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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 1, 1999
REGISTRATION NO. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
MAXIM PHARMACEUTICALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 87-0279983
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
8899 UNIVERSITY CENTER LANE, SUITE 400
SAN DIEGO, CALIFORNIA 92122
(858) 453-4040
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OR REGISTRANT'S PRINCIPAL
EXECUTIVE OFFICES)
DALE A. SANDER
VICE PRESIDENT, FINANCE, CHIEF FINANCIAL OFFICER AND SECRETARY
MAXIM PHARMACEUTICALS, INC.
8899 UNIVERSITY CENTER LANE, SUITE 400
SAN DIEGO, CALIFORNIA 92122
(858) 453-4040
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
STEVEN KAPLAN
ARNOLD & PORTER
555 TWELFTH STREET, N.W.
WASHINGTON, D.C. 20004-1202
(202) 942-5998
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ___________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ___________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / / ___________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE (1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $.001. . . . . . 3,544,225 $13.7505 $48,734,866 $12,866.00
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of the Securities Act of 1933 based upon the average of the
high and low prices of Registrant's Common Stock on November 29, 1999 as
reported on the American Stock Exchange.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS
3,544,225 SHARES
MAXIM PHARMACEUTICALS, INC.
COMMON STOCK
The selling stockholders identified in this prospectus are selling
3,544,225 shares of Maxim Pharmaceuticals, Inc. common stock. Maxim will not
receive any of the proceeds from the sale of shares by the selling stockholders.
Our common stock is listed on the American Stock Exchange under the symbol "MMP"
and on the Stockholm Stock Exchange under the symbol "MAXM". The closing sale
price of the common stock, as reported on the American Stock Exchange on
November 29, 1999, was $13.625 per share.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS," BEGINNING ON PAGE 3.
Neither the Securities Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is December 1, 1999.
<PAGE>
SUMMARY
IN THIS PROSPECTUS, THE WORDS "WE," "OUR," AND "US" REFER ONLY TO MAXIM
AND NOT TO THE SELLING STOCKHOLDERS OR ANY OTHER PERSON. THIS PROSPECTUS
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE CERTAIN RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS COULD BE VERY DIFFERENT THAN THE RESULTS WE
DISCUSS IN THIS PROSPECTUS OR THE INFORMATION WE INCORPORATE BY REFERENCE INTO
THIS PROSPECTUS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THE FOLLOWING SECTION AND
THOSE DISCUSSED IN THE SECTION ENTITLED "RISK FACTORS."
THE COMPANY
Maxim is developing a new generation of drugs, therapies and vaccines
for cancer, infectious diseases and topical disorders.
Our lead drug candidate, MAXAMINE(-Registered Trademark-), is currently
being tested in Phase 3 clinical trials in malignant melanoma, the most deadly
form of skin cancer and acute myelogenous leukemia, the most common acute adult
leukemia, in 12 countries around the world. A Phase 3 trial is a large-scale
test designed to be the final human study demonstrating the safety and efficacy
of a drug and supporting an application to the U.S. Food and Drug Administration
or international regulatory agencies for marketing approval. The initial market
launch of MAXAMINE is planned for early 2001 in the U.S. and late 2001 in
certain countries outside the U.S, subject to the receipt of regulatory
approvals.
A series of Phase 2 clinical trials in patients with malignant melanoma
and acute myelogenous leukemia have shown a more than doubling of survival and
remission times for patients treated with MAXAMINE as well as the ability to
maintain patient quality of life during treatment with the drug. A Phase 2 trial
is an intermediate test designed to show a preliminary evidence of efficacy of
the drug being tested. These studies have shown a more than doubling of survival
and remission times for patients treated with MAXAMINE as well as the ability to
maintain patient quality of life during treatment with the drug. Earlier-stage
clinical studies have also suggested promise in the following diseases:
- Renal cell carcinoma, a cancer of the kidneys; and
- Multiple myeloma, a cancer of the bone marrow.
In November 1999 we announced preliminary 12-week results from a phase
2 study of MAXAMINE in combination in the treatment of previously untreated
hepatitis C-infected patients. Hepatitis C is a viral infection targeting the
liver, and the study is designed to evaluate the safety and activity of four
different dose regimens of MAXAMINE in combination with the standard dose of
interferon, an agent currently approved for the treatment of hepatitis C. After
12 weeks of therapy, the combination of MAXAMINE and interferon achieved a
complete biochemical and viral response, the accepted endpoints for measuring
effectiveness of treatment, in 72 percent of all patients compared to the 25 to
40 percent response that is commonly observed in patients with similar profiles
treated with interferon alone.
More than 800 patients have been treated in our completed and ongoing
clinical trials.
A second product platform under development is MAXDERM(-TM-), A
MAXAMINE-related series of drugs for the treatment of certain topical disorders.
Randomized, blinded, placebo-controlled trials have been conducted in more than
75 patients. Studies in patients with oral mucositis, a serious side effect of
chemotherapy and radiation treatment of cancer patients, and cold sores
suggested that MAXDERM resolved lesions more effectively than a placebo control.
Other clinical data suggests that MAXDERM may be beneficial in the treatment of
bed sores, shingles, burns, eye infections and other related conditions. Our
third technology platform, MAXVAX(-TM-), is currently in preclinical development
and is designed to facilitate a new class of needle-free mucosal vaccines for
several infectious diseases including respiratory infections, sexually
transmitted diseases, and gastrointestinal tract diseases.
THE OFFERING
We recently completed a preferred stock financing from which we received
aggregate proceeds of $23.8 million. We are obligated to register the common
stock issuable upon conversion of this preferred stock so that it can be resold
in the public market. We are also registering common stock, and the common stock
issuable upon
2.
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exercise of warrants held by certain advisors to Maxim. We will not receive any
of the proceeds from the sale of common stock pursuant to this prospectus.
The selling stockholders may sell the shares of common stock described
in this prospectus in public or private transactions, on or off the American
Stock Exchange, at prevailing market prices, or at privately negotiated prices.
The selling stockholders may sell shares directly to purchasers or through
brokers or dealers. Brokers or dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders. More
information is provided in the section entitled "Plan of Distribution."
Our principal executive offices are located at 8899 University Center
Lane, Suite 400, San Diego, California 92122 and our telephone number is (619)
453-4040.
3.
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RISK FACTORS
IN EVALUATING OUR BUSINESS, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING
RISK FACTORS IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS
AND INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
WE ARE NOT PROFITABLE AND EXPECT TO CONTINUE TO INCUR LOSSES. IF WE DO NOT
BECOME PROFITABLE, WE MAY ULTIMATELY BE FORCED TO DISCONTINUE OUR OPERATIONS.
We are a development-stage enterprise. We have experienced net losses
every year since our inception and, as of September 30, 1999 had an accumulated
deficit of approximately $81.9 million. We anticipate incurring substantial
additional losses over at least the next several years related to developing and
testing our product candidates and preparing for commercialization of our
products. If we do not become profitable, our stock price will be negatively
affected, and we may ultimately be forced to wind down our operations.
WE WILL LIKELY NEED TO RAISE ADDITIONAL FUNDS IN THE FUTURE. IF WE ARE UNABLE TO
OBTAIN THE FUNDS NECESSARY TO CONTINUE OUR OPERATIONS, WE MAY BE REQUIRED TO
DELAY, SCALE BACK OR ELIMINATE ONE OR MORE OR OUR PRODUCT COMMERCIALIZATION
PROGRAMS.
We have already spent substantial funds developing our products and
business. We expect to continue to have negative cash flow from our operations
for at least the next several years. We will likely have to raise substantial
additional funds to complete the development of our products and to bring them
to market. Our future capital requirements will depend on numerous factors,
including:
- the results of our clinical trials; o the timing and scope of
any additional clinical trials undertaken;
- the scope and results of our research and development
programs;
- the time required to obtain regulatory approvals;
- our ability to establish marketing alliances and collaborative
agreements;
- the cost of our internal marketing activities; and
- the cost of filing, prosecuting and, if necessary, enforcing
patent claims.
Additional financing may not be available on acceptable terms, if at
all. If adequate funds are not available, we may be required to delay, scale
back or eliminate one or more of our product development programs or obtain
funds through arrangements with collaborative partners or others that may
require us to relinquish rights to certain of our technologies or products that
we would not otherwise relinquish.
THE DEVELOPMENT OF OUR PRODUCTS IS SUBJECT TO UNCERTAINTIES, MANY OF WHICH ARE
BEYOND OUR CONTROL. IF WE FAIL TO SUCCESSFULLY DEVELOP OUR PRODUCTS, OUR ABILITY
TO GENERATE REVENUES WILL BE SUBSTANTIALLY IMPAIRED.
Potential products based on our MAXAMINE, MAXDERM and MAXVAX
technologies will require extensive clinical testing, regulatory approval and
substantial additional investment before we can sell them. We cannot assure you
that any of our products will:
- be successfully developed;
- prove to be safe and effective in clinical trials;
- meet applicable regulatory standards;
- be capable of being produced in commercial quantities at
acceptable costs;
- be eligible for third party reimbursement from governmental or
private insurers; or
- be successfully marketed or achieve market acceptance.
We have not completed final testing for efficacy or safety in humans
for any of our products, and any delay in our expected testing and development
schedules, or any elimination of product development program entirely, will
negatively impact our ability to generate revenues from the sale of our
products.
4.
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OUR PRODUCT CANDIDATES ARE SUBJECT TO SIGNIFICANT GOVERNMENT REGULATION WHICH
COULD INCREASE THE COST OF DEVELOPING OUR PRODUCTS AND DELAY OR PREVENT THE
SALES OF OUR PRODUCTS.
Our product candidates are subject to significant regulation by the
U.S. Food and Drug Administration, or the FDA, as well as similar agencies in
countries outside the United States. Satisfaction of lengthy and detailed
laboratory and clinical testing procedures required to submit an application for
regulatory approval is costly and may take a number of years. If we do not
receive FDA approval for our products under development, we will not be able to
market or sell our products in the United States. This would prevent us from
generating product revenue in the United States and would be extremely
detrimental to our business and financial condition. European and other
international regulatory approvals are subject to similar risks and
uncertainties as regulatory approvals in the United States.
We are expending substantial time and financial resources to conduct
clinical trials, but we cannot be sure that the results of our clinical trials
will support the submission of an investigational new drug application or a
product license application, or that any applications we do file will be
approved by the FDA or any similar foreign agency on a timely basis, or at all.
Once we do receive regulatory approval, we will still be subject to
ongoing regulatory requirements. Moreover, government regulation may increase at
any time, creating additional costs and delays for us.
IF WE FAIL TO SECURE ADEQUATE PROTECTION OF OUR INTELLECTUAL PROPERTY OR THE
RIGHT TO USE CERTAIN INTELLECTUAL PROPERTY OF OTHERS, WE MAY NOT BE ABLE TO
PROTECT OUR PRODUCTS AND TECHNOLOGIES FROM COMPETITORS.
Our success depends in large part on our ability to obtain, maintain
and protect patents and trade secrets and to operate without infringing upon the
proprietary rights of others. If we are unable to do so, our products and
technologies may not provide us with any competitive advantage.
The patent positions of biotechnology and pharmaceutical companies are
highly uncertain and involve complex legal and factual questions, and the
breadth of claims allowed in biotechnology and pharmaceutical patents cannot be
predicted. As a result, patents may not issue from any of our patent
applications. Further, patent applications in the United States are secret until
a patent issues, and we cannot be certain that others have not filed patent
applications for technology covered by our pending applications or that we were
the first to file patent applications for this technology. In addition, patents
currently held by us or issued to us in the future, or to licensors from whom we
have licensed technology rights, may be challenged, invalidated or circumvented
so that our intellectual property rights may not protect our technologies or
provide commercial advantage to us. In addition, we also rely on unpatented
trade secrets and proprietary know-how, and we cannot be sure that others will
not obtain access to or independently develop such trade secrets and know-how.
The pharmaceutical industry has experienced extensive litigation
regarding patent and other intellectual property rights. Although, to date, we
are not aware of any intellectual property claims against us, in the future, we
could be forced to incur substantial costs in defending ourselves in lawsuits
that are brought against us claiming that we have infringed the patent rights of
others or in asserting our patent rights in lawsuits against other parties. We
may also be required to participate in interference proceedings declared by the
United States Patent and Trademark Office for the purpose of determining the
priority of inventions in connection with our patent applications or other
parties' patent applications. Adverse determinations in litigation or
interference proceedings could require us to seek licenses that may not be
available on commercially reasonable terms or subject us to significant
liabilities to third parties.
5.
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OUR FAILURE TO ATTRACT AND RETAIN QUALIFIED PERSONNEL COULD PREVENT US FROM
GROWING OUR BUSINESS.
Our future performance and growth depends in part upon the continued
contributions of our senior management team and on our ability to attract and
retain qualified management and scientific personnel. Competition for such
personnel is intense, and we do not know if we will be able to continue to
attract, assimilate or retain highly qualified technical and management
personnel. The loss of key personnel or the failure to recruit additional
personnel or develop needed expertise could have a material and adverse affect
on our efficiency and on our ability to grow our business.
BECAUSE WE ARE DEPENDENT ON OUR COLLABORATIVE PARTNERS AND CONTRACTORS FOR
CLINICAL TESTING AND FOR CERTAIN RESEARCH AND DEVELOPMENT ACTIVITIES, THE
RESULTS OF OUR CLINICAL TRIALS AND SUCH RESEARCH ACTIVITIES ARE, TO A CERTAIN
EXTENT, BEYOND OUR CONTROL.
Our business strategy requires us to rely on our collaborative partners
and contractors to assist us with clinical testing and certain research and
development activities. As a result, our success is dependent upon the success
of these outside parties in performing their responsibilities. Although we
believe our collaborative partners are economically motivated to perform on
their contractual obligations, we can not control the amount of and timing of
resources and skill applied to these activities by our collaborators. In
addition, we may not be able in the future to negotiate acceptable collaborative
arrangements required to implement our business strategy, and even if we are
able to enter into further collaborative arrangements in the future, we cannot
be sure that these arrangements will be successful.
WE HAVE NO EXPERIENCE MARKETING OR SELLING PHARMACEUTICAL PRODUCTS.
Although we currently intend to co-market MAXAMINE in the United
States, we have never marketed or sold any pharmaceutical product before. In
order to co-market and co-sell MAXAMINE or other products, we will need to
develop a sales force and a marketing group with relevant pharmaceutical
experience, and also to make appropriate arrangements with strategic partners.
We cannot guarantee that we will be able to attract, assimilate or retain highly
qualified marketing and sales personnel, or successfully employ them to
commercialize MAXAMINE. If we cannot develop the required marketing and sales
expertise both internally and through our partnering arrangements, our ability
to generate revenue from product sales will likely suffer.
We intend to rely on our collaborative partners to market and sell
MAXAMINE in international markets, and such arrangements may be sought to market
MAXDERM and MAXVAX in all markets. We have not yet entered into any
collaborative arrangement with respect to marketing or selling MAXAMINE with the
exception of agreements relating to Australia, New Zealand and Israel, and have
not entered into any agreements regarding MAXDERM or MAXVAX, and we cannot
guarantee that we will be able to enter into any such arrangements on terms
favorable to us, or at all. If we are able to enter into marketing and selling
arrangements with collaborative partners we cannot assure you that such
marketing collaborators will apply adequate resources and skills to their
responsibilities, or that their marketing efforts will be successful.
WE WILL BE DEPENDENT ON THIRD PARTY MANUFACTURERS OF OUR PRODUCTS. OUR ABILITY
TO SELL PRODUCT MAY BE HARMED TO THE EXTENT ADEQUATE QUANTITIES OF OUR PRODUCTS
ARE NOT MANUFACTURED ON A TIMELY BASIS.
We do not intend to acquire or establish our own dedicated
manufacturing facilities for MAXAMINE in the foreseeable future and have, and
expect to continue to, contract with established pharmaceutical manufacturers
for the production of the product. If we are unable to continue to contract with
third-party manufacturers on acceptable terms, our ability to conduct clinical
testing and to produce commercial quantities of MAXAMINE and other products will
be adversely affected. If we cannot adequately manufacture our products, it
could result in delays in submissions for regulatory approval and in commercial
product launches, which in turn could materially impair our competitive position
and the possibility of achieving profitability. We cannot guarantee that we will
be able to
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<PAGE>
maintain our existing contract manufacturing relationships, or acquire or
establish new, satisfactory third-party relationships to provide adequate
manufacturing capabilities in the future.
OUR PRODUCTS MAY NOT BE ACCEPTED, PURCHASED OR USED BY DOCTORS, PATIENTS OR
PAYORS.
MAXAMINE, and any of our other products in development, may not achieve
market acceptance even if the FDA and similar foreign regulatory agencies
approve the drug. The degree of market acceptance of our products will depend on
a number of factors, including:
- the scope of regulatory approvals;
- the establishment and demonstration in the medical community
of the clinical efficacy and safety of our products;
- their potential advantages over existing treatment methods;
and o reimbursement policies of government and other
third-party payors.
We cannot guarantee that physicians, patients, payors or the medical
community in general will accept and utilize any products that we develop.
WE COMPETE AGAINST MANY COMPANIES AND RESEARCH INSTITUTIONS THAT ARE DEVELOPING
PRODUCTS TO TREAT THE SAME DISEASES AS OUR PRODUCTS. TO THE EXTENT THESE
COMPETITORS ARE SUCCESSFUL IN DEVELOPING AND MARKETING SUCH PRODUCTS, OUR FUTURE
POTENTIAL MARKET SHARE AND REVENUES COULD BE REDUCED.
There are many companies, both publicly and privately held, including
well-known pharmaceutical companies and academic and other research
institutions, engaged in developing pharmaceutical and biologically-derived
products for the treatment of cancer and vaccines and therapeutics for the
prevention or the treatment of infectious diseases. Products developed by any of
these companies or institutions may demonstrate greater safety or efficacy than
our products or be more widely accepted by doctors, patients or payors. Many of
our competitors and potential competitors have substantially greater capital,
research and development capabilities and human resources than we do and
represent significant competition. Many of these competitors also have
significantly greater experience than we do in undertaking preclinical testing
and clinical trials of new pharmaceutical products and obtaining FDA and other
regulatory approvals. If any of our products are approved for commercial sale,
we will also be competing with companies that have greater resources and
experience in manufacturing, marketing and selling pharmaceutical products. To
the extent that any of our competitors succeed in developing products that are
more effective, less costly, or have better side effect profiles than our
products, then our market share could decrease which may have a negative impact
on our business.
THE TECHNOLOGY IN OUR SECTOR IS DEVELOPING RAPIDLY, AND OUR FUTURE SUCCESS
DEPENDS ON OUR ABILITY TO KEEP ABREAST OF TECHNOLOGICAL CHANGE.
We are engaged in the pharmaceutical field, which is characterized by
extensive research efforts and rapid technological progress. New developments in
oncology, cancer therapy, medicinal pharmacology, biochemistry and other fields
are expected to continue at a rapid pace. Research and discoveries by others may
render some or all of our proposed programs or products noncompetitive or
obsolete. Our business strategy is subject to the risks inherent in the
development of new products using new technologies and approaches. Unforeseen
problems may develop with these technologies or applications, and we may not be
able to successfully address technological challenges we encounter in our
research and development programs. This may result in our inability to develop
commercially feasible products.
THERE ARE SUBSTANTIAL SHARES ELIGIBLE FOR FUTURE SALE. THE SALE OF THESE SHARES
MAY DEPRESS OUR STOCK PRICE.
Sales of substantial amounts of our common stock in the public market
could adversely affect prevailing market prices for our common stock and our
ability to raise equity capital in the future. As of December 1, 1999 we have
outstanding 12,523,538 shares of common stock. Of these shares, an aggregate of
11,599,198 shares are freely tradable in the public market, unless acquired by
our affiliates. The remaining 924,340 shares are "restricted
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securities" as that term is defined in Rule 144 under the Securities Act, of
which 773,919 are eligible for immediate sale in the public market pursuant to
Rule 144, subject to certain volume and manner of sale limitations, and of which
23,021 are being registered hereby and will be eligible for immediate sale in
the public market pursuant to such registration. As of December 1, 1999 we also
have outstanding 267,664 shares of preferred stock which are convertible into
2,676,640 shares of common stock. All of these preferred shares are restricted
and none are eligible for immediate sale in the public market pursuant to Rule
144. However, the shares of common stock issuable upon conversion of such shares
of preferred stock are being registered hereby and will be eligible for
immediate sale in the public market pursuant to such registration.
As of December 1, 1999 approximately 3,121,216 shares of common stock
underlying warrants, 977,310 shares issued or reserved for issuance under our
equity incentive plan, and 41,909 shares reserved for issuance under our 401(k)
plan will be available for immediate sale in the public market, unless purchased
by our affiliates. There are 681,302 shares of common stock underlying certain
warrants outstanding as of December 1, 1999 which have not been registered for
public sale and will be subject to the public sale restrictions of Rule 144 or
Rule 701 under the Securities Act, where applicable if the warrants are
exercised. However, 509,024 of the shares of common stock underlying these
warrants are being registered hereby and will be available for immediate sale in
the public market upon such registration.
OUR STOCK PRICE MAY BE HIGHLY VOLATILE DUE TO EXTERNAL FACTORS.
Our common stock currently trades on the American Stock Exchange and on
the Stockholm Stock Exchange. Historically, our common stock has generally
experienced relatively low daily trading volumes in relation to the aggregate
number of shares outstanding. Sales of substantial amounts of our common stock
in the public market could adversely affect the prevailing market prices of our
common stock and our ability to raise equity capital in the future.
Factors that may have a significant impact on the market price or the
liquidity of our common stock also include:
- actual or potential clinical trial results relating to
products under development by us or our competitors;
- delays in our testing and development schedules;
- events or announcements relating to our collaborative
relationships with others;
- announcements of technological innovations or new products by
us or our competitors;
- developments or disputes concerning patents or proprietary
rights;
- regulatory developments in both the United States and
countries outside of the United States;
- economic and other external factors, as well as
period-to-period fluctuations in our financial results.
External factors may also adversely affect the market prices for our
common stock. The price and liquidity of our common stock may be significantly
affected by the overall trading activity and market factors on the American
Stock Exchange and the Stockholm Stock Exchange, and these factors may differ
between the two markets. In addition, the securities markets have from time to
time experienced significant price and volume fluctuations that may be unrelated
to the operating performance of particular companies. The market prices of the
common stock of many publicly traded pharmaceutical or biotechnology companies
have in the past been, and can in the future be expected to be, especially
volatile.
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The following table sets forth the high and the low sales prices for our common
stock for the quarter indicated as reported on the American Stock Exchange:
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HIGH LOW
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YEAR ENDED SEPTEMBER 30, 1998:
First Quarter.................................................... $ 19-1/4 $ 12-1/4
Second Quarter................................................... 16-5/8 13-3/4
Third Quarter.................................................... 23 14-1/8
Fourth Quarter................................................... 20-1/2 14
YEAR ENDED SEPTEMBER 30, 1999:
First Quarter.................................................... $ 16-1/2 $ 11-5/8
Second Quarter................................................... 15-5/8 10-1/2
Third Quarter ................................................... 11-3/8 9
Fourth Quarter................................................... 10-5/8 7-1/2
YEAR ENDING SEPTEMBER 30, 2000:
First Quarter (through November 29, 1999)........................ $ 15-3/8 $ 8
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WHERE YOU CAN GET MORE INFORMATION
We are a reporting company and file annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read and
copy these reports, proxy statements and other information at the SEC's public
reference rooms in Washington, D.C., New York, NY and Chicago, IL. You can
request copies of these documents by writing to the SEC and paying a fee for the
copying cost. Please call the SEC at 1-800-SEC-0330 for more information about
the operation of the public reference rooms. Our SEC filings are also available
at the SEC's Web site at "HTTP://WWW.SEC.GOV". In addition, you can read and
copy our SEC filings at the office of the American Stock Exchange at 86 Trinity
Place, New York, New York.
The SEC allows us to "incorporate by reference" information that we
file with them, which means that we can disclose important information to you by
referring you to those documents. Our SEC file number for the information we
have incorporated by reference is 001-14430. The information incorporated by
reference is an important part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934:
- Annual Report on Form 10-K for the year ended September 30,
1998;
- Quarterly Reports on Form 10-Q for the quarters ended December
31, 1998, March 31, 1999 and June 30, 1999;
- Our registration statement on Form 8-A filed on June 28, 1996
which includes a description of our common stock; and
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You may request a copy of these filings at no cost, by writing or
telephoning us at the following address or telephone number:
Maxim Pharmaceuticals
8899 University Center Lane, Suite 400
San Diego, CA 92122
Attn: Corporate Secretary
(858) 453-4040
This prospectus is part of a larger registration statement we filed with the
SEC. In deciding whether to buy our common stock, you should rely only on the
information incorporated by reference or provided in this prospectus. We have
not authorized anyone else to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document
USE OF PROCEEDS
Maxim will not receive any of the proceeds from the sale of the shares
of common stock offered by the selling stockholders.
10.
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SELLING STOCKHOLDERS
The following table sets forth the names of each of the selling
stockholders, the number of shares of common stock beneficially owned by the
selling stockholders as of December 1, 1999 and the number of shares of common
stock being offered by each of them pursuant to this prospectus. This
information is based upon information provided by each respective selling
stockholder. Because the selling stockholders may offer all, some or none of
their respective shares of common stock, no definitive estimate can be provided
as to the number of shares or percentage of outstanding common stock that will
be held by the selling stockholders after such offering. The term "selling
stockholders" includes the stockholders listed below and their transferees,
pledgees, donees or other successors.
- To our knowledge, the persons named in the table below have
sole voting and investment power with respect to all shares of
the common stock shown as beneficially owned by them, subject
to community property laws where applicable and the
information contained in the footnotes to this table.
- Percentage ownership is based on 12,523,538 shares of common
stock outstanding as of December 1, 1999 plus shares of common
stock that may be received upon conversion of the Series B
Preferred Stock or exercise of warrants held by the selling
stockholder.
- The number of shares being offered includes shares of common
stock issuable in connection with dividends payable on such
shares, assuming such dividends are paid in stock in lieu of
cash.
Unless otherwise indicated in the footnotes below, the number of shares
beneficially owned before this offering by each selling stockholder and the
number of shares being offered consist solely of shares of common stock issuable
upon conversion of our Series B Preferred Stock. For each selling stockholder,
we have included shares issuable in connection with required dividends on the
Series B Preferred Stock assuming that each selling stockholder will elect to
take such dividends in shares of stock instead of cash. For any stockholder that
elects to take all such dividends in cash, the number of shares of common stock
issuable upon conversion of such holder's Series B Preferred Stock would be
approximately 11% less than the number indicated in the table below.
None of the selling stockholders has, or within the past three years
has had, any position, office or other material relationship with Maxim
Pharmaceuticals, Inc. or any of its predecessors or affiliates.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED NUMBER OF SHARES BENEFICIALLY OWNED
BEFORE OFFERING SHARES AFTER OFFERING
BEING
SELLING STOCKHOLDER NUMBER PERCENT OFFERED NUMBER PERCENT
- ------------------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
AP Asset Management AG (1) 135,580 1.07% 135,580 - -
Werkstrasse 2
8806 Bach
Switzerland
The Aries Master Fund (2) 340,170 2.66% 263,210 76,960 *
787 Seventh Avenue, 48th Floor
New York, NY 10019
Aries Domestic Fund, L.P.(3) 140,990 1.12% 106,740 34,250 *
787 Seventh Avenue, 48th Floor
New York, NY 10019
Aries Domestic Fund II, L.P.(4) 9,420 * 8,300 1,120 *
787 Seventh Avenue, 48th Floor
New York, NY 10019
</TABLE>
11.
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED NUMBER OF SHARES BENEFICIALLY OWNED
BEFORE OFFERING SHARES AFTER OFFERING
BEING
SELLING STOCKHOLDER NUMBER PERCENT OFFERED NUMBER PERCENT
- ------------------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Caduceus Capital II L.P. 105,280 * 105,280 - -
767 Third Avenue, 6th Floor
New York, NY 10017
Cappello Capital Corp. (5) 5,602 * 5,602 - -
1299 Ocean Avenue, Suite 306
Santa Monica, CA 90401
Clarion Capital Corporation 37,800 * 37,800 - -
1801 East 9th Street, Suite 1120
Cleveland, Ohio 44114
DVG Deutsche Vermogensbildungsgesellschaft mbH (6) 841,200 6.52% 378,290 462,910 3.70%
Feldbergstra(beta)e 22
60323 Frankfurt, Germany
DWS Investment GmbH 1,125,500 8.25% 1,125,500 - -
Gruneburgweg 113-115
60323 Frankfurt Am Main, Germany
Evolution Capital (7) 360,000 2.79% 360,000 - -
156 West 56th Street, 11th Floor
New York, NY 10019
Forsakringsbolaget SPP Omsesidigt (8) 736,540 5.82% 129,820 606,720 4.84%
SE-103 73 Stockholm, Sweden
Kristoffer Hellstrand 30,815 * 23,021 7,794 *
Brodragatan 19
S-412 74 Goteborg, Sweden
Index Special Situations Fund, Ltd. 37,800 * 37,800 - -
Montague Sterling Centre, East Bay Street
P.O. Box SS-6238
Nassau, Bahamas
Charles Johnston (9) 29,420 * 12,580 16,840 *
706 Ocean Drive
Juno Beach, FL 33408
The Kriegsman Group (10) 240,232 1.88% 7,842 232,390 1.82%
920 Greentree Road
Pacific Palisades, CA 90272
Livforsahringsahtiebolaget Skandia (publ) (11) 951,300 7.45% 252,200 699,100 5.58%
SE-103 50 Stockholm
Sweden
Merced Partners, LP 126,090 1.00% 126,090 - -
601 Carlson Parkway, Suite 200
Minnetonka, MN 55305
</TABLE>
12.
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED NUMBER OF SHARES BENEFICIALLY OWNED
BEFORE OFFERING SHARES AFTER OFFERING
BEING
SELLING STOCKHOLDER NUMBER PERCENT OFFERED NUMBER PERCENT
- ------------------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Douglas & Laurie Moore Family Trust 12,580 * 12,580 - -
2455 Deer Valley Lane
Walnut Creek, CA 94598
Mr. Steven M. Oliveira 25,200 * 25,200 - -
4 Piper Court
Blauvelt, NY 10913
Roston Enterprises (12) 35,190 * 6,280 28,910 *
2201 Canyonback Road
Los Angles, CA 90049
SEB Lakemedel och Bioteknikfond (13) 573,006 4.54% 107,180 465,826 3.72%
ST S6
SE-106 40 Stockholm, Sweden
SEB Lux (F) Lakemedel och Bioteknikfond (14) 37,520 * 18,890 18,630 *
SEB Private Bank
P.O. Box 487
L-2014, Sweden
Wechsler & Co., Inc. (15) 71,490 * 37,800 33,690 *
105 South Bedford Road, Suite 310
Mount Kisco, NY 10549
Wendt Family Revocable Trust (16) 29,040 * 10,700 18,340 *
4900 West Dry Creek Road
Healdsburg, CA 95448
Winchester Global Trust Company Limited 209,940 1.65% 209,940 - -
as Trustee for Caduceus Capital Trust
767 Third Avenue, 6th Floor
New York, NY 10017
</TABLE>
- -------------------------
* Less than 1%
(1) Includes warrants to purchase 135,580 shares of common stock at an
exercise price of $11.9375 per share, all of which are immediately
exercisable.
(2) Includes 76,960 shares of common stock beneficially owned by the Aries
Master Fund as of December 1, 1999.
(3) Includes 34,250 shares of common stock beneficially owned the Aries
Domestic Fund, L.P. as of December 1, 1999.
(4) Includes 1,120 shares of common stock beneficially owned by Aries
Domestic Fund II, L.P. as of December 1, 1999.
(5) Includes warrants to purchase 5,602 shares of common stock at an
exercise price of $8.925 per share, all of which are immediately
exercisable.
(6) Includes 462,910 shares of common stock beneficially owned by DVG
Deutsche Vermogensbildungsgesellschaft mbH as of December 1, 1999.
13.
<PAGE>
(7) Includes warrants to purchase 360,000 shares of common at an exercise
price of $11.15625 per share, all of which are immediately exercisable.
(8) Includes 606,720 shares of common stock beneficially owned by
Forsakringsbolaget SPP Omsesidigt as of December 1, 1999.
(9) Includes 16,840 shares of common stock beneficially owned by Charles
Johnston as of December 1, 1999.
(10) Includes warrants to purchase 7,842 shares of common stock at an
exercise price of $8.925 per share, all of which are immediately
exercisable. Also includes warrants to purchase 32,390 shares of common
stock at an exercise price of $9.725 per share, all of which are
immediately exercisable and warrants to purchase 200,000 shares of
common stock at an exercise price of $13.00 per share, 75% of which are
immediately exercisable, and 25% of which will become exercisable on
December 6, 1999.
(11) Includes 699,100 shares of common stock beneficially owned by
Livforsahringsahtiebolaget Skandia (publ) as of December 1, 1999.
(12) Includes 28,910 shares of common stock beneficially owned by Roston
Enterprises as of December 1, 1999.
(13) Includes 465,826 shares of common stock beneficially owned by SEB
Lakemedel och Bioteknikfond as of December 1, 1999.
(14) Includes 465,826 shares of common stock beneficially owned by SEB Lux
(F) Lakemedel och Bioteknikfond as of December 1, 1999.
(15) Includes 33,690 shares of common stock beneficially owned by Wechsler &
Co., Inc. as of December 1, 1999.
(16) Includes 17,340 shares of common stock beneficially owned by the Wendt
Family Revocable Trust as of December 1, 1999 and warrants to purchase
1,000 shares of common stock, all of which are immediately exercisable.
14.
<PAGE>
PLAN OF DISTRIBUTION
We are registering the shares on behalf of the selling stockholders or
their respective pledgees, donees, transferees or other successors in interest.
All or part of the shares may be offered by the selling stockholders from time
to time in transactions on the American Stock Exchange, or such other exchange
on which the common stock may from time to time be trading, in privately
negotiated transactions, through the writing of options on the shares or a
combination of such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The methods by which the
shares may be sold or distributed may include, but not be limited to, the
following:
- purchases by a broker or dealer as principal and resale by such broker
or dealer for its account;
- an exchange distribution in accordance with the rules of such
exchange;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
- privately negotiated transactions;
- a cross or block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent, but may position and resell a
portion of the block as principal to facilitate the transaction;
- short sales, short sales against the box, puts and calls and other
transactions in our securities or derivatives thereof, in connection
with which the selling stockholders may sell and deliver the shares;
- short sales or borrowings, returns and reborrowings of the shares
pursuant to stock loan agreements to settle short sales;
- delivery in connection with the issuance of securities by issuers,
other than us, that are exchangeable for (whether optional or
mandatory), or payable in, such shares (whether such securities are
listed on a national securities exchange or otherwise) or pursuant to
which such shares may be distributed; and
- a combination of such methods of sale or distribution.
The selling stockholders may also sell such shares in accordance with
Rule 144 under the Securities Act.
In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from the selling stockholders or
from the purchasers in amounts to be negotiated.
This prospectus may also be used by donees of the selling stockholders
or other persons acquiring shares, including brokers who borrow the shares to
settle short sales of shares of common stock, and who wish to offer and sell
such shares under circumstances requiring or making desirable its use. From time
to time the selling stockholders may pledge its shares pursuant to the margin
provisions of its respective customer agreements with respective brokers or
otherwise. Upon a default by the selling stockholders, the broker or pledgee may
offer and sell the pledged shares from time to time.
The selling stockholders and any broker-dealers who act in connection
with the sale of shares hereunder may be deemed to be "underwriters" as that
term is defined in the Securities Act, and any commissions received by them and
any profit on the resale of the shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. In addition, if
a selling stockholder is deemed to be an underwriter, the anti-manipulative
provisions of Regulation M promulgated under the Exchange Act may apply to its
sales.
15.
<PAGE>
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholders will bear the brokerage
commissions and similar selling expenses, if any, attributable to the sale of
their shares.
LEGAL MATTERS
Arnold & Porter will give its opinion that the shares offered in this
prospectus have been validly issued and are fully paid and non-assessable.
EXPERTS
The financial statements of Maxim Pharmaceuticals, Inc. as of September
30, 1998 and 1997, and for each of the years in the three-year period ended
September 30, 1998, and for the period from inception (October 23, 1989) through
September 30, 1998, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
16.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the
Company in connection with the sale of the shares of common stock being
registered. All amounts shown are estimates except for the SEC registration fee.
<TABLE>
<S> <C>
SEC Registration Fee $12,866
Legal Fees and expenses $10,000
Blue sky qualification fees and expenses $1,000
Accounting fees and expenses $3,000
Printing and engraving $10,000
Miscellaneous $13,134
----------
Total $50,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Bylaws provide that the Company will indemnify its
directors and executive officers and may indemnify its other officers, employees
and other agents to the fullest extent permitted by Delaware law. The Company is
also empowered under its Bylaws to enter into indemnification contracts with its
directors and officers and to purchase insurance on behalf of any person whom it
is required or permitted to indemnify. Pursuant to this provision, the Company
has entered into indemnity agreements with each of its directors and officers
and currently maintains directors and officers insurance coverage.
In addition, the Company's Certificate of Incorporation provides that
to the fullest extent permitted by Delaware law, the Company's directors will
not be liable for monetary damages for breach of the directors' fiduciary duty
of care to the Company and its stockholders. This provision in the Certificate
of Incorporation does not eliminate the duty of care, and in appropriate
circumstances equitable remedies such as an injunction or other forms of
non-monetary relief would remain available under Delaware law. Each director
will continue to be subject to liability for breach of the director's duty of
loyalty to the Company or its stockholders, for acts or omissions not in good
faith or involving intentional misconduct or knowing violations of law, for any
transaction from which the director derived an improper personal benefit, and
for unlawful payments of dividends or unlawful stock purchase or redemption.
This provision also does not affect a director's responsibilities under any
other laws, such as the federal securities laws or state or federal
environmental laws.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of Registrant. (1)
3.2 Certificate of Amendment of Amended and Restated Certificate of
Incorporation. (13)
3.3 Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions Thereof of Series A
Convertible Preferred Stock. (13)
3.4 Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions Thereof of Series B
Convertible Preferred Stock.
3.5 Bylaws of Registrant. (1)
4.1 Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4.
4.2 Form of Common Stock Certificate. (1)
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C>
5.1 Opinion of Arnold & Porter. *
10.1 Form of Indemnification Agreement for directors and officers of the
Registrant. (1)
10.2 Form of Representative's Warrant Agreement between the Company and
National Securities Corporation, as representative of the several
Underwriters (the "Representative"), including form of Representative's
Warrant Certificate. (1)
10.3 Form of Warrant Agreement between the Company, the Representative and
American Stock Transfer & Trust Company, including form of Warrant
Certificate. (1)
10.4 Option to Buy Technology and Rights Agreement, dated March 30, 1993,
between the Registrant and Estero Anstalt. (1)(2)
10.5 Security Agreement, dated July 27,1993, between the Registrant and
Estero Anstalt. (1)(2)
10.6 Exclusive License Agreement, dated June 14, 1995, among the Registrant,
Jan Holmgren, M.D., Ph.D., Cecil Czerkinsky, Duotol AB and Triotol Ltd.
(1)(2)
10.7 Option and License Agreement, dated May 19, 1993, among the Registrant,
Vitec AB and SBL Vaccin AB, as amended. (1)(2)
10.8 License Agreement dated January 14, 1994, among the Registrant, Vitec
AB and SBL Vaccin, AB, as amended. (1)(2)
10.9 Agreement, dated December 2, 1995, among the Registrant, Syntello
Vaccine Development AB and Estero Anstalt. (1)(2)
10.10 Agreement, dated April 23, 1996, among the Registrant, Anders Vahlne,
M.D., Ph.D. and Syntello Vaccine Development AB. (1)(2)
10.11 Letter Agreement, dated February 15, 1996, between the Registrant and
Burrill & Craves, Inc.(1)
10.12 Lease dated November 1, 1996 between DM Spectrum LLC, a California
limited liability company, as Landlord and the Registrant for 3099
Science Park Road, Suite 150, San Diego, California 92121. (3)
10.13 Stock Purchase Agreement, dated as of July 5, 1996, by and between Dr.
Anders Vahlne and the Registrant. (1)
10.14 Amended and Restated 1993 Long-Term Incentive Plan and forms of stock
option agreements. (4)
10.15 Employment Agreement dated October 1, 1999 between the Registrant and
Kurt R. Gehlsen. *
10.16 Employment Agreement dated October 1, 1999 between the Registrant and
Dale A. Sander.*
10.17 Employment Agreement dated October 1, 1999 between the Registrant and
Larry G. Stambaugh.*
10.18 Loan and Security Agreement between the Registrant and Silicon Valley
Bank. (5)
10.19 Financial Advisory Services Agreement between the Registrant and Rodman
& Renshaw, Inc. dated September 17, 1997.(6)
10.20 Lease dated January 13, 1998 between British Pacific Properties
Corporation, a California Corporation, as Landlord, and the Registrant.
(7)
10.21 Amendment to Loan and Security Agreement dated March 16, 1998 between
the Registrant and Silicon Valley Bank. (8)
10.22 Lease dated July 2, 1998 between British Pacific Properties, a
California Corporation, as Landlord, and the Registrant. (9)
10.23 Employment Agreement dated October 1, 1999 between the Registrant and
Geoffrey B. Altman. *
10.24 Amendment to Loan and Security Agreement dated September 1, 1998
between the Registrant and Silicon Valley Bank. (10)
10.25 License Agreement dated November 6, 1998 among the Registrant,
Professional Pharmaceutical, Inc., Bruce A. Jack, D.D.S. and B. Thomas
White, R.PH. (11)
10.26 Series A Convertible Preferred Stock Purchase Agreement, dated July 20,
1999, between the Registrant and certain purchasers of Registrant's
preferred stock. (13)
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
10.27 Series A Convertible Preferred Stock Purchase Agreement, dated July 20,
1999 between the Registrant and Alfred Berg. (13)
10.28 Secured Promissory Note dated April 7, 1999 between Larry G. Stambaugh
and the Registrant. (12)
10.29 Secured Promissory Note dated April 14, 1999 between Larry G. Stambaugh
and the Registrant. (12)
10.30 Secured Promissory Note dated April 7, 1999 between Kurt R. Gehlsen and
the Registrant. (12)
10.31 Secured Promissory Note dated April 7, 1999 between Dale A. Sander and
the Registrant. (12)
10.32 Common Stock Purchase Warrant, No.#99AR-1, to purchase 200,000 shares
of the Registrant's common stock, issued to The Kriegsman Group on
March 3, 1999. (13)
10.33 Common Stock Purchase Warrant, No.#99PA-1, to purchase 32,390 shares of
the Registrant's common stock, issued to The Kriegsman Group on July
26, 1999. (13)
10.34 Common Stock Purchase Warrant to purchase 300,000 shares of the
Registrant's common stock issued to RGC International Investors, LDC on
July 20, 1999. (13)
10.35 Series B Convertible Preferred Stock Purchase Agreement, dated November
10, 1999, between the Registrant and certain purchasers of Registrant's
preferred stock.
10.36 Form of Common Stock Purchase Warrant issued to AP Asset Management AG,
The Kriegsman Group and Cappello Partners, LLC.
10.37 Form of Common Stock Purchase Warrant issued to Evolution Capital,
Wayne Philip Rothbaum and Mitchell Silber.*
23.1 Consent of KPMG LLP, Independent Auditors.
23.2 Consent of Arnold & Porter. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
- -------
* To be filed by amendment.
(1) Previously filed together with Registrant's Registration Statement on Form
SB-2 (File No. 333-4854-LA) or amendments thereto and incorporated herein
by reference.
(2) Certain confidential portions deleted pursuant to Order Granting
Application Under the Securities Act of 1933 and Rule 406 thereunder
respecting confidential treatment.
(3) Previously filed together with Registrant's Annual Report on Form 10-K
(File No. 1-4430) dated September 30, 1996 and incorporated herein by
reference.
(4) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated December 31, 1996 and incorporated herein by
reference.
(5) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated March 31, 1997 and incorporated herein by
reference.
(6) Previously filed together with Registrant's Registration Statement on Form
S-1 (File No. 333-35895) dated September 18, 1997 and incorporated herein
by reference.
(7) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated December 31, 1997 and incorporated herein by
reference.
(8) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated March 31, 1998 and incorporated herein by
reference.
(9) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated June 30, 1998 and incorporated herein by reference.
II-3
<PAGE>
(10) Previously filed together with the Registrant's Annual Report on Form
10-K/A (File No. 1-4430) dated September 30, 1998 and incorporated herein
by reference.
(11) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated December 31, 1998 and incorporated herein by
reference.
(12) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated June 30, 1999 and incorporated herein by reference.
(13) Previously filed together with Registration Statement on Form S-3 (File No.
333-84711) or amendments thereto and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification by us for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Maxim Pharmaceuticals, Inc. pursuant to the provisions referenced above or
otherwise, we have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is, therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or controlling person of Maxim
Pharmaceuticals, Inc. in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Securities
Act of 1933, as amended, and will be governed by the final adjudication of such
issue.
We hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
II-4
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
We hereby undertake that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Diego, State of
California, on the 1st day of December, 1999.
MAXIM PHARMACEUTICALS, INC.
By: /s/ DALE A. SANDER
-------------------------
Dale A. Sander
Vice President, Finance
Chief Financial Officer
II-6
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Larry G. Stambaugh and Dale A. Sander as his true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for the undersigned and in his name, place and stead, in any and
all capacities, to sign any or all amendments (including post-effective
amendments) to the Registration Statement and to file the same, with exhibits
thereto and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to perform each and every act and thing requisite and necessary to
be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and conforming all that such
attorney-in-fact and agent, or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ LARRY G. STAMBAUGH Chairman of the Board, December 1, 1999
- ----------------------------------------------------- President and Chief Executive Officer
Larry G. Stambaugh (PRINCIPAL EXECUTIVE OFFICER)
/s/ DALE A. SANDER Vice President, Finance, December 1, 1999
- ----------------------------------------------------- Chief Financial Officer and Secretary
Dale A. Sander (PRINCIPAL FINANCIAL
AND ACCOUNTING OFFICER)
/s/ COLIN B. BIER, PH.D. Director December 1, 1999
- -----------------------------------------------------
Colin B. Bier, Ph.D.
/s/ GARY E. FRASHIER Director December 1, 1999
- -----------------------------------------------------
Gary E. Frashier
/s/ THEODOR H. HEINRICHS Director December 1, 1999
- -----------------------------------------------------
Theodor H. Heinrichs
/s/ PER-OLOF MARTENSSON Director December 1, 1999
- -----------------------------------------------------
Per-Olof Martensson
/s/ F. DUWAINE TOWNSEN Director December 1, 1999
- -----------------------------------------------------
F. Duwaine Townsen
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
3.6 Amended and Restated Certificate of Incorporation of Registrant. (1)
3.7 Certificate of Amendment of Amended and Restated Certificate of
Incorporation. (13)
3.8 Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions Thereof of Series A
Convertible Preferred Stock. (13)
3.9 Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions Thereof of Series B
Convertible Preferred Stock.
3.10 Bylaws of Registrant. (1)
4.1 Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4.
4.2 Form of Common Stock Certificate. (1)
5.1 Opinion of Arnold & Porter. *
10.1 Form of Indemnification Agreement for directors and officers of the
Registrant. (1)
10.2 Form of Representative's Warrant Agreement between the Company and
National Securities Corporation, as representative of the several
Underwriters (the "Representative"), including form of Representative's
Warrant Certificate. (1)
10.3 Form of Warrant Agreement between the Company, the Representative and
American Stock Transfer & Trust Company, including form of Warrant
Certificate. (1)
10.4 Option to Buy Technology and Rights Agreement, dated March 30, 1993,
between the Registrant and Estero Anstalt. (1)(2)
10.5 Security Agreement, dated July 27,1993, between the Registrant and
Estero Anstalt. (1)(2)
10.6 Exclusive License Agreement, dated June 14, 1995, among the Registrant,
Jan Holmgren, M.D., Ph.D., Cecil Czerkinsky, Duotol AB and Triotol Ltd.
(1)(2)
10.7 Option and License Agreement, dated May 19, 1993, among the Registrant,
Vitec AB and SBL Vaccin AB, as amended. (1)(2)
10.8 License Agreement dated January 14, 1994, among the Registrant, Vitec
AB and SBL Vaccin, AB, as amended. (1)(2)
10.9 Agreement, dated December 2, 1995, among the Registrant, Syntello
Vaccine Development AB and Estero Anstalt. (1)(2)
10.10 Agreement, dated April 23, 1996, among the Registrant, Anders Vahlne,
M.D., Ph.D. and Syntello Vaccine Development AB. (1)(2)
10.11 Letter Agreement, dated February 15, 1996, between the Registrant and
Burrill & Craves, Inc.(1)
10.12 Lease dated November 1, 1996 between DM Spectrum LLC, a California
limited liability company, as Landlord and the Registrant for 3099
Science Park Road, Suite 150, San Diego, California 92121. (3)
10.13 Stock Purchase Agreement, dated as of July 5, 1996, by and between Dr.
Anders Vahlne and the Registrant. (1)
10.14 Amended and Restated 1993 Long-Term Incentive Plan and forms of stock
option agreements. (4)
10.15 Employment Agreement dated October 1, 1999 between the Registrant and
Kurt R. Gehlsen. *
10.16 Employment Agreement dated October 1, 1999 between the Registrant and
Dale A. Sander.*
10.17 Employment Agreement dated October 1, 1999 between the Registrant and
Larry G. Stambaugh.*
10.18 Loan and Security Agreement between the Registrant and Silicon Valley
Bank. (5)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.19 Financial Advisory Services Agreement between the Registrant and Rodman
& Renshaw, Inc. dated September 17, 1997.(6)
10.20 Lease dated January 13, 1998 between British Pacific Properties
Corporation, a California Corporation, as Landlord, and the Registrant.
(7)
10.21 Amendment to Loan and Security Agreement dated March 16, 1998 between
the Registrant and Silicon Valley Bank. (8)
10.22 Lease dated July 2, 1998 between British Pacific Properties, a
California Corporation, as Landlord, and the Registrant. (9)
10.23 Employment Agreement dated October 1, 1999 between the Registrant and
Geoffrey B. Altman. *
10.24 Amendment to Loan and Security Agreement dated September 1, 1998
between the Registrant and Silicon Valley Bank. (10)
10.25 License Agreement dated November 6, 1998 among the Registrant,
Professional Pharmaceutical, Inc., Bruce A. Jack, D.D.S. and B. Thomas
White, R.PH. (11)
10.26 Series A Convertible Preferred Stock Purchase Agreement, dated July 20,
1999, between the Registrant and certain purchasers of Registrant's
preferred stock. (13)
10.27 Series A Convertible Preferred Stock Purchase Agreement, dated July 20,
1999 between the Registrant and Alfred Berg. (13)
10.28 Secured Promissory Note dated April 7, 1999 between Larry G. Stambaugh
and the Registrant. (12)
10.29 Secured Promissory Note dated April 14, 1999 between Larry G. Stambaugh
and the Registrant. (12)
10.30 Secured Promissory Note dated April 7, 1999 between Kurt R. Gehlsen and
the Registrant. (12)
10.31 Secured Promissory Note dated April 7, 1999 between Dale A. Sander and
the Registrant. (12)
10.32 Common Stock Purchase Warrant, No.#99AR-1, to purchase 200,000 shares
of the Registrant's common stock, issued to The Kriegsman Group on
March 3, 1999. (13)
10.33 Common Stock Purchase Warrant, No.#99PA-1, to purchase 32,390 shares of
the Registrant's common stock, issued to The Kriegsman Group on July
26, 1999. (13)
10.34 Common Stock Purchase Warrant to purchase 300,000 shares of the
Registrant's common stock issued to RGC International Investors, LDC on
July 20, 1999. (13)
10.35 Series B Convertible Preferred Stock Purchase Agreement, dated November
10, 1999, between the Registrant and certain purchasers of Registrant's
preferred stock.
10.36 Form of Common Stock Purchase Warrant issued to AP Asset Management AG,
The Kriegsman Group and Cappello Partners, LLC.
10.37 Form of Common Stock Purchase Warrant issued to Evolution Capital,
Wayne Philip Rothbaum and Mitchell Silber.*
23.1 Consent of KPMG LLP, Independent Auditors.
23.2 Consent of Arnold & Porter. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4.
</TABLE>
- -------
* To be filed by amendment.
(1) Previously filed together with Registrant's Registration Statement on Form
SB-2 (File No. 333-4854-LA) or amendments thereto and incorporated herein
by reference.
(2) Certain confidential portions deleted pursuant to Order Granting
Application Under the Securities Act of 1933 and Rule 406 thereunder
respecting confidential treatment.
<PAGE>
(3) Previously filed together with Registrant's Annual Report on Form 10-K
(File No. 1-4430) dated September 30, 1996 and incorporated herein by
reference.
(4) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated December 31, 1996 and incorporated herein by
reference.
(5) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated March 31, 1997 and incorporated herein by
reference.
(7) Previously filed together with Registrant's Registration Statement on Form
S-1 (File No. 333-35895) dated September 18, 1997 and incorporated herein
by reference.
(7) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated December 31, 1997 and incorporated herein by
reference.
(11) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated March 31, 1998 and incorporated herein by
reference.
(12) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated June 30, 1998 and incorporated herein by reference.
(13) Previously filed together with the Registrant's Annual Report on Form
10-K/A (File No. 1-4430) dated September 30, 1998 and incorporated herein
by reference.
(11) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated December 31, 1998 and incorporated herein by
reference.
(12) Previously filed together with Registrant's Quarterly Report on Form 10-Q
(File No. 1-4430) dated June 30, 1999 and incorporated herein by reference.
(13) Previously filed together with Registration Statement on Form S-3 (File No.
333-84711) or amendments thereto and incorporated herein by reference.
a<PAGE>
Exhibit 3.9
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
MAXIM PHARMACEUTICALS, INC.,
A DELAWARE COMPANY
-------------------------
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
-------------------------
MAXIM PHARMACEUTICALS, INC., a Delaware Company (the "Company"),
certifies that pursuant to the authority contained in its Certificate of
Incorporation (the "Certificate of Incorporation") and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors of the Company adopted the following
resolution, which resolution remains in full force and effect on the date
hereof:
RESOLVED, that there is hereby established a series of authorized
preferred stock having a par value of $.001 per share, which series shall be
designated as "Series B Convertible Preferred Stock," shall consist of Three
Hundred Thousand (300,000) shares and shall have the following voting powers,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof as follows:
1. DESIGNATION AND AMOUNT. The designation of the series of the
Preferred Stock shall be "Series B Convertible Preferred Stock", par value $.001
per share (the "Series B Preferred"). The number of authorized shares of Series
B Preferred shall be Three Hundred Thousand (300,000). The Series B Preferred
shall have an initial issue price of $89.25 per share (the "Original Issue
Price"). The date on which any shares of Series B Preferred are first issued is
referred to herein as the "Original Issue Date."
2. DIVIDEND RIGHTS.
a. At the election of each holder of Series B Preferred, each
holder of Series B Preferred shall be entitled to receive, pari passu with the
payment of dividends to holders of the Company's Series A Convertible Preferred
Stock (the "Series A Preferred") and in
1.
<PAGE>
preference to the payment of dividends to holders of the common stock of the
Company ("Junior Stock"), whether or not dividends are declared by the Board,
either (i) cumulative cash dividends at a rate of twelve percent (12%) of the
"Original Issue Price" per annum on each outstanding share of Series B Preferred
(as adjusted for any stock dividend, combination, splits, recapitalization and
the like with respect to such shares), out of funds of the Company, whether such
funds are legally available therefor or not, or (ii) cumulative dividends
payable in additional shares of Series B Preferred at the rate of twelve percent
(12%) per annum of the number of shares of Series B Preferred issued (whether
issued on the Original Issue Date or subsequent to the Original Issue Date as a
dividend) and outstanding and held by such holder. Notwithstanding the
foregoing, in the event of a conversion of the Series A Preferred into Common
Stock, dividends with respect to such shares of Series A Preferred stock shall
be paid to the holders thereof in preference to the payment of any dividend to
the holders of Series B Preferred Stock. Dividends on the Series B Preferred
Stock shall accrue daily from the date of issuance based on a 360 day year and
shall be paid quarterly in arrears, with the date for such quarterly payments
measured from the Original Issue Date. Should any dividend that is paid through
the issuance and delivery of additional shares of Series B Preferred require the
issuance and delivery of a fractional share of Series B Preferred, no such
fractional share shall be so issued, but instead the Company shall pay the
equivalent value of such fractional share in cash at a rate based upon the
Original Issue Price of the Series B Preferred.
b. So long as any shares of Series B Preferred shall be
outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any other distribution be made, on any Junior Stock, nor
shall any shares of any Junior Stock of the Company be purchased, redeemed, or
otherwise acquired for value by the Company (except for acquisitions of Common
Stock by the Company pursuant to agreements which permit the Company to
repurchase such shares upon termination of services to the Company or in
exercise of the Company's right of first refusal upon a proposed transfer) until
all dividends (set forth in Section 2a above) on the Series B Preferred shall
have been paid or declared and set apart. In the event dividends are paid on any
share of Common Stock, an additional dividend shall be paid with respect to all
outstanding shares of Series B Preferred in an amount equal per share (on an
as-if-converted to Common Stock basis) to the amount paid or set aside for each
share of Common Stock. The provisions of this Section 2b shall not, however,
apply to a dividend payable in Common Stock.
3. VOTING RIGHTS.
a. GENERAL RIGHTS. Except as otherwise provided herein or as
required by law, the Series B Preferred shall be voted equally with the shares
of the Common Stock of the Company and not as a separate class, at any annual or
special meeting of stockholders of the Company, and may act by written consent
in the same manner as the Common Stock, in either case upon the following basis:
each holder of shares of Series B Preferred shall be entitled to such number of
votes as shall be equal to the whole number of shares of Common Stock into which
such holder's aggregate number of shares of Series B Preferred are convertible
(pursuant to Section 5 hereof) as of the close of business on the record date
fixed for such meeting or the effective date of such written consent.
2.
<PAGE>
b. SEPARATE VOTE OF SERIES B PREFERRED. In addition to any
other vote or consent required herein or by law, the vote or written consent of
the holders of at least a majority of the outstanding Series B Preferred shall
be necessary for effecting or validating the following actions:
(i) any amendment to the Company's Certificate of
Incorporation or Bylaws that materially and adversely alters or changes (whether
by merger, consolidation or otherwise) the rights, preferences or privileges of
the Series B Preferred in a manner different than other classes of stock or
increases or decreases the authorized number of shares of Series B Preferred;
(ii) any merger or consolidation of the Company with one or
more other companies in which the stockholders of the Company immediately before
such merger or consolidation hold stock representing less than a majority of the
outstanding stock of the surviving company or any sale of all or substantially
all of the assets of the Company;
(iii) any sale of Common Stock or other security
convertible into Common Stock of the Company for cash at a price per share (or,
in the case of a convertible security at a conversion price per share) less than
the Conversion Price, which sale would result in the issuance of shares of
Common Stock equal to 10% or more of the number of shares of Common Stock
outstanding at the time of such sale (including, for the purposes of such
calculation, the shares of Common Stock issuable upon conversion of the Series B
Preferred);
(iv) any redemption by the Company of any equity securities
of the Company;
(v) any payment of a dividend other than dividends payable
on the Series A Preferred and the Series B Preferred;
(vi) any grant by the Company of an exclusive license under
its core technology (other than licensing arrangements related to marketing or
selling the Company's products); or
(vii) any issuance of securities senior in rights,
preferences or privileges to the Series B Preferred.
c. ELECTION OF DIRECTORS. If at any time the Company shall not
make a regularly scheduled dividend payment and such dividend shall remain
accrued and unpaid at the time of an election of the Company's directors, the
holders of the Series B Preferred, voting as a separate class, shall be entitled
to elect one (1) director to the Company's Board of Directors, and to remove
from office such director and to fill any vacancy caused by the resignation,
death or removal of such director.
4. LIQUIDATION RIGHTS.
a. Upon any liquidation, dissolution, or winding up of the
Company, whether voluntary or involuntary, the holders of Series B Preferred
shall be entitled to be paid
3.
<PAGE>
out of the assets of the Company an amount per share of Series B Preferred equal
to the greater of (i) the Original Issue Price plus all accrued and unpaid
dividends on the Series B Preferred (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such
shares) for each share of Series B Preferred held by them, or (ii) such amount
per share as would have been payable had each such share been converted to
Common Stock pursuant to Section 5 immediately prior to such liquidation,
dissolution or winding-up (the "Liquidation Preference"). The Liquidation
Preference shall be paid on a pari passu basis with the liquidation preference
paid to the holders of any outstanding Series A Preferred Stock and before any
distribution or payment shall be made to the holders of any Junior Stock.
b. After the payment of the full liquidation preferences of
the Series B Preferred and Series A Preferred as set forth in Section 4a above,
the remaining assets of the Company legally available for distribution, if any,
shall be distributed ratably to the holders of the Common Stock.
c. The following events shall be considered a liquidation
under this Section:
(i) any consolidation or merger of the Company with or into
any other company or other entity or person, or any other corporate
reorganization, in which the stockholders of the Company immediately prior to
such consolidation, merger or reorganization, own less than 50% of the Company's
voting power immediately after such consolidation, merger or reorganization, or
any transaction or series of related transactions to which the Company is a
party in which in excess of fifty percent (50%) of the Company's voting power is
transferred (an "Acquisition"); or
(ii) a sale, lease, transfer or other disposition of all or
substantially all of the assets of the Company or the grant of an exclusive
license of all or substantially all of the Company's rights to its core
technology (other than licensing arrangements related to marketing or selling
the Company's products) (an "Asset Transfer").
d. If, upon any liquidation, distribution, or winding up, the
assets of the Company shall be insufficient to make payment in full to all
holders of Series A Preferred and Series B Preferred of the liquidation
preferences set forth in Section 4a, then such assets shall be distributed among
the holders of Series A Preferred and Series B Preferred at the time
outstanding, ratably in proportion to the full amounts to which they would
otherwise be respectively entitled.
e. In any of such events, if the consideration received by the
Company is other than cash, the amount of the consideration shall be deemed to
be the fair market value of such consideration as determined in good faith by
the Board of Directors; provided, however, that any securities shall be valued
as follows:
(i) Securities not subject to restrictions on free
marketability covered by (ii) below:
4.
<PAGE>
(A) If traded on a securities exchange or through the
Nasdaq National Market, the value shall be deemed to be the average of the
closing prices of the securities on such quotation system over the thirty (30)
day period ending three (3) days prior to the closing;
(B) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid prices over the thirty (30)
day period ending three (3) days prior to the closing; and
(C) If there is no active public market, the value
shall be the fair market value thereof, as determined by the Board of Directors.
(ii) The method of valuation of securities subject to
restrictions on free marketability (other than restrictions arising solely by
virtue of a stockholder's status as an affiliate or former affiliate) shall be
to make an appropriate discount from the market value determined as set forth in
(i) (A), (B) or (C) to reflect the approximate fair market value thereof, as
determined by the Board of Directors.
5. CONVERSION RIGHTS.
The holders of the Series B Preferred shall have the following
rights with respect to the conversion of the Series B Preferred into shares of
Common Stock (the "Conversion Rights"):
a. OPTIONAL CONVERSION. Subject to and in compliance with the
provisions of this Section 5, any shares of Series B Preferred may, at the
option of the holder, be converted at any time into fully-paid and nonassessable
shares of Common Stock. The number of shares of Common Stock to which a holder
of Series B Preferred shall be entitled upon conversion shall be the product
obtained by multiplying the "Series B Preferred Conversion Rate" then in effect
(determined as provided in Section 5b) by the number of shares of Series B
Preferred being converted.
b. SERIES B PREFERRED CONVERSION RATE. The conversion rate in
effect at any time for conversion of the Series B Preferred (the "Series B
Preferred Conversion Rate") shall be the quotient obtained by dividing the
Original Issue Price of the Series B Preferred by the "Series B Preferred
Conversion Price," calculated as provided in Section 5c.
c. SERIES B PREFERRED CONVERSION PRICE. The conversion price
for the Series B Preferred shall initially be $8.925 (the "Series B Preferred
Conversion Price"). Such initial Series B Preferred Conversion Price shall be
adjusted from time to time in accordance with this Section 5. All references to
the Series B Preferred Conversion Price herein shall mean the Series B Preferred
Conversion Price as so adjusted.
d. MECHANICS OF CONVERSION. Each holder of Series B Preferred
who desires to convert the same into shares of Common Stock pursuant to this
Section 5 shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Company or any transfer agent for the Series B
Preferred, and shall give written notice to the Company at
5.
<PAGE>
such office that such holder elects to convert the same. Such notice shall state
the number of shares of Series B Preferred being converted. Thereupon, the
Company shall promptly, but no later than three business days after surrender of
the Series B Preferred stock certificates being converted, issue and deliver at
such office to such holder a certificate or certificates for the number of
shares of Common Stock to which such holder is entitled and shall promptly pay
in cash, or in the event a holder elects to receive Series B Preferred Stock
dividends in lieu of cash dividends, in Series B Preferred, any accrued and
unpaid dividends on the shares of Series B Preferred being converted. In the
event dividends are paid in Series B Preferred, such Series B Preferred shall
also be converted into Common Stock pursuant to the terms of this Section 5.
Such conversion shall be deemed to have been made at the close of business on
the date of such surrender of the certificates representing the shares of Series
B Preferred to be converted, and the person entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder of such shares of Common Stock on such date.
e. ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Company shall at any time or from time to time after the date that the first
share of Series B Preferred is issued (the "Original Issue Date") effect a
subdivision of the outstanding Common Stock without a corresponding subdivision
of the Series B Preferred, the Series B Preferred Conversion Price in effect
immediately before that subdivision shall be proportionately decreased.
Conversely, if the Company shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock into a
smaller number of shares without a corresponding combination of the Series B
Preferred, the Series B Preferred Conversion Price in effect immediately before
the combination shall be proportionately increased. Any adjustment under this
Section 5e shall become effective at the close of business on the date the
subdivision or combination becomes effective.
f. ADJUSTMENT FOR COMMON STOCK DIVIDENDS AND DISTRIBUTIONS. If
the Company at any time or from time to time after the Original Issue Date
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in additional
shares of Common Stock, in each such event the Series B Preferred Conversion
Price that is then in effect shall be decreased as of the time of such issuance
or, in the event such record date is fixed, as of the close of business on such
record date, by multiplying the Series B Preferred Conversion Price then in
effect by a fraction (i) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and (ii) the denominator
of which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date plus the number of shares of Common Stock issuable in payment of
such dividend or distribution; PROVIDED, HOWEVER, that if such record date is
fixed and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Series B Preferred Conversion Price shall
be recomputed accordingly as of the close of business on such record date and
thereafter the Series B Preferred Conversion Price shall be adjusted pursuant to
this Section 5f to reflect the actual payment of such dividend or distribution.
6.
<PAGE>
g. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION.
If at any time or from time to time after the Original Issue Date, the Common
Stock issuable upon the conversion of the Series B Preferred is changed into the
same or a different number of shares of any class or classes of stock, whether
by recapitalization, reclassification or otherwise (other than an Acquisition or
Asset Transfer as defined in Section 4c or a subdivision or combination of
shares or stock dividend or a reorganization, merger, consolidation or sale of
assets provided for elsewhere in this Section 5), in any such event each holder
of Series B Preferred shall have the right thereafter to convert such stock into
the kind and amount of stock and other securities and property receivable upon
such recapitalization, reclassification or other change by holders of the
maximum number of shares of Common Stock into which such shares of Series B
Preferred could have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as provided herein
or with respect to such other securities or property by the terms thereof.
h. REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF
ASSETS. If at any time or from time to time after the Original Issue Date, there
is a capital reorganization of the Common Stock (other than an Acquisition or
Asset Transfer as defined in Section 4c or a recapitalization, subdivision,
combination, reclassification, exchange or substitution of shares provided for
elsewhere in this Section 5), as a part of such capital reorganization,
provision shall be made so that the holders of the Series B Preferred shall
thereafter be entitled to receive upon conversion of the Series B Preferred the
number of shares of stock or other securities or property of the Company to
which a holder of the number of shares of Common Stock deliverable upon
conversion would have been entitled on such capital reorganization, subject to
adjustment in respect of such stock or securities by the terms thereof. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 5 with respect to the rights of the holders of Series
B Preferred after the capital reorganization to the end that the provisions of
this Section 5 (including adjustment of the Series B Preferred Conversion Price
then in effect and the number of shares issuable upon conversion of the Series B
Preferred) shall be applicable after that event and be as nearly equivalent as
practicable.
i. CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or
readjustment of the Series B Preferred Conversion Price for the number of shares
of Common Stock or other securities issuable upon conversion of the Series B
Preferred, the Company, at its expense, shall compute such adjustment or
readjustment in accordance with the provisions hereof and prepare a certificate
showing such adjustment or readjustment, and shall mail such certificate, by
first class mail, postage prepaid, to each registered holder of Series B
Preferred at the holder's address as shown in the Company's books. The
certificate shall set forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (i) the Series B Preferred Conversion Price at the time in effect,
and (ii) the type and amount, if any, of other property which at the time would
be received upon conversion of the Series B Preferred.
j. NOTICES OF RECORD DATE. Upon (i) any taking by the Company
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, or (ii) any Acquisition (as defined
7.
<PAGE>
in Section 4c) or other capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company, any
merger or consolidation of the Company with or into any other Company, or any
Asset Transfer (as defined in Section 4c), or any voluntary or involuntary
dissolution, liquidation or winding up of the Company, the Company shall mail to
each holder of Series B Preferred at least ten (10) days prior to the record
date specified therein a notice specifying (A) the date on which any such record
is to be taken for the purpose of such dividend or distribution and a
description of such dividend or distribution, (B) the date on which any such
Acquisition, reorganization, reclassification, transfer, consolidation, merger,
Asset Transfer, dissolution, liquidation or winding up is expected to become
effective, and (C) the date, if any, that is to be fixed as to when the holders
of record of Common Stock (or other securities) shall be entitled to exchange
their shares of Common Stock (or other securities) for securities or other
property deliverable upon such Acquisition, reorganization, reclassification,
transfer, consolidation, merger, Asset Transfer, dissolution, liquidation or
winding up.
k. AUTOMATIC CONVERSION.
(i) Each share of Series B Preferred shall automatically be
converted into shares of Common Stock, based on the then-effective Series B
Preferred Conversion Price, (A) at any time upon the affirmative election of the
holders of at least a majority of the outstanding shares of the Series B
Preferred, or (B) at any time after on or after the date that is ninety (90)
days after the Original Issue Date upon at least five (5) business days advance
written notice from the Company to the holders of the Series B Preferred;
PROVIDED, HOWEVER, that the Company shall not be entitled to force the
conversion of the Series B Preferred under this Section 5(k)(i)(B): (i) until
such time as a registration statement covering all of the shares of Common Stock
issuable upon conversion of the Series B Preferred is effective with the
Securities and Exchange Commission, and (ii) all of the shares of Common Stock
issuable upon conversion of all outstanding shares of Series B Preferred are
then (x) authorized and reserved for issuance, and (y) eligible to be traded on
the American Stock Exchange, the NASDAQ National Market, the New York Stock
Exchange or the NASDAQ SmallCap Market. Upon such automatic conversion, any
accrued and unpaid dividends shall be paid in accordance with the provisions of
Section 5d and Section 2; PROVIDED, HOWEVER, that in the event the Series B
Preferred is converted pursuant to subsection k(i)(B) above on a date that is
prior to the one year anniversary of the Original Issue Date, then the Company
shall pay to the holders of the Series B Preferred dividends equal to the
dividends that would have accrued and been payable on such Series B Preferred
had such shares remained outstanding until the one year anniversary of the
Original Issue Date in accordance with the provisions of Section 5(d) and
Section 2.
(ii) Upon the occurrence of the event specified in
subsection (k)(i) above, the outstanding shares of Series B Preferred shall be
converted automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to
the Company or its transfer agent; PROVIDED, HOWEVER, that the Company shall not
be obligated to issue certificates evidencing the shares of Common Stock
issuable upon such conversion unless the certificates evidencing such shares of
Series B Preferred are either delivered to the Company or its transfer agent as
provided below, or the
8.
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holder notifies the Company or its transfer agent that such certificates have
been lost, stolen or destroyed and executes an agreement satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection with
such certificates. Upon the occurrence of such automatic conversion of the
Series B Preferred, the holders of Series B Preferred shall surrender the
certificates representing such shares at the office of the Company or any
transfer agent for the Series B Preferred. Thereupon, there shall be issued and
delivered to such holder promptly at such office and in its name as shown on
such surrendered certificate or certificates, a certificate or certificates for
the number of shares of Common Stock into which the shares of Series B Preferred
surrendered were convertible on the date on which such automatic conversion
occurred, and any accrued and unpaid dividends shall be paid in accordance with
the provisions of Section 5d.
l. FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon conversion of Series B Preferred. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of Series B Preferred by a holder thereof shall be aggregated for purposes
of determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of any fractional share, the Company shall, in lieu of
issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's fair market value (as determined by the Board
of Directors) on the date of conversion.
m. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series B Preferred, such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series B Preferred. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series B Preferred, 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 to
such number of shares as shall be sufficient for such purpose.
n. NOTICES. Any notice required by the provisions of this
Section 5 shall be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified, (ii) when sent by confirmed telex
or facsimile if sent during normal business hours of the recipient; if not, then
on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (iv)
one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All notices
shall be addressed to each holder of record at the address of such holder
appearing on the books of the Company.
o. PAYMENT OF TAXES. The Company will pay all taxes (other
than taxes based upon income) and other governmental charges that may be imposed
with respect to the issue or delivery of shares of Common Stock upon conversion
of shares of Series B Preferred, excluding any tax or other charge imposed in
connection with any transfer involved in
9.
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the issue and delivery of shares of Common Stock in a name other than that in
which the shares of Series B Preferred so converted were registered.
6. NO REISSUANCE OF SERIES B PREFERRED.
No share or shares of Series B Preferred acquired by the Company by
reason of redemption, purchase, conversion or otherwise shall be reissued.
10.
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IN WITNESS WHEREOF, Maxim Pharmaceuticals, Inc. has caused these
presents to be signed by its Chief Executive Officer on November 3, 1999.
MAXIM PHARMACEUTICALS, INC.
By: /s/ LARRY G. STAMBAUGH
---------------------------------
Name: Larry G. Stambaugh
Title: Chief Executive Officer
11.
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Exhibit 10.35
MAXIM PHARMACEUTICALS, INC.
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (the
"Agreement") is entered into as of November 10, 1999, by and among Maxim
Pharmaceuticals, Inc., a Delaware corporation (the "Company") and each of those
persons and entities, severally and not jointly, whose names are set forth on
the Schedule of Purchasers attached hereto as Exhibit A (which persons and
entities are hereinafter collectively referred to as "Purchasers" and each
individually as a "Purchaser").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of an
aggregate of three hundred thousand (300,000) shares of its Series B Convertible
Preferred Stock (the "Shares");
WHEREAS, Purchasers desire to purchase the Shares on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares to Purchasers
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. On or prior to the Closing (as
defined in Section 2 below), the Company shall have authorized (i) the sale and
issuance to Purchasers of the Shares and (ii) the issuance of shares of Common
Stock to be issued upon conversion of the Shares (the "Conversion Shares"). The
Shares shall have the rights, preferences, privileges and restrictions set forth
in the Certificate of Designations in the form attached hereto as Exhibit B (the
"Certificate of Designations").
1.2 SALE AND PURCHASE. Subject to the terms and conditions
hereof, at the Closing (as hereinafter defined) the Company hereby agrees to
issue and sell to each Purchaser, severally and not jointly, and each Purchaser
agrees to purchase from the Company, severally and not jointly, the number of
Shares set forth opposite such Purchaser's name on Exhibit A, at a purchase
price of $89.25 per share, such price per share determined based on the average
of the closing bid price for the five days preceding the Closing Date as
reported on the American Stock Exchange multiplied by the number of shares of
Common Stock into which each Share is initially convertible as set forth in the
Certificate of Designations.
1.
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2. CLOSING, DELIVERY AND PAYMENT.
2.1 CLOSING. The closing of the sale and purchase of the
Shares under this Agreement (the "Closing") shall take place at 10:00 a.m. on
the date each of the conditions to closing set forth in Section 5 hereof have
occurred, at the offices of Cooley Godward LLP, 4365 Executive Drive, Suite
1100, San Diego, CA 92121 or at such other time or place as the Company and
Purchasers may mutually agree (such date is hereinafter referred to as the
"Closing Date"). Payment for the Shares and delivery of the stock certificates
representing the Shares shall take place no later than five (5) business days
after the Closing Date (the "Settlement Date") and in accordance with Section
2.2 below.
2.2 DELIVERY AND SETTLEMENT. On the Settlement Date, subject
to the terms and conditions hereof, the Company will deliver to the Purchasers
certificates representing the number of Shares to be purchased at the Closing by
each Purchaser, against payment of the purchase price therefor by check, wire
transfer made payable to the order of the Company, cancellation of indebtedness
or any combination of the foregoing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Purchaser as of the
date of this Agreement as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and to issue and sell the Shares and the Conversion Shares and to
carry out the provisions of this Agreement and the Certificate of Designations
and to carry on its business as presently conducted and as presently proposed to
be conducted. The Company is duly qualified and is authorized to do business and
is in good standing as a foreign corporation in all jurisdictions in which the
nature of its activities and of its properties (both owned and leased) makes
such qualification necessary, except for those jurisdictions in which failure to
do so would not have a material adverse effect on the assets, liabilities,
financial condition, regulatory condition, capital, properties, results of
operations or prospects of the Company or its business (a "Material Adverse
Effect").
3.2 SUBSIDIARIES. The Company owns no equity securities of any
other corporation, limited partnership or similar entity. The Company is not a
participant in any joint venture, partnership or similar arrangement.
3.3 CAPITALIZATION; VOTING RIGHTS. The authorized capital
stock of the Company, immediately prior to the Closing, will consist of
35,000,000 shares of Common Stock, (par value $ .001) per share, 10,205,697
shares of which are issued and outstanding as of the date of this Agreement,
5,000,000 shares of Preferred Stock, (par value $ .001) per share, 300,000 of
which are designated Series A Preferred Stock, 210,047 of which are issued and
outstanding as of the date of this Agreement and 300,000 of which are designated
Series B Preferred Stock, none of which are issued and outstanding as of the
date of this Agreement. All issued and outstanding shares of the Company's
Common Stock (a) have been duly authorized and validly
2.
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issued and (b) are fully paid and nonassessable. The rights, preferences,
privileges and restrictions of the Shares are as stated in the Certificate of
Designations; all such rights, preferences, privileges and restrictions are
valid, binding and enforceable against the Company and in accordance with
applicable laws. The Conversion Shares have been duly and validly reserved for
issuance. Other than the 977,310 shares reserved for issuance under the
Company's 1993 Long Term Incentive Plan and outstanding warrants to purchase an
aggregate of 3,293,494 shares of Common Stock and 41,909 shares reserved for
issuance under the Company's 401(k) plan, there are no outstanding options,
warrants, rights (including conversion or preemptive rights and rights of first
refusal), proxy or shareholder agreements, or agreements of any kind authorized
or outstanding for the purchase or acquisition from the Company of any of its
securities or any interest therein. Except as set forth herein, there is no
commitment by the Company to issue shares, subscriptions, warrants, options,
convertible securities, or other such rights or to distribute to holders of any
of its equity securities any evidence of indebtedness or asset. The Company has
no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interest therein or to pay any dividend
(other than dividends payable on the Shares) or to make any other distribution
in respect thereof. When issued in compliance with the provisions of this
Agreement and the Certificate of Designations, the Shares and the Conversion
Shares will be validly issued, fully paid and nonassessable, and will be free of
any liens or encumbrances; provided, however, that the Shares and the Conversion
Shares may be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed.
3.4 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action
on the part of the Company, its officers, directors and shareholders necessary
for the authorization of this Agreement, the performance of all obligations of
the Company hereunder at the Closing and the authorization, sale, issuance and
delivery of the Shares pursuant hereto and the Conversion Shares pursuant to the
Certificate of Designations has been taken or will be taken prior to the
Closing. The Agreement when executed and delivered, will be valid and binding
obligations of the Company enforceable in accordance with their terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors' rights;
(b) general principles of equity that restrict the availability of equitable
remedies; and (c) to the extent that the enforceability of the indemnification
provisions in Section 6.2 may be limited by applicable laws. The sale of the
Shares and the subsequent conversion of the Shares into Conversion Shares are
not and will not be subject to any preemptive rights or rights of first refusal
that have not been properly waived or complied with.
3.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has made available to each Purchaser a
complete and accurate copy (excluding copies of exhibits) of the Company's (i)
Annual Report of Form 10-K for the year ended September 30, 1998, (ii) Quarterly
Reports on Form 10-Q for the quarters ended December 31, 1998, March 31, 1999
and June 30, 1999, (iii) Proxy Statement on Schedule 14A dated January 13, 1999,
and (iv) Proxy Statement on Schedule 14A dated June 1, 1999, each filed by the
Company with the Securities and Exchange Commission ("SEC") (collectively, the
"Company SEC Documents"). The Company SEC Documents (i) complied with the
requirements of the Securities Act or the Exchange Act, as the case may be, at
and as of
3.
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the times they were filed (or, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), (ii) were filed in a
timely manner, and (iii) did not at and as of the time they were filed (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) Each of the sets of financial statements (including,
in each case, any related notes thereto) contained in the Company SEC Documents
(collectively, the "Past Financial Statements") including the Company's
unaudited consolidated balance sheet as of June 30, 1999 (the "June Balance
Sheet") (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered (except as may be indicated in the notes
thereto and, in the case of unaudited interim financial statements, as permitted
by Form 10-Q of the SEC, and except that unaudited financial statements may not
contain footnotes and are subject to year-end audit adjustments which are not
expected to be material in amount) and (iii) fairly presents the financial
position of the Company as at the respective dates thereof and the results of
operations of the Company and cash flows for the periods indicated.
3.6 LIABILITIES. The Company has no material liabilities and,
to the best of its knowledge, knows of no material contingent liabilities not
disclosed in the Past Financial Statements, except current liabilities incurred
in the ordinary course of business subsequent to the June Balance Sheet which
have not been, either in any individual case or in the aggregate, materially
adverse.
3.7 CHANGES. Since the June Balance Sheet, there has not been:
(a) Any change in the assets, liabilities, financial
condition or operations of the Company from that reflected in the Past Financial
Statements, other than changes in the ordinary course of business, none of which
individually or in the aggregate has had or is expected to have a Material
Adverse Effect;
(b) Any resignation or termination of any key officers of
the Company; and the Company, to the best of its knowledge, does not know of the
impending resignation or termination of employment of any such officer;
(c) Any material change in the contingent obligations of
the Company by way of guaranty, endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not
covered by insurance, which has a Material Adverse Effect;
(e) Any waiver by the Company of a valuable right or of a
material debt owed to it;
4.
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(f) Any direct or indirect loans made by the Company to
any shareholder, employee, officer or director of the Company, other than
advances made in the ordinary course of business;
(g) Any material change in any compensation arrangement or
agreement with any officer, director or shareholder of the Company;
(h) Any declaration or payment of any dividend or other
distribution of the assets of the Company, except for dividends due on the
Company's Series A Preferred Stock;
(i) Any labor organization activity involving the
Company's employees;
(j) Any debt, obligation or liability (absolute, accrued
or contingent) incurred, assumed or guaranteed by the Company, except those for
immaterial amounts and for current liabilities incurred in the ordinary course
of business;
(k) Any sale, assignment, pledge or transfer of tangible
assets or any patents, trademarks, copyrights, trade secrets or other intangible
assets;
(l) Any change in any material agreement to which the
Company is a party or by which it is bound which has a Material Adverse Effect;
or
(m) Any other event or condition of any character that,
either individually or cumulatively, has a Material Adverse Effect.
3.8 PATENTS AND TRADEMARKS.
(a) To the best of its knowledge, the Company owns or
possesses sufficient rights under all material patents, patent rights,
trademarks, copyrights, licenses, inventions, trade secrets, trade names and
know-how (collectively, "Intellectual Property") described or referred to in the
Company SEC Documents as owned or used by it or that are necessary for the
conduct of its business as now conducted, (ii) the Company has not received any
notice of, or has no knowledge of, any infringement of or conflict with asserted
rights of the Company by others with respect to any Intellectual Property, and
(iii) the Company has not received any notice of, or has no knowledge of, any
infringement of or conflict with asserted rights of a third party with respect
to any Intellectual Property.
(b) In addition to the foregoing, the Company is unaware
of any facts which would preclude the Company from having clear title to the
patents and patent applications referred to or described in the Company SEC
Documents (the "Maxamine Patents"). The Company has complied with the Patent and
Trademark Office ("PTO") duty of candor and good faith in dealing with the PTO,
including the duty to disclose to the PTO all information known to be material
to the patentability of each of such United States patents and patent
applications. To the best of its knowledge, all assignments from each named
inventor to the Company have been executed and recorded with the PTO for each
Maxamine Patent. To the best of its knowledge, the Company has maintained all
rights with respect to the Maxamine Patents. The Company has
5.
<PAGE>
no reason to believe that any of the claims of the Maxamine Patents is
unpatentable, unenforceable or invalid. The Company is not aware of any pending
U.S. or foreign patent applications which, if issued, would limit, prohibit or
materially affect the business now conducted or proposed to be conducted by the
Company as described in the Company SEC Document. The Company is not aware of
any facts which would form the basis for a belief that the products or processes
of any third party infringe the claims of any Maxamine Patent.
(c) The Company is unaware of any legal or governmental
proceedings pending relating to the Maxamine Patents, other than PTO review of
pending applications for patents, including appeal proceedings, and, to the best
of its knowledge, no such proceedings are threatened or contemplated by
governmental authorities or others.
(d) The Company is unaware of any contracts or other
documents material to the Company's Maxamine Patents or Intellectual Property
other than those described in the Company SEC Documents.
3.9 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of (i) any term of its Certificate of Incorporation or
Bylaws, each as amended to date, (ii) any provision of any mortgage, indenture,
contract, agreement, instrument or contract to which it is party or by which it
is bound or of any judgment, decree, order, writ, except such violations or
defaults which, alone or in the aggregate, do not have a Material Adverse
Effect, or (iii) to its knowledge, any statute, rule or regulation applicable to
the Company, except such violations or defaults which, alone or in the
aggregate, would not have a Material Adverse Effect. The execution, delivery,
and performance of and compliance with this Agreement and the issuance and sale
of the Shares pursuant hereto and of the Conversion Shares pursuant to the
Certificate of Designations, will not, with or without the passage of time or
giving of notice, result in any such violation, or be in conflict with or
constitute a default under any such term, or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company or the suspension, revocation, impairment, forfeiture or
nonrenewal of any permit license, authorization or approval applicable to the
Company, its business or operations or any of its assets or properties.
3.10 LITIGATION. There is no action, suit, proceeding or
investigation pending or to the Company's knowledge currently threatened against
the Company that questions the validity of this Agreement or the right of the
Company to enter into this Agreement, or to consummate the transactions
contemplated hereby, or which might result, either individually or in the
aggregate, in a Material Adverse Effect, or any change in the current equity
ownership of the Company, nor is the Company aware that there is any basis for
the foregoing. There is no action or suit by the Company pending, threatened or
contemplated against others.
3.11 REGISTRATION RIGHTS. Except for National Securities
Corporation, HealthCap KB and as set forth in (i) Section 6 of the Series A
Convertible Preferred Stock Purchase Agreement, dated as of July 20, 1999, among
the Company and the purchasers of the Company's outstanding Series A Convertible
Preferred Stock (the "Series A Purchase Agreement") and (ii) Section 6 of this
Agreement, the Company is presently not under any obligation, and has not
granted any rights, to register any of the Company's presently outstanding
securities or any of its securities that may hereafter be issued.
6.
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3.12 COMPLIANCE WITH LAWS; PERMITS. To its knowledge, the
Company is not in violation of any applicable statute, rule, regulation, order
or restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties, except such violations which, alone or in the aggregate, do not have
a Material Adverse Effect. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of this Agreement and the issuance of the Shares or the Conversion
Shares, except such as has been duly and validly obtained or filed, or with
respect to any filings that must be made after the Closing, as will be filed in
a timely manner. The Company has all franchises, permits, licenses and any
similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could have a Material Adverse Effect and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted.
3.13 OFFERING VALID. Assuming the accuracy of the
representations and warranties of the Purchasers contained in Section 4.2
hereof, the offer, sale and issuance of the Shares and the Conversion Shares
will be exempt from the registration requirements of the Securities Act of 1933,
as amended (the "Securities Act") and will have been registered or qualified (or
are exempt from registration and qualification) under the registration, permit
or qualification requirements of all applicable state securities laws.
3.14 OTHER AGREEMENTS. Except as set forth under the Company
SEC Documents, the Company is not a party to or otherwise bound by any written
or oral agreement, instrument, commitment or restriction which individually
could reasonably be expected to have a Material Adverse Effect or any other
written or oral:
(a) agreement with any labor union representing employees
of the Company;
(b) agreement for the future purchase of fixed assets or
for the future purchase of materials, supplies or equipment in excess of its
normal operating requirements;
(c) agreement relating to the borrowing of money or to the
mortgaging or pledging of, or otherwise placing a lien or security interest on,
any asset of the Company;
(d) guaranty of any obligations for borrowed money or
otherwise;
(e) other agreement, instrument, commitment, plan or
arrangement, a copy of which would be required to be filed with the SEC as an
exhibit to a registration statement on Form S-1 if the Company were registering
securities under the Securities Act.
The Company, and to the best of its knowledge, each other party thereto have in
all material respects performed all the obligations required to be performed by
them to date (or each non-performing party has received a valid, enforceable and
irrevocable written waiver with respect to its non-performance), have received
no notice of default and are not in default (with due notice or elapse of time
or both) under any agreement, instrument, commitment or plan or arrangement to
which the Company is a party or by which it or its property may be bound except
such
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defaults which, alone or in the aggregate, are not reasonably expected to have a
Material Adverse Effect. The Company has no present expectation or intention of
not performing all its material obligations under each such agreement,
instrument, commitment, plan or arrangement, and the Company has no knowledge of
any breach or anticipated breach by the other party to any agreement,
instrument, commitment, plan or arrangement to which the Company is a party
except for such breaches which, alone or in the aggregate, are not reasonably
expected to have a Material Adverse Effect. The Company is in compliance with
all of the material terms of its Charter and By-Laws, as amended.
3.15 DISCLOSURE. Neither this Agreement, nor any Schedule or
Exhibit to this Agreement, nor any documents furnished or made available to the
Purchasers relating to this Agreement, contains any material misstatement of
fact or omits to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which they are
made, not misleading. None of the statements, documents, certificates or other
items prepared or supplied by the Company with respect to the transactions
contemplated hereby contains any material misstatement of fact or omits to state
a material fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. There is no fact
which the Company has not disclosed to the Purchasers and their counsel and of
which the Company is aware which, alone or in the aggregate is reasonably
expected to have a Material Adverse Effect. The financial projections and other
estimates contained in any documents furnished to the Purchasers relating to
this Agreement were prepared by the Company based on the Company's experience in
the industry and on assumptions of fact and opinions as to future events which
the Company believed to be reasonable, but which the Company cannot and does not
assure or guarantee the attainment of in any manner. As of the date hereof, no
facts have come to the attention of the Company which would, in its opinion,
require the Company to materially revise or amplify the assumptions underlying
such projections and other estimates or the conclusions derived therefrom.
3.16 OFFERING OF SHARES. Neither the Company nor any person
authorized or employed by the Company as agent, broker, dealer or otherwise in
connection with the offering or sale of the Shares or any security of the
Company similar to the Shares has offered the Shares or any such similar
security for sale to, or solicited any offer to buy the Shares or any such
similar security from, or otherwise approached or negotiated with respect
thereto with, any person or persons, and neither the Company nor any person
acting on its behalf has taken or will take any other action (including, without
limitation, any offer, issuance or sale of any security of the Company under
circumstances which might require the integration of such security with the
Shares under the Securities Act or the rules and regulations of the SEC
thereunder), in either case so as to subject the offering, issuance or sale of
the Shares to the registration provisions of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby represents and warrants to the Company as
follows:
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary
power and authority under all applicable provisions of law to execute and
deliver and to perform its obligations under this Agreement. All action on
Purchaser's part required for the lawful
8.
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execution and delivery of this Agreement have been or will be effectively taken
prior to the Closing. Upon their execution and delivery, this Agreement will be
valid and binding obligation of Purchaser, enforceable in accordance with its
terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights and (b) general principles of equity that
restrict the availability of equitable remedies.
4.2 INVESTMENT REPRESENTATIONS. Purchaser understands that
neither the Shares nor the Conversion Shares have been registered under the
Securities Act. Purchaser also understands that the Shares are being offered and
sold pursuant to an applicable exemption from registration contained in the
Securities Act based in part upon Purchaser's representations contained in the
Agreement. Purchaser hereby represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to the Company so that it is
capable of evaluating the merits and risks of its investment in the Company and
has the capacity to protect its own interests. Purchaser must bear the economic
risk of this investment indefinitely unless the Shares (or the Conversion
Shares) are registered pursuant to the Securities Act, or an exemption from
registration is available. Purchaser understands that, except as set forth in
this Agreement, the Company has no present intention of registering the Shares,
the Conversion Shares or any shares of its Common Stock. Purchaser also
understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available, such
exemption may not allow Purchaser to transfer all or any portion of the Shares
or the Conversion Shares under the circumstances, in the amounts or at the times
Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring
the Shares and the Conversion Shares for Purchaser's own account for investment
only, and not with a view towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser
represents that by reason of its, or of its management's, business or financial
experience, Purchaser has the capacity to protect its own interests in
connection with the transactions contemplated in this Agreement, and the Related
Agreements. Further, Purchaser is aware of no publication of any advertisement
in connection with the transactions contemplated in the Agreement.
(d) ACCREDITED INVESTOR. Purchaser represents that it is
an accredited investor within the meaning of Regulation D under the Securities
Act.
(e) COMPANY INFORMATION. Purchaser has received and read
the Company SEC Reports and the Past Financial Statements and has had an
opportunity to discuss the Company's business, management and financial affairs
with directors, officers and management of the Company and has had the
opportunity to review the Company's operations and facilities. Purchaser has
also had the opportunity to ask questions of and receive answers from the
Company and its management regarding the terms and conditions of this
investment.
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(f) RULE 144. Purchaser acknowledges and agrees that the
Shares, and, if issued, the Conversion Shares must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act as in effect from
time to time, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things: the availability of certain current public information about the
Company, the resale occurring following the required holding period under Rule
144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
(g) RESIDENCE. If the Purchaser is an individual, then the
Purchaser resides in the state, province or country identified in the address of
the Purchaser set forth on Exhibit A; if the Purchaser is a partnership,
corporation, limited liability company or other entity, then the office or
offices of the Purchaser in which its investment decision was made is located at
the address or addresses of the Purchaser set forth on Exhibit A.
4.3 ADDITIONAL REGULATION S REPRESENTATIONS. Each Purchaser
who is not a resident of the United States also represents as follows:
(a) Purchaser certifies that he, she or it is neither a
citizen nor a resident of the United States and that his, her or its address set
forth on Schedule A of this Agreement is correct.
(b) No public offer or solicitation of the Shares was made
to such Purchaser and no offer of the Shares was made to such Purchaser while
such purchaser was present in the United States.
(c) At the time any buy order for the Shares was
originated, such Purchaser was located outside the United States and is outside
the United States on the date of the execution and delivery of this Agreement
and will be outside the United States on the Closing Date.
(d) Purchaser is aware that the Shares and the Conversion
Shares have not been registered under the Securities Act and may only be offered
or sold pursuant to registration under the Securities Act or an available
exemption therefrom, and such Purchaser has not, and will not, engage in any
public offering or distribution of the Shares or Conversion Shares or engage in
any hedging transaction with respect thereto, except in accordance with the
registration or exemption provisions of the Securities Act.
(e) Except to the extent the Shares or Conversion Shares
have been registered under the Securities Act, such Purchaser (i) will not,
during the period commencing on the Closing Date and ending one year after the
Closing Date (the "Distribution Compliance Period"), offer or sell or agree to
sell the Shares or Conversion Shares in the United States, to a U.S. Person (as
defined in Regulation S promulgated under the Securities Act ("Regulation S"))
or for the account or benefit of a U.S. Person other than in accordance with
Regulation S, and (ii) will, after the expiration of the Distribution Compliance
Period, offer, sell, pledge or otherwise transfer the Shares or Conversion
Shares only pursuant to registration under the Securities Act or
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an available exemption therefrom and, in any case, in accordance with applicable
United States federal and state securities laws.
(f) Purchaser has been advised of, and is familiar with,
has complied, and will comply, with the offering restrictions, and any other
requirements of Regulation S.
(g) The transactions contemplated by this Agreement (i)
have not been pre-arranged by Purchaser with the view to sell or transfer the
Shares or Conversion Shares to another purchaser located in the United Stated
who is a U.S. Person, and (ii) are not part of a plan or scheme by Purchaser to
evade the registration provisions of the Securities Act.
(h) Neither Purchaser nor any of his, her or its
affiliates has entered, has the intention of entering, or will during the
Distribution Compliance Period enter into, with any U.S. Person, any put option,
short position or other similar instrument or position with respect to the
Shares or Conversion Shares or participate in any other attempt designed to
lower the trading prices of the Shares or Conversion Shares.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT THE CLOSING. Each
Purchaser's obligation to purchase the Shares at the Closing are subject to the
satisfaction of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 3
hereof shall be true and correct (except to the extent that the aggregate of all
inaccuracies and breaches thereof would not have a Material Adverse Effect) as
of the Closing Date (except to the extent such representations specifically
relate to an earlier date, in which case such representations and warranties
shall be true and correct as of such earlier date, and in any event subject to
the foregoing materiality qualification) with the same force and effect as if
they had been made as of the Closing Date, and the Company shall have performed
all obligations and conditions herein required to be performed or observed by it
on or prior to the Closing.
(b) LEGAL INVESTMENT. On the Closing Date, the sale and
issuance of the Shares and the proposed issuance of the Conversion Shares shall
be legally permitted by all laws and regulations to which Purchasers and the
Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. As of the Closing
Date, the Company shall have obtained any and all consents, permits and waivers
necessary or appropriate for consummation of the transactions contemplated by
the Agreement (except for such as may be properly obtained subsequent to the
Closing).
(d) FILING OF CERTIFICATE OF DESIGNATIONS. On the
Settlement Date, the Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware.
(e) RESERVATION OF CONVERSION SHARES. As of the Closing
Date, the Conversion Shares issuable upon conversion of the Shares shall have
been duly authorized and reserved for issuance upon such conversion.
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(f) LEGAL OPINION. On the Settlement Date, the Purchasers
shall have received from legal counsel to the Company an opinion addressed to
them, dated as of the Settlement Date, in substantially the form attached hereto
as Exhibit C.
(g) COMPLIANCE CERTIFICATE. The Company shall have
delivered a certificate, executed by the President of the Company, dated the
Settlement Date, stating that the conditions set forth in paragraphs (a), (c),
(d), (e) and (f) have been complied with and that between the date of execution
of this Agreement and the Settlement Date, there has been no material adverse
change affecting the Company or its business which, alone or in the aggregate,
shall have a Material Adverse Effect.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to issue and sell the Shares at the Closing is subject to the
satisfaction of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties made by those Purchasers acquiring Shares in
Section 4 hereof shall be true and correct (except to the extent that the
aggregate of all inaccuracies and breaches thereof would not have a Material
Adverse Effect) at the Closing Date (except to the extent such representations
specifically relate to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date, and in any event
subject to the foregoing materiality qualification), with the same force and
effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Such Purchasers shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by such Purchasers on or before the Closing.
(c) FILING OF CERTIFICATE OF DESIGNATIONS. On the
Settlement Date, the Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware.
(d) CONSENTS, PERMITS, AND WAIVERS. As of the Closing
Date, the Company shall have obtained any and all consents, permits and waivers
necessary or appropriate for consummation of the transactions contemplated by
the Agreement (except for such as may be properly obtained subsequent to the
Closing).
6. REGISTRATION.
6.1 REGISTRATION REQUIREMENTS.
(a) The Company shall prepare and file, not later than
thirty (30) days after the Closing Date, a registration statement on Form S-3 or
another available form (the "Registration Statement") with the SEC under the
Securities Act to register the resale of the Conversion Shares by the Purchasers
and thereafter shall use its best efforts to secure effectiveness of the
Registration Statement within ninety (90) days after the Closing Date. In the
event the Company fails to secure effectiveness of the Registration Statement
within ninety (90) days after the Closing Date, the dividend rate on the Series
B Preferred shall be increased to 15% per annum for the period the Registration
Statement remains ineffective, and at such time as the
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Registration Statement becomes effective, the dividend rate on the Series B
Preferred shall revert to 12% per annum. In order to have shares included in the
Registration Statement, each Purchaser must complete and deliver to the Company
not later than ten (10) days after the Closing, a Registration Statement
Questionnaire in the form attached hereto as Exhibit D.
(b) The Company shall pay all Registration Expenses (as
defined below) in connection with any registration, qualification or compliance
hereunder, and each Purchaser shall pay all of its respective Selling Expenses
(as defined below) and other expenses that are not Registration Expenses
relating to the Shares resold by such Purchaser. "Registration Expenses" shall
mean all expenses, except for Selling Expenses, incurred by the Company in
complying with the registration provisions herein described, including, without
limitation, all registration, qualification and filing fees, printing expenses,
fees and disbursements of counsel and accountants for the Company, blue sky fees
and expenses and the expense of any special audits incidents to or required by
any such registration. "Selling Expenses" shall mean all selling commissions,
underwriting fees and stock transfer taxes applicable to the Conversion Shares
and all fees and disbursements of counsel for any Purchaser.
(c) In the case of the registration effected by the
Company pursuant to these registration provisions, the Company will use its
reasonable best efforts to: (i) keep such registration effective until the
earlier of (A) such date as all of the Conversion Shares have been resold or (B)
the date on which each Purchaser is entitled to sell all of its Conversion
Shares pursuant to Rule 144(k) promulgated under the Securities Act; (ii)
prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Conversion Shares covered
by the Registration Statement; (iii) cause the Conversion Shares to be listed on
each securities exchange and quoted on each quotation service on which similar
securities issued by the Company are then listed or quoted; (iv) provide a
transfer agent and registrar for all Conversion Shares registered pursuant to
the Registration Statement and a CUSIP number for all such Conversion Shares;
(v) comply with all applicable rules and regulations of the SEC governing such
registration; and (vi) file the documents required of the Company by, and
otherwise use its reasonable best efforts to maintain requisite blue sky
clearance in, (X) all jurisdictions in which any of the Shares are originally
sold and (Y) all other states specified in writing by a Purchaser; provided,
however, that as to clause (Y), the Company shall not be required to qualify to
do business or consent to service of process in any state in which it is now so
qualified or has not so consented.
(d) The Company shall furnish to each Purchaser upon
request a reasonable number of copies of a supplement to or an amendment of the
prospectus used in connection with the Registration Statement as may be
necessary in order to facilitate the public sale or other disposition of all or
any of the Conversion Shares held by the Purchaser.
(e) With a view to making available to the Purchasers the
benefit of Rule 144 and Form S-3 and any other rule or regulation of the SEC
that may at any time permit a Purchaser to sell shares to the public without
registration, the Company covenants and agrees to use its reasonable best
efforts to: (i) make and keep public information available, as those terms are
understood and defined in Rule 144, until the earlier of (A) the date on which
each Purchaser is entitled to sell all of its Conversion Shares pursuant to Rule
144(k) promulgated under the
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Securities Act or (B) such date as all of the Conversion Shares shall have been
resold; (ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and furnish to any
Purchaser upon request, as long as the Purchaser owns any Shares or Conversion
Shares, (A) a written statement by the Company that it has complied with the
reporting requirement of the Exchange Act, (B) a copy of the most recent annual
or quarterly report of the Company, and (C) such other information as may be
reasonably requested in order to avail any Purchaser of any rule or regulation
of the SEC that permits the selling of any such Shares or Conversion Shares
without registration or pursuant to such registration statement on Form S-3.
(f) The Company may suspend the use of the Registration
Statement and refuse to permit the Purchasers to resell any Conversion Shares
pursuant to the Registration Statement for a period not to exceed 20 days in any
twelve month period; PROVIDED, HOWEVER, that in order to exercise this right,
the Company must notify the Purchasers to the effect that such action is
necessary because there then exists material, non-public information relating to
the Company, which, in the reasonable opinion of the board of directors of the
Company would not be appropriate for disclosure during that time. In such an
event, the Company shall use its best efforts to amend the Registration
Statement as necessary and to take all other actions necessary to allow such
sales and shall notify the Purchasers promptly after it has determined that such
sales have become permissible.
6.2 INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Purchaser from and against any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) to which such Purchaser may become
subject (under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon, any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, on the effective date
thereof, the omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, any violation by the
Company of any rule or regulation promulgated under the Securities Act, the
Exchange Act or state securities laws applicable to the Company in connection
with such registration, or arise out of any failure by the Company to fulfill
any undertaking included in the Registration Statement, and the Company will, as
incurred, reimburse such Purchaser for any reasonable legal or other expenses
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; PROVIDED, HOWEVER, that the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of, or is based upon (i) an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Purchaser specifically for use in
preparation of the Registration Statement, (ii) the failure of such Purchaser to
comply with the covenants and agreements contained in Section 6.3 hereof, or
(iii) any untrue statement in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Purchaser prior to the pertinent sale or
sales by the Purchaser.
(b) Each Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company from and against any losses, claims,
damages or liabilities (or
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actions or proceedings in respect thereof) to which the Company may become
subject (under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon an untrue statement made in such Registration Statement in
reliance upon and in conformity with written information furnished by such
Purchaser on Exhibit D hereto for use in preparation of the Registration
Statement; PROVIDED, HOWEVER, that no Purchaser shall be liable in any such case
for any untrue statement included in any Prospectus which statement has been
corrected, in writing, by such Purchaser and delivered to the Company before the
sale from which such loss occurred, and each Purchaser, severally and not
jointly, will, as incurred, reimburse the Company for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim; PROVIDED, FURTHER, HOWEVER, that in no
event shall any indemnity under this Section 6.2(b) exceed the net proceeds from
the offering received by the applicable Purchaser or Purchasers from the sale of
the Conversion Shares.
(c) Promptly after receipt by any indemnified person of a
notice of a claim to the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this Section 6.2,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, and subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and the indemnifying person shall have been notified thereof,
the indemnifying person shall be entitled to participate therein, and, to the
extent that it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to the indemnified person. After notice from the
indemnifying person to such indemnified person of the indemnifying person's
election to assume the defense thereof, the indemnifying person shall not be
liable to such indemnified person for any legal expense subsequently incurred by
such indemnified person in connection with the defense thereof; PROVIDED,
HOWEVER, that if there exists or shall exist a conflict of interest that would
make it inappropriate in the reasonable judgment of the indemnified person for
the same counsel to represent both the indemnified person and such indemnifying
person or any affiliate or associate thereof, the indemnified person shall be
entitled to retain its own counsel at the expense of such indemnifying person.
No indemnifying person shall, without the prior written consent of the
indemnified person (which consent shall not be unreasonably withheld), effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified person is or could have been a party and indemnification could have
been sought hereunder by such indemnified party.
(d) The obligations of the Company and the Purchasers
under this Section 6.2 shall be in addition to any liability which the Company
and each respective Purchaser may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls the Company or any
Purchaser within the meaning of the Securities Act.
(e) In order to provide for just and equitable
contribution to joint liability in any case in which a claim for indemnification
is made pursuant to this Section 6 but it is judicially determined (by entry of
a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding that this
Section 6 provides for indemnification in such case, the Company and each
Purchaser shall contribute to the
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aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in proportion to the relative fault of the
Company on the one hand, and the Purchasers, severally, on the other hand;
provided, however, that in any such case, no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was no guilty of such fraudulent misrepresentation and; provided, further, that
in no event shall any contribution under this Section 6.2(e) on the part of any
seller exceed the net proceeds received by such seller from the sale of
Conversion Shares.
6.3 TRANSFER OF CONVERSION SHARES AFTER REGISTRATION. Each
Purchaser hereby covenants with the Company not to make any sale of the
Conversion Shares except either (a) in accordance with the Registration
Statement, in which case the Purchaser covenants to comply with the requirements
of delivering a current prospectus, (b) in accordance with Rule 144, in which
case Purchaser covenants to comply with Rule 144, or (c) subject to such
conditions as the Company shall reasonably impose, in accordance with another
exemption from the registration requirements of the Securities Act. Each
Purchaser also covenants that it will not make any sale of the Conversion Shares
pursuant to the Registration Statement during any period in which the Company
has suspended use of the Registration Statement pursuant to Section 6.1(f) of
this Agreement. Each Purchaser further acknowledges and agrees that such
Conversion Shares are not transferable on the books of the Company unless the
certificate submitted to the Company's transfer agent evidencing such Conversion
Shares is accompanied by such additional certification, documentation or
information as the Company shall reasonably require in order to effect such sale
in accordance with the Registration Statement, Rule 144 or such other exemption
from the registration requirements of the Securities Act.
6.4 ADDITIONAL PURCHASER COVENANTS. Each Purchaser covenants
that it will promptly notify the Company of any changes in the information set
forth in the Registration Statement regarding such Purchaser or such Purchaser's
"Plan of Distribution," including, without limitation, the information contained
in the Registration Statement Questionnaire attached hereto as Exhibit D
relating to such Purchaser. Each Purchaser shall provide the Company in writing
with such change or additional information necessary so that the information set
forth in the Registration Statement regarding such Purchaser will be true and
correct as of the effective date of the Registration Statement and until the
Company is no longer required to keep the Registration Statement effective
pursuant to Section 6.1(c) of this Agreement.
6.5 TERMINATION. All registration rights granted under this
Section 6 shall expire and be of no further force and effect if all Shares or
Conversion Shares held by or issuable to each Purchaser (and its affiliates,
partners, former partners, members and former members) may be sold under Rule
144(k) promulgated under the Securities Act.
7. RIGHTS OF FIRST REFUSAL
7.1 SUBSEQUENT OFFERINGS. Each Purchaser shall have a right of
first refusal to purchase its PRO RATA share of all Equity Securities, as
defined below, that the Company may, from time to time, propose to sell and
issue after the date of this Agreement, other than the Equity Securities
excluded by Section 7.4 hereof. Each Purchaser's PRO RATA share is equal to the
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ratio of (a) the number of shares of the Common Stock issuable upon conversion
of the Shares (and excluding those shares of Common Stock already issued upon
conversion of the Shares and any other Common Stock acquired by a Purchaser
other than under this Agreement) which such Purchaser is deemed to be a holder
immediately prior to the issuance of such Equity Securities to (b) the total
number of shares of the Company's outstanding Common Stock (including all shares
of Common Stock issued or issuable upon conversion of the Shares or upon the
exercise of any outstanding warrants or options) immediately prior to the
issuance of the Equity Securities. The term "Equity Securities" shall mean (i)
any Common Stock, Preferred Stock or other security convertible, with or without
consideration, into any Common Stock or Preferred Stock (including any option to
purchase such a convertible security), (ii) any security carrying any warrant or
right to subscribe to or purchase any Common Stock or Preferred Stock or (iii)
any such warrant or right.
7.2 Exercise of Rights. If the Company proposes to issue any
Equity Securities, it shall give each Purchaser written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Purchaser shall have fifteen
(15) days from the giving of such notice to agree to purchase its PRO RATA share
of the Equity Securities for the price and upon the terms and conditions
specified in the notice by giving written notice to the Company and stating
therein the quantity of Equity Securities to be purchased. Notwithstanding the
foregoing, the Company shall not be required to offer or sell such Equity
Securities to any Purchaser who would cause the Company to be in violation of
applicable federal securities laws by virtue of such offer or sale.
7.3 Issuance of Equity Securities to Other Persons. If the
Purchasers do not exercise in full the rights of first refusal, the Company
shall have ninety (90) days thereafter to sell the Equity Securities in respect
of which the Purchaser's rights were not exercised, at a price and upon general
terms and conditions materially no more favorable to the purchasers thereof than
specified in the Company's notice to the Purchaser's pursuant to Section 7.2
hereof. If the Company has not sold such Equity Securities within ninety (90)
days of the notice provided pursuant to Section 7.2, the Company shall not
thereafter issue or sell any Equity Securities, without first offering such
securities to the Purchaser's in the manner provided above.
7.4 Excluded Securities. The rights of first refusal
established by this Section 8 shall have no application to any of the following
Equity Securities:
(a) any shares of Common Stock (and/or options, warrants
or other Common Stock purchase rights and shares of Common Stock issued upon the
exercise or conversion thereof) issued or to be issued to employees, officers or
directors of, or consultants or advisors to the Company or any subsidiary of the
Company, pursuant to its 1993 Long Term Incentive Plan;
(b) stock issued pursuant to any rights or agreements
(including options or warrants) outstanding as of the date of this Agreement;
(c) any Equity Securities issued pursuant to any
acquisition by the Company;
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(d) shares of Common Stock issued in connection with any
stock split, stock dividend or recapitalization by the Company;
(e) shares of Common Stock issued upon conversion of the
Shares and/or the outstanding shares of the Company's Series A Convertible
Preferred Stock;
(f) any Equity Securities issued pursuant to any equipment
leasing arrangement, or debt financing from a bank or similar financial
institution;
(g) shares of the Company's Common Stock or Preferred
Stock issued in connection with any licensing arrangement entered into by the
Company, including strategic transactions involving the Company and other
entities, such as joint ventures, manufacturing, marketing or distribution
arrangements or technology transfer or development arrangements.
7.5 Termination of Rights of First Refusal. The rights of
first refusal established by this Section 4 shall terminate as to each Purchaser
at such time as all such Purchaser's Series B Preferred has been converted into
Common Stock
8. MISCELLANEOUS.
8.1 DIVIDEND GROSS-UP PAYMENT. The Company shall pay any and
all United States withholding tax on foreign persons imposed in connection with
dividends paid or payable on the Shares (including any United States withholding
tax imposed on such additional payments), and the amount of dividends otherwise
payable to a holder of Shares with respect to which the Company makes such a
payment shall not be reduced. The intention of this provision is that each
Purchaser who is a foreign person shall receive dividend payments from the
Company with respect to the Shares, net of United States withholding taxes,
equal to the dividend provided in the Certificate of Designations.
8.2 USE OF PROCEEDS. The Company shall use the proceeds from
the sale of the Shares to further current clinical trials, for other activities
associated with the commercialization of its product candidates and for general
corporate purposes.
8.3 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and performed entirely in
California.
8.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
8.5 ENTIRE AGREEMENT. This Agreement, the Exhibits and
Schedules hereto and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.
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8.6 SEVERABILITY. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
8.7 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon
the written consent of the Company and holders of at least fifty percent (50%)
of the Shares (treated as if converted and including any Conversion Shares into
which the Shares have been converted that have not been sold by such holder).
(b) The obligations of the Company and the rights of the
holders of the Shares and the Conversion Shares under this Agreement may be
waived only with the written consent of the holders of at least fifty percent
(50%) of the Shares (treated as if converted and including any Conversion Shares
into which the Shares have been converted that have not been sold by such
holder).
8.8 NOTICES. All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified; (b) when sent by confirmed telex or facsimile if
sent during normal business hours of the recipient, if not, then on the next
business day; (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (d) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the Company at the address as set forth on the signature page hereof and
to Purchaser at the address set forth on Exhibit A attached hereto or at such
other address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
8.9 EXPENSES. Each party shall pay all costs and expenses that
it incurs with respect to the negotiation, execution, delivery and performance
of this Agreement; provided, however, that the Company shall reimburse the
reasonable fees of and expenses of one special counsel for the Purchasers, not
to exceed $15,000.
8.10 ATTORNEYS' FEES. In the event that any dispute among the
parties to this Agreement should result in litigation, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
8.11 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
8.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
19.
<PAGE>
8.13 PRONOUNS. All pronouns contained herein, and any
variations thereof, shall be deemed to refer to the masculine, feminine or
neutral, singular or plural, as to the identity of the parties hereto may
require.
8.14 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN EXEMPTION FROM SUCH
QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH CONSIDERATION BY THE
COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION FROM SUCH QUALIFICATION
BEING AVAILABLE.
20.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed the SERIES B
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASER:
MAXIM PHARMACEUTICALS, INC. ---------------------------
[PRINT NAME OF PURCHASER]
By: /s/ LARRY G. STAMBAUGH By:
-------------------------------- ------------------------
Larry G. Stambaugh, President
Title:
---------------------
KEY HOLDERS:
/s/ LARRY G. STAMBAUGH
-----------------------------------
Larry G. Stambaugh
/s/ DALE A. SANDER
-----------------------------------
Dale A. Sander
/s/ KURT R. GEHLSEN
-----------------------------------
Kurt R. Gehlsen
MAXIM PHARMACEUTICALS, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
<PAGE>
MAXIM PHARMACEUTICALS, INC.
SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. Agreement To Sell And Purchase..........................................................................1
1.1 Authorization of Shares........................................................................1
1.2 Sale and Purchase..............................................................................1
2. Closing, Delivery And Payment...........................................................................2
2.1 Closing........................................................................................2
2.2 Delivery and Settlement........................................................................2
3. Representations And Warranties Of The Company...........................................................2
3.1 Organization, Good Standing and Qualification..................................................2
3.2 Subsidiaries...................................................................................2
3.3 Capitalization; Voting Rights..................................................................2
3.4 Authorization; Binding Obligations.............................................................3
3.5 SEC Filings; Financial Statements..............................................................3
3.6 Liabilities....................................................................................4
3.7 Changes........................................................................................4
3.8 Patents and Trademarks.........................................................................5
3.9 Compliance with Other Instruments..............................................................6
3.10 Litigation.....................................................................................6
3.11 Registration Rights............................................................................7
3.12 Compliance with Laws; Permits..................................................................7
3.13 Offering Valid.................................................................................7
3.14 Other Agreements...............................................................................7
3.15 Disclosure.....................................................................................8
3.16 Offering of Shares.............................................................................8
4. Representations And Warranties Of The Purchasers........................................................9
4.1 Requisite Power and Authority..................................................................9
4.2 Investment Representations.....................................................................9
4.3 Additional Regulation S Representations.......................................................10
5. Conditions To Closing..................................................................................11
5.1 Conditions to Purchasers' Obligations at the Closing..........................................11
5.2 Conditions to Obligations of the Company......................................................12
6. Registration...........................................................................................13
6.1 Registration Requirements.....................................................................13
6.2 Indemnification...............................................................................15
6.3 Transfer of Conversion Shares After Registration..............................................16
6.4 Additional Purchaser Covenants................................................................17
6.5 Termination...................................................................................17
7. Rights of First Refusal................................................................................17
8. Miscellaneous..........................................................................................19
8.1 Dividend Gross-Up Payment.....................................................................19
8.2 Use of Proceeds...............................................................................19
8.3 Governing Law.................................................................................19
8.4 Successors and Assigns........................................................................19
</TABLE>
i.
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
8.5 Entire Agreement..............................................................................19
8.6 Severability..................................................................................19
8.7 Amendment and Waiver..........................................................................19
8.8 Notices.......................................................................................20
8.9 Expenses......................................................................................20
8.10 Attorneys' Fees...............................................................................20
8.11 Titles and Subtitles..........................................................................20
8.12 Counterparts..................................................................................20
8.13 Pronouns......................................................................................20
8.14 California Corporate Securities Law...........................................................20
</TABLE>
ii.
<PAGE>
LIST OF EXHIBITS
Schedule of Purchasers Exhibit A
Certificate of Designations Exhibit B
Form of Legal Opinion Exhibit C
Registration Statement Questionnaire Exhibit D
1.
<PAGE>
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
EXHIBIT A
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK INTO
SHARES OF WHICH THE SERIES B PREFERRED AGGREGATE
SERIES B IS CONVERTIBLE (AT THE INITIAL PURCHASE
NAME AND ADDRESS PREFERRED CONVERSION PRICE) PRICE
- -------------------------------------------------- -------------- -------------------------------- ------------------
<S> <C> <C> <C>
DVG Deutsche 33,613 336,130 $2,999,960.25
Vermogensbildungsgesellschaft mbH
Wechsler & Co., Inc. 3,361 33,610 $299,969.25
105 South Bedford Road, Suite 310
Mt. Kisco, NY 10549
DWS Investment GmbH 100,000 1,000,000 $8,925,000.00
Gruneburgweg U3-115
60323 Frankfurt AM Main
Germany
Wendt Family Revocable Trust 952 9,520 $84,966.00
4900 West Dr., Creek Road
Healdsberg, CA 84448
Roston Enterprises 560 5,600 $49,980.00
2201 Canyonback Road
Los Angeles, CA 90049
Charles Johnston 1,120 11,200 $99,960.00
706 Ocean Drive
Juno Beach, Florida 33408
Forsakringsbolaget SPP Omsesidigt 11,535 115,350 $1,029,498.75
Regeringsgatan 107
10373 Stockholm
Sweden
Aries Master Fund 23,388 233,880 $2,087,379.00
c/o Paramount Capital Asset Management, Inc.
787 Seventh Avenue
New York, NY 10019
Aries Domestic Fund, L.P. 9,486 94,860 $846,625.50
c/o Paramount Capital Asset Management, Inc.
787 Seventh Avenue
New York, NY 10019
</TABLE>
1.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Aries Domestic Fund II, L.P. 739 7,390 $65,955.75
c/o Paramount Capital Asset Management, Inc.
787 Seventh Avenue
New York, NY 10019
Winchester Global Trust Company Limited 18,655 186,550 $1,664,958.75
as Trustee for Caduceus Capital Trust
Coduceus Capital Trust
767 Third Avenue, 6th Floor
New York, NY 10017
Caduceus Capital II L.P. 9,356 93,560 $835,023.00
767 Third Avenue, 6th Floor
New York, NY 10017
Clarion Capital Corporation 3,361 33,610 $299,969.25
1801 East 9th Street, Suite 1120
Cleveland, Ohio 44114
Mr. Steven M. Oliveira 2,240 22,400 $199,920.00
4 Piper Court
Blauvelt, NY 10913
Douglas & Laurie Moore Family Trust 1,120 11,200 $99,960.00
2455 Deervalley Lane
Walnut Creek, CA 94598
SEB Lakemedel-och Biolekuilefond 9,524 95,240 $850,017.00
St. S6
SE-106 40 Stockholm
SEB Lux (F) Lakemedel-och Biolekuilefond 1,680 16,800 $149,940.00
SEB - Private Bank
P.O. Box 487
L-2014
Livforsahringsahtiebolaget Skandia (publ) 22,409 224,090 $2,000,003.25
Index Special Situation Fund, Ltd. 3,361 33,610 $299,969.25
MeesPierson Fund Services (Bahamas) Limited
Montaque Sterling Centre, East Bay Street
P.O. Box SS-6238, Nassau, Bahamas
Merced Partners, LP 11,204 112,040 $999,957.00
601 Carlson Parkway, Suite 200
Minnesota, MN 55305
-------------- -------------------------------- -----------------
TOTAL: 267,664 2,676,640 $23,889,012.00
============== ================================ =================
</TABLE>
` 2.
<PAGE>
Exhibit 10.36
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES AVAILABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED UNLESS (I)
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR (II) MAXIM PHARMACEUTICALS, INC. HAS BEEN FURNISHED AN OPINION OF
COUNSEL ACCEPTABLE TO IT TO THE EFFECT THAT NO REGISTRATION IS LEGALLY REQUIRED
FOR SUCH TRANSFER.
DATE OF ISSUANCE: NOVEMBER 12, 1999 WARRANT NO. _______
WARRANT TO PURCHASE
____ SHARES
OF COMMON STOCK AS
HEREIN DESCRIBED
MAXIM PHARMACEUTICALS, INC.
COMMON STOCK PURCHASE WARRANT
Void after November 12, 2004
This is to certify that, for value received, _________________ or a proper
assignee (in each case, the "Holder") is entitled to purchase, subject to the
provisions of this Warrant from Maxim Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), at any time during the period from the date of
issuance set forth above (the "Commencement Date") to 5:00 p.m., California
time, on November 12, 2004 (the "Expiration Date") at which time this Warrant
shall expire and become void, _____________ (_____) SHARES ("Warrant Shares") of
the Company's Common Stock ("Stock"). This Warrant shall be exercisable at
$______ U.S. Dollars per share (the "Exercise Price"). The number of shares of
Stock to be received upon exercise of this Warrant and the Exercise Price shall
be adjusted from time to time as set forth below. This Warrant also is subject
to the following terms and conditions:
1. EXERCISE OF WARRANT. Subject to the terms and conditions
hereof, this Warrant may be exercised in whole or in part at any time from and
after the Commencement Date and before the Expiration Date. Exercise shall be by
presentation and surrender to the Company at its principal office, or at the
office of any transfer agent for its warrants ("Transfer Agent") designated by
the Company, of (i) this Warrant and (ii) a signed cashier's check payable to
the Company in an amount equal to the product of
<PAGE>
the Exercise Price multiplied by the number of Warrant Shares being purchased
upon such exercise. If this Warrant is exercised in part only, the Company or
Transfer Agent shall, as soon as practicable after presentation of this Warrant
upon such exercise, execute and deliver a new Warrant, dated the date hereof,
evidencing the right of the Holder to purchase the balance of the Warrant Shares
purchasable hereunder upon the same terms and conditions herein set forth. Upon
and as of receipt by the Company or Transfer Agent of such properly completed
and duly executed purchase form accompanied by payment as herein provided, the
Holder shall be deemed to be the Holder of record of the shares of Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Stock shall not then actually be delivered to the Holder.
2. CASHLESS EXERCISE.
2.1 In addition to the method of payment set forth in Section
1 and in lieu of any cash payment required thereunder, the Holder of the Warrant
will have the right to exercise the vested portion of the Warrant, in full or in
part, by surrendering the Warrant certificate in the manner specified in Section
1 in exchange for a number of shares equal to the number of shares of Stock as
to which the Warrant is being exercised, multiplied by the quotient derived from
dividing (i) the per share Market Price (defined in Section 2.2 below), by (ii)
an amount equal to the difference between the per share Market Price and the
Exercise Price.
2.2 "Market Price shall be the last reported sale price, or in
the case no such reported sales takes place on such day, the average of the last
reported sales prices for the last three (3) trading days, in either case as
reported by the principal United States exchange on which the Common Stock is
listed, on the date on which the Annex A form attached hereto is delivered to
the Company.
3. REGISTRATION RIGHTS. Upon written request from the Holder, the
Company shall use its best efforts to register for resale the shares of stock
underlying the warrant, to the extent such shares are not freely tradable. The
Company may delay such registration at the time of request until after
completion of an equity offering if requested by the underwriter or placement
agent.
4. RESERVATIONS OF SHARES. The Company shall, at all times until
the expiration of this Warrant, reserve for issuance and delivery upon exercise
of this Warrant the number of Warrant Shares as shall be required for issuance
and delivery upon any unexercised portion of this Warrant.
5. FRACTIONAL SHARES. The Company shall not issue any fractional
shares nor scrip representing fractional shares upon exercise of any portion of
this Warrant.
2.
<PAGE>
6. NO RIGHTS AS SHAREHOLDER. This Warrant shall not entitle the
Holder to any rights as a shareholder of the Company, either at law or in
equity. The rights of the Holder are limited to those expressed in this Warrant
and are not enforceable against the Company except to the extent set forth
herein.
7. ADJUSTMENTS IN NUMBER AND EXERCISE PRICES OF WARRANT SHARES.
7.1 The number of shares of Stock for which this Warrant may
be exercised and the Exercise Price therefor shall be subject to adjustments as
follows:
(a) If the Company is recapitalized through the subdivision or
combination of its outstanding shares of Stock into a larger or smaller number
of shares, the number of shares of Stock for which this Warrant may be exercised
shall be increased or reduced, as of the record date for such recapitalization,
in the same proportion as the increase or decrease in the outstanding shares of
Stock, and the Exercise Price shall be adjusted so that the aggregate amount
payable for the purchase of all of the Warrant Shares issuable hereunder
immediately after the record date for such recapitalization shall equal the
aggregate amount so payable immediately before such record date.
(b) If the Company declares a dividend on Stock payable in
Stock or securities convertible into Stock, the number of shares of Stock for
which this Warrant may be exercised shall be increased as of the record date for
determining which holders of Stock shall be entitled to receive such dividend,
in proportion to the increase in the number of outstanding shares (and shares of
Stock issuable upon conversion of all such securities convertible into Stock) of
Stock as a result of such dividend, and the Exercise Price shall be adjusted so
that the aggregate amount payable for the purchase of all the Warrant Shares
issuable hereunder immediately after the record date for such dividend shall
equal the aggregate amount so payable immediately before such record date.
7.2 In the event of any reorganization or reclassification of
the outstanding shares of Stock (other than a change in par value or from no par
value to par value, or from par value to no par value, or as a result of a
subdivision or combination) or in the event of any consolidation or merger of
the Company with another entity after which the Company is not the surviving
entity, at any time prior to the expiration of this Warrant, upon subsequent
exercise of this Warrant the Holder shall have the right to receive the same
kind and number of shares of Stock and other securities, cash or other property
as would have been distributed to the Holder upon such reorganization,
reclassification, consolidation or merger had the Holder exercised this Warrant
immediately prior to such reorganization, reclassification, consolidation or
merger, appropriately adjusted for any subsequent event described in this
Section 5. The Holder shall pay upon such exercise the Exercise Price that
otherwise would have been payable pursuant to the terms of this Warrant. If any
such reorganization, reclassification,
3.
<PAGE>
consolidation or merger results in a cash distribution in excess of the then
applicable Exercise Price, the Holder may, at the Holder's option, exercise this
Warrant without making payment of the Exercise Price, and in such case the
Company shall, upon distribution to the Holder, consider the Exercise Price to
have been paid in full, and in making settlement to the Holder, shall deduct an
amount equal to the Exercise Price from the amount payable to the Holder. In the
event of any such reorganization, merger or consolidation, the corporation
formed by such consolidation or merger or the corporation which shall have
acquired the assets of the Company shall execute and deliver a supplement hereto
to the foregoing effect, which supplement shall also provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided in this Warrant.
7.3 If the Company shall, at any time before the expiration of
this Warrant, dissolve, liquidate or wind up its affairs, the Holder shall have
the right to receive upon exercise of this Warrant, in lieu of the shares of
Stock of the Company that the Holder otherwise would have been entitled to
receive, the same kind and amount of assets as would have been issued,
distributed or paid to the Holder upon any such dissolution, liquidation or
winding up with respect to such Stock receivable upon exercise of this Warrant
on the date for determining those entitled to receive any such distribution. If
any such dissolution, liquidation or winding up results in any cash distribution
in excess of the Exercise Price provided by this Warrant, the Holder may, at the
Holder's option, exercise this Warrant without making payment of the Exercise
Price and, in such case, the Company shall, upon distribution to the Holder,
consider the Exercise Price to have been paid in full and, in making settlement
to the Holder, shall deduct an amount equal to the Exercise Price from the
amount payable to the Holder.
7.4 The Company may retain a firm of independent public
accountants of recognized standing (who may be any such firm regularly employed
by the Company) to make any computation required under this Section 5, and a
certificate signed by such firm shall be conclusive evidence of the correctness
of any computation made under this Section 5.
8. INVESTMENT REPRESENTATIONS.
8.1 The Holder represents and warrants that it is acquiring
the Warrant, and upon exercise will hold the Warrant Shares, solely for its
account for investment and not with a view to or for sale or distribution of
said Warrant or Warrant Shares or any part thereof. The Holder also represents
that the entire legal and beneficial interests of the Warrant and Warrant Shares
the Holder is acquiring is being acquired for, and will be held for, its account
only.
4.
<PAGE>
8.2 The Holder understands that the Warrant has not been
registered under the Securities Act of 1933, as amended (the "Act"), on the
basis that no distribution or public offering of the stock of the Company is to
be effected. The Holder realizes that the basis for the exemption may not be
present if, notwithstanding its representations, it has in mind merely acquiring
the securities for a fixed or determinable period in the future, or for a market
rise, or for sale if the market does not rise. The Holder has no such intention.
8.3 The Holder recognizes that the Warrant and Warrant Shares
being acquired by it must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
The Holder recognizes that the Company has no obligation to register the Warrant
or the Warrant Shares of the Company, or to comply with any exemption from such
registration.
8.4 The Holder is aware that neither the Warrant nor Warrant
Shares may be sold pursuant to Rule 144 adopted under the Act unless certain
conditions are met and until the Holder has held the Warrant Shares for at least
two years. Among the conditions for use of the Rule is the availability of
current information to the public about the Company. The Holder understands that
the Company has not made such information available and has no present plans to
do so.
8.5 The Holder represents and warrants that it is an
"accredited investor" as such term is defined in Rule 501(a) under the
Securities Act of 1933, as amended. Specifically, the Holder represents and
warrants that it is either a corporation or partnership, not formed for the
specific purpose of acquiring securities of the Company, with total assets in
excess of $5,000,000, or an individual whose net worth exceeds $1,000,000.
9. TRANSFER, EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT.
9.1 This Warrant may be transferred, in whole or in part,
subject to the following restrictions. This Warrant and the Warrant Shares or
any other securities ("Other Securities") received upon exercise of this Warrant
shall be subject to restrictions on transferability until registered under the
Act, unless an exemption from registration is available. Until this Warrant and
the Warrant Shares or Other Securities are so registered, this Warrant and any
certificate for Warrant Shares or Other Securities issued or issuable upon
exercise of this Warrant shall contain a legend on the face thereof, in form and
substance satisfactory to counsel for the Company, stating that this Warrant,
the Warrant Shares or Other Securities may not be sold, transferred or otherwise
disposed of unless, in the opinion of counsel (which counsel and which opinion
shall be satisfactory to the Company), that the Warrant, the Warrant Shares or
Other Securities may be transferred without such registration.
5.
<PAGE>
9.2 Any transfer permitted hereunder shall be made by
surrender of this Warrant to the Company at its principal office or to the
Transfer Agent at its offices with a duly executed request to transfer the
Warrant, which shall provide adequate information to effect such transfer and
shall be accompanied by funds sufficient to pay any transfer taxes applicable.
Upon satisfaction of all transfer conditions, the Company or Transfer Agent
shall, without charge, execute and deliver a new Warrant in the name of the
transferee named in such transfer request, and this Warrant promptly shall be
canceled.
9.3 Upon receipt by the Company of evidence satisfactory to it
of loss, theft, destruction or mutilation of this Warrant and, in the case of
loss, theft or destruction, of reasonably satisfactory indemnification, or, in
the case of mutilation, upon surrender of this Warrant, the Company will execute
and deliver, or instruct the Transfer Agent to execute and deliver, a new
Warrant of like tenor and date, and any such lost, stolen or destroyed Warrant
thereupon shall become void.
9.4 Each Holder of this Warrant, the Warrant Shares and any
Other Securities shall indemnify and hold harmless the Company, its directors
and officers, and each other person, if any, who controls the Company, against
any losses, claims, damages or liabilities, joint or several, to which the
Company or any such director, officer or any such person may become subject
under the Act or any statute or common law, insofar as such losses, claims,
damages or liabilities, or actions in respect thereof, arise out of or based
upon the disposition by such Holder of the Warrant, the Warrant Shares or Other
Securities in violation of this Warrant.
9.5 The terms and conditions of this Warrant shall be binding
upon any permitted assignee and successor of the Holder. Any such successor or
assignee shall be obligated to and shall immediately execute an instrument which
provides that such party is bound under the terms of this Warrant. Any transfer,
assignment or other disposition without such execution by the proposed
transferee, assignee or successor shall be null and void.
10. GOVERNING LAW. This Warrant shall be governed by and construed
in accordance with the laws of the State of California, as such laws are applied
to contracts entered into and wholly to be performed within the State of
California.
11. ENTIRE AGREEMENT. The undersigned Holder agrees that this
Warrant sets forth the entire understanding between the such Holder and the
Company with respect to the obligation of the Company to issue additional shares
of Stock to such Holder and supersedes all prior oral and written agreements on
that subject, including any prior common stock purchase warrant issued to the
Holder.
6.
<PAGE>
IN WITNESS WHEREOF, the Company and Holder have executed this Warrant
as of this 12th day of November, 1999.
__________________________________ MAXIM PHARMACEUTICALS, INC.
By:_______________________________ By:___________________________________
Larry G. Stambaugh
Chairman of the Board, President
and Chief Executive Officer
7.
<PAGE>
ANNEX A
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase __________ shares of Common Stock and
herewith tenders payment for such shares of Common Stock to the order of Maxim
Pharmaceuticals, Inc. in the amount of $____________ in accordance with the
terms hereof. The undersigned requests that a certificate for such shares of
Common Stock be registered in the name of
_______________________________________________ whose address is
_______________________________________________________________________. If said
numbers of shares of Common Stock is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant representing
the remaining balance of the shares of Common Stock be registered in the name of
and that such Warrant be delivered to
____________________________________________, whose address is ________________
________________________________
Dated:__________________________________________
Signature:______________________________________
Tax Identification Number:______________________
1.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Maxim Pharmaceuticals, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Prospectus.
KPMG LLP
San Diego, California
November 30, 1999
