UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __________)*
SYMBOLLON CORPORATION
(Name of Issuer)
Common Stock
(Title of Class of Securities)
8715H106
(CUSIP Number)
Thomas M. Riedhammer
Senior Vice President and President
Bausch & Lomb Pharmaceuticals, Inc.
8500 Hidden River Parkway
Tampa, Florida 33637
(813) 975-7713
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
August 4, 1997
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box [ ].
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent
amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
(Continued on the following page(s))
Page 1 of 5 Pages
CUSIP No. 8715H106 Page 2 of 5 Pages
___________________________________________________________________________
(1) NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bausch & Lomb Pharmaceuticals, Inc.
59-2551652
___________________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See
Instructions)
(a) / /
(b) / /
___________________________________________________________________________
(3) SEC USE ONLY
___________________________________________________________________________
(4) SOURCE OF FUNDS
WC
___________________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) / /
___________________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
___________________________________________________________________________
(7) SOLE VOTING POWER
266,667
NUMBER OF SHARES (8) SHARED VOTING POWER
BENEFICIALLY OWNED BY
EACH REPORTING PERSON ___________________________________
WITH (9) SOLE DISPOSITIVE POWER
266,667
(10) SHARED DISPOSITIVE POWER
___________________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
266,667
___________________________________________________________________________
(12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions) / /
___________________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.39%
___________________________________________________________________________
(14) TYPE OF REPORTING PERSON (See Instructions)
CO
___________________________________________________________________________
CUSIP No. 8715H106 Page 3 of 5 Pages
Item 1. Security and Issuer.
This Schedule relates to shares of the Common Stock, par value .001
per share ("Common Stock") of Symbollon Corporation (the "Issuer"). The
Issuer's principal executive office is located at 37 Loring Drive,
Framingham, Massachusetts 33637.
Item 2. Identity and Background.
This statement is submitted by Bausch & Lomb Pharmaceuticals, Inc.,
a corporation organized under the laws of the State of Delaware. Bausch &
Lomb Pharmaceuticals, Inc.'s principal business is pharmaceuticals and its
principal business and office address is 8500 Hidden River Parkway, Tampa,
Florida 33637. Bausch & Lomb Pharmaceuticals, Inc. is a wholly-owned
subsidiary of Bausch & Lomb Incorporated, a corporation organized under the
laws of the State of New York. Its principal business is eye care,
including soft and rigid gas permeable contact lenses, lens care products,
premium sunglasses and ophthalmic pharmaceutical products. Bausch & Lomb
Incorporated's principal executive office is at One Bausch & Lomb Place,
Rochester, New York 14604. Bausch & Lomb Pharmaceuticals, Inc. has not,
during the last five years, been convicted in a criminal proceeding and has
not, during the last five years, been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of
which it is or was subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to
such laws.
The names, business addresses and occupational information for: (a)
each executive officer and director of Bausch & Lomb Pharmaceuticals, Inc.,
(b) each executive officer and director of Bausch & Lomb Incorporated is
set forth in Exhibit A. To the best of the knowledge of Bausch & Lomb
Pharmaceuticals, Inc. and Bausch & Lomb Incorporated, respectively, each of
the individuals on Exhibit A has not, during the last five years, been
convicted in a criminal proceeding and has not, during the last five years,
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which it is or was subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
Working capital.
Item 4. Purpose of the Transaction
Bausch & Lomb Pharmaceuticals, Inc. ("BLPI") entered into a Stock
Purchase Agreement with Symbollon Corporation (the "Issuer"), dated
August 4, 1997 (the "Stock Purchase Agreement") in connection with a
Collaboration and Sale/License Agreement of the same date between BLPI and
the Issuer (the "Sale/License Agreement"). Under the Sale/License
CUSIP No. 8715H106 Page 4 of 5 Pages
Agreement, Symbollon, with assistance from BLPI, will develop enzyme-based
iodine technology for treatment of infectious diseases of the eye and BLPI
will have the exclusive U.S. and Canada marketing rights for ophthalmic
products based on the Issuer's iodine technology. Under the terms of the
Stock Purchase Agreement, on the date thereof, BLPI purchased $500,000 in
original issue shares of the Issuer's Common Stock at a price per share
equal to the average closing price for the preceding five trading days, or
266,667 shares at $1.8975 per share.
Under the Stock Purchase Agreement, BLPI must purchase an additional
$350,000 of Common Stock at the then market value on the first anniversary
of the date of the Stock Purchase Agreement. BLPI has and will purchase
the shares of the Issuer's Common Stock for investment purposes and has
agreed with the Issuer not to sell the Common Stock for four years
($350,000 in original cost of the shares) or seven years (the balance of
the shares) except as otherwise provided in the Stock Purchase Agreement.
BLPI and its affiliates have agreed not to purchase additional shares of
the Issuer's Common Stock through the seventh anniversary of the Stock
Purchase Agreement without the Issuer's prior consent.
BLPI has no present intention to seek any extraordinary transactions like a
merger or sale or material amounts of assets with respect to the Issuer nor
to change the Issuer's board of directors, management or organizational
documents or in its business or corporate structure. BLPI has agreed to
vote its shares of Common Stock generally in accordance with the
recommendations of the Issuer's Board of Directors, unless a significant
transaction with a competitor of BLPI is contemplated. See Item 6 below.
BLPI does expect to be actively involved in a collaborative effort with the
Issuer to develop, obtain regulatory approval for and commercialize the
Issuer's iodine technology or ophthalmic (and possibly otic) products.
Item 5. Interest in Securities of the Issuer
(a) Bausch & Lomb Pharmaceuticals, Inc. beneficially owns 266,667
shares of the Issuer's Common Stock, representing 8.39% of the issued and
outstanding shares of the Issuer's Common Stock. It also has the
obligation to purchase an additional $350,000 in original issue shares of
the Issuer's Common Stock at the then market value (the average closing
price for the five trading days immediately preceding the closing of the
purchase) upon the first anniversary date of the Stock Purchase Agreement.
(b) Bausch & Lomb Pharmaceuticals, Inc. has the sole power to vote,
subject to a voting agreement with Issuer set forth in the Stock Purchase
Agreement that requires Bausch & Lomb Pharmaceuticals, Inc. to vote
pursuant to the recommendation of the Issuer's board of directors and in
the absence of any such recommendation, in the same proportion of the other
outstanding voting shares of Issuer provided however that such voting
agreement does not apply to any transaction which is not approved by
Issuer's board of directors or in the event of a proposed merger or
combination of sale of substantially all the assets of a company which is a
competitor of Bausch & Lomb Pharmaceuticals, Inc. Bausch & Lomb
Pharmaceuticals, Inc. has the sole power to dispose of 266,667 shares of
Common Stock.
CUSIP No. 8715H106 Page 5 of 5 Pages
(c) Neither Bausch & Lomb Pharmaceuticals, Inc. nor any entity
controlling Bausch & Lomb Pharmaceuticals, Inc. has had any transactions in
the Common Stock within the last 60 days.
(d) None.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
As described under Item 4 above, the Stock Purchase Agreement contains an
obligation on the part of BLPI to purchase an additional $350,000 of Common
Stock on the first anniversary of the Stock Purchase Agreement. BLPI's
ability to transfer the Common Stock is restricted by the Stock Purchase
Agreement until the fourth anniversary thereof with respect to the Base
Shares (as that term is defined in the Stock Purchase Agreement attached
hereto as Exhibit B) and the seventh anniversary with respect to the
Additional Shares (as that term is defined in the Stock Purchase Agreement
attached hereto as Exhibit B), although BLPI may use the original cost of
certain such shares to offset certain payment obligations under the
Sale/License Agreement. The Issuer may repurchase the Common Stock at its
original cost.
In the Stock Purchase Agreement, BLPI and its affiliates agreed to vote
their shares of the Issuer's Common Stock in accordance with the
recommendation of the Issuer's Board of Directors. In the absence of a
recommendation, they agreed to vote in the same proportion as the other
outstanding shares of the Issuer are voted in any matter submitted to the
Issuer's shareholders. These voting agreements do not apply to any
transaction not approved by the Issuer's Board of Directors or in the event
of a proposed merger or combination or sale of substantially all of the
assets of the Issuer to a competitor of BLPI.
Item 7. Material to Be Filed as Exhibits
(a) Executive Officers and Directors of Bausch & Lomb
Pharmaceuticals, Inc. and Bausch & Lomb Incorporated.
(b) Stock Purchase Agreement dated August 4, 1997 between Bausch &
Lomb Pharmaceuticals, Inc. and the Issuer.
Signature
After reasonable inquiry and to the best of the undersigned's
knowledge and belief the undersigned certify that the information set forth
in this statement is true, complete and correct.
August 4, 1997 BAUSCH & LOMB PHARMACEUTICALS, INC.
By:_______________________________
Thomas M. Riedhammer, President
EXHIBIT A
DIRECTORS AND OFFICERS OF
BAUSCH & LOMB PHARMACEUTICALS, INC.
DIRECTORS
David F. Jarosz
Thomas M. Riedhammer
Robert B. Stiles
OFFICERS
Thomas M. Riedhammer, President
Eileen Farinacci, Vice President
Robert B. Stiles, Secretary
David F. Jarosz, Assistant Secretary
Alan H. Resnick, Treasurer
E. Mullen, Assistant Treasurer
BAUSCH & LOMB INCORPORATED
Officers
July 23, 1997
William H. Waltrip Chairman
William M. Carpenter President and Chief Executive Officer
Dwain L. Hahs Executive Vice President and President,
Global Bausch & Lomb Eyewear
Carl E. Sassano Executive Vice President and President,
Global Bausch & Lomb Vision Care
Daryl M. Dickson Senior Vice President, Human Resources
James C. Foster Senior Vice President, President and Chief Executive Officer,
Charles River Laboratories
Stephen C. McCluski Senior Vice President and Chief Financial Officer
Thomas M. Riedhammer Senior Vice President and President,
Worldwide Pharmaceutical, Surgical and Hearing Care Products
Robert B. Stiles Senior Vice President and General Counsel
BAUSCH & LOMB INCORPORATED
Board of Directors
July 23, 1997
Franklin E. Agnew Business Consultant
William Balderston III Executive Vice President (Retired)
The Chase Manhattan Bank
William M. Carpenter President & Chief Operating Officer
Bausch & Lomb Incorporated
Domenico De Sole President and Chief Executive Officer
Gucci Group N.V.
Jonathan S. Linen Vice Chairman
American Express Company
Ruth R. McMullin Business Consultant
John R. Purcell Chairman & Chief Executive Officer
Grenadier Associates, Ltd.
Linda Johnson Rice President & Chief Operating Officer
Johnson Publishing Company
Alvin W. Trivelpiece
Director, Oak Ridge National Laboratory and
President, Lockheed Martin Energy Research Corporation
William H. Waltrip Chairman & Chief Executive Officer
Bausch & Lomb Incorporated
Kenneth L. Wolfe Chairman & Chief Executive Officer
Hershey Foods Corporation
EXHIBIT B
SYMBOLLON CORPORATION
STOCK PURCHASE AGREEMENT
This Agreement dated as of August 4, 1997 is entered
into by and between Symbollon Corporation, a Delaware
corporation, residing at 37 Loring Drive, Framingham,
Massachusetts 01702 (the "Company"), and Bausch & Lomb
Pharmaceuticals, Inc., a Delaware corporation ("B&L"),
residing at 8500 Hidden River Parkway, Tampa, Florida 33637
(B&L and any subsequent valid and permitted transferee,
shall hereinafter be collectively referred to as the
"Purchaser"). Certain other terms are defined in Section 9 below.
A. The Company and B&L have entered into a
Collaboration and Sale/License Agreement of even date
herewith (the "Collaboration and Sale/License Agreement")
pursuant to which the Company and B&L have provided for the
development and commercialization of products for the
treatment of various ophthalmic conditions;
B. In connection with the execution and delivery of
the Collaboration and Sale/License Agreement, the Purchaser
desires to purchase, and the Company desires to sell, shares
of the Company's Class A Common Stock, $.001 par value per
share (the "Common Stock") upon the terms and conditions
hereinafter described.
In consideration of the mutual promises and covenants
contained in the Agreement, the parties hereto agree as
follows:
1. Authorization and Sale of Shares.
1.1 Authorization. The Company has, or before
the Closings (as defined in Section 2) will have, duly
authorized and taken all such corporate and other actions
within its control as is necessary for the issuance, sale
and delivery, pursuant to the terms of this Agreement, of
that number of shares of the Common Stock that can be
purchased for a purchase price of eight hundred fifty
thousand dollars ($850,000) as is determined by dividing
$850,000 by the applicable Market Price relevant thereto as
defined in Section 2 below.
1.2 Sale of Shares. Subject to the terms and
conditions of this Agreement, at the First Closing (as
defined in Section 2) the Company will sell and issue to
B&L, and B&L will purchase, for an aggregate purchase price
of $500,000 that number of shares of the Common Stock as is
determined by dividing $500,000 by the Market Price per
share on the First Closing Date (the "First Closing
Shares"). Subject to the terms and conditions of this
Agreement, at the Second Closing (as defined in Section 2)
the Company will sell and issue to B&L, and B&L will
purchase, for an aggregate purchase price of $350,000 that
number of shares of the Common Stock as is determined by
dividing $350,000 by the Market Price per share on the
Second Closing Date (the "Second Closing Shares"). The
First Closing Shares and the Second Closing Shares are
hereinafter referred to collectively as the "Shares".
2. The Closings. The closing of the sale and
purchase of the First Closing Shares shall take place at the
offices of the Company, or such other mutually agreeable
location as the parties may deem appropriate, on the date
hereof unless the parties shall otherwise agree in writing
(the "First Closing"). The closing of the sale to and
purchase of the Second Closing Shares shall take place at
the offices of the Company, or such other mutually agreeable
location as the parties may deem appropriate, on the date
the payment is due by B&L to the Company pursuant to Section
6.2(b) of the Collaboration and Sale/License Agreement, if
and when such payment becomes due (the "Second Closing").
The First Closing and the Second Closing are sometimes
each referred to hereinafter as a "Closing" and
collectively as the "Closings". The date of the First
Closing is hereinafter referred to as the "First Closing
Date" and the date of the Second Closing is hereinafter
referred to as the "Second Closing Date".
At each of the Closings, the Company shall deliver to
B&L certificates for the number of Shares being purchased by
B&L, registered in the name of B&L, against payment to the
Company of the purchase price therefor, by wire transfer.
The purchase price per share for the Shares to be purchased
at the Closings shall be the average of the closing price of
the Common Stock for the immediately preceding five trading
days before the First Closing Date or the Second Closing
Date, as applicable (the "Market Price").
3. Representations of the Company. The Company
hereby represents and warrants to B&L as follows:
3.1 Organization and Standing. The Company is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has
full corporate power and authority to conduct its business
as presently conducted and as proposed to be conducted by it
and to enter into and perform this Agreement and to carry
out the transactions contemplated hereby. The Company is
qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the nature of
the business transacted by it or the character or location
of its properties requires such qualification, except where
the failure to so qualify would not have a Material Adverse
Effect.
3.2 Capitalization. The authorized capital stock
of the Company as of the date hereof consists of 18,750,000
shares of the Common Stock, 1,250,000 shares of Class B
Common Stock, $.001 par value per share, and 5,000,000
shares of Preferred Stock, $.001 par value per share, of
which 2,913,234 shares of the Common Stock and 15,738 shares
of Class B Common Stock are outstanding as of the date
hereof without taking into effect the transactions
contemplated by this Agreement. As of the date of this
Agreement, there are 1,572,080 Class A Warrants (each of
which is exercisable to purchase one share of Class A Common
Stock and one Class B Warrant on the terms and conditions
thereof) and 1,227,920 Class B Warrants (each of which is
exercisable to purchase one share of Class A Common Stock on
the terms and conditions thereof) presently outstanding. As
of the date of this Agreement, there are options outstanding
to purchase 100,000 Units (a Unit consists of one share of
Class A Common Stock, one Class A Warrant and one Class B
Warrant), and 691,222 shares of Class A Common Stock. All
shares outstanding on the date hereof are, and any shares
that will be issued under the terms and conditions of the
warrants and options referred to above, when issued in
accordance with their terms, will be, duly authorized,
validly issued and fully paid and nonassessable. There are
no preemptive rights, rights of first refusal, or other
similar rights available to the existing holders of Common
Stock or other securities of the Company.
3.3 Issuance of Shares. The issuance, sale and
delivery of the Shares have been, or will be on or prior to
the applicable Closing Date, duly authorized by all
necessary corporate action on the part of the Company. The
Shares, when issued, sold and delivered against payment
therefor in accordance with the provisions of this
Agreement, will be duly and validly issued, fully paid and
non-assessable and free and clear of any liens or
preemptive, rights of first refusal, or other similar rights
(other than Applicable Securities Laws and the terms of this
Agreement).
3.4 Authority for Agreement; No Conflicts. The
execution, delivery and performance by the Company of this
Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by all
necessary corporate action. This Agreement has been duly
executed and delivered by the Company, and is enforceable
against it in accordance with its terms, except that such
enforcement may be subject to applicable bankruptcy,
receivership, fraudulent transfer, moratorium and similar
laws affecting creditors' rights, and the remedy of specific
performance and injunctive relief may be subject to
equitable defenses and to the discretion of the court for
which proceeding therefor may be brought. The execution and
delivery of this Agreement and performance of the
transactions contemplated by this Agreement and compliance
with its provisions by the Company will not conflict with or
result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or require a
consent or waiver under, its Certificate of Incorporation or
By-Laws (each as amended to date) or any indenture, lease,
agreement or other instrument to which the Company is party
or by which it or any of its properties is bound, or
violate any decree, judgment, order, statute, rule,
regulation or other provision of law applicable to the
Company, except in each case as would not result in a
Material Adverse Effect.
3.5 Governmental Consents. No consents,
approval, order or authorization of, or regulation,
qualification, designation, declaration or filing with, any
governmental authority is required on the part of the
Company in connection with the execution and delivery of
this Agreement or the offer, issuance, sale and delivery of
the Shares or the other transactions to be consummated at
any Closing, as contemplated by this Agreement, except for
compliance with the provisions of any laws as to which the
failure to be made or obtained would not result in a
Material Adverse Effect and such filings as shall have been
made prior to and shall be effective on and as of the
applicable Closing, except that any notices of sale required
to be filed with the Securities and Exchange Commission (the
"Commission") under Regulation D of the Securities Act of
1933, as amended (the "Securities Act"), or such post-
closing filings as may be required under applicable state
securities laws, which will be timely filed within the
applicable periods therefor.
3.6 Corporate Condition. The Company's condition
was, in all material respects, as described in the
Disclosure Documents at the respective dates thereof,
including without limitation the reports filed pursuant to
the Exchange Act. There has been no material adverse change
in the Company's business, financial condition or prospects
since March 31, 1997. The Disclosure Documents are true and
correct as of their respective dates, in all material
respects, and the financial statements contained in the
Disclosure Documents have been prepared in accordance with
generally accepted accounting principles, consistently
applied, and fairly present the financial position and
results of operation and cash flows of the Company, for the
periods then ended. Without limiting the foregoing as of
the date hereof, there are no material pending or threatened
litigation or other material liabilities, contingent or
actual, that are not disclosed in the Disclosure Documents
except as incurred in the ordinary course of business since
March 31, 1997. This Agreement and the Disclosure Documents
do not contain any untrue statement of a material fact and
do not omit to state any material fact required to be stated
therein or herein necessary to make statements contained
therein or herein not misleading in the light of the
circumstances under which they were made.
3.7 Current Public Information. During the three
months prior to the execution of this Agreement, the Company
has filed all the materials required to be filed as reports
pursuant to the Exchange Act on a timely basis.
4. Representations of the Purchaser. The Purchaser
represents and warrants to the Company as follows (such
representations and warranties shall be true and correct on
the date hereof and on and as of the Second Closing Date):
4.1 Investment. The Purchaser is acquiring the
Shares for its own account for investment and not with a
view to, or for sale in connection with, any distribution
thereof, nor with any present intention of distributing or
selling the same. The Purchaser is an "Accredited
Investor" within the meaning of Rule 501(a)(3) of
Regulation D under the Securities Act. The Purchaser
understands that the Shares have not been registered under
the Securities Act by reason of a specific exemption from
the registration provisions thereof which depends upon,
among other things, the bona fide nature of its investment
intent as expressed herein. The Purchaser will not transfer
the Shares except in compliance with Applicable Securities
Laws and the terms of this Agreement.
4.2 Power and Authority. The Purchaser has the
full power and authority to execute, deliver and perform
this Agreement. This Agreement, when executed and delivered
by the Purchaser, will constitute a valid and legally
binding obligation of the Purchaser, enforceable in
accordance with its terms.
4.3 State of Jurisdiction. The Purchaser
represents and warrants that all matters and actions
relevant to its considerations, evaluations or executions of
this Agreement or the transactions contemplated hereby by
its including, without limitation, the receipt of any offer
to purchase, the receipt and review of any documents or
other materials relevant hereto, the participation in any
communications with the Company or any other party, and the
consummation of the transactions contemplated hereby
occurred solely in Florida or Massachusetts.
4.4 Independent Investigation. The Purchaser has
relied solely upon an independent investigation made by it
and its representatives and has, prior to the date hereof,
been given access to and the opportunity to examine all
material contracts and documents of the Company which have
been filed as exhibits to the Company's filings made under
the Securities Act and the Exchange Act through publicly
available means. The Purchaser has been provided with
copies of the Company's (i) Annual Report on Form 10-KSB for
the year ended December 31, 1996; (ii) Annual Report to
Stockholders for the year ended December 31, 1996, (iii)
Registration Statement on Form S-3 filed with the Commission
on May 21, 1997, (iv) Quarterly Report on Form 10-QSB for
the quarter ended March 31, 1997; (v) Risk Factors, attached
hereto as Exhibit 4.4, and (vi) Proxy Statement dated April
9, 1997 (collectively, the "Disclosure Documents"). The
Purchaser has requested, received, reviewed and considered
all information it deems relevant in making a decision to
execute this Agreement and to purchase the Shares. In
making its investment decision to purchase the Shares, the
Purchaser is not relying on any oral or written
representations or assurances from the Company or any other
person or any representation of the Company or any other
person other than as set forth in this Agreement, or the
Disclosure Documents.
4.5 Economic Risk. The Purchaser understands and
acknowledges that an investment in the Shares involves a
high degree of risk. The Purchaser acknowledges that there
are limitations on the liquidity of the Shares. The
Purchaser represents that the Purchaser is able to bear the
economic risk of an investment in the Shares, including a
possible total loss of investment. The Purchaser has such
knowledge and experience in financial and business matters
that the Purchaser is capable of evaluating the merits and
risks of the investment in the Shares to be received by the
Purchaser; and that the Purchaser is sophisticated
accredited investor with experience with development stage
issuers engaged in biotech and pharmaceutical businesses.
4.6 No Conflicts. The execution of and
performance of the transactions contemplated by this
Agreement and compliance with its provisions by the
Purchaser will not conflict with or result in any breach of
any of the terms, conditions or provisions of, or constitute
a default under, or require a consent or waiver under any
indenture, lease, agreement or other instrument to which the
Purchaser is a party or by which it or any of its properties
are bound, or violate any decree, judgment, order, statute,
rule, regulation or other provision of law applicable to the
Purchaser, which violation would prevent, impair, hinder or
delay the consummation of the transactions contemplated by
this Agreement.
4.7 Governmental Consents. No consents,
approval, order or authorization of, or regulation,
qualification, designation, declaration or filing with, any
governmental authority is required on the part of the
Purchaser in connection with the execution and delivery of
this Agreement or the purchase of the Shares or the other
transactions to be consummated at any Closing, as
contemplated by this Agreement.
4.8 Brokers, Etc. The Purchaser has dealt with
no broker, finder, commission agent or person in connection
with the offer or sale of the Shares and the transactions
contemplated by this Agreement and neither the Purchaser nor
the Company is under any obligation to pay any broker's
fees, finder's fees, or other fees or commissions in
connection with such transactions as a result of any action
by the Purchaser.
5. Conditions to the Obligations of the Purchaser at
the Closings. Notwithstanding anything to the contrary
contained herein, the obligation of the Purchaser to
purchase Shares at each of the Closings is subject to the
fulfillment, or the waiver by the Purchaser, of each of the
following conditions on or before each Closing:
5.1 Accuracy of Representations and Warranties.
Each representation and warranty of the Company contained in
Section 3 hereof shall be true on and as of each Closing
Date in all material respects with the same effect as though
such representation and warranty had been made on and as of
that date.
5.2 Performance. The Company shall have
performed and complied in all material respects with all
agreements and conditions contained in this Agreement and
the Collaboration and Sale/License Agreement required to be
performed or complied with by the Company prior to or at
each Closing.
5.3 Qualifications. There shall not be in effect
any law, rule or regulation prohibiting or restricting the
sale and issuance of the Shares or requiring any consent or
approval of any person or governmental entity which shall
not have been obtained prior to the issuance of the Shares
in such Closing.
5.4 Collaboration and Sale/License Agreement.
The Company and the Purchaser shall have executed and
delivered the Collaboration and Sale/License Agreement, and
that as of each Closing Date, the Collaboration and
Sale/License Agreement shall be a validly existing
agreement.
5.5 Proceedings and Documents. All corporate or
other proceedings in connection with the transactions
contemplated at such Closing and all documents incident
thereto shall be reasonably satisfactory in form and
substance to the Purchaser and its counsel and the Purchaser
shall have received all such counterpart original and
certified or other copies of such documents as it may
reasonably request.
5.6 Issuance of Shares. The Company shall have
taken all steps necessary to instruct its transfer agent to
issue a share certificate or certificates representing the
Shares issued in such Closing.
5.7 Compliance Certificate. An authorized
officer of the Company shall have delivered to the Purchaser
a certificate certifying that the conditions specified in
Sections 5.1, 5.2, and 5.3 have been fulfilled and stating
that there shall have been no adverse change in the
business, affairs, properties, assets or conditions of the
Company since the Effective Date, except as otherwise
disclosed in any report or other document filed by the
Company with the Commission under the Securities Act or the
Exchange Act from the date hereof through the applicable
Closing Date.
6. Conditions to the Obligations of the Company.
Notwithstanding anything to the contrary contained herein,
the obligations of the Company to issue, sell and deliver at
each Closing the Shares are subject to fulfillment, on or
before each Closing Date, of each of the following
conditions:
6.1 Accuracy of Representations and Warranties.
Each representation and warranty of the Purchaser contained
in Section 4 hereof shall be true on and as of each Closing
Date in all material respects with the same effect as though
such representation and warranty had been made on and as of
that date.
6.2 Performance. The Purchaser shall have
performed and complied in all material respects with all
agreements and conditions contained in this Agreement and
the Collaboration and Sale/License Agreement required to be
performed or complied with by the Purchaser prior to or at
each Closing.
6.3 Qualifications. There shall not be in effect
any law, rule or regulation prohibiting or restricting the
sale and issuance of the Shares or requiring any consent or
approval of any person or governmental entity which shall
not have been obtained prior to the issuance of the Shares
in such Closing.
6.4 Collaboration and Sale/License Agreement.
The Company and the Purchaser shall have executed and
delivered the Collaboration and Sale/License Agreement, and
that as of each Closing Date, the Collaboration and
Sale/License Agreement shall be a validly existing
agreement.
6.5 Required Payment. The Purchaser shall have
delivered in accordance with this Agreement and the
Collaboration and Sale/License Agreement the purchase price
of $500,000 (with respect to the First Closing), the
purchase price of $350,000 (with respect to the Second
Closing), and all amounts as required to be paid by the
Purchaser pursuant to the terms of the Collaboration and
Sale/License Agreement.
6.6 Compliance Certificate. An authorized
officer of the Purchaser shall have delivered to the Company
a certificate certifying that the conditions specified in
Sections 6.1, 6.2, and 6.3 have been fulfilled.
7. Transfer Restrictions and Registration.
7.1 Legend. Unless and until otherwise
permitted, each certificate representing the Shares shall be
stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW. NO TRANSFER, SALE OR
OTHER DISPOSITION OF THESE SHARES MAY BE MADE UNLESS A
REGISTRATION STATEMENT WITH RESPECT TO THESE SHARES HAS
BECOME EFFECTIVE UNDER SAID ACT, OR SYMBOLLON CORPORATION IS
FURNISHED WITH AN OPINION OF COUNSEL SATISFACTORY IN FORM
AND SUBSTANCE TO IT THAT SUCH REGISTRATION IS NOT
REQUIRED."
"THE SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS ON
THEIR TRANSFER, SALE OR OTHER DISPOSITION AND ARE SUBJECT TO
CERTAIN REDEMPTION PROVISIONS PURSUANT TO A STOCK PURCHASE
AGREEMENT DATED AUGUST 4, 1997. A COPY OF WHICH IS
AVAILABLE UPON WRITTEN REQUEST OF SYMBOLLON CORPORATION
WITHOUT CHARGE."
and any legend required by any applicable state securities
laws.
7.2 Required Registration. The Purchaser shall
have the right, exercisable upon written notice to the
Company, to request the Company to file a registration
statement on the Form S-3 (or other applicable form, as the
Company determines appropriate) covering the Base Shares
purchased hereunder after the fourth anniversary of the date
of this Agreement. Upon receipt of any such notice, the
Company shall, as expeditiously as possible, use
commercially reasonable efforts to effect such registration,
obtain any governmental approval and effect listing with any
securities exchange on which the stock of the Company is
then listed, which may be required to permit the Purchaser
to dispose of the Shares. The Company shall use its
commercially reasonable efforts to maintain the
effectiveness of the registration statement until the first
to occur of (i) the completion of the distribution of the
Shares covered thereby, (ii) such time as the Shares covered
thereby may be sold without restrictive legend under Rule
144 or other exemption from the registration requirements of
the Securities Act, or (iii) 90 days from the effective date
of the registration statement. The Company agrees to keep
the registration statement current during such period. The
Company's obligation shall be limited to one registration
covering the Base Shares.
The Purchaser shall have the right, exercisable upon
written notice to the Company, to request the Company to
file a registration statement on the Form S-3 (or other
applicable form, as the Company determines appropriate)
covering the Additional Shares purchased hereunder after the
seventh anniversary of the date of this Agreement. Upon
receipt of any such notice, the Company shall, as
expeditiously as possible, use commercially reasonable
efforts to effect such registration, obtain any governmental
approval and effect listing with any securities exchange on
which the stock of the Company is then listed, which may be
required to permit the Purchaser to dispose of the Shares.
The Company shall use its commercially reasonable efforts to
maintain the effectiveness of the registration statement
until the first to occur of (i) the completion of the
distribution of the Shares covered thereby, (ii) such time
as the Shares covered thereby may be sold without
restrictive legend under Rule 144 or other exemption from
the registration requirements of the Securities Act, or
(iii) 90 days from the effective date of the registration
statement. The Company agrees to keep the registration
statement current during such period. The Company's
obligation shall be limited to one registration covering the
Additional Shares.
Notwithstanding anything contained in this Section 7.2
to the contrary, the Company shall not be obligated to
effect a registration covering the Shares if at the time of
request, all such Shares can be immediately sold without
restrictive legend under Rule 144 or other exemption from
the registration requirements of the Securities Act. The
Company shall not be required to cause a registration
statement to become effective pursuant to this Section 7.2
prior to 120 days following the effective date of the most
recent registration by the Company under the Securities Act.
7.3 Piggy-Back Registration Rights. With regard
to the Base Shares and the Additional Shares, if the Company
at any time after the fourth and the seventh anniversary,
respectively, proposes to register under the Securities Act
any of its Common Stock on any form on which the Shares may
be included, except shares to be issued in connection with
any acquisition of any entity or business, shares issuable
upon the exercise of stock options or shares issuable
pursuant to employee benefit plans, it will each such time
give written notice to the Purchaser of its intention to do
so. If the Purchaser desires to have any of its Shares
purchased hereunder included in such registration, it shall,
within 20 days after it receipt of such notice from the
Company, notify the Company of the number of shares which it
desires to have so included and the manner in which it
proposes to dispose of such Shares. The Company will cause
all such Shares requested to be registered by the Purchaser
to be registered or qualified to the extent requisite to
permit the sale or other disposition thereof in the manner
described by the Purchaser; provided, however, that if, in
connection with the offering of Common Stock pursuant to a
registration under the Securities Act, such offering
includes shares of Common Stock being sold by the Company
and the managing underwriter shall impose a limitation on
the number of shares of the Common Stock which may be
included in any such registration statement because, in its
judgment, such limitation is necessary to effect an orderly
public distribution and such limitation is imposed pro rata
with respect to all securities which have an incidental or
"piggy back" rights to be included in the registration
statement, then the Company shall be obligated to include in
such registration statement only such limited portion of the
Shares which it has been requested hereunder to include.
In connection with any such offering, the Purchaser
shall execute such agreements as the underwriters shall
reasonably request, including without limitation "lock-up"
agreements. Notwithstanding anything contained in this
Section 7.3 to the contrary, the Company shall not be
required to offer the Purchaser the right to participate in
more than two offerings.
7.4 Non-public Information. Notwithstanding
anything to the contrary in this Section 7, the Company
shall have the right (i) to defer the initial filing or
request for acceleration of effectiveness of any
registration or (ii) after effectiveness, to suspend
effectiveness of any such registration statement, if, in the
good faith judgment of the board of directors of the
Company, such delay in filing or requesting acceleration of
effectiveness or such suspension of effectiveness is
necessary in light of the existence of material non-public
information (financial or otherwise) concerning the Company
disclosure of which at the time is not, in the opinion of
the board of directors of the Company, (A) otherwise
required and (B) in the best interests of the Company;
provided however that the Company will use its commercially
reasonable efforts to terminate such delay or suspension as
soon as practicable.
7.5 Payment of Expenses. The Company shall bear
the expense (excluding underwriting commissions, dealers'
fees, brokers' fees, concessions applicable to the Shares,
legal fees and expenses of the Purchaser and any out-of-
pocket expenses of the Purchaser) of all registrations
pursuant to this Section 7.
7.6 Indemnification. The Company hereby agrees
to indemnify and hold harmless the Purchaser and any
underwriter against all losses, claims, damages, liabilities
and expenses (under the Applicable Securities Laws, or
common law or otherwise) caused by any untrue statement or
alleged untrue statement of a material fact contained in any
registration statement or prospectus (and as amended or
supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary
prospectus or any other document prepared and/or furnished
to the Purchaser incident to such registration statements or
prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statements therein complete or not
misleading except insofar as such losses, claims, damages,
liabilities or expenses are caused by any untrue statement
or omission contained in information furnished in writing to
the Company by the Purchaser expressly for use therein. In
connection with any registration statement in which the
Purchaser is participating, and as a condition to the
obligation of the Company to cause any Shares of the
Purchaser to be included in a registration statement
pursuant to this Section 7, the Purchaser will furnish to
the Company in writing such information as shall reasonably
be requested by the Company for use in any such registration
statement or prospectus and will indemnify, severally and
not jointly, the Company, its directors and officers, each
person, if any, who controls the Company within the meaning
of the Applicable Securities Laws, such underwriters and
each person who controls such underwriters within the
meaning of the Applicable Securities Laws, against any
losses, claims, damages, liabilities and expenses resulting
from any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission of a
material fact required to be stated in the registration
statement or prospectus and necessary to make the statements
therein complete or not misleading, but only to the extent
that such untrue statement or omission is contained in
information so furnished in writing by the Purchaser
expressly for use therein.
Promptly after receipt by any person entitled to
indemnity hereunder (the "Indemnified Party") of notice of
the commencement of any action in respect of which indemnity
may be sought against another party hereunder (the
"Indemnifying Party") such Indemnified Party will notify
the Indemnifying Party in writing of the commencement
thereof, and, subject to the provisions hereinafter stated,
the Indemnifying Party shall assume the defense of such
action (including the employment of counsel, who shall be
counsel reasonably satisfactory to such Indemnified Party),
and the payment of expenses as incurred insofar as such
action shall relate to any alleged liability in respect of
which indemnity may be sought against the Indemnifying
Party. Such Indemnified Party shall have the right to
employ separate counsel in any such action and to
participate in the defense thereof but the fees and expenses
of such counsel shall not be at the expense of the
Indemnifying Party unless (i) the employment of such counsel
has been specifically authorized by the Indemnifying Party
or (ii) the Indemnifying Party shall have failed to assume
the defense of such action or proceeding. The Indemnifying
Party shall not be liable to indemnify any person for any
settlement of any such action effected without the
Indemnifying Party's consent, which consent shall not be
unreasonably withheld or delayed.
If the indemnification provided for in this Section is
held by a court of competent jurisdiction to be unavailable
to the Indemnified Party with respect to any loss,
liability, claim, damage or expense referred to herein, then
the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of
such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault
of the Indemnifying Party on the one hand and of the
Indemnified Party on the other hand in connection with the
statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other
relevant equitable considerations. The relevant fault of
the Indemnifying Party and the Indemnified Party shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such
statement or omission.
7.7 Exchange Act Registration Requirements. The
Company shall use its commercially reasonable efforts to
remain subject to the reporting requirements of either
Section 13 or Section 15(d) of the Exchange Act. The
Company shall file with the Commission in a timely manner
such information as the Commission may require under either
of said Sections, and shall take all reasonable action as
may be required to be taken under the Exchange Act to permit
sales of the Shares pursuant to Rule 144 (or any similar or
successor exemptive rule hereafter in effect) and the use of
Form S-3 (or any similar form which hereafter may be
promulgated under the Securities Act) for registration of
the Shares.
7.8 Notice. The Company shall provide notice to
the Purchaser of any "stop order" or other notice
affecting the Purchaser's right to sell the Shares under any
effective registration statement.
8. Covenants of the Purchaser.
8.1 Transfer Restrictions. On or before the
fourth anniversary of this Agreement, B&L shall not,
directly or indirectly, transfer, sell, assign or otherwise
encumber the Base Shares except as noted below. Starting
with the payment due pursuant to Section 6.2(c) of the
Collaboration and Sale/License Agreement, and for each
payment due on or before the fourth anniversary of this
Agreement, B&L shall have the right to offset a portion of
the payment then due with up to 50% of the Base Shares;
provided, that for the payment due pursuant to Section
6.2(e) of the Collaboration and Sale/License Agreement such
offset may be up to 100% of the Base Shares. The Base
Shares shall be valued at their original Market Price per
share. At any time on or before the fourth anniversary of
this Agreement, Symbollon shall have a right to purchase
some or all of the Base Shares from B&L at their original
Market Price per share.
On or before the seventh anniversary of this Agreement,
B&L shall not, directly or indirectly, transfer, sell,
assign or otherwise encumber the Additional Shares except as
noted below. Starting with the payment due pursuant to
Section 6.2(e) of the Collaboration and Sale/License
Agreement, and for each payment due on or before the seventh
anniversary of this Agreement, B&L shall have the right to
offset a portion of the payment then due with up to one
hundred seventy thousand dollars ($170,000) of the
Additional Shares; provided, that for the payment due
pursuant to Section 6.2(g) of the Collaboration and
Sale/License Agreement such offset may be up to 100% of the
Additional Shares; and provided, further, that for any
payment (except for the payment due pursuant to Section
6.2(g) of the Collaboration and Sale/License Agreement) that
B&L has a right to offset a portion of such payment with
both Base Shares and Additional Shares, B&L shall only be
allowed to offset such payment with an amount of Additional
Shares such that the offset does not exceed one hundred
seventy thousand ($170,000) of the Shares. The Additional
Shares shall be valued at their original Market Price per
share. At any time on or before the seventh anniversary of
this Agreement, Symbollon shall have a right to purchase
some or all of the Additional Shares from B&L at their
original Market Price per share.
For purposes of B&L's right to offset payments with the
Shares and Symbollon's right to purchase the Shares, the
Shares shall be offset and purchased, as the case may be, in
the order in which the Shares were originally purchased from
Symbollon. The Base Shares shall be deemed to have been
purchased prior to the Additional Shares.
8.2 Voting Agreement. The Purchaser agrees that
it, and its affiliates, shall vote any shares of the Common
Stock, including the Shares, in such manner as the Company's
Board of Directors shall recommend and, in the absence of
any such recommendation, the same proportion as the other
outstanding voting shares of Symbollon are voted on any
matter submitted to the shareholders for consideration;
provided, however, that the foregoing voting requirement
shall not apply to the Purchaser in any transaction which is
not approved by the Company's Board of Directors or in the
event of a proposed merger or combination or sale of
substantially all of the assets of the Company to a
competitor of the Purchaser.
8.3 Forfeiture. If the Collaboration and
Sale/License Agreement is terminated before the payments
required pursuant to Sections 6.2(a) through (g) of the
Collaboration and Sale/License Agreement are made by the
Purchaser, then the Purchaser shall transfer the Additional
Shares held by the Purchaser to Symbollon for no
consideration.
8.4 Standstill. Except for the Shares, prior to
the seventh anniversary of this Agreement, B&L, and its
affiliates, shall not acquire any securities of the Company
without the Company's consent.
8.4 Redemption Rights. If the Collaboration and
Sale/License Agreement is terminated by B&L pursuant to
Sections 16.2 or 16.3 thereof prior to the fourth
anniversary of this Agreement, then after the completion of
each calendar year thereafter which ends prior to the
seventh anniversary of this Agreement, B&L shall have the
right to require the Company to purchase at their original
Market Price per share that number of the Base Shares then
outstanding equal to twenty-five percent (25%) of the
Company's positive cash flows from operating activities, as
determined under generally accepted accounting principles,
for that calendar year. B&L may exercise its right to
require redemption in accordance with this Section 8.4 for a
given calendar year by sending written notice to the Company
within 30 days of its receipt of the Company's audited
financial statements for such year.
9. Definitions. When used in this Agreement, the
following terms shall have the meanings indicated.
"Additional Shares" mean the remaining one
hundred fifty thousand dollars ($150,000) of the Shares
purchased by the Purchaser from the Company on the First
Closing Date after subtracting the Base Shares, together
with the Shares purchased by the Purchaser from the Company
on the Second Closing, if and when purchased.
"Applicable Securities Laws" means the
applicable Federal and state securities laws.
"Base Shares" mean three hundred fifty thousand
dollars ($350,000) of the Shares purchased by the Purchaser
from the Company on the First Closing Date.
"Class A Common Stock" means the Company's Class
A Common Stock, $.001 par value per share.
"Class B Common Stock" means the Company's Class
B Common Stock, $.001 par value per share.
"Closing" shall have the meaning specified in
Section 2.
"Collaboration and Sale/License Agreement" shall
have the meaning specified on the first page hereof.
"Commission" means the Securities and Exchange
Commission.
"Common Stock" means the Class A Common Stock.
"Company" means Symbollon Corporation, a
Delaware corporation.
"Disclosure Documents" shall have the meaning
specified in Section 4.4.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"First Closing" shall have the meaning specified
in Section 2.
"First Closing Date" shall have the meaning
specified in Section 2.
"First Closing Shares" shall have the meaning
specified in Section 1.2.
"Indemnified Party" shall have the meaning
specified in Section 7.6.
"Indemnifying Party" shall have the meaning
specified in Section 7.6.
"Market Price" shall have the meaning specified
in Section 2.
"Material Adverse Effect" means a material
adverse effect on the business, prospects, condition
(financial or otherwise), assets or results of operations of
the Company taken as a whole.
"Purchaser" means Bausch & Lomb Pharmaceuticals,
Inc., and any subsequent valid transferee.
"Second Closing" shall have the meaning
specified in Section 2.
"Second Closing Date" shall have the meaning
specified in Section 2.
"Second Closing Shares" shall have the meaning
specified in Section 1.2.
"Securities Act" means the Securities Act of
1933, as amended.
"Shares" shall have the meaning specified in
Section 1.2.
"Units" means securities of the Company each of
which consist of one share of Class A Common Stock, one
Class A Warrant and one Class B Warrant.
10. Notices. All notices, requests, consents, and
other communications under this Agreement shall be in
writing and shall be delivered in person with receipt
acknowledged or mailed by first class certified or
registered mail, return receipt requested, postage prepaid,
by reputable overnight mail or courier, with receipt
confirmed, or by telecopy and confirmed by telecopy
answerback, addressed as follows:
If to the Company:
Symbollon Corporation
37 Loring Drive
Framingham, Massachusetts 01702
Telephone: (508) 620-7676
Telecopy: (508) 620-7111
Attn: President
With a copy to:
William P. Gelnaw, Jr., Esq.
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, MA 02109
Telephone: (617)-248-5000
Fax: (617)-248-4000
To B&L:
Bausch & Lomb Pharmaceuticals, Inc.
8500 Hidden River Parkway
Tampa, FL 33637
Telephone: (800) 227-1427
Fax: (813) 975-7774
Attention: President
With copy to:
Bausch & Lomb, Incorporated
One Bausch & Lomb Place
Rochester, N.Y. 14604-2701
Telephone: (716) 338-8600
Fax: (716) 338-8017
Attention: General Counsel
or at such other address or addresses as may have been
furnished in writing by any party to the other in accordance
with the provisions of this Section 10. Notices and other
communications provided in accordance with this Section 10
shall be deemed delivered upon receipt.
11. Entire Agreement. This Agreement, together with
the Exhibits and documents incorporated by reference herein,
embodies the entire agreement and understanding between the
parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating
to such subject matter.
12. Amendments and Waivers. Except as otherwise
expressly set forth in this Agreement, any term of this
Agreement may be amended and the observance of any term of
this Agreement may be waived (either generally or in a
particular instance and either retroactively or
prospectively), only with the written consent of the Company
and the Purchaser. Any amendment or waiver effected in
accordance with this Section 12 shall be binding upon each
party. No waivers of or exceptions to any terms, condition
or provision of this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such term, condition or
provision.
13. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to
be an original, but all of which shall be one and the same
document.
14. Section Headings. The section headings are for
the convenience of the parties and in no way alter, modify,
amend, limit, or restrict the contractual obligations of the
parties.
15. Severability. The invalidity or unenforceability
of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement.
16. Governing Law. This Agreement shall be governed
by and construed in accordance with the law of The
Commonwealth of Massachusetts.
17. Successors and Assigns. This Agreement shall be
binding upon the parties hereto and their respective
successors and assigns and shall inure to the benefit of the
parties hereto, provided that B&L (and any subsequent
permitted Purchaser) may not assign its rights hereunder
without the prior written consent of the Company.
IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement as of the date first above written.
SYMBOLLON CORPORATION BAUSCH & LOMB PHARMACEUTICALS, INC.
By:__________________________ By:_______________________________
Paul C. Desjourdy, Thomas Riedhammer,
Executive Vice President President
and Chief Financial
Officer
EXHIBIT 4.4
RISK FACTORS
An investment in the securities offered hereby involves
a high degree of risk. Prior to making an investment, the
Purchaser should carefully consider the following factors,
as well as others described elsewhere in the Disclosure
Documents, relating to the business of the Company and the
securities offered hereby.
Development Stage Company; Early Stage of Product
Development; No Assurance of Successful Product Development.
The Company is in the development stage and has not
conducted any significant operations to date or received any
operating revenues, except for revenues from the sale of
the Company's bovine teat sanitizer, marketed under the name
IodoZyme(R), which the Company began shipping in early 1995,
and license fees and contract revenues. Potential
investors should be aware of the problems, delays, expenses
and difficulties encountered by an enterprise in the
Company's stage of development, many of which may be beyond
the Company's control. These include, but are not limited
to, unanticipated problems relating to product development,
testing, regulatory compliance, manufacturing costs,
production, the competitive and regulatory environment in
which the Company plans to operate, marketing problems and
additional costs and expenses that may exceed current
estimates. Products under development by the Company will
require additional development and investment prior to
obtaining regulatory approvals and commercialization. There
can be no assurance that such products will be successfully
developed, meet applicable regulatory standards, be capable
of production in commercial quantities at reasonable costs
or be successfully marketed.
Risks Associated With Uncertainties Of Clinical Trials.
Most of the Company's proposed therapeutic products are
required to obtain approval from the United States Food and
Drug Administration ("FDA") prior to marketing such products
in the United States and the approval of foreign regulatory
authorities to commercialize such proposed products in other
countries. To obtain such approvals, the Company is
required to prove the safety and efficacy of its proposed
products through extensive preclinical studies and clinical
trials. The Company's proposed therapeutic products are in
various stages of pre-clinical development. The completion
of clinical trials regarding any of such proposed products
is dependent upon many factors including the rate of patient
enrollment and the heterogeneity of the patients and
indications to be treated. Delays in patient enrollment, as
well as the heterogeneity of patients and indications to be
treated, may result in increased trial costs and delays in
FDA submissions, which could have a material adverse effect
on the Company.
A number of companies in the biotechnology and
pharmaceutical industries have suffered significant setbacks
in clinical trials, even after showing promising results in
earlier studies or trials. Therefore, any favorable results
the Company may obtain in the future in preclinical studies
and clinical trials of its proposed products may not be
predictive of results that will ultimately be obtained in or
throughout such preclinical studies and clinical trials.
There can be no assurance that the Company will not
encounter problems in its clinical trials that will cause
the Company to delay or suspend its development efforts and
any proposed clinical trials for its proposed products, that
any clinical trial will be completed at all, that such
testing will ultimately demonstrate the safety or efficacy
of such proposed products or that any proposed products will
receive regulatory approval on a timely basis, if at all.
If any such problems occur, the Company could be materially
and adversely affected.
No Assurance Of Regulatory Approvals; Potential Delays.
The Company's proposed products will be subject to
regulation by the FDA and comparable agencies in foreign
countries. The regulatory approval process often takes a
number of years and requires the expenditure of substantial
funds. In the United States, the FDA enforces, where
applicable, development, testing, labeling, manufacturing,
registration, notification, clearance or approval,
marketing, distribution, recordkeeping and reporting
requirements for new drugs, medical devices, biologics and
cosmetics. In addition, there can be no assurance that
government regulations applicable to the Company's products
or the interpretation of those regulations will not change
and thereby prevent the Company from marketing some or all
of its products temporarily or permanently. There can be no
assurance that any proposed products that may be developed
by the Company will be able to satisfy the current
requirements and regulations of the FDA or comparable
foreign agencies. There can be no assurance that the
Company's proposed products will ever obtain the regulatory
clearance or approval required for marketing. Therapeutic
products currently being developed utilizing the Company's
iodine technologies will likely be regulated as new drugs
products, each of which faces a substantially more
burdensome regulatory approval process than that applicable
to most medical devices.
Whether or not FDA approval has been obtained, approval
of a drug by comparable regulatory authorities in other
countries must be obtained prior to marketing the product in
those countries. The approval process varies by country and
the time required may be longer or shorter than that
required for FDA approval. Approval of a drug for sale in
one country does not ensure approval in other countries.
The results of Phase I or Phase II studies are not
necessarily indicative of the efficacy or safety of a drug
candidate for human therapeutic use. There can be no
assurance that clinical testing will provide evidence of
safety and efficacy in humans or that regulatory approvals
will be granted for any of the Company's products.
Manufacturers of therapeutic products are required to obtain
FDA approval of their manufacturing facilities and
processes, to adhere to applicable standards for
manufacturing practices and to engage in extensive
recordkeeping and reporting. Failures to obtain or delays
in obtaining regulatory approvals would adversely affect the
manufacturing and marketing of the Company's products, the
Company's financial position and the Company's revenues or
royalties. When and if approvals are granted, the Company,
the approved drug, the manufacture of such drug and the
facilities in which such drug is manufactured are subject to
ongoing regulatory review. Subsequent discovery of
previously unknown problems may result in restriction on a
product's use or withdrawal of the product from the market.
Adverse government regulation that might arise from future
legislative or administrative action, particularly as it
relates to healthcare reform and product pricing, cannot be
predicted.
Teat sanitizers, although considered animal drugs by
the FDA, do not currently require clearance by the FDA prior
to marketing. The FDA, however, has recently issued draft
voluntary guidelines governing teat dips and no assurance
can be made that clearance by the FDA will not be required
in the future. Required compliance with these guidelines or
other FDA requirements, the probability of which cannot
currently be ascertained by the Company, would have a
significant adverse effect on the marketing of IodoZyme and,
consequently, on the Company's results of operations. The
Federal Environmental Protection Agency ("EPA") has
regulations covering many of the same areas for many of the
Company's products and proposed products. In addition,
the United States Department of Agriculture ("USDA") may
regulate, on either a voluntary or mandatory basis, products
which the Company may develop for sanitizing food or food
contact surfaces. Comparable state and local agencies may
have similar regulations.
Uncertain Market Acceptance of Proposed Products. The
Company's future growth and profitability will depend, in
large part, on the acceptance by the medical community of
the Company's proposed products. This acceptance will be
substantially dependent on educating the medical community
as to the full capabilities, distinctive characteristics,
perceived benefits and clinical efficacy of the Company's
proposed products. There can be no assurance that the
Company's efforts or those of others on its behalf will be
successful or that any of the Company's proposed products
will receive the necessary market acceptance. Failure of
the Company's proposed products to gain market acceptance
would have a material adverse effect on the Company.
Risk Of Not Obtaining Manufacturing Facility And
Experienced Manufacturing Personnel And/Or Establishing
Manufacturing Arrangements With Others. The Company intends
to seek out contracts to obtain sufficient manufacturing
capabilities to allow for production of its proposed
therapeutic products in quantities sufficient to support its
anticipated clinical needs. To be successful, however, the
Company must be capable of manufacturing or contracting for
the manufacture of its products in commercial quantities, in
compliance with regulatory requirements and at acceptable
costs. While the Company has manufacturing experience
regarding IodoZyme, the Company has no experience in large
scale commercial manufacturing of therapeutic products. The
Company intends to enter into contractual arrangements to
manufacture its proposed products at such time, if ever,
that such products are successfully developed. There can be
no assurance that the Company will be able to enter into any
such arrangements on acceptable terms, or at all, or that
any manufacturer will be able to meet any demand for such
products on a timely basis. The Company's dependence on
third parties for manufacturing may adversely affect the
Company's ability to develop and deliver products on a
timely and competitive basis. The Company may manufacture
its proposed products directly at such time, if ever, that
such products are successfully developed. The Company has
no experience with the direct manufacture of these proposed
products. The manufacture of these proposed products is
complex and difficult, and will require the Company to
attract and retain experienced manufacturing personnel and
to obtain the use of a manufacturing facility in compliance
with FDA and other regulatory requirements. There can be no
assurance that experienced personnel can be attracted to or
retained by the Company, or that the Company will be able to
obtain the financing necessary to manufacture these products
directly. In the event the Company continues to perform its
current IodoZyme manufacturing activities in-house,
additional manufacturing space and equipment may be
necessary beyond 1997 as product volume increases.
Dependence Upon Third Parties For Clinicals Development
Of Proposed Products. The Company has entered into
strategic alliances for the clinical development of certain
of its proposed products. There can be no assurance that
the Company will be successful in retaining the existing
agreements, or be able to obtain satisfactory new agreements
with strategic partners in other areas. In addition, there
can be no assurance that the interests and motivations of
any strategic partner would be or remain consistent with
those of the Company or that such partner would successfully
perform its obligations.
Accumulated Deficit; Expectation of Future Losses; Need
for Additional Financing. At March 31, 1997, the Company
had an accumulated deficit of $5,546,130, which deficiency
has increased to date. The Company will be required to
conduct significant research, development and testing
activities which, together with manufacturing, and other
general and administrative expenses, are expected to result
in operating losses for the foreseeable future. There can
be no assurance that the Company will ever have significant
revenues or achieve profitable operations. At March 31,
1997, the Company had working capital of $1,503,808. Based
on its current operating plan, the Company believes it will
have sufficient working capital to fund its operations for
the next 12 months. It is not expected that revenues from
operations will be sufficient to enable the Company to
complete the necessary regulatory approval process for its
products currently under development, or if any such
approval were obtained, to begin manufacturing or marketing
such products on a commercial basis. Given the Company's
limited financial resources, the uncertainty of the
development effort and the necessity for regulatory
approval, there can be no assurance of ultimate success with
respect to any product development program or that
resulting product, if any, will be commercially successful.
Additionally, the Company's limited resources will require
substantial support from corporate partners who would
ultimately introduce the Company's products into the
marketplace. In addition to support from corporate
partners, the Company may seek additional financing to fund
its operating requirements. There can be no assurance that
the Company will be able to obtain such partnering
arrangements or financing, or that such partnering
arrangements or financing, if available, will be on
acceptable terms. In the event that the Company fails to
raise any funds it requires, it may be necessary for the
Company to cease operations or severely limit growth.
Lack of Marketing Experience; Dependence on Outside
Parties for Marketing and Distribution; Uncertainty of
Market Acceptance of Products and Proposed Products. The
marketing and distribution of IodoZyme is conducted by West
Agro pursuant to an exclusive marketing and supply agreement
with the Company which covers IodoZyme as well as other
products which may be developed for use in dairy facilities.
The Company intends to rely on similar arrangements with
others for the marketing and distribution of its products
currently under development, if and when successfully
developed and approved by applicable regulatory agencies.
This results, and will result, in a lack of control by the
Company over some or all of the marketing and distribution
of such products. Although the Company has entered into
development agreements with parties experienced in the
marketing of some of the Company's proposed products, which
development agreements contemplate future marketing
arrangements, there can be no assurance that the Company
will be able to enter into any marketing arrangements for
such products, if and when developed, on terms acceptable to
the Company or that any marketing efforts undertaken on
behalf of the Company will be successful. Although the
Company has no present plans to do so, the Company may, in
the future, determine to directly market certain of its
proposed products. The Company has no marketing experience
and significant additional capital expenditures and
management resources would be required to develop a direct
sales force. In the event the Company elects to engage in
direct marketing activities, there can be no assurance that
the Company would be able to obtain the requisite funds or
attract and retain the human resources necessary to
successfully market any of such products.
The Company's future growth and profitability will
depend, in large part, on the success of its personnel and
others conducting marketing efforts on behalf of the Company
in fostering acceptance among the various markets of the use
of the Company's products as an alternative to other
available products or otherwise. The Company's success in
marketing its products will be substantially dependent on
educating its targeted markets as to the distinctive
characteristics and perceived benefits of the Company's
products. In this regard, West Agro, which acts as
exclusive marketer and distributor of IodoZyme, also markets
and distributes products which are directly competitive with
IodoZyme. There can be no assurance that the Company's
efforts or the efforts of others will be successful or that
any of the Company's products or proposed products will be
favorably accepted among the targeted markets.
Dependence Upon, and Need for, Key Personnel. The
Company does not currently have a President or Chief
Executive Officer. The Company is dependent on the services
of Dr. Jack H. Kessler, the Chairman of the Board, Executive
Vice President, Chief Scientific Officer, Secretary and a
principal stockholder of the Company, and Paul C. Desjourdy,
Executive Vice President, Chief Financial Officer, Treasurer
and a director of the Company. The loss of either of such
individuals or a reduction in the time devoted by such
persons to the Company's business could have a material
adverse effect on the Company's business. The Company has
obtained key-person life insurance coverage in the face
amount of $1,000,000 for Dr. Kessler naming the Company as
beneficiary under such policy. The Company's success also
will depend, in large part, on its ability to attract and
retain highly qualified scientific and business personnel,
competition for which is intense. There can be no assurance
that the Company will be able to attract and retain the
necessary personnel to implement its business plan.
Intense Competition and Rapid Technological Change.
The Company is engaged in rapidly evolving and highly
competitive fields. There are many companies, including
large pharmaceutical and chemical companies, which have
established a significant presence in the markets which the
Company's products and proposed products are designed to
address. Most of these companies have substantially greater
capital resources, research and development staffs,
facilities and experience in obtaining regulatory approvals,
as well as in the manufacturing, marketing and distribution
of products, than the Company. There can be no assurance
that the Company's competitors will not succeed in
developing technologies and products that are more effective
and less costly than any products developed or being
developed by the Company or which could render the Company's
microbicide technology obsolete.
Uncertain Protection of Patents and Proprietary Rights.
The Company considers patent protection of its technology to
be critical to its business prospects. There can be no
assurance that the Company's pending patent applications
will issue as patents, that any issued patents will provide
the Company with significant competitive advantages, or that
challenges will not be instituted against the validity or
enforceability of any patent owned by the Company or, if
instituted, that such challenges will not be successful. The
cost of litigation to uphold the validity and prevent
infringement of patents can be substantial. Furthermore,
there can be no assurance that others will not independently
develop similar or more advanced technologies or design
around aspects of the Company's technology which may be
patented, or duplicate the Company's trade secrets. In some
cases, the Company may rely on trade secrets to protect its
innovations. There can be no assurance that trade secrets
will be established, or that secrecy obligations will be
honored, or that others will not independently develop
similar or superior technology. To the extent that
consultants, key employees or other third parties apply
technological information independently developed by them or
by others to Company projects, disputes may arise as to the
proprietary rights to such information which may not be
resolved in favor of the Company.
Materials Incompatibility. An important aspect of the
Company's present and future microbicides is that they must
be compatible with the surfaces on which they come in
contact. The Company has ceased efforts to develop a
microbicide for dental handpieces and renal control units as
a result of staining and corrosion caused by required
microbicide formulations, and the Company has encountered
problems of staining in connection with its efforts to
develop a high level disinfectant for flexible endoscopes.
The Company continues to investigate the balance between the
level of microbicidal efficacy and the need to avoid
staining and corrosion. For any proposed inanimate object
product applications, staining or corrosion from a
microbicide could be sufficient to limit or forestall
regulatory approval of such microbicide or, if approved,
could adversely affect market acceptance of such
microbicide. There can be no assurance that the Company
will be successful in overcoming any problems of materials
incompatibility.
Potential Product Liability and Lack or Insufficiency
of Insurance. The Company's business will expose it to
potential product liability risks which are inherent in the
testing, manufacturing, marketing and sale of microbicide
products for animal and human use. If available, product
liability insurance generally is expensive. The Company
currently has product liability insurance in amounts that it
believes are adequate to protect it against potential
liabilities. However, there can be no assurance to such
effect or that the Company will be able to maintain such
insurance on acceptable terms. In the event of a successful
suit against the Company, a lack or insufficiency of
insurance coverage could have a material adverse effect on
the Company's business and operations.
Charge to Income in the Event of Release of
Restrictions on Shares. In connection with the Company's
initial public offering, certain stockholders of the Company
agreed to transfer an aggregate of 700,000 shares of Common
Stock to the Company if the Company does not attain certain
minimum earnings thresholds. In the event the Company
attains any of such earnings thresholds, the position of the
Securities and Exchange Commission is that the release of
these restrictions will be treated as expense to the Company
which is nondeductible for income tax purposes. (See "Note
E - Capitalization" to the Company's Financial Statements
set forth in the Annual Report on Form 10-KSB for the year
ended December 31, 1996.) Accordingly, the Company will, in
the event of the release of the restrictions, recognize
during the period in which the earnings thresholds are met
or probable of being met, what could be a substantial one-
time charge which would have the effect of substantially
increasing the Company's loss or reducing or eliminating
earnings, if any, at such time. Although the amount of
expense recognized by the Company will not affect the
Company's total stockholders' equity, it may have a
depressive effect on the market price of the Company's
securities.
Possible Adverse Effects of Authorization of Preferred
Stock. The Company's Certificate of Incorporation
authorizes the issuance of 5,000,000 shares of preferred
stock on terms which may be fixed by the Company's Board of
Directors without further stockholder action. The terms of
any series of preferred stock, which may include priority
claims to assets and dividends, and special voting rights,
could adversely affect the rights of holders of the Class A
Common Stock. The issuance of such preferred stock could
make the possible takeover of the Company or the removal of
management of the Company more difficult, discourage hostile
bids for control of the Company in which stockholders may
receive premiums for their shares of Class A Common Stock,
or otherwise dilute the rights of holders of Class A Common
Stock and the market price of the Class A Common Stock. The
Company has no current plans to issue any shares of
preferred stock.
Possible Volatility of Stock Price. The market prices
for securities of emerging and development stage companies
in general, and biopharmaceutical companies in particular,
have historically been highly volatile. Future
announcements concerning the Company or its competitors,
including the results of testing, technological innovations
or new commercial products, government regulations,
developments concerning proprietary rights, litigation or
public concern as to safety of products developed by the
Company or others, may have a significant adverse impact on
the market price of the Company's securities.
Shares Eligible For Future Sale; Outstanding Warrants
And Options; Registration Rights. Of the Company's
2,913,234 shares of Class A Common Stock currently
outstanding, 1,234,262 shares are "restricted securities,"
as defined in Rule 144 of the Securities Act, and all
1,234,262 shares of Class A Common Stock are eligible for
sale under Rule 144. The Company is unable to predict the
effect that sales made under Rule 144, or otherwise, may
have on the then prevailing market price of the Common
Stock. Any substantial sale of restricted securities
pursuant to Rule 144 may have an adverse effect on the
market price of the Common Stock. 456,500 shares of Class A
Common Stock issuable upon exercise of stock options have
been registered on a registration statement on Form S-8.
The Company has outstanding (i) Class A Warrants and
Class B Warrants which could result in the issuance of
4,372,080 additional shares of Class A Common Stock, and
(ii) 456,500 shares of Class A Common Stock issuable upon
exercise of options which have been granted under the
Company's Option Plans (the "Plans"). In connection with
the Company's IPO the Company issued Unit Purchase Options
("UPO") to the underwriter of the IPO which UPO's are
convertible into 100,000 shares of Class A Common Stock,
100,000 Class A Warrants and 100,000 Class B Warrants. The
foregoing options and warrants are likely to be exercised at
a time when the Company might be able to obtain additional
equity capital on more favorable terms. In addition, to the
extent they are exercised, they will decrease the percentage
of the Company owned by the Company's stockholders. While
these options and warrants are outstanding, they may
adversely affect the terms on which the Company could obtain
additional capital. The Company cannot predict the effect,
if any, that market sales of Class A Common Stock, the
exercise of options or warrants or the availability of such
Class A Common Stock for sale will have on the market price
prevailing from time to time. In addition, if the exercise
price of options or warrants are adjusted downward, such
options or warrants may be exercised sooner than otherwise
with a resulting increase in the number of shares of Class A
Common Stock available for sale on the market.
Possible Delisting of Securities from the NASDAQ System
and Possible Market Illiquidity. There can be no assurance
that the Company will continue to meet the criteria for
continued listing of securities on NASDAQ. In order to
qualify for continued listing on the NASDAQ System, a
company must, among other things, have at least $2,000,000
in total assets, $1,000,000 in capital and surplus, a
minimum bid price of $1.00 per share of common stock, and
100,000 shares in the public float. In addition, the common
stock must have at least two registered and active market
makers and must be held by at least 300 holders and the
market value of its public float must be at least $200,000.
If an issuer does not meet the $1.00 minimum bid price
standard, it may, however, remain in NASDAQ if the market
value of its public float is at least $1,000,000 and the
issuer has capital and surplus of at least $2,000,000.
NASDAQ has proposed changes to the criteria for continued
listing of securities. These proposed changes are currently
being considered by the SEC, and if approved, would make it
more difficult for the Company to maintain its NASDAQ
listing. Under the proposed criteria, among other things,
the Company would have to have net tangible assets (total
assets less total liabilities and goodwill) of at least
$2,000,000, a minimum bid price of $1.00 per share of common
stock and 500,000 shares in the public float. In addition,
the market value of its public float must be at least
$1,000,000. At March 31, 1997, the Company's balance sheet
reflects total assets of $2,159,279, capital and surplus of
$1,730,152 and net tangible assets of $1,610,970. If the
Company should become unable to meet the continued listing
criteria of NASDAQ and is delisted therefrom, trading, if
any, in the Class A Common Stock would thereafter be
conducted in the over-the-counter market in the so-called
"pink sheets" or, if then available, the "OTC Bulletin Board
Service." As a result, an investor would likely find it
more difficult to dispose of, or to obtain accurate
quotations as to the value of, the Company's securities. If
the Company's securities were delisted from NASDAQ, they may
become subject to penny stock restrictions. If the
Company's securities were subject to the rules on penny
stocks, the market liquidity for the Company's securities
could be severely adversely affected.
Disclosure Relating to Low Priced Securities; Possible
Restrictions on Resales of Low Priced Securities and on
Broker-Dealer Sales; Possible Adverse Effect of "Penny
Stock" Rules on Liquidity for the Company's Securities. If
the Company's securities were removed from NASDAQ (see
"Possible Delisting of Securities from the NASDAQ System
and Possible Market Illiquidity" above), they may become
subject to rule 15g-9 under the Securities Exchange Act of
1934 (the "1934 Act"), which imposes additional sales
practice requirements on broker-dealers which sell such
securities to persons other than established customers and
"accredited investors" (generally, individuals with net
worths in excess of $1,000,000 or annual incomes exceeding
$200,000 or $300,000 together with their spouses). For
transactions covered by this Rule, a broker-dealer must make
a special suitability determination for the purchase and
have received the purchaser's written consent to the
transaction prior to sale. Consequently, such Rule may
affect the ability of broker-dealers to sell the Company's
securities and may affect the ability of purchasers in this
offering to sell any of the securities acquired hereby in
the secondary market.
The SEC has adopted regulations which generally define
a "penny stock" to be any non-NASDAQ equity security that
has a market price (as therein defined) less than $5.00 per
share, subject to certain exceptions. For any transaction
by broker-dealers involving a penny stock, unless exempt,
the rules require delivery of a risk disclosure document
relating to the penny stock market prior to any such
transaction. Disclosure is also required to be made about
compensation payable to both the broker-dealer and the
registered representative and current quotations for the
securities. Finally, monthly statements are required to be
sent disclosing recent price information for the penny stock
held in the account and information on the limited market in
penny stocks.
The foregoing penny stock restrictions will not apply
to the Company's securities if such securities are listed on
the NASDAQ SmallCap Market System, are otherwise listed on
NASDAQ and have certain price and volume information
provided on a current and continuing basis, or if the
Company meets certain minimum net tangible assets or average
revenue criteria. There can be no assurance that the
Company's securities will qualify for exemption from these
restrictions. In any event, even if the Company's
securities were exempt from any such restrictions, the SEC
has the authority, pursuant to Section 15(b)(6) of the 1934
Act, to prohibit any person that is engaged in unlawful
conduct while participating in a distribution of a penny
stock from associating with a broker-dealer or participating
in a distribution of a penny stock, if the SEC finds that
such a restriction would be in the public interest.
If the Company's securities were subject to the rules
on penny stocks, the market liquidity for the Company's
securities could be severely adversely affected.
No Dividends Anticipated. The Company has never paid
any cash dividends on its common stock and does not
anticipate the payment of cash dividends in the foreseeable
future.
Substantial Influence of the Market Makers. There are
a limited number of market makers which currently make a
market in the Company's securities and the securities are
thinly traded. Consequently, such market makers may exert a
dominating influence on the market for such securities.
Such market-making activity may be discontinued at any time.
The price and liquidity of the Company's securities may be
significantly affected by the degree of any current market
maker's participation in such market.
