of the shares granted thereby minus the number of shares with respect to which
such Option shall have theretofore been exercised. The foregoing
notwithstanding, each Outside Director may exercise in full the Options granted
pursuant to paragraph D of Section 8 hereof commencing on the anniversary date
of the date of grant.
B. Except as hereinbefore otherwise set forth, an Option may be exercised
either in whole at any time or in part from time to time.
C. An Option may be exercised only by a written notice of intent to
exercise such Option with respect to a specific number of shares of the Common
Stock and payment to the Company of the amount of the option price for the
number of shares of the Common Stock so specified; provided, however, that up
to 50% of such payment may be made in kind by the delivery of shares of
the Common Stock having a fair market value equal to the portion of the option
price so paid; provided, further, however, that, subject to the requirements of
Regulation T (as in effect from time to time) promulgated under the Securities
Exchange Act of 1934, as amended, the Committee may implement procedures to
allow a broker chosen by a Participant to make payment of all or any portion of
the option price payable upon the exercise of an Option and receive, on behalf
of such Participant, all or any portion of the shares of the Common Stock
issuable upon such exercise.
D. Except in the case of an Option granted to an Outside Director, the
Board may, in its discretion, permit any Option to be exercised, in whole or in
part, prior to the time when it would otherwise be exercisable and to extend
the period during which an Option is exercisable.
E. I. Notwithstanding the provisions of paragraph A of this Section 10, in
the event that a Change in Control shall occur, then, each Option theretofore
granted to any Participant which shall not have theretofore expired or
otherwise been cancelled or become unexercisable shall become immediately
exercisable in full. For the purposes of this paragraph E, a "Change in
Control" shall be deemed to occur upon (a) the election of one or more
individuals to the Board which election results in a majority of the directors
of the Company consisting of individuals who have not been directors of the
Company for at least two years, unless such
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<PAGE> 6
individuals have been nominated as directors by three-fourths of the
directors of the Company who have been directors of the Company for at least
two years; (b) the execution of a definitive agreement for the sale by the
Company of all or substantially all of its assets to any Person, the
consolidation of the Company with any Person, the merger of the Company with
any Person as a result of which the Company is not the surviving entity as a
publicly held corporation; (c) the Company and/or any Person acquires, sells or
transfers, in one or more transactions, related or unrelated, under
circumstances whereby any Person and its Affiliates shall own, after such
acquisition, sale or transfer, at least 20%, but less than 40%, of the shares
of the Company having voting power for the election of directors, unless such
acquisition, sale or transfer has been approved in advance by three-fourths of
the directors of the Company who have been directors of the Company for at
least two years; or (d) the Company and/or any Person acquires, sells or
transfers, in one or more transactions, related or unrelated, under
circumstances whereby any Person and its Affiliates shall own, after such
acquisition, sale or transfer, at least 40% of the shares of the Company having
voting power for the election of directors; or (e) a "tender offer" (as defined
in Section 14(d)(1) of the Securities Exchange Act of 1934, as amended), other
than a self tender by the Company, for a portion of the shares of the
Company having voting power for the election of directors, which, taken
together with shares owned by such acquirer, and giving effect to all rights to
acquire shares, will represent ownership of at least 20% of the shares of the
Company having voting power for the election of directors, unless such "tender
offer" has been approved in advance by three-fourths of the directors of the
Company who have been directors of the Company for at least two years. For the
purposes of this division I, (A) the term "Affiliate" shall mean any Person
that directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, any other Person, (B) the
term "Person" shall mean any individual, partnership, firm, trust, corporation
or other similar entity, and (C) when two or more Persons act as a partnership,
limited partnership, syndicate or other group for the purpose of acquiring,
holding or disposing of securities of the Company, such partnership, limited
partnership, syndicate or group shall be deemed a "Person".
II. In the event that a Change of Control shall occur, then, from
and after the time of such event, neither the provisions of this paragraph E
nor any of the rights of any Participant thereunder shall be modified or
amended in any way.
F. Notwithstanding any other provision of the Plan to the contrary, if a
Participant has effected a "hardship withdrawal" from a "401(k) Plan"
maintained by the Company and/or any of the Subsidiaries, he may not exercise
any Option for a period of twelve months after the date of such "hardship
withdrawal". For the purposes of this paragraph F, (1) a Participant shall be
deemed to
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<PAGE> 7
have effected a "hardship withdrawal" from a "401(k) Plan" if he has
received a distribution from such "401(k) Plan" on account of his "hardship"
within the meaning of Reg. 1.401(k)-l(d)(2) promulgated under Section 401(k) of
the Code and (2) a "401(k) Plan" is a profit-sharing or stock bonus plan which
satisfies the requirements of Section 401(a) of the Code and includes a
"qualified cash or deferred arrangement" within the meaning of Section
401(k)(2) of the Code.
11. Transferability.
No Option shall be assignable or transferable except by will and/or by the
laws of descent and distribution and, during the life of any Participant, each
Option granted to him may be exercised only by him.
12. Termination of Employment or Service.
A. In the event an employee who is a Participant leaves the employ of the
Company and its Subsidiaries, whether voluntarily or otherwise but other than
by reason of his death or discharge for cause, each Option theretofore granted
to him which shall not have theretofore expired or otherwise been cancelled
shall be exercisable to the extent it was exercisable on the date on which he
shall cease to be an employee and shall, to the extent not theretofore
exercised, terminate upon the earlier to occur of the expiration of three
months after the date on which he shall cease to be an employee and the date
specified in such Option.
B. In the event an Outside Director ceases to be an Outside Director,
whether voluntarily or otherwise but other than by reason of his death or
discharge for cause, each Option theretofore granted to him which shall not
have theretofore expired or otherwise been cancelled shall be
exercisable to the extent it was exercisable on the date on which he shall
cease to be an Outside Director and shall, to the extent not theretofore
exercised, terminate upon the earlier to occur of the expiration of three
months after the date on which he shall cease to be an Outside Director and the
date specified in such Option.
C. In the event a Participant's employment or service with the Company and
its Subsidiaries terminates by reason of his death, each Option theretofore
granted to him which shall not have theretofore expired or otherwise been
cancelled shall become immediately exercisable in full by the person or persons
to whom his rights under such Option shall pass by will or the laws of descent
and distribution. Each Option which is an incentive stock option will remain
in full force and effect for a period of one year from the date of death, and
each Option which is a non-incentive stock option shall remain in full force
and effect and exercisable by such person or persons, to the extent not
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<PAGE> 8
theretofore exercised, until the date originally specified in such Option as
the date on which such Option is no longer exercisable.
D. In the event a Participant's employment or service with the Company and
its Subsidiaries terminates by reason of his discharge for cause, each Option
theretofore granted to him which shall not have theretofore expired or
otherwise been cancelled shall terminate immediately. For the purposes of this
Section 12, a "discharge for cause" shall be deemed to occur only after a good
faith determination by the Board that the termination of the employment or
service by the Company and/or a Subsidiary of the Participant is necessary or
desirable by reason of (i) the commission by the Participant of any act which,
if successfully prosecuted by the appropriate authorities, would constitute a
felony under state or federal law, (ii) the improper disclosure by the
Participant of material secrets of the Company and/or a Subsidiary or (iii) the
knowing violation by the Participant of the Company's and/or a Subsidiary's
conflicts of interest policy, unless, in any case, the Participant performed
such act, made such disclosure or violated said policy in good faith and in a
manner the Participant reasonably believed to be in or not opposed to the best
interests of the Company and its Subsidiaries.
13. Adjustment of Number of Shares.
In the event that a dividend shall be declared upon the Common Stock
payable in shares of the Common Stock, the number of shares of the Common Stock
then subject to any Option, the number of shares of the Common Stock reserved
for issuance in accordance with the provisions of the Plan but not yet covered
by an Option and the number of shares of the Common Stock to be subject to an
Option to be issued to an Outside Director shall be adjusted by adding to each
share the number of shares which would be distributable thereon if such shares
had been outstanding on the date fixed for determining the stockholders
entitled to receive such stock dividend. In the event that the outstanding
shares of the Common Stock shall be changed into or exchanged for a different
number or kind of shares of stock or other securities of the Company or of
another corporation, whether through reorganization, recapitalization, stock
split-up, combination of shares, sale of assets, merger or consolidation in
which the Company is the surviving corporation, then, there shall be
substituted for each share of the Common Stock then subject to any Option and
for each share of the Common Stock reserved for issuance in accordance with the
provisions of the Plan but not yet covered by an Option, the number and kind of
shares of stock or other securities into which each outstanding share of the
Common Stock shall be so changed or for which each such share shall be
exchanged. In the case of any substitution or adjustment in accordance with
the provisions of this Section 13, the option price in each stock option
agreement or certificate for each share covered thereby prior to such
substitution or adjustment shall be the option price for all shares
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<PAGE> 9
of stock or other securities which shall have been substituted for such
share or to which such share shall have been adjusted in accordance with the
provisions of this Section 13. No adjustment or substitution provided for in
this Section 13 shall require the Company to sell a fractional share under any
stock option agreement or certificate. In the event of the dissolution or
liquidation of the Company, or a merger, reorganization or consolidation in
which the Company is not the surviving corporation, then, except as otherwise
Provided in the second sentence of this Section 13, each Option, to the extent
not theretofore exercised, shall terminate on fifteen days notice from the
Company.
14. Purchase for Investment, Withholding and Waivers.
A. Unless the shares to be issued upon the exercise of an Option by a
Participant shall be registered prior to the issuance thereof under the
Securities Act of 1933, as amended, such Participant will, as a condition of
the Company's obligation to issue such shares, be required to give a
representation in writing that he is acquiring such shares for his own account
as an investment and not with a view to, or for sale in connection with, the
distribution of any thereof.
B. In the event of the death of a Participant, a condition of exercising
any Option shall be the delivery to the Company of such tax waivers and other
documents as the Committee shall determine.
C. In the case of each non-incentive stock option, a condition of
exercising the same shall be the entry by the Participant exercising the same
into such arrangements with the Company with respect to income tax withholding
as the Committee may determine.
15. No Stockholder Status.
Neither any Participant nor his legal representatives, legatees or
distributees shall be or be deemed to be the holder of any share of the Common
Stock covered by an Option unless and until a certificate for such share has
been issued. Upon payment of the purchase price thereof, a share issued upon
exercise of an Option shall be fully paid and non-assessable.
16. No Restrictions on Corporate Acts.
Neither the existence of the Plan nor any Option shall in any way affect
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or
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<PAGE> 10
dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding
whether of a similar character or otherwise.
17. No Employment or Service Right.
Neither the existence of the Plan nor the grant of any Option shall
require the Company or any Subsidiary to continue any Participant in the employ
or service of the Company or such Subsidiary.
18. Termination and Amendment of the Plan.
A. The Board may at any time terminate the Plan or make such modifications
of the Plan as it shall deem advisable; provided, however, that the Board may
not without further approval of the holders of a majority of the shares of the
Common Stock present in person or by proxy at any special or annual meeting of
the stockholders increase the number of shares as to which Options may be
granted under the Plan (as adjusted in accordance with the provisions of Section
13 hereof) or change the manner of determining the initial option prices.
Except as otherwise provided in Section 13 hereof, no termination or amendment
of the Plan may, without the consent of the Participant to whom any Option shall
theretofore have been granted, adversely affect the rights of such Participant
under such Option.
B. The provisions of this Section 18 may not be amended except by the vote
of the majority of the members of the Board and by the vote of the majority of
the members of the Board who are not Outside Directors, and the provisions of
the Plan shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act of
1974 or the Rules and Regulations thereunder.
19. Expiration and Termination of the Plan.
The Plan shall terminate on October 31, 2001 or at such earlier time as
the Board may determine. Options may be granted under the Plan at any time and
from time to time prior to its termination. Any Option outstanding under the
Plan at the time of the termination of the Plan shall remain in effect until
such Option shall have been exercised or shall have expired in accordance with
its terms.
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<PAGE> 1
EXHIBIT 10-M
EMPLOYMENT AGREEMENT
AGREEMENT, made as of October 11, 1994, between Unimed
Pharmaceuticals, Inc., a Delaware corporation with an office at 2150 East Lake
Cook Road, Buffalo Grove, Illinois 60089 (the "Company"), and Stephen M. Simes,
1173 RFD, Long Grove, Illinois 60047 (the "Executive").
WITNESSETH:
WHEREAS, the Company desires that Executive be employed with the
Company, and Executive desires to be so employed by the Company, upon the terms
and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, representations and covenants herein contained, the parties hereto
agree as follows:
1. EMPLOYMENT
The Company hereby employs Executive and Executive hereby accepts such
employment, subject to the terms and conditions herein set forth. Executive
shall hold the office of President and Chief Executive Officer of the Company.
Executive shall report to the Board of Directors of the Company through the
Chairman of the Board. The Company shall appoint Executive as a Director of
the Company no later than the date hereof. In addition, the Company shall
nominate Executive as a nominee for director and solicit proxies for his
election for so long as this Agreement is in effect.
2. TERM
Executive's employment under this Agreement shall begin on October 25,
1994, (the "Employment Date") and shall continue until terminated in accordance
with the terms hereof.
3. COMPENSATION
As compensation for the employment services to be rendered by
Executive hereunder, including all services as an officer or director of the
Company and any of its subsidiaries, the Company agrees to pay, or cause to be
paid, for Executive, and Executive agrees to accept, payable in equal
installments in accordance with Company practice, an initial annual salary of
$200,000. Executive's annual salary hereunder of the remaining years of
employment shall be determined by the Board of Directors in its sole discretion
provided, however, that salary can
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<PAGE> 2
not be reduced. Any reduction in salary shall be viewed as involuntary
termination. In addition, Executive shall be entitled to bonuses of up to 40%
of Executive's annual salary, as may be determined by the Board of Directors in
its sole discretion. Executive shall not be entitled to any additional
compensation for his service as a director of the Company.
4. EXPENSES
The Company shall pay or reimburse Executive, upon presentment of
suitable vouchers, for all reasonable business and travel expenses which may be
incurred or paid by Executive in connection with his employment hereunder.
Executive shall comply with such restrictions and shall keep such records as
the Company may deem necessary to meet the requirements of the Internal Revenue
Code, as amended from time to time, and regulations promulgated thereunder.
5. OTHER BENEFITS
(a) Executive shall be entitled to a vacation allowance
of not less than four (4) weeks per annum and to participate in and receive any
other benefit customarily provided by the Company to its senior management
personnel (including any profit sharing, pension, short and long-term
disability insurance, hospital, major medical insurance and group life
insurance plans in accordance with the terms of such plans) and including stock
option and/or stock purchase plans, all as determined from time to time by the
Board of Directors of the Company. Promptly following the date hereof, the
Company agrees to obtain supplementary insurance coverage in favor of Executive
in order that he will receive the maximum long-term disability insurance
benefit allowed by applicable law. Unused annual vacation may not be carried
over to other years without the consent of the Board of Directors excepting
those instances in which Executive has been unable to utilize fully his annual
vacation entitlement due to Company business matters and needs.
(b) The Company shall pay Executive a monthly automobile
allowance of $850.
(c) The Company agrees to obtain term insurance on the
life of Executive in an amount equal to $1.1 million. Such insurance shall be
payable on Executive's death to a beneficiary which he may designate.
(d) As of December 1, 1994, the company shall provide
Executive $175,000 pursuant to the terms of a promissory note, the terms of
which will be agreed to between the Company and Executive. The interest rate
shall be Prime interest rate, plus one percent, unless a lower rate is approved
by the Board of Directors. Executive agrees to repay the loan, plus all
accrued interest thereon, upon termination of this Agreement; provided,
however, that in the event of termination by reason of death or disability of
Executive or if the Company shall terminate Executive's employment for any
reason which would not constitute justifiable cause (as defined herein), then
such repayment date shall be extended for ninety (90) days. Such loan shall be
fully collateralized by Executive's shares of stock in Bio-Technology General
Corp.
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6. STOCK OPTIONS
(a) The Company will recommend to the Compensation and
Stock Option Committee of the Board of Directors (the "Committee") that
Executive be granted, at the next regular meeting of the Board of Directors
subsequent to the date herein, an incentive stock option subject to the terms
and conditions of the Company's 1991 Stock option plan (the "Option Plan") as
amended, to purchase 300,000 shares of the Company's Common Stock (the
"Options"), at an exercise price per share equal to the fair market value of
the Company's Common Stock on the date of grant. 50,000 shares shall vest
immediately. 150,000 option shares shall vest at a rate of 25% in each of the
first four years of employment, becoming exercisable on each successive
anniversary date of the Employment until 200,000 shares shall be fully
exercisable.
(b) The remaining 100,000 shares (the "Additional
Shares") shall vest as to 25,000 shares on the first anniversary date of
employment, with an additional 25,000 shares becoming vested on each successive
anniversary date of the Employment until all of the Additional Shares shall be
fully vested, but vested Additional Shares shall only become exercisable after
the closing price of the Company's common stock, as reported by NASDAQ, has
reached a price equal to $5.00 per share for ten (10) successive trading days
(the "threshold"). If any of the Additional Shares have not yet vested at the
time that the Threshold has been achieved, such Additional Shares shall become
exercisable upon vesting regardless of the price of the Company's common stock
on the vesting date.
7. DUTIES
(a) Executive shall actively manage the day-to-day
business of the Company and shall set corporate policies, under the direction
of the Board of Directors. Executive shall represent the Company in dealings
with the public and shall supervise the carrying out of all orders and
resolutions of the Board of Directors.
(b) Executive agrees to devote his entire working time,
attention and energies to the performance of the business of the Company and of
any of its subsidiaries by which he may be employed; and Executive shall not,
directly or indirectly, alone or as a member of any partnership or other
organization, or as an officer, director or employee of any other corporation,
partnership or other organization, be actively engaged in or concerned with any
other duties or pursuits which interfere with the performance of his duties
hereunder.
(c) All fees, compensation or commissions received by
Executive during the term of this Agreement for personal services (including,
but not limited to, commissions and compensation received as a fiduciary or a
director, and fees for lecturing and teaching) rendered at the request of the
Company shall be paid to the Company when received by Executive, except those
fees that the Board of Directors determines may be kept by Executive.
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(d) Nothing In this Agreement shall be construed to
prevent Executive (i) from investing or trading in nonconflicting investments
as he sees fit for his own account, including real estate, stocks, bonds,
securities, commodities or other forms of investments: or (ii) from serving as
a director of Bio-Technology General Corp, or any other company engaged in
businesses which do not compete with the business of the Company.
8. TERMINATION OF EMPLOYMENT: EFFECT OF TERMINATION
(a) Executive's employment hereunder may be terminated at
any time upon written notice from the Company to Executive:
(i) upon the determination by the Board of
Directors that Executive's performance of his
duties has not been fully satisfactory for
any reason which would not constitute
justifiable cause (as hereinafter defined)
upon thirty (30) days' prior written notice
to Executive; or
(ii) upon the determination by the Board of
Directors that there is justifiable cause (as
hereinafter defined) for such termination
upon ten(10) days' prior written notice to
Executive.
(b) Executive's employment shall terminate upon:
(i) the death of Executive; or
(ii) the "disability" of Executive (as hereinafter
defined pursuant to subsection (c) herein)
pursuant to subsection (f) hereof.
(c) For the purposes of this Agreement, the term
"disability" shall mean the inability of Executive, due to illness, accident or
any other physical or mental incapacity, substantially to perform his duties
for a period of three (3) consecutive months or for a total of six (6) months
(whether or not consecutive) in any twelve (12) month period during the term of
this Agreement, as reasonably determined by the Board of Directors of the
Company after examination of Executive by an independent physician reasonably
acceptable to Executive.
(d) For the purposes hereof, the term "justifiable cause"
shall mean and be limited to: (i) Executive's conviction (which, through lapse
of time or otherwise, is not subject to appeal) of any crime or offense
involving money or other property of the Company or its subsidiaries or which
constitutes a felony in the jurisdiction involved; (ii) Executive's performance
of any act or his failure to act, for which it is determined by independent
counsel retained by the Board of Directors (which may be counsel for the
Company), after due inquiry in which Executive is given the opportunity to be
heard, that if he were prosecuted and convicted, a crime or offense involving
money or property of the Company or its subsidiaries,
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or which would constitute a felony in the jurisdiction involved, would have
occurred; (iii) any unauthorized disclosure by Executive to any person, firm or
corporation other than the Company, its subsidiaries and its and their
directors, officers and employees, of any confidential information or trade
secret of the Company or any of its subsidiaries; (iv) any attempt by Executive
to secure any improper personal profit in connection with the business of the
Company or any of its subsidiaries; (v) the failure by Executive to devote his
full working time to the affairs of the Company and its subsidiaries; (vi) the
engaging by Executive in any business other than the business of the Company
and its subsidiaries which interferes with the performance of his duties
hereunder; or (vii) Executive's repeated and willful failure to follow the
instructions of the Board of Directors of the Company (other than instructions
which are illegal or improper) provided, however, that with respect to the
conduct described in subsections (v), (vi) and (vii) above, justifiable cause
shall only exist where such conduct shall not have ceased or offense cured
within 30 days following written warning from the Company that sets forth in
reasonable detail the facts claimed to provide a basis for such termination.
In any event of justifiable cause, the Company must provide Executive with
written notice, prior to such termination, which shall set forth in reasonable
detail the facts claimed to provide a basis for such termination. Upon
termination of Executive's employment for justifiable cause, this Agreement
shall terminate immediately and Executive shall not be entitled to any amounts
or benefits hereunder other than such portion of Executive's annual salary as
has been accrued through the date of his termination of employment and
reimbursement of expenses pursuant to Section 4 hereof.
(e) If Executive shall die during the term of his
employment hereunder, this Agreement shall terminate immediately. In such
event, the estate of Executive shall thereupon be entitled to receive such
portion of Executive's annual salary as has been accrued through the date of
his death and such bonus, if any, as the Board of Directors, in its sole
discretion may determine to award taking into account Executive's contributions
to the Company prior to his death.
(f) Upon Executive's "disability", the Company shall have
the right to terminate Executive's employment. Notwithstanding any inability
to perform his duties, Executive shall be entitled to receive his compensation
(including bonus, if any) as provided herein until the later of: (i) the date
of his termination of employment for disability in accordance with this
Agreement, or (ii) the date upon which he begins to receive long-term
disability insurance benefits under the policy provided by the Company pursuant
to Section 5 hereof. Any termination pursuant to this subsection (f) shall be
effective on the date 30 days after which Executive shall have received written
notice of the Company's election to terminate.
(g) Executive may terminate his employment at any time
upon 30 days' prior written notice to the Company. Upon Executive's
termination of his employment hereunder, this Agreement (other than Sections 4,
8, 10, 11, 12, and 13, which shall survive) shall terminate immediately. In
such event, Executive shall be entitled to receive such portion of Executive's
annual salary as has been accrued to date. Executive shall be entitled to
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reimbursement of expenses pursuant to Section 4 hereof and to participate in
the Company's benefit plans to the extent participation by former employees is
required by law or permitted by such plans, with the expense of such
participation to be as specified in such plans for former employees.
(h) Notwithstanding any provision to the contrary
contained herein, in the event that Executive's employment is involuntarily
terminated by the Company at any time for any reason other than justifiable
cause, disability or death, the Company shall (i) pay to Executive, in full
satisfaction and in lieu of any and all other payments due and owing to
Executive under the terms of this Agreement (other than any payments
constituting reimbursement of expenses pursuant to Section 4 hereof and
payments due under sections (ii) and (iii) below), a severance benefit in an
amount equal to his then annual salary, payment shall be made on a semi-monthly
basis in accordance with the Company's normal payroll cycle, (ii) continue to
allow Executive to participate, at the company's expense and to the same extent
that Executive had participated prior to termination of his employment, in the
Company's health insurance and long-term disability insurance, to the extent
permitted under such programs, until the earlier of (x) one year or (y)
Executive becoming eligible to participate in another employer's group health
insurance and long-term disability plans and (iii) continue to provide
Executive, at the Company's expense, with term life insurance, as provided in
Section 4(c) above, until the earlier of (x) one year, or (y) Executive
obtaining full-time employment. Executive shall immediately notify the Company
of his acceptance of a position with a new employer, together with the specific
date on which Executive shall become eligible for coverage in such new
employer's health and disability insurance programs, such notice to be given
within 15 days following commencement of such employment.
(i) Far purposes of subsection (h) above of this Section
8, Executive shall be deemed to have been "involuntarily terminated" if there
has been (i) a reduction in his compensation or benefits (other than an across
the board reduction in benefits which is made prospectively for all similarly
situated executives), (ii) a reassignment of Executive to a position of lesser
rank or status, or (iii) a relocation of Executive outside of the Chicago area
without his consent.
9. REPRESENTATION AND AGREEMENTS OF EXECUTIVE
(a) Executive represents and warrants that he is free to
enter into this Agreement and to perform the duties required hereunder, and
that there are no employment contracts or understandings, restrictive covenants
or other restrictions, whether written or oral, preventing the performance of
his duties hereunder or requiring him to perform employment, consulting,
business related or similar duties for any other person. The Company
acknowledges that Executive is currently a director of Bio-Technology General
Corp.
(b) Executive agrees to submit to a medical examination
and to cooperate and supply such other information and documents as may be
required by an insurance company in
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connection with the Company's obtaining life insurance on the life of
Executive, and any other type of insurance or fringe benefit as the Company
shall determine from time to time to obtain.
10. NON-INTERFERENCE
Executive agrees that for a period of one year following the
termination of Executive employment hereunder, Executive shall not, directly or
indirectly, request or cause any collaborative partners, universities,
governmental agencies, contracting parties, suppliers or customers with whom
the Company or any of its subsidiaries has a business relationship to cancel or
terminate any such business relationship with the Company or any of its
subsidiaries or solicit from the Company any employee of the Company.
11. INVENTIONS AND DISCOVERIES
(a) Executive shall promptly and fully disclose to the
Company, and with all necessary detail for a complete understanding of the
same, all developments, know-how, discoveries, inventions, improvements,
concepts, ideas, writings, formulae, processes and methods of a financial or
other nature (whether copyrightable, patentable or otherwise) made, received,
conceived, acquired or written during working hours, or otherwise, by Executive
(whether or not at the request or upon the suggestion of the Company) during
the period of his employment with, or rendering of advisory or consulting
services to, the Company or any of its subsidiaries, solely or jointly with
others, in or relating to any activities of the Company or its subsidiaries
known to him as a consequence of his employment or the rendering of advisory
and consulting services hereunder (collectively the "Subject Matter").
(b) Executive hereby assigns and transfers, and agrees to
assign and transfer, to the Company, all his rights, title and interest in and
to the Subject Matter, and Executive further agrees to deliver to the Company
any and all drawings, notes, specifications and data relating to the Subject
Matter, and to execute, acknowledge and deliver all such further papers,
including applications for copyrights or patents, as may be necessary to obtain
copyrights and patents for any thereof in any and all countries and to vest
title thereto to the Company. Executive shall assist the Company in obtaining
such copyrights or patents during the term of this Agreement, and any time
thereafter on reasonable notice and at mutually convenient times, and Executive
agrees to testify in any prosecution or litigation involving any of the Subject
Matter, provided however, that Executive shall be compensated in a timely
manner at the rate of $100.00 per hour (with a minimum of $500 per day), plus
out-of-pocket expenses incurred in rendering such assistance or giving or
preparing to give such testimony if it is required after termination of his
employment hereunder.
12. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
(a) Executive shall not, during the term of this
Agreement, or at any time following termination of this Agreement, directly or
indirectly, disclose or make accessible
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(other than as is required in the regular course of his duties or is required
by law (in which case Executive shall give the Company prior written notice of
such required disclosure) or with the prior written consent of the Board of
Directors of the Company), to any person, firm or corporation, any confidential
information acquired by him during the course of, or as an incident to, his
employment or the rendering of his advisory or consulting services hereunder,
relating to the Company or any of its subsidiaries, the directors of the
Company or its subsidiaries, any client of the Company or any of its
subsidiaries, or any corporation, partnership or other entity owned or
controlled, directly or indirectly, by any of the foregoing, or in which any of
the foregoing has a beneficial interest, including, but not limited to, the
business affairs of each of the foregoing. Such confidential information shall
include, but shall not be limited to, proprietary technology, trade secrets,
patented processes, research and development data, know-how, market studies and
forecasts, competitive analyses, pricing policies, employee lists, personnel
policies, the substance of agreements with customers and others, marketing or
dealership arrangements, servicing and training programs and arrangements,
customer lists and any other documents embodying such confidential information.
This confidentiality obligation shall not apply to any confidential information
which thereafter becomes publicly available other than pursuant to a breach of
this Section 12 by Executive.
(b) All information and documents relating to the Company
and its affiliates as hereinabove described shall be the exclusive property of
the Company, and Executive shall use commercially reasonable best efforts to
prevent any publication or disclosure thereof. Upon termination of Executive's
employment with the Company, all documents, records, reports, writings and
other similar documents containing confidential information, including copies
thereof, then in Executive's possession or control shall be returned and left
with the Company.
13. SPECIFIC PERFORMANCE
Executive agrees that if he breaches, or threatens to commit a
breach of, any of the provisions of Sections 10, 11, or 12 (the "Restrictive
Covenants"), the Company shall have, in addition, and not in lieu of, any other
rights and remedies available to the Company under law and in equity, the right
to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and
that money damages would not provide an adequate remedy to the Company.
Notwithstanding the foregoing, nothing herein shall constitute a waiver by
Executive of his right to contest whether a breach or threatened breach of any
Restrictive Covenant has occurred.
14. AMENDMENT OR ALTERATION
No amendment or alteration of the terms of this Agreement
shall be valid unless made in writing and signed by both of the parties hereto.
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15. GOVERNING LAW
This Agreement shall be governed by the laws of the State of
Illinois applicable to agreements made and to be performed therein.
16. SEVERABILITY
The holding of any provision of this Agreement to be invalid
or unenforceable by a court of competent jurisdiction shall not affect any
other provision of this Agreement, which shall remain in full force and effect.
17. NOTICES
Any notices required or permitted to be given hereunder shall
be sufficient if in writing, and if delivered by hand, or sent by certified
mail, return receipt requested, to the addresses set forth above or such other
address as either party may from time to time designate in writing to the
other, and shall be deemed given as of the date of the delivery or mailing.
18. WAIVER OR BREACH
It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
19. ENTIRE AGREEMENT AND BINDING EFFECT
This agreement contains the entire agreement of the parties
with respect to the subject matter hereof and shall be binding upon and inure
to the benefit of the parties hereto and their respective legal
representatives, heirs, successors and assigns.
20. SURVIVAL
The termination of Executive's employment hereunder or the
expiration of this Agreement shall not affect the enforceability of Section 4,
8, 10, 11, 12 and 13 hereof.
21. FURTHER ASSURANCES
The parties should execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
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22. HEADINGS
The Section headings appearing in this Agreement are for the
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, demand or affect its provisions.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
UNIMED PHARMACEUTICALS, INC.
By: /s/ John Kapoor
-------------------------------
/s/ Stephen M. Simes
----------------------------------
Stephen M. Simes
Attested by:
---------------------
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EXHIBIT 10-N
EMPLOYMENT AGREEMENT
This Agreement is made as of November 3, 1994 between UNIMED Pharmaceuticals,
Inc., a Delaware corporation with offices located at 2150 E. Lake Cook Road,
Buffalo Grove, Illinois 60089 (the "Company") and Robert E. Dudley, PhD,
residing at 47 W. Frost Avenue, Edison, NJ 08820 (the "Employee").
WITNESSETH:
WHEREAS, the Company desires to employ Employee and retain his services,
experience and abilities which it regards as important to its corporate growth
and success; and
WHEREAS, Employee desires to accept such employment upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, it is agreed as follows:
1. Employment. The Company hereby employs the Employee and the Employee
hereby accepts such employment under all of the terms and conditions of the
Agreement. The Employee shall be an officer of the Company and shall hold the
office of Vice President, Clinical & Regulatory Affairs, reporting to the
President and Chief Executive Officer of the Company.
2. Term. Employee's employment under this Agreement shall begin December 12,
1994 (the "Employment Date") and shall continue until termination in accordance
with terms hereof.\
3. Duties. During the term of this Agreement, Employee shall perform
diligently all the duties of Vice President, Clinical & Regulatory Affairs
consistent with the type of duties currently performed by the Employee and as
set forth by the President of the Company. Such duties will be in compliance
with the policies of the Board of Directors.
Employee shall devote all of his time and attention to the business of the
Company during business hours normal for the position. The Employee agrees not
to be directly or indirectly engaged in or concerned with any other duties or
pursuits which interfere with performance of his duties except those duties or
pursuits specifically authorized by the Board of Directors.
4. Compensation. In consideration of the services to be rendered by the
Employee hereunder, the Company agrees to compensate and to provide benefits to
Employee as follows:
(a) Employee shall be paid a base salary of $140,000 per annum plus an
annual automobile allowance of $7,200, one twenty-fourth of which amount
shall be payable semi-monthly. Employee shall be entitled to bonuses
based on a multiple of his annual salary, as may be determined by the
Board of Directors in its sole discretion.
<PAGE> 2
(b) Employee shall be entitled to participate in and receive any other
benefits customarily provided by the Company to senior management
personnel, including any profit sharing, pension, 401(k), short and long
term disability insurance, hospital, major medical insurance plans and
group life insurance plans in accordance with the terms of such plan.
(c) Employee shall be entitled to a vacation allowance of not less
than four (4) weeks per annum.
5. Stock Options. Employee shall be granted at the next regular meeting of
the Board of Directors following the employment date an option contract to
purchase 60,000 of Company common stock subject to the terms and conditions of
the Company's 1991 Stock Option Plan. Such option shares shall vest evenly
over four years, 25% per year on each of the first four anniversaries of
Employee's employment.
6. Expenses. From and after the hereof, the Company shall reimburse Employee
for all reasonable expenses incurred in the performance of his duties hereunder
on behalf of the Company. In addition, the Company will reimburse Employee for
the following expenses incurred in connection with relocating from New Jersey
to the Chicago area:
(a) Temporary living expenses for maximum of twelve (12) weeks.
(b) Two (2) house-hunting trips and associated expenses for Employee
and his family.
(c) Travel, lodging and meals associated with the physical relocation
of Employee and family.
(d) The cost of moving household goods and one automobile from New
Jersey to Employee's new residence in Illinois. Should storage of such
goods be required prior to occupancy of new residence, such fees will be
paid by Company for up to 12 weeks.
(e) The sales commission and other closing costs related to the sale
of Employee's New Jersey residence and purchase of Illinois residence.
(f) Expenses for the additional out-of-pocket federal and state tax
liability (including any tax liability resulting from reimbursement
pursuant to this sentence) incurred by Employee to the extent such
expenses are not deductible by Employee for income tax purposes.
7. Loan. If requested by Employee, the Company shall provide an interest
bearing loan, at the rate of the then applicable prime interest rate plus one
percent of up to $50,000 to facilitate relocation of the Employee from New
Jersey to Illinois. Such a loan must be repaid within six (6) months after
Employee closes on his new residence in Illinois, provided however, that the
loan repayment will become due and payable immediately upon termination of
employment.
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8. Relocation. Employee agrees to relocate to the Chicago area as soon as
possible upon signing Agreement. Should employment commence prior to
relocation, Employee agrees to spend that number of days each week at Company
offices as directed by the President of Company. Employee shall not be
relocated from the Chicago area without Employee's written consent. Employee's
consent shall not be unreasonably refused.
9. Termination. Notwithstanding any other provision of this Agreement, the
Company may terminate this Agreement as follows:
(a) For cause, immediately upon written notice, which shall set forth
in reasonable detail the facts and circumstances claimed to provide a
basis for such termination (or oral notice followed by written
confirmation sent within seven days thereafter) to Employee if the Board
of Directors or the President of the Company shall have determined that
Employee (A) has been guilty of gross misconduct or dishonesty in the
performance of his duties to the Company; (B) has committed a material
breach of any provision of this Agreement, specifically including the
non-competition and confidentiality provisions of this Agreement as set
forth in Section 10 hereof; (C) has committed any other material act or
omission which impairs his ability to perform substantially all of his
duties (provided, however, that cause for purposes of this subsection will
not be deemed to include any type of illness, disability or incapacity
which otherwise would be covered in subsection 9(c)(iii) if the same were
to continue for a continuous period exceeding six (6) months), or which
impairs the Company's ability to conduct its business in the usual manner
or has otherwise failed to perform his duties as Vice President, Clinical
& Regulatory Affairs to the satisfaction of the Board of Directors or the
President of the Company and, following thirty (30) days notice to
Employee, Employee has failed to correct such problem described in this
subsection (C) to the satisfaction of the Board of Directors or the
President of the Company.
(b) Immediately upon 30 day written notice (or oral notice followed by
written confirmation sent within seven days thereafter) to Employee from
the President or Board of Directors of the Company at any time, without
cause, provide that Employee shall receive (A) his then current base
salary and benefits for nine (9) months after such termination (unless
Employee becomes otherwise employed within such a period as an owner,
employee or consultant on a full or part-time basis, provided that the
amount of compensation received by Employee is at least two- thirds of the
then monthly base salary).
(c) For incapacity, immediately upon written notice to Employee, if
the Board of Directors or the President of the Company shall have
determined that Employee has been unable due to illness, disability or
incapacity to perform the services required hereunder for a continuous
period exceeding six (6) months (provided that Employee will be paid his
then current base salary during the first three months of any such
incapacity, and for the remaining term of such incapacity, Employee will
receive benefits under his long term disability insurance policy with the
Company, throughout the entire six month period, the
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Company will continue to provide all benefits hereunder other than base
salary on the same terms as if Employee had not been incapacitated).
Notwithstanding any other provision of this Agreement, Employee may terminate
this Agreement at any time upon providing thirty (30) days prior written notice
to the Company, in which event the Company shall not be obligated to provide
any benefits after the effective date of such termination. The death of the
Employee shall automatically terminate this Agreement. In such event, Company
will pay to Employee's estate all accrued unpaid salary.
10. Covenant Not to Compete/Confidentiality/Inventions/Discoveries.
(a) During the term hereof, Employee agrees that he shall not, without
written authorization of the Board of Directors of the Company, directly
or indirectly, engage, individually or as an officer, director, employee,
consultant, advisor, partner, or as a controlling stockholder or other
proprietor of any entity in the business of development, production,
distribution or sale of any products or services competitive with those
manufactured or sold by the Company.
(b) During the term hereof and after termination of this Agreement,
Employee shall not, without written authorization by the Board of
Directors of the Company, publish or disclose any confidential information
or trade secrets relating to the business of the Company.
(c) In the event of a breach or threatened breach of either of the
foregoing subsections, the Company shall be entitled to an injunction
restraining Employee from such breach. Nothing herein shall be construed
as prohibiting the Company from pursuing any other remedy for such breach.
(d) Employee shall promptly and fully disclose to the Company, and
with all necessary detail for a complete understanding of the same, all
developments, know-how, discoveries, inventions, improvements, concepts,
ideas, writings, formulae, processes and methods of a financial or other
nature (whether copyrightable, patentable or otherwise) made, received,
conceived, acquired or written during working hours, or otherwise, by
Employee (whether or not at the request or upon the suggestion of the
Company) during the period of his employment with,k or rendering of
advisory or consulting services to, the Company or any of its
subsidiaries, solely or jointly with others, in or relating to any
activities of the Company or its subsidiaries known to him as a
consequence of his employment or the rendering of advisory and consulting
services hereunder (collectively the "Subject Matter").
(c) Employee hereby assigns and transfers, and agrees to assign and
transfer, to the Company, all his rights, title and interest in and to the
Subject Matter, and Employee further agrees to deliver to the Company any
and all drawings, notes, specifications and data relating to the Subject
Matter, and to execute, acknowledge and deliver all such
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further papers, including applications for copyrights or patents, as
may be necessary to obtain copyrights and patents for any thereof in any
and all countries and to vest title thereto to the Company.
(f) Employee shall assist the Company in obtaining such copyrights or
patents during the term of this Agreement, and any time thereafter on
reasonable notice and at mutually convenient time, and Employee agrees to
testify in any prosecution or litigation involving any of the Subject
Matter, provided however, that Employee shall be compensated in a timely
manner at the rate of $75.00 per hour, plus out-of-pocket expenses
incurred in rendering such assistance or giving or preparing to give such
testimony if it is required after termination of his employment hereunder.
11. Successors. This Agreement shall be binding upon the successors and
assigns of the Company.
12. Miscellaneous.
(a) All notices, requests, demands and other communications which are
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given when delivered personally or when mailed by
registered or certified mail, postage prepaid, return receipt requested,
sent to the address given above or to such address as either party may
hereafter designate by written notice to the party in accordance herewith.
(b) This Agreement shall be governed and construed in accordance with
the laws of the State of Illinois without regard to principles of choice
of law.
(c) This Agreement supersedes any and all oral or written agreements
heretofore made relating to the subject matter hereof and constitutes the
entire agreement of the parties relating to the subject matter hereof.
(d) The invalidity, illegality or unenforceability of any provision of
this Agreement shall not in any way affect, impair or render unenforceable
any other provision hereof, all of which shall remain in effect in full
force and effect.
(e) This Agreement may not be amended or modified in any manner except
by an instrument in writing signed by each of the parties hereto.
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<PAGE> 6
IN WITNESS WHEREOF, each of the parties hereto has executed or caused this
agreement to be executed on its behalf as of the day and year first above
written.
UNIMED PHARMACEUTICALS, INC.
By: /s/ David E. Riggs 11/4/94
-------------------------------- --------------
Name/Title Date
EMPLOYEE
By: /s/ Robert E. Dudley 11/3/94
-------------------------------- --------------
Robert E. Dudley, PhD Date
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<PAGE> 1
EXHIBIT 10-Q
UNIMED PHARMACEUTICALS, INC.
A minimum of 1,000,000 and
a maximum of 1,400,000 Shares of Common Stock
SALES AGENCY AGREEMENT
Sunrise Securities Corp.
919 Third Avenue
New York, New York 10022
February 29, 1996
Dear Sirs:
UNIMED Pharmaceuticals, Inc., a Delaware corporation (the "Company"),
proposes to offer for sale in a private offering (the "Offering") pursuant to
Rule 506 of Regulation D ("Regulation D") under the Securities Act of 1933, as
amended (the "Act"), a minimum of 1,000,000 (including "Affiliate Shares", as
hereinafter defined, if any) and a maximum of 1,400,000 shares of common
stock), par value $.25 per share (the "Shares"). This Offering is being made
solely to "accredited investors" as defined in Regulation D. This is to
confirm our agreement concerning your acting as our exclusive placement agent
(the "Placement Agent") in connection with the Offering.
The Company has prepared and has delivered to the Placement Agent copies
of a confidential private placement memorandum, dated January 22, 1996,
relating to, among other things, the Company, the Shares and the terms of the
sale of the Shares. Such confidential private placement memorandum, including
all exhibits thereto and all documents delivered therewith and incorporated by
reference therein, is referred to herein as the "Memorandum" unless such
confidential private placement memoranda or any such exhibits or documents
shall be supplemented or amended in accordance with this Agreement, in which
event the term "Memorandum" shall refer to such confidential private offering
memorandum and such exhibits and documents as so supplemented or amended from
and after the time of delivery to the Placement Agent of such supplement or
amendment.
1. Appointment of Placement Agent.
On the basis of the representations and warranties contained herein, and
subject to the terms and conditions set forth herein, the Company hereby
appoints you as its Placement Agent and grants to you the exclusive right to
<PAGE> 2
offer, as its agent, the Shares pursuant to the terms of this Agreement. On
the basis of such representations and warranties, and subject to such
conditions, you hereby accept such appointment and agree to use your best
efforts to secure subscriptions to purchase a minimum of 1,000,000 and a
maximum of 1,400,000 Shares pursuant to the terms of this Agreement. The
agency created hereby is not terminable by the Company except upon termination
of the Offering pursuant to the terms of this Agreement or upon expiration of
the Offering Period (as hereinafter defined) in accordance with the terms of
this Agreement.
2. Terms of the Offering.
(a) A minimum of 1,000,000 and a maximum of 1,400,000 Shares shall be
offered for sale to prospective investors in this Offering ("Prospective
Investors") at a purchase price equal to the greater of $6.00 per share or 80%
of the Market Price (as defined herein) of the Company's common stock, par
value $.25 (the "Common Stock") provided that such purchase price shall not
exceed $7.00 per share (the "Purchase Price"). Officers, directors and
employees of the Company and the Placement Agent may purchase Shares on the
same terms and conditions as other investors (the "Affiliate Shares"). The
Affiliate Shares shall be included in determining whether the minimum and
maximum number of Shares have been subscribed for, and all references herein to
subscriptions from Prospective Investors shall be deemed to include the
Affiliate Shares. For purposes of this Section 2(a) and Section 4(d), "Market
Price" shall mean the average closing price of the Common Stock for the 10
trading days ending three days prior to the Closing Date.
(b) The Offering shall commence on the date hereof and shall expire at
5:00 P.M., New York time, on February 22, 1996, unless extended from time to
time for up to an aggregate of 30 days by mutual agreement of the Company and
the Placement Agent. Such period, as the same may be so extended, shall
hereinafter be referred to as the "Offering Period".
(c) Each Prospective Investor who desires to purchase Shares shall be
required to deliver to the Placement Agent one copy of a subscription agreement
in the form annexed to the Memorandum (a "Subscription Agreement"), including
the investor questionnaire, and payment in the amount necessary to purchase the
number of Shares such Prospective Investor desires to purchase. The Placement
Agent shall not have any obligation to independently verify the accuracy or
completeness of any information contained in any Subscription Agreement or the
authenticity, sufficiency or validity of any check or other form of payment
delivered by any Prospective Investor in payment for Shares.
(d) Pursuant to an Escrow Agreement, dated as of January 22, 1996 (the
"Escrow Agreement"), the Placement Agent has established as special account
with the Harris Trust and Savings Bank (the "Escrow Agent") entitled "UNIMED
Pharmaceuticals, Inc. - Escrow Account" (the "Special Account"). The Placement
Agent shall deliver each check received from a Prospective Investor to the
Escrow Agent for deposit in the Special Account and shall deliver the executed
copy of the Subscription Agreement received from such Prospective Investor to
the Company. The Company shall notify the Placement Agent promptly of
the acceptance or rejection of any subscription. The Company shall not
unreasonably reject any subscription.
(e) If subscriptions to purchase at least 1,400,000 Shares are not
received from Prospective Investors prior to the expiration of the Offering
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<PAGE> 3
Period and accepted by the Company, the Offering shall be canceled, all funds
received by the Escrow Agent on behalf of the Company shall be refunded in full
with interest, and this Agreement and the agency created hereby shall be
terminated without any further obligation on the part of either party, except
as provided in Section 10 hereof.
(f) You may engage other persons selected by you to assist you in the
Offering (each such person being hereinafter referred to as a "Selected
Dealer") and you may allow such persons such part of the compensation payable
to you hereunder as you shall determine. Each Selected Dealer shall be
required to agree in writing to comply with the provisions of, and to make the
representations, warranties and covenants contained in Sections 5(b) and 6(b)
hereof by executing a form of Selected Dealer Agreement attached hereto as
Exhibit I. On or prior to the Closing (as hereinafter defined), the Placement
Agent shall deliver a copy of each executed Selected Dealer Agreement to the
Company. By executing this Agreement, the Company hereby agrees to make, and
is deemed to make, the representations and warranties to, and covenants and
agreements with, each Selected Dealer (including an agreement to indemnify such
Selected Dealer under Section 9 hereof) who has executed the Selected Dealer
Agreement as are contained in this Agreement.
3. Closing.
(a) Subject to the conditions set forth in Section 8 hereof, if
subscriptions to purchase at least 1,000,000 Shares have been received prior to
the expiration of the Offering Period and accepted by the Company, the initial
closing under this Agreement (the "Closing") shall be held at the offices of
Squadron, Ellenoff, Plesent & Sheinfeld, LLP ("SEP&S"), 551 Fifth Avenue, New
York, New York, at 10:00 A.M., New York time, on the third business day
following the date upon which the Placement Agent receives notice from the
Company that subscriptions to purchase at least 1,000,000 Shares (including
Affiliate Shares) have been so accepted or at such other place, time and/or
date as the Company and the Placement Agent shall agree upon. The Company
shall provide the notice required by the preceding sentence as promptly as
practicable. The date upon which the Closing is held shall hereinafter be
referred to as the "Closing Date."
(b) Subject to the conditions set forth in Section 8 hereof, if,
subsequent to the date the subscriptions referred to in Section 3(a) hereof are
received and accepted and prior to the expiration of the Offering Period,
additional subscriptions to purchase Shares are received from Prospective
Investors, which subscriptions are accepted by the Company, one or more
additional closings under this Agreement (each, an "Additional Closing") shall
be held at the offices of SEP&S at 10:00 A.M., New York time, on the third
business day following the date upon which the Placement Agent receives notice
from the Company that additional subscriptions have been so accepted, or at
such other place, time or date as the Company and the Placement Agent shall
agree upon. The Company shall notify the Placement Agent as promptly as
practicable whether any additional subscriptions so received have been
accepted. The date upon which any Additional Closing is held shall hereinafter
be referred to as an "Additional Closing Date."
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<PAGE> 4
Notwithstanding anything contained here into the contrary, in no event
shall the Company accept subscriptions to purchase in excess of 1,400,000
Shares including Affiliate Shares.
(c) At the Closing, or an Additional Closing, as the case may be, the
Company shall instruct the Escrow Agent to pay to the Placement Agent at the
Closing or an Additional Closing, from the funds deposited in the Special
Account in payment for the Shares, the amounts payable to the Placement Agent
pursuant to Section 4 of this Agreement. Promptly after the Closing Date, or
an Additional Closing Date, as the case may be, the Company shall deliver to
the purchasers of Shares certificates representing the Shares to which they are
entitled.
4. Compensation.
(a) If subscriptions to purchase at least 1,000,000 Shares (including
Affiliate Shares) are received from Prospective Investors prior to the
expiration of the Offering Period and accepted by the Company, you shall be
entitled, as compensation for your services as Placement Agent under this
Agreement, to an amount equal to 8% of the gross proceeds received by the
Company from the sale of the Shares, except that such compensation shall be 6%
of the gross proceeds received by the Company from the sale of the Shares to
each of the John N. Kapoor Trust, the Harris Group, Solvay-Duphar and
Laboratoires Besins Iscovesco, S.A., a corporation organized under the laws of
France. Such compensation is payable by the Company on the Closing Date, or an
Additional Closing Date, as the case may be, with respect to the Shares sold on
such date and may be paid, at the Placement Agent's option, in part or in
whole, in shares of the Common Stock, valued at the Purchase Price per
share, provided, however, that any such shares of Common Stock shall not be
included in the calculation of the minimum or the maximum number of Shares
offered for sale to prospective investors in the Offering. Any such shares of
Common Stock issued pursuant to this paragraph shall be subject to the
identical registration rights granted pursuant to the Registration Rights
Agreement (as defined below) to investors in the Offering.
(b) If subscriptions to purchase at least 1,000,000 Shares (including
Affiliate Shares) have been received from Prospective Investors prior to the
expiration of the Offering Period and accepted by the Company, the Company
shall issue to you or, at your discretion, your Selected Dealers or your
designees, in addition to the amount set forth in Section 4(a) above, warrants
(individually, a "Warrant" and collectively, the "Warrants") to purchase a
number of Shares of the Company equal to 10% of the aggregate number of Shares
issued in the Offering. Each Warrant will entitle the holder thereof for a
five-year period commencing on the first anniversary of the Closing Date or any
Additional Closing Date as the case may be, to purchase one share of Common
Stock of the Company at an exercise price equal to 120% of the Purchase Price
per share (the "Warrant Shares"). The Warrants shall be in the form attached
hereto as Exhibit II.
(c) Notwithstanding anything contained herein to the contrary, the number
of Shares upon which the commission provided for in Section 4(a) and the
Warrants described in Section 4(b) shall be based shall include Shares with
respect to which the Company unreasonably rejected subscriptions.
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<PAGE> 5
(d) If the Offering is terminated by the Company (i) during the Offering
Period (provided you are actively pursuing the Offering during such period),
(ii) during the 30 day extension period (provided you are actively pursuing the
Offering during such period), or (iii) at the completion of the Offering
(provided that you shall have obtained offers to purchase at least the required
minimum), and within six months after such termination, the Company completes
the sale of any of its equity securities (including securities convertible into
equity securities) for cash, other than in connection with exercise of existing
options, strategic alliances or pursuant to a transaction incident to a sale of
the Company, then in any such case, the Company shall pay to you 11% of the
gross sales price of such securities and shall issue to you, on the terms set
forth in Section 4, warrants to purchase 10% of the securities so sold. This
paragraph shall not apply with respect to clauses (i) and (ii) above if the
Company terminates the Offering because the Market Price of the Common Stock
falls below $6.00 per share.
5. Representations and Warranties.
(a) Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Placement Agent and the Selected Dealers
that:
(i) The Memorandum, as supplemented or amended from time to time, at
all times during the period from the date hereof to and including the later of
the Closing Date and the expiration of the Offering Period, and the last
Additional Closing Date (if any), does not, and during such period will not,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, all in light of the circumstances under which they were made.
Each contract, agreement, instrument, lease, license or other document described
in the Memorandum has been accurately described therein in all material
respects.
(ii) No document provided by the Company to Prospective Investors
pursuant to Section 6(a)(vii) hereof, and no oral information provided by the
Company to Prospective Investors, will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. Contracts to which
the Company is a party provided by the Company to Prospective Investors shall
not be deemed to contain any untrue statement of a material fact or to omit to
state any material fact if the contract so provided is a true, correct and
complete copy of such contract, as amended or modified through the date it is so
provided.
(iii) The Company has not, directly or indirectly, solicited any offer
to buy or offered to sell any Shares or any other securities of the Company
during the twelve-month period ending on the date hereof except as may be
described in the Memorandum or which would not be integrated with the sale of
the Shares in a manner that would require the registration of the Offering
pursuant to the Act and has no present intention to solicit any offer to buy or
offer to sell any Shares or any other securities of the Company other than
pursuant to this Agreement or pursuant to a registered public offering of the
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<PAGE> 6
Company's securities which may be commenced after the completion of the
Offering.
(iv) The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware, with full power and
authority, and all necessary consents, authorizations, approvals, orders,
licenses, certificates, and permits of and from, and declarations and filings
with (collectively, "Consents"), all federal, state, local, foreign, and other
governmental authorities and all courts and other tribunals, to own, lease,
license and use its properties and assets and to carry on its business in the
manner described in the Memorandum, except where the failure to have obtained
such Consents would not have a material adverse effect on the Company and the
Company has not received any notice of proceedings relating to the revocation
or modification of any such consent, authorization, approval, order, license
certificate, or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding would result in a material adverse
change in the financial condition, results of operations, business, properties,
assets, liabilities or future prospects of the Company. The Company is duly
qualified to do business and is in good standing in every jurisdiction in which
its ownership, leasing, licensing or use of property and assets or the conduct
of its business makes such qualification necessary. The Company has two
subsidiaries, Unimed Canada Inc. and Unimed Technology Management Inc.
(v) The Company has, as of the date hereof, an authorized and outstanding
capitalization as set forth in the Memorandum. Each outstanding share of
capital stock of the Company is duly authorized, validly issued, fully paid and
nonassessable and has not been issued and is not owned or held in violation of
any preemptive rights set forth in the Company's Certificate of Incorporation
or By-laws, each as amended to date, or any agreement to which the Company is a
party. There is no commitment, plan or arrangement to issue, and no
outstanding option, warrant or other right calling for the issuance of, any
share of capital stock of the Company or any security or other instrument which
by its terms is convertible into, exercisable for or exchangeable for
shares of capital stock of the Company, except as may be described in the
Memorandum. There is outstanding no security or other instrument which by its
terms is convertible into or exchangeable for any class of share of capital
stock of the Company, except as may be described in the Memorandum. The
capital stock of the Company conforms to the description thereof contained in
the Memorandum.
(vi) The financial statements of the Company included in the Memorandum
(by incorporation by reference or otherwise) fairly present the financial
position, the results of operations, cash flows and the other information
purported to be shown therein at the respective dates and for the respective
periods to which they apply. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles
consistently applied throughout the periods involved, are correct and complete
and are in accordance with the books and records of the Company. The selected
financial data set forth under the caption "Selected Financial Data" in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994
("Form 10-K") fairly presents on the basis stated in the Form 10-K the
information included therein. There has at no time been a material adverse
change in the financial condition, results of operations, business, properties,
assets, liabilities or future prospects of the Company from the latest
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<PAGE> 7
information set forth in the Memorandum, except as may be described in the
Memorandum as having occurred.
(vii) Coopers & Lybrand L.L.P., who have certified certain financial
statements of the Company and delivered their report with respect to the
audited financial statements and schedules included in the Memorandum are
independent public accountants as required by the Act and the applicable rules
and regulations thereunder.
(viii) There is no litigation, arbitration, governmental or other
proceeding (formal or informal) or claim or investigation pending or, to the
knowledge of the Company, threatened with respect to the Company or any of its
operations, businesses, properties or assets, except as may be described in the
Memorandum or such as individually or in the aggregate do not now have and will
not in the future have a material adverse effect upon the operations, business,
properties or assets of the Company. The Company is not in violation of, or in
default with respect to, any law, rule, regulation, order, judgment or decree,
except as may be described in the Memorandum or such as in the aggregate do not
now have and will not in the future have a material adverse effect upon the
operations, business, properties, assets or future prospects of the Company.
(ix) Any real property and buildings held under lease by the Company are
held by it under valid, subsisting and enforceable leases with such exceptions
as in the aggregate are not material.
(x) Neither the Company, nor, to the knowledge of the Company, any other
party, is in violation or breach of or in default with respect to, complying
with any material provision of any contract, agreement, instrument, lease,
license, arrangement or understanding which is material to the Company, and
each such contract, agreement, instrument, lease, license, arrangement and
understanding is in full force and effect and is the legal, valid and binding
obligation of the parties thereto enforceable as to them in accordance with its
terms (subject to applicable bankruptcy, insolvency and other laws affecting
the enforceability of creditors' rights generally and to general equitable
principles). Except as described in the Memorandum, the Company enjoys
peaceful and undisturbed possession under all real property leases under which
it is operating. The Company is not in violation or breach of, or in default
with respect to, any term of its Certificate of Incorporation or its By-laws,
each as amended to date.
(xi) There is no right under any patent, patent application, trademark,
trademark application, trade name, service mark, copyright, franchise or other
intangible property or asset (all of the foregoing being herein called
"Intangibles") necessary to the business of the Company as presently conducted
or as the Memorandum indicates it contemplates conducting, except as may be so
designated in the Memorandum and which the Company has the right or license to
use as necessary. To the Company's knowledge, except as described in the
Memorandum, the Company has not infringed nor is it infringing with respect to
Intangibles of others, and the Company has not received notice of infringement
with respect to asserted Intangibles of others. Except as described in the
Memorandum, there is no Intangible of others which has had or may in the future
have a materially adverse effect on the financial condition, results of
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<PAGE> 8
operations, business, properties, assets, liabilities or future prospects of
the Company.
(xii) The Company has all requisite power and authority to execute,
deliver and perform this Agreement, the Warrants, the Subscription Agreements,
the Escrow Agreement and the Registration Rights Agreement made by the Company
for the benefit of purchasers of Shares (the "Registration Rights Agreement")
(collectively, the "Operative Agreements") and to consummate the transactions
contemplated by the Operative Agreements. All necessary corporate proceedings
of the Company have been duly taken to authorize the execution, delivery and
performance by the Company of the Operative Agreements. This Agreement and the
Escrow Agreement have been duly authorized, executed, and delivered by
the Company, are the legal, valid and binding obligations of the Company and
are enforceable as to the Company in accordance with their terms (subject to
applicable bankruptcy, insolvency and other laws affecting the enforceability
of creditors' rights generally and to general equitable principles). The
Subscription Agreements and the Registration Rights Agreement have been duly
authorized by the Company and, when executed and delivered by the Company, will
be the legal, valid and binding obligations of the Company enforceable against
it in accordance with their respective terms (subject to applicable bankruptcy,
insolvency and other laws affecting the enforceability of creditors' rights
generally and to general equitable principles). No consent, authorization,
approval, order, license, certificate or permit of or from, or registration,
qualification, declaration or filing with, any federal, state, local, foreign
or other governmental authority or any court or other tribunal is required by
the Company for the execution, delivery or performance by the Company of the
Operative Agreements or the consummation of the transactions contemplated by
the Operative Agreements, except (A) the filing of a Notice of Sales of
Securities on Form D pursuant to Regulation D and (B) such consents,
authorizations, approvals, registrations and qualifications as may be required
under securities or "blue sky" laws in connection with the issuance, sale and
delivery of the Shares pursuant to this Agreement. No consent of any party to
any contract, agreement, instrument, lease, license, arrangement or
understanding to which the Company is a party or to which any of their
properties or assets are subject is required for the execution, delivery or
performance of the Operative Agreements or the consummation of the transactions
contemplated by the Operative Agreements, which has not been or will not be
obtained prior to the Closing or any Additional Closings and the execution,
delivery and performance of the Operative Agreements, and the consummation of
the transactions contemplated by the Operative Agreements, will not violate,
result in a breach of, conflict with or (with or without the giving of notice
or the passage of time or both) entitle any party to terminate or call a
default under any such contract, agreement, instrument, lease, license,
arrangement or understanding (except for any such violation, breach or conflict
which has been properly waived thereunder), violate or result in a breach of
any term of the Company's Certificate of Incorporation or By-laws, each as
amended to date, or violate, result in a breach of or conflict with any law,
rule, regulation, order, judgment or decree binding on the Company, or to which
any of its operations, businesses, properties or assets are subject.
(xiii) The Shares, the Warrants and the Warrant Shares conform to all
statements relating thereto contained in the Memorandum. The Shares, when
issued and delivered to the subscribers therefor, pursuant to the terms of
this
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<PAGE> 9
Agreement and the Subscription Agreements, and the Warrant Shares, when
issued and delivered pursuant to the terms of the Warrants, shall be duly
authorized, validly issued, fully paid and nonassessable and shall not have
been issued in violation of any preemptive rights set forth in the Company's
Certificate of Incorporation or By-laws, each as amended to date, or any
agreement to which the Company is a party.
(xiv) Subsequent to the dates as of which information is given in the
Memorandum, and except as may otherwise be properly described in the
Memorandum, (A) the Company has not, except in the ordinary course of business,
incurred any liability or obligation, primary or contingent, for borrowed
money, (B) there has not been any material change in the capital stock,
short-term debt or long-term debt of the Company, (C) the Company has not
entered into any transaction not in the ordinary course of business, (D) the
Company has not purchased any of its outstanding capital stock nor declared or
paid any dividend or distribution of any kind on its capital stock, (E) the
Company has not sustained any material loss or interference with its businesses
or properties from fire, flood, hurricane, accident or other calamity, whether
or not covered by insurance, or from any labor dispute or any legal or
governmental proceeding or (F) there has not been any material adverse change,
or any development which the Company reasonably believes could result in a
prospective material adverse change, in the financial condition results of
operations, business, properties, assets, liabilities or future prospects of
the Company, except in each case as described in or contemplated by the
Memorandum.
(xv) Neither the Company nor, to the knowledge of the Company, any of its
affiliates has, directly or through any agent, sold, offered for sale or
solicited offers to buy, nor will any of the foregoing directly buy (other than
pursuant to the Offering) any security of the Company, as defined in the Act,
which is or will be integrated with the sale of the Shares, the Warrants or the
Warrant Shares in a manner that would require the registration, pursuant to the
Act, of the Offering.
(xvi) The Company has not, directly or indirectly, taken any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares or sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Shares.
(xvii) The Company has good and marketable title to all real and personal
property owned by it, in each case free and clear of any security
interests, liens, encumbrances, equities, claims and other defects, except such
as do not materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Company, and any real property and buildings held under lease by the Company
are held under valid, subsisting and enforceable leases, with such exceptions
as are not material and do not interfere with the use made or proposed to be
made of such property and buildings by the Company, in each case except as
described in or contemplated by the Memorandum.
(xviii) No labor dispute with the employees of the Company exists or is
threatened or imminent that could result in a material adverse change in
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<PAGE> 10
the financial condition results of operations, business, properties,
assets, liabilities or future prospects of the Company, except as described in
or contemplated by the Memorandum.
(xix) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which they are engaged; the Company has not
been refused any insurance coverage sought or applied for; and the Company has
no reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
insurers of recognized financial responsibility as may be necessary to continue
its business at a cost that would not materially and adversely affect the
financial condition results of operations, business, properties, assets,
liabilities or future prospects of the Company, except as described in or
contemplated by the Memorandum.
(xx) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a material
adverse affect on the Company; and has paid all taxes required to be paid by it
and any other assessment, fine or penalty levied against it to the extent that
any of the foregoing is due and payable, except for any such assessment, fine
or penalty that is currently being contested in good faith or as described in
or contemplated by the Memorandum.
(xxi) The Company is not in violation of any federal or state law or
regulation relating to occupational safety and health or to the storage,
handling or transportation of hazardous or toxic materials and the Company has
received all permits, licenses or other approvals required of it under
applicable federal and state occupational safety and health and environmental
laws and regulations to conduct its business, and the Company is in compliance
with all terms and conditions of any such permit, license or approval, except
any such violation of law or regulation, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals which would not, singly or in the
aggregate, result in a material adverse change in the financial condition,
results of operations, business, properties, assets, liabilities or future
prospects of the Company, except as described in or contemplated by the
Memorandum.
(xxii) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxiii) No default by the Company exists, and no event has occurred which,
with notice or lapse of time or both, would constitute a default by the
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<PAGE> 11
Company in the due performance and observance of any term, covenant or
condition of any contract, agreement, instrument, lease, license, arrangement
or understanding to which the Company is a party or by which the Company or any
of its properties is bound or may be affected in any material adverse respect
with regard to property, business or operations of the Company.
(xxiv) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
(b) Representations and Warranties of the Placement Agent and Selected
Dealers. The Placement Agent, and each Selected Dealer that the Placement
Agent may from time to time appoint, by signing the Selected Dealer Agreement,
hereby represent and warrant to, and agree with, the Company and each other as
to themselves only as follows:
(i) Neither the Placement Agent nor any Selected Dealer will offer or sell
any Shares to any investor which the Placement Agent or such Selected Dealer
did not have reasonable grounds to believe and did not believe, was an
"accredited investor".
(ii) Neither the Placement Agent nor any Selected Dealer will offer or
sell any Shares by means of any form of general solicitation or general
advertising, including, without limitation, the following:
(A) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over
television or radio; and
(B) any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
(iii) The Placement Agent and each Selected Dealer is a member in good
standing of the National Association of Securities Dealers, Inc. or a
registered representative thereof.
(iv) The representations and warranties contained in the Certificate of
Selected Dealer attached to the form of Selected Dealer Agreement are true and
correct as to the Selected Dealer which executed such Certificate and are true
and correct as to the Placement Agent as if it had executed such a certificate.
(v) Each of the Placement Agent and each Selected Dealer has all requisite
power and authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby. All necessary corporate
proceedings of the Placement Agent and each Selected Dealer have been duly
taken to authorize the execution, delivery and performance by the Placement
Agent and each Selected Dealer of this Agreement. This Agreement has been duly
authorized, executed, and delivered by the Placement Agent and each Selected
Dealer and is the legal, valid and binding obligation of the Placement Agent
and each Selected Dealer in accordance with its terms (subject to applicable
bankruptcy, insolvency and other laws affecting the enforceability of
creditors' rights generally and to general equitable principles).
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<PAGE> 12
6. Covenants.
(a) Covenants of the Company. The Company covenants to the Placement
Agent and each Selected Dealer that it will:
(i) Notify you immediately, and confirm such notice promptly in writing,
(A) when any event shall have occurred during the period commencing on the date
hereof and ending on the later of the Closing Date, the expiration of the
Offering Period and the last Additional Closing Date (if any) as a
result of which the Memorandum would include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (B) of the receipt
of any notification with respect to the modification, rescission, withdrawal or
suspension of the qualification or registration of the Shares or of an
exemption from such registration or qualification in any jurisdiction. The
Company will use its best efforts to prevent the issuance of any such
modification, rescission, withdrawal or suspension and, if any such
modification, rescission, withdrawal or suspension is issued and you so
request, to obtain the lifting thereof as promptly as possible.
(ii) Not supplement or amend the Memorandum unless you shall have approved
of such supplement or amendment in writing. If, at any time during the period
commencing on the date hereof and ending on the later of the Closing Date, the
expiration of the Offering Period or the last Additional Closing Date (if any),
any event shall have occurred as a result of which the Memorandum contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or if, in the opinion of counsel to the Company or counsel to the
Placement Agent, it is necessary at any time to supplement or amend the
Memorandum to comply with the Act, Regulation D or any applicable securities or
"blue sky" laws, the Company will promptly prepare an appropriate supplement or
amendment (in form and substance satisfactory to you) which will correct such
statement or omission or which will effect such compliance.
(iii) Deliver without charge to the Placement Agent such number of copies
of the Memorandum and any supplement or amendment thereto as may reasonably be
requested by the Placement Agent.
(iv) Not, directly or indirectly, solicit any offer to buy from, or offer
to sell to any person any Shares except through the Placement Agent.
(v) Not solicit any offer to buy or offer to sell Shares by any form of
general solicitation or advertising, including, without limitation, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar medium or broadcast over television or radio or
any seminar or meeting whose attendees have been invited by any general
solicitation or advertising.
(vi) Use its best efforts to qualify or register the Shares for offering
and sale under, or establish an exemption from such qualification or
registration under, the securities or "blue sky" laws of such jurisdictions as
you may reasonably request. The Company will not consummate any sale of Shares
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<PAGE> 13
in any jurisdiction or in any manner in which such sale may not be lawfully
made.
(vii) At all times during the period commencing on the date hereof and
ending on the later of the Closing Date, the expiration of the Offering Period
and the last Additional Closing Date (if any), provide to each Prospective
Investor or his purchaser representative, if any, on request, such information
(in addition to that contained in the Memorandum) concerning the Offering, the
Company and any other relevant matters as it possesses or can acquire without
unreasonable effort or expense and extend to each Prospective Investor or his
purchaser representative, if any, the opportunity to ask questions of, and
receive answers from, the Company concerning the terms and conditions of the
Offering and the business of the Company and to obtain any other additional
information, to the extent it possesses the same or can acquire it without
unreasonable effort or expense, as such Prospective Investor or purchaser
representative may consider necessary in making an informed investment decision
or in order to verify the accuracy of the information furnished to such
Prospective Investor or purchaser representative, as the case may be.
(viii) Before accepting any subscription to purchase Shares from, or
making any sale to, any Prospective Investor, have reasonable grounds to
believe and actually believe that (A) such Prospective Investor meets the
suitability requirements for investing in the Shares set forth in the
Memorandum and (B) such Prospective Investor is an accredited investor.
(ix) Notify you promptly of the acceptance or rejection of any
subscription. The Company shall not unreasonably reject any subscription for
Shares unless it pays the Placement Agent its compensation pursuant to Section
4 with respect thereto. Any subscription unreasonably rejected shall be deemed
to have been accepted for purposes of determining whether at least 1,400,000
Shares (including Affiliate Shares) have been sold solely for the purpose of
determining whether the Placement Agent is entitled to its compensation
pursuant to Section 4 hereof and this subsection (ix).
(x) File five (5) copies of a Notice of Sales of Securities on Form D with
the Securities and Exchange Commission (the "Commission") no later than 15 days
after the first sale of the Shares and file a final notice on Form D with the
Commission no later than 60 days after the last sale of Shares. The Company
shall file promptly such amendments to such Notices on Form D as shall become
necessary and shall also comply with any filing requirement imposed by the laws
of any state or jurisdiction in which offers
and sales are made. The Company shall furnish you with copies of all such
filings.
(xi) Place the following legend on all certificates representing the
Shares and the Warrants:
"The securities represented hereby have not been
registered under the Securities Act of 1933, as
amended or any state securities laws and neither the
securities nor any interest therein may be offered,
sold, transferred, pledged or otherwise disposed of
except pursuant to an effective registration statement
under such act or such laws or an exemption from
registration
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<PAGE> 14
under such act and such laws which, in
the opinion of counsel for the holder, which counsel
and opinion are reasonably satisfactory to counsel for
this corporation, is available."
(xii) Not, directly or indirectly, engage in any act or activity which may
jeopardize the status of the offering and sale of the Shares as exempt
transactions under the Act or under the securities or "blue sky" laws of any
jurisdiction in which the Offering may be made. Without limiting the
generality of the foregoing, and notwithstanding anything contained herein to
the contrary, the Company shall not, during the six (6) months following
completion of the Offering, (A) directly or indirectly, engage in any offering
of securities which, if integrated with the Offering in the manner prescribed
by Rule 502(a) of Regulation D and applicable releases of the Commission, may
jeopardize the status of the Offering and sale of the Shares as exempt
transactions under Regulation D or (B) engage in any offering of securities,
without the opinion of counsel reasonably satisfactory to the Placement Agent,
to the effect that such offering would not result in integration with this
Offering, or if integration would so result, that such integration would not
jeopardize the status of this Offering as an exempt transaction under
Regulation D.
(xiii) Apply the net proceeds from the sale of the Shares for the purposes
set forth under the caption "Use of Proceeds" in the Memorandum in
substantially the manner indicated thereunder.
(xiv) Not, during the period commencing on the date hereof and ending on
the later of the Closing Date, the expiration of the Offering Period and the
last Additional Closing Date (if any), issue any press release or other
communication or hold any press conference with respect to the Company,
its financial condition, results of operations, business, properties, assets,
liabilities or future prospects or the Offering, without your prior written
consent.
(xv) Not, for a period of 12 months after the date hereof, without your
prior written consent, offer, issue, sell, contract to sell, grant any option
for the sale of or otherwise dispose of, directly or indirectly, any shares of
Common Stock (or any security or other instrument which by its terms is
convertible into, exercisable for, or exchangeable for shares of Common Stock),
except for (A) the securities issuable under this Agreement or the Warrants,
(B) shares of Common Stock issuable upon the exercise of stock options under
any stock option plan of the Company, warrants and other commitments, each of
which are outstanding on the date hereof and which are described in the
Memorandum, (C) pursuant to options granted after the date hereof under
existing stock option plans, provided that the underlying shares are subject to
the lock-up provided in Section 8(h) hereof, (D) securities disposed of in
strategic alliances and (E) shares of Common Stock sold at a price of or over
$10.00 per share (subject to adjustment for stock splits) or in a public
offering by an underwriter which has effected an offering of at least $25
million during the last year.
(xvi) For a period of five years after the date hereof, furnish you,
without charge, the following:
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<PAGE> 15
(A) within 90 days after the end of each fiscal year, three (3) copies
of financial statements certified by independent certified public accountants,
including a balance sheet, statement of income and statement of cash flows of
the Company and its then existing subsidiaries, with supporting schedules,
prepared in accordance with generally accepted accounting principles, as at the
end of such fiscal year and for the 12 months then ended, which may be on a
consolidated basis, and, within 45 days after the end of each fiscal quarter,
three (3) copies of unaudited interim financial statements, as at the end of
such quarter and for the three (3) months then ended, copies of all of which
financial statements shall also be furnished to the purchasers in this
Offering;
(B) as soon as practicable after they have been sent to stockholders of
the Company or filed with the Commission, three (3) copies of each annual and
interim financial and other report or communication sent by the Company to its
stockholders or filed with the Commission; and
(C) as soon as practicable, two copies of every press release and every
material news item and article in respect of the Company or its affairs which
was released by the Company.
(xvii) Comply in all respects with its obligations under the Operative
Agreements.
(xviii) Not, prior to the completion of the Offering, bid for, purchase,
attempt to induce others to purchase, or sell, directly or indirectly, any
Shares or any other securities of the Company of the same class and series as
the Shares in violation of the provisions of Rule 10b-6 under the Exchange Act.
(b) Covenants of the Placement Agent and Selected Dealers.
(i) Neither the Placement Agent nor any Selected Dealer, by signing the
Selected Dealer Agreement, will accept the subscription of any person unless
immediately before accepting such subscription the Placement Agent or such
Selected Dealer has reasonable grounds to believe and does believe that (A)
such person is an accredited investor and (B) all representations made and
information furnished by such person in the Subscription Agreement and related
documents are true and correct in all material respects. The Placement Agent
and Selected Dealers agree to notify the Company promptly if the Placement
Agent or a Selected Dealer, as applicable, shall, at any time during the period
after delivery of the documents furnished by such person to the Company in
connection with subscription for Shares and immediately before the sale of
Shares to such person, no longer reasonably believe one or more of the
foregoing matters with respect to such person.
(ii) Neither the Placement Agent nor any Selected Dealer will solicit
purchasers of Shares other than in the jurisdictions in which such solicitation
may, upon the advice of counsel, be made under applicable securities or "blue
sky" laws and in which the Placement Agent or such Selected Dealer, as the case
may be, is qualified so to act.
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<PAGE> 16
(iii) Neither the Placement Agent nor any Selected Dealer will sell any
Shares to any investor unless a Memorandum is furnished to such investor within
a reasonable time prior thereto.
(iv) Upon notice from the Company that the Memorandum is to be amended or
supplemented (which the Company will promptly give upon becoming aware of any
untrue statement of a material fact required to be stated in the Memorandum or
omission to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading), the Placement Agent and each Selected Dealer, if any, will
immediately cease use of the Memorandum until the Placement Agent and such
Selected Dealers have received such amendment or supplement and thereafter will
make use of the Memorandum only as so amended or supplemented, and the
Placement Agent and each Selected Dealer, if any, will deliver a copy of such
amendment or supplement to each Prospective Investor to whom a copy of the
Memorandum had previously been delivered (and who had not returned such copy)
and whose subscription had not been rejected.
7. Payment of Expenses.
(a) The Company hereby agrees to pay all fees, charges and expenses of the
Offering, including, without limitation, all fees, charges, and expenses in
connection with (i) the preparation, printing, reproduction, filing,
distribution and mailing of the Memorandum, and all other documents relating to
the offering, purchase, sale and delivery of the Shares, and any supplements or
amendments thereto, including the fees and expenses of counsel to the Company,
and the cost of all copies thereof, (ii) the issuance, sale, transfer and
delivery of the Shares and the Warrants, including any transfer or other taxes
payable thereon and the fees of any Transfer Agent, Warrant Agent or Registrar,
(iii) the registration or qualification of the Shares or the securing of an
exemption therefrom under state or foreign "blue sky" or securities laws,
including, without limitation, filing fees payable in the jurisdictions in
which such registration or qualification or exemption therefrom is sought, the
costs of preparing preliminary, supplemental and final "Blue Sky Surveys"
relating to the offer and sale of the Shares and the fees and disbursements of
counsel to the Placement Agent in connection with such "blue sky" matters, (iv)
the filing fees, if any, payable to the Commission; and (v) the retention of
the Escrow Agent, including the fees and expenses of the Escrow Agent for
serving as such and the fees and expenses of its counsel.
(b) If subscriptions to purchase at least 1,000,000 shares (including the
Affiliate Shares) are received prior to the expiration of the Offering Period
and accepted by the Company, the Company shall pay to the Placement Agent a
non-accountable expense allowance equal to 3% of the gross proceeds. Such
amounts (less amounts, if any, previously paid to you in respect of such
non-accountable expense allowance) shall be paid by the Company out of the
funds received from the sale of the Shares.
(c) If subscriptions to purchase at least 1,000,000 shares (including the
Affiliate Shares) are not received prior to the expiration of the Offering
Period or if this Agreement is terminated by the Placement Agent pursuant to
Section 8 hereof prior to the issuance, sale and delivery of any Shares, the
Company shall reimburse the Placement Agent for its reasonable out-of-pocket
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<PAGE> 17
expense hereunder (including, without limitation, the reasonable fees and
expenses of counsel).
8. Conditions of Placement Agent's Obligations. The obligations of the
Placement Agent pursuant to this Agreement shall be subject, in its discretion,
to the continuing accuracy of the representations and warranties of the Company
contained herein and in each certificate and document contemplated under this
Agreement to be delivered to the Placement Agent, as of the date hereof and as
of the Closing Date (and, if applicable, each Additional Closing Date) to the
performance by the Company of its obligations hereunder, and to the following
conditions:
(a) At the Closing and each Additional Closing, as the case may be, the
Placement Agent shall have received the favorable opinion of Schwartz &
Freeman, counsel for the Company, and Olson & Hierl, Ltd., patent counsel for
the Company, respectively, each dated the date of delivery, addressed to the
Placement Agent, in substantially the forms of Exhibit III-1 and Exhibit III-2
hereto, respectively.
(b) At the Closing and each Additional Closing, as the case may be, the
Placement Agent shall have received a letter or letters, from Coopers &
Lybrand, L.L.P., accountants for the Company, dated the date of delivery,
addressed to the Placement Agent, as to the financial information contained in
the Memorandum, in form and substance satisfactory to the Placement Agent.
(c) On or prior to the Closing Date and each Additional Closing Date, as
the case may be, the Placement Agent shall have been furnished such
information, documents and certificates as it may reasonably require for the
purpose of enabling it to review the matters referred to in this Section 8 and
in order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties, covenants, agreements or conditions herein
contained, or as it may otherwise reasonably request.
(d) At the Closing and each Additional Closing, as the case may be, the
Placement Agent shall have received a certificate of the chief executive
officer and of the chief financial officer of the Company, dated the Closing
Date or such Additional Closing Date, as the case may be, to the effect that,
as of the date of this Agreement and as of the Closing Date or such Additional
Closing Date, as the case may be, the representations and warranties of the
Company contained herein were and are accurate, and that as of the Closing Date
or such Additional Closing Date, as the case may be, the obligations to
be performed by the Company hereunder on or prior thereto have been fully
performed.
(e) All proceedings taken in connection with the issuance, sale and
delivery of the Shares shall be reasonably satisfactory in form and substance
to you and your counsel.
(f) There shall not have occurred, at any time prior to the Closing or, if
applicable, an Additional Closing, as the case may be, (i) any domestic or
international event, act or occurrence which has materially disrupted, or in
your reasonable opinion will in the immediate future materially disrupt, the
securities markets; (ii) a general suspension of, or a general limitation on
prices for, trading in securities on the New York Stock Exchange or the
American
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<PAGE> 18
Stock Exchange or in the over-the-counter market; (iii) any outbreak
of major hostilities or other national or international calamity affecting
securities markets in the United States; (iv) any banking moratorium declared
by a state or federal authority; (v) any moratorium declared in foreign
exchange trading by major international banks or other persons; (vi) any
material interruption in the mail service or other means of communication
within the United States; (vii) any material adverse change in the business,
properties, assets, results of operations or financial condition of the
Company; or (viii) any change in the market for securities in general or in
political, financial or economic conditions which, in your reasonable business
judgment, makes it inadvisable to proceed with the offering, sale and delivery
of the Shares.
(g) The Sales Agent shall have received an agreement reflecting the
provisions of Section 6(a)(xv) hereof.
(h) The Sales Agent shall have received from each person who is an officer
or director of the Company and from each person who holds 5% or more of the
Common Stock, an agreement to the effect that such person will not, without the
Sales Agent's prior written consent, offer, issue, sell, contract to sell,
grant any option for the sale of or otherwise dispose of, directly or
indirectly, any shares of Common Stock (or any security or other instrument
which by its terms is convertible into, exercisable for, or exchangeable for
shares of Common Stock) for a period of one year from the filing date of a
Registration Statement on Form S-3 for the resale of the Shares. This
paragraph shall not be applicable to the Escrow Agent or to an officer or
director who has terminated service to the Company.
(i) John Kapoor shall have exercised warrants to purchase 800,000 shares
of Common Stock at an exercise price of $2.125 per share and shall have
delivered full payment therefor to the Company.
Any certificate or other document signed by any officer of the Company and
delivered to you or to your counsel as required hereunder shall be deemed a
representation and warranty by the Company hereunder as to the statements made
therein. If any condition to your obligations hereunder has not been fulfilled
as and when required to be so fulfilled, you may terminate this Agreement or,
if you so elect, in writing waive any such conditions which have not been
fulfilled or extend the time for their fulfillment. In the event that you
elect to terminate this Agreement, you shall notify the Company of such
election in writing. Upon such termination, neither party shall have any
further liability or obligation to the other except as provided in Section 10
hereof.
9. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Placement Agent,
the Selected Dealers, their officers, directors, stockholders, employees,
agents, advisors, consultants and counsel, and each person, if any, who
controls the Placement Agent or a Selected Dealer within the meaning of Section
15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), against any and all loss, liability, claim,
damage and expense whatsoever (which shall include, for all purposes of this
Section 9, without limitation, attorneys' fees and any and all expenses
whatsoever incurred in
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<PAGE> 19
investigating, preparing or defending against any litigation, commenced
or threatened, or any claim whatsoever and any and all amounts paid in
settlement of any claim or litigation) as and when incurred arising out of,
based upon or in connection with (i) any untrue statement or alleged untrue
statement of a material fact contained in (A) the Memorandum or in any document
delivered or statement made pursuant to Section 6(a)(vii), or (B) in any
application or other document or communication (in this Section 9 collectively
called an "application") executed by or on behalf of the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to register or qualify the Shares under the "blue sky" or
securities laws thereof or in order to secure an exemption from such
registration or qualification or filed with the Commission; or any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, all in light of the
circumstances in which made, unless such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company as stated in Section 9(b) with respect to the Placement Agent expressly
for inclusion in the Memorandum or in any application, as the case may be; or
(ii) any breach of any representation, warranty, covenant or agreement of the
Company contained in this Agreement or any Operative Agreement. The foregoing
agreement to indemnify shall be in addition to any liability the Company may
otherwise have, including liabilities arising under this Agreement.
If any action is brought against the Placement Agent, a Selected Dealer or
any of their officers, directors, stockholders, employees, agents, advisors,
consultants and counsel, or any controlling persons of the Placement Agent or a
Selected Dealer (an "indemnified party"), in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company (the
"indemnifying party") in writing of the institution of such action (but the
failure so to notify shall not relieve the indemnifying party from any
liability it may have other than pursuant to this Section 9(a) unless such
failure materially prejudices the indemnifying party), and the indemnifying
party shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties) and payment of expenses. Such indemnified party shall have the right
to employ its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless the employment
of such counsel shall have been authorized in writing by the indemnifying party
in connection with the defense of such action or the indemnifying party shall
not have promptly employed counsel reasonably satisfactory to such indemnified
party or parties to have charge of the defense of such action or such
indemnified party or parties shall have reasonably concluded that there may be
one or more legal defenses available to it or them or to other indemnified
parties which are different from or additional to those available to one or
more of the indemnifying parties and it would be inappropriate for the same
counsel to represent both parties due to actual or potential differing
interests between them, in any of which events such fees and expenses shall be
borne by the indemnifying party and the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party
or parties. Anything in this paragraph to the contrary notwithstanding, the
indemnifying party shall not be liable for any settlement of any such claim or
action effected without its written consent. The Company agrees promptly to
notify the
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<PAGE> 20
Placement Agent of the commencement of any litigation or proceedings
against the Company or any of its officers or directors in connection with the
sale of the Shares, the Memorandum or any application.
(b) The Placement Agent agrees to indemnify and hold harmless the Company,
its officers, directors, employees, agents and counsel, and each other person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Placement Agent in Section 9(a), but only
with respect to statements or omissions, if any, made in the Memorandum in
reliance upon and in conformity with written information furnished to the
Company as stated in this Section 9(b) with respect to the Placement Agent
expressly for inclusion in the Memorandum. For all purposes of this Agreement,
information set forth under the caption "Placement Agent's Limited History" in
the Memorandum constitute the only information furnished in writing by the
Placement Agent expressly for inclusion in the Memorandum. If any action shall
be brought against the Company or any other person so indemnified based on the
Memorandum and in respect of which indemnity may be sought against the
Placement Agent pursuant to this Section 9(b), the Placement Agent shall have
the rights and duties given to the indemnifying party, and the Company
and each other person so indemnified shall have the rights and duties given to
the indemnified parties, by the provisions of Section 9(a). The foregoing
agreement to indemnify shall be in addition to any liability the Placement
Agent may otherwise have, including liabilities arising under this Agreement.
(c) To provide for just and equitable contribution, if (i) an indemnified
party makes a claim for indemnification pursuant to Section 9(a) or 9(b) but it
is found in a final judicial determination, not subject to further appeal, that
such indemnification may not be enforced in such case, even though this
Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the Act, the
Exchange Act, or otherwise, then the Company (including for this purpose any
contribution made by or on behalf of any officer, director, employee, agent or
counsel of the Company or any controlling person of the Company), on the one
hand, and the Placement Agent and the Selected Dealers (including for this
purpose any contribution by or on behalf of an indemnified party), on the other
hand, shall contribute to the losses, liabilities, claims, damages and expenses
whatsoever to which any of them may be subject, in such proportions as are
appropriate to reflect the relative benefits received by the Company, on the
one hand, and the Placement Agent and the Selected Dealers, on the other hand;
provided, however, that if applicable law does not permit such allocation, then
other relevant equitable considerations such as the relative fault of the
Company and the Placement Agent and the Selected Dealers in connection with the
facts which resulted in such losses, liabilities, claims, damages and expenses
shall also be considered. The relative benefits received by the Company, on
the one hand, and the Placement Agent and the Selected Dealers, on the other
hand, shall be deemed to be in the same proportion as (x) the total proceeds
from the Offering (net of compensation payable to the Placement Agent pursuant
to Section 4 hereof but before deducting expenses) received by the Company, and
(y) the compensation received by the Placement Agent pursuant to Section 4
hereof or, in the case of a Selected Dealer, the allowance paid to such
Selected Dealer.
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<PAGE> 21
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission or alleged omission
relates to information supplied by the Company or by the Placement Agent and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement, alleged statement, omission or alleged
omission. The Company and the Placement Agent agree that it would be unjust
and inequitable if the respective obligations of the Company and the Placement
Agent and the Selected Dealers for contribution were determined by
pro rata or per capita allocation of the aggregate losses, liabilities, claims,
damages and expenses or by any other method of allocation that does not reflect
the equitable considerations referred to in this Section 9(c). In no case
shall the Placement Agent or a Selected Dealer be responsible for a portion of
the contribution obligation in excess of the compensation received by it
pursuant to Section 4 hereof or the Selected Dealer Agreement, as the case may
be, less the aggregate amount of any damages that such Placement Agent or
Selected Dealer has otherwise been required to pay in respect of the same or
any substantially similar claim. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 9(c), each person, if any, who
controls the Placement Agent or a Selected Dealer within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act and each officer, director,
stockholder, employee, agent and counsel of the Placement Agent and the
Selected Dealers shall have the same rights to contribution as the Placement
Agent or the Selected Dealer, and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act and each officer, director, employee, agent and counsel of the Company
shall have the same rights to contribution as the Company, subject in each case
to the provisions of this Section 9(c). Anything in this Section 9(c) to the
contrary notwithstanding, no party shall be liable for contribution with
respect to the settlement of any claim or action effected without its written
consent. This Section 9(c) is intended to supersede any right to contribution
under the Act, the Exchange Act or otherwise.
10. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants and
agreements at the Closing Date and, if applicable, each Additional Closing
Date, and such representations, warranties, covenants and agreements, including
the indemnity and contribution agreements contained in Section 9, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of the Placement Agent or any indemnified person, or by or on
behalf of the Company or any person or entity which is entitled to be
indemnified under Section 9(b), and shall survive termination of this Agreement
or the issuance, sale and delivery of the Shares. In addition, notwithstanding
any election hereunder or any termination of this Agreement, and whether or not
the terms of this Agreement are otherwise carried out, the provisions of
Sections 6(a)(xvii), 7, 9, 10 and 12 shall survive termination of this
Agreement and shall not be affected in any way by such election or termination
or failure to carry out the terms of this Agreement or any part thereof.
-21-
<PAGE> 22
11. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to the Placement
Agent, shall be mailed, delivered or telexed or telegraphed and confirmed by
letter, to its address set forth above, or if sent to the Company, shall be
mailed, delivered or telexed or telegraphed and confirmed by letter, to UNIMED
Pharmaceuticals, Inc., 2150 East Lake Cook Road, Suite 210, Buffalo Grove,
Illinois 60089. All notices hereunder shall be effective upon receipt by the
party to which it is addressed.
12. Assignment. This Agreement shall not be assigned by any party hereto
without the prior written consent of the other parties hereto.
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Placement Agent and the Company and the persons and
entities referred to in Section 9 who are entitled to indemnification or
contribution and their respective successors, legal representatives and assigns
(which shall not include any purchaser, as such, of Shares), and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provision
herein contained.
14. Construction. This Agreement shall be construed in accordance with
the laws of the State of New York, without giving effect to conflict of laws.
15. Counterparts. This Agreement may be executed in counterparts, each of
which shall constitute an original and all of which, when taken together, shall
constitute one agreement.
-22-
<PAGE> 23
If the foregoing correctly sets forth the understanding between us, please
so indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us.
Very truly yours,
UNIMED PHARMACEUTICALS, INC.
By: __________________________________
Stephen M. Simes
President
Accepted as of the date first above written.
New York, New York
SUNRISE SECURITIES CORP.
By: ___________________________________
Nathan Low
President
<PAGE> 1
EXHIBIT 11
UNIMED PHARMACEUTICALS, INC. AND SUBSIDIARIES
COMPUTATION OF INCOME (LOSS) PER SHARE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995
---------------------- 1994(1) 1993(1)
FULLY --------- ----------
PRIMARY DILUTED PRIMARY PRIMARY
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Common and equivalent shares:
Weighted average shares outstanding............. 6,178,453 6,226,729 6,127,161 6,040,606
Additional shares assuming exercise of dilutive
stock options................................ 499,226 637,761 33,040 --
Additional shares assuming exercise of dilutive
stock warrants............................... 352,874 436,431 240,865 --
--------- --------- --------- ---------
Average number of common and common equivalent
shares.......................................... 7,030,553 7,300,921 6,401,066 6,040,606
========= ========= ========= =========
Net income (loss):
Net income (loss)............................... $625,062 $625,062 $40,708 $(852,294)
--------- --------- --------- ---------
Net income (loss) per common and common equivalent
share(1):....................................... $0.09 $0.09 $0.01 $(0.14)
========= ========= ========= =========
</TABLE>
- -------------------------
Note:
(1) The fully diluted calculation is not presented in the 1994 and 1993
computations since they would have been antidilutive, as the resultant net
income (loss) per share is the same as for primary net income (loss) per
share.
<PAGE> 1
EXHIBIT 24(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of Unimed Pharmaceuticals, Inc. and Subsidiaries Form S-8 (File No. 33-55286) of
our report dated February 13, 1996, except for Note 14 as to which the date is
February 29, 1996 on our audits of the consolidated financial statements and
financial statement schedule of Unimed Pharmaceuticals, Inc. and Subsidiaries as
of December 31, 1995 and 1994 and for each of the three years in the period
ended December 31, 1995, which report is included in this Annual Report on Form
10-K.
Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 21, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000100759
<NAME> UNIMED PHARMACEUTICALS, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 7,012
<SECURITIES> 1,389
<RECEIVABLES> 2,083
<ALLOWANCES> 0
<INVENTORY> 3,328
<CURRENT-ASSETS> 14,088
<PP&E> 1,922
<DEPRECIATION> 1,051
<TOTAL-ASSETS> 16,305
<CURRENT-LIABILITIES> 5,665
<BONDS> 0
0
0
<COMMON> 1,568
<OTHER-SE> 9,072
<TOTAL-LIABILITY-AND-EQUITY> 16,305
<SALES> 7,320
<TOTAL-REVENUES> 7,750
<CGS> 3,201
<TOTAL-COSTS> 7,007
<OTHER-EXPENSES> 106
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 637
<INCOME-TAX> 12
<INCOME-CONTINUING> 625
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 625
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
