SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1933
IMMUNOTHERAPEUTICS, INC.
(Name of Issuer)
Dominion Resources, Inc.
(Name of Person filing Statement)
Common Stock, $.001 par value
(Title of class of securities)
452916 40 6
(CUSIP Number)
Dominion Resources, Inc. c/o Gene Mulvihill, Chairman
355 Madison Avenue, Morristown, New Jersey 07960; (201) 984-2276
(Name, address and telephone number of person authorized to
receive notices and communications)
March 1, 1996
(Date of event which requires filing of this Statement)
Mark the following box if a fee is being paid with this Statement
[ X ]
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SCHEDULE 13D
CUSIP NO. 452916 40 6 PAGE 2 OF 4 PAGES
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Dominion Resources, Inc.
22-2306487
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (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
</TABLE>
7 SOLE VOTING POWER
5,000,000
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY None
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 5,000,000
WITH
10 SHARED DISPOSITIVE POWER
None
<TABLE>
<CAPTION>
<S> <C> <C>
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
55%%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
</TABLE>
<PAGE>
Schedule 13D
re
IMMUNOTHERAPEUTICS, INC.
------------
Item 1. Security and Issuer
This statement relates to the shares of Common Stock, $.001
par value of ImmunoTherapeutics, Inc., a Delaware corporation ("ITI"), the
principal executive offices of which are located at 3233 Fifteenth Street South,
Fargo, North Dakota 58104.
Item 2. Identity and Background
This statement is being filed by Dominion Resources, Inc., a
Delaware corporation ("DRI"), with principal offices at 355 Madison Avenue,
Morristown, New Jersey 07960, with respect to its purchase of 5,000,000 shares
of ITI Common Stock (the "Shares") from ITI pursuant to an Agreement dated March
1, 1996 (the "Stock Purchase Agreement"). The three directors of DRI are Gene M.
Mulvihill (also chairman of the Executive Committee and DRI's controlling
stockholder); William E. McManus, II (also president); and Paul Donahue. Mr.
Mulvihill is currently principally engaged as a private investor. Mr. McManus is
currently principally engaged as a practicing attorney. Mr. Donahue is currently
principally engaged as a private investor. During the past five years, neither
DRI nor any executive officer, director or controlling person was convicted in
any criminal proceeding (excluding traffic violations and similar misdemeanors)
nor was DRI or any of such individuals a party to any civil proceeding with a
result as described in Item 2(e) of Schedule 13D. Each of such individuals is a
citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration
DRI purchased the Shares at a cash purchase price of $.065 per
share or $325,000 in the aggregate pursuant to the Stock Purchase Agreement. The
purchase price was paid in three essentially equal installments on March 18,
April 15 and May 15, 1996 with cash provided from DRI's working capital.
Item 4. Purpose of Transaction
DRI purchased the Shares as an investment and without any
specific plan or proposal which related to or would result in any of the
transactions referred to in subparagraphs (a) through (i) of Item 4 of Schedule
13D. However, pursuant to the Stock Purchase Agreement, ITI may not without
DRI's prior approval (or the approval of its representative on ITI's board of
directors if any), (i) merge or consolidate with another entity (excluding the
merger
Page 3 of 4
<PAGE>
or consolidation of a subsidiary of ITI with another subsidiary or with
ITI), (ii) sell, lease or otherwise dispose of any of its assets other than
sales or leases in the ordinary course of business, (iii) acquire any interest
in any business, or (iv) pay dividends or other distributions with respect to
its capital stock or redeem or retire shares of its capital stock. DRI will have
the right to designate a representative to be elected as a member of ITI's board
of directors so long as it holds more than 500,000 of the Shares.
In connection with the purchase, DRI was granted two "demand"
registration rights as well as "piggy-back" rights to register the Shares for
public offer and sale pursuant to the Securities Act of 1933.
Item 5. Interest in Securities of the Issuer
As a result of the foregoing purchase, DRI is the record and
beneficial owner of an aggregate 5,000,000 shares of ITI Common Stock comprising
55% of the outstanding Common Stock. DRI has sole power to vote and to dispose
of such shares and to receive or to direct the receipt of dividends from, or the
proceeds from the sale of the Shares. With the exception of the purchase of said
5,000,000 shares, DRI did not acquire or dispose of any shares of ITI Common
Stock during the past sixty days.
Item 6. Contracts, Arrangements, Understandings or Relationship with Respect
to Securities of the Issuer
DRI received certain registration rights to register the
Shares under the Securities Act of 1933 as described in Item 4 herein.
Item 7. Material to be Filed as Exhibits
1. Purchase Agreement dated as of March 1, 1996 between DRI
and ITI.
Signature
After reasonable inquiry and to the best of my knowledge, I
certify that the information set forth in this statement is true, complete and
correct.
DOMINION RESOURCES, INC.
By
William E. McManus, II
President
Date: June 14, 1996
as of March 1, 1996
Page 4 of 4 Pages
PURCHASE AGREEMENT
AGREEMENT dated as of March 1, 1996 by and between Immunotherapeutics,
Inc., a Delaware corporation (the "Company"), Dominion Resources, Inc., a
Delaware corporation ("Dominion").
WITNESSETH:
WHEREAS, the Company desires to issue and sell to Dominion, at a price
of $.065 per share, 5,000,000 shares of the Company's Common Stock (the
"Shares"); and
WHEREAS, Dominion desires to purchase the Shares upon and subject to
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto hereby agree as follows:
1. Purchase and Sale of the Shares. Subject to the terms and conditions
set forth herein, the Company hereby agrees to issue and sell to Dominion, and
Dominion hereby agrees to purchase from the Company, 1,666,666 Shares at the
First Closing (as such term is defined in Section 2.1 hereof) and 1,666,666
Shares at the Second Closing (as such term is defined in Section 2.1 hereof),
and 1,666,668 Shares at the Third Closing (as such term is defined in Section
2.1 hereof). The purchase price for the Shares sold pursuant to this Agreement
shall be $.065 per Share.
2. Closings; Dominion Breach; Termination.
2.1. Closings. There shall be three (3) closings of the
purchase and sale of the Shares, each of which will take place at the offices of
Dominion at The Abbey, 355 Madison Avenue, Morristown, New Jersey. The first
such closing (the "First Closing") will take place at 10:00 A.M., local time, on
March 18, 1996, the second such closing (the "Second Closing") will take place
at 10:00 A.M., local time, on April 15, 1996, and the third such closing (the
"Third Closing") will take place at 10:00 A.M., local time, on May 15, 1996. Any
such Closing may take place at such other time and place or on such later date
as may be mutually agreeable to the parties hereto. At each such Closing, the
Company will deliver to Dominion certificates for the Shares purchased as set
forth in Section 1 hereof, against payment of the purchase price therefor by
Dominion, by wire transfer or check payable to
<PAGE>
the Company. The Shares shall be registered in Dominion's name or the name of
the nominee of Dominion in such denominations as Dominion shall request
according to its instructions delivered to the Company not less than two days
prior to each Closing.
2.2. Termination. In the event that the transactions
contemplated by this Agreement to take place at or prior to the First Closing
have not been consummated by March 22, 1996, this Agreement shall, at the option
of Dominion, terminate and be of no further force and effect, and there shall be
no further liability on the part of any party hereto except for breaches of this
Agreement prior to the time of such termination.
3. Conditions to the Obligations of Dominion at the First Closing. The
obligation of Dominion to purchase and pay for the Shares to be purchased by
Dominion at the First Closing is subject to the satisfaction on or prior to the
date of the First Closing of the following conditions, any of which may be
waived by Dominion:
3.1. Opinion of Counsel to the Company. Dominion shall have
received from William S. Clarke, P.A., counsel for the Company, its opinion
dated the date of the First Closing substantially in the form of Exhibit A
hereto.
3.2. Representations and Warranties. All of the
representations and warranties of the Company contained in this Agreement shall
be true and correct at and as of the date of the First Closing with the same
effect as if made on the date of the First Closing, except to the extent of
changes caused by the transactions contemplated hereby.
3.3. Performance of Covenants. All of the covenants and
agreements of the Company contained in this Agreement and required to be
performed on or prior to the date of the First Closing shall have been performed
in a manner reasonably satisfactory in all respects to Dominion.
3.4. Board and Committee Representation. The person designated
by Dominion shall have been elected as a member of the Company's Board of
Directors.
3.5. Legal Action. No action or proceeding before any court or
governmental body shall be pending or threatened wherein an unfavorable
judgment, decree or order would prevent the carrying out of this Agreement or
any of the transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement or cause such transactions to be rescinded.
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<PAGE>
3.6. Consents. The Company shall have obtained in writing all
consents required to enable it to observe and comply with all of its obligations
under this Agreement and to consummate the transactions contemplated hereby.
3.7. Closing Documents. The Company shall have delivered to
Dominion (a) a certificate executed by the President of the Company dated the
date of the First Closing stating that the conditions set forth in Sections 3.2
through 3.6 hereof have been satisfied and (b) such certificates, other
documents and instruments as Dominion may reasonably request in connection with,
and to effect, the transactions contemplated by this Agreement.
3.8. Proceedings. All corporate and other proceedings taken or
to be taken in connection with the transactions contemplated hereby to be
consummated at the First Closing and all documents incident thereto shall be
reasonably satisfactory in form and substance to Dominion.
4. Conditions to the Obligations of the Company at the First Closing.
The obligation of the Company to issue and sell the Shares to Dominion as set
forth herein at the First Closing is subject to the satisfaction on or prior to
the date of the First Closing of the following conditions, any of which may be
waived by the Company:
4.1. Representations and Warranties. The representations and
warranties of Dominion contained in this Agreement shall be true and correct at
and as of the date of the First Closing with the same effect as if made on the
date of the First Closing, except to the extent of changes caused by the
transactions contemplated hereby.
4.2. Legal Action. No action or proceeding before any court or
governmental body shall be pending or threatened wherein an unfavorable
judgment, decree or order would prevent the carrying out of this Agreement or
any of the transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement or cause such transactions to be rescinded.
4.3. Proceedings. All proceedings taken or to be taken by
Dominion in connection with the transactions contemplated hereby to be
consummated at the First Closing and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Company.
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<PAGE>
5. Conditions Precedent to the Purchase and Sale of Firm Shares at the
Second Closing and Third Closing. The obligation of Dominion to purchase and pay
for the Shares to be purchased by Dominion at each of the Second Closing and the
Third Closing is subject to the delivery by the Company at each such Closing of
a certificate signed by the principal executive officer and the principal
financial officer of the Company that there has been no material adverse change
or development involving a prospective material change in the condition or
prospects or the business activities, financial or otherwise, of the Company
since the Balance Sheet Date.
6. Representations and Warranties of the Company. The Company
hereby represents and warrants to Dominion as follows:
6.1. Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power and authority, and holds
all licenses, permits and other required authorizations from governmental
authorities, necessary to conduct its business as it is now being conducted or
proposed to be conducted and to own or lease the properties and assets it now
owns or holds under lease. The Company is duly qualified or licensed and in good
standing as a foreign corporation in each jurisdiction wherein the character of
its properties or the nature of the activities conducted by it makes such
qualification or licensing necessary.
6.2. Charter Documents. The Company has heretofore delivered
to Dominion true, correct and complete copies of the Company's Certificate of
Incorporation and By-Laws as in full force and effect on the date hereof. Except
as expressly contemplated by this Agreement, there will be no changes or
amendments to such Certificate of Incorporation or By-laws between the date
hereof and the date of the First Closing.
6.3. Capitalization. As of the date hereof and the First
Closing, the Company's authorized capitalization consists of 50,000,000 shares
of Common Stock, of which 4,122,047 shares are presently issued and outstanding
and 2,089,140 shares are reserved for issuance upon the conversion or exercise
of presently outstanding convertible securities, options, warrants or other
rights to purchase Common Stock. All outstanding shares of the Company are
validly issued, fully paid and nonassessable. No stockholder of the Company is,
or as of the First Closing will be, entitled to any preemptive rights with
respect to the purchase or sale of any securities by the Company. Except as has
been set forth in Schedule 6.3 hereto, there are no outstanding options,
warrants or other rights, commitments or arrangements, written or
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<PAGE>
oral, to purchase or otherwise acquire any authorized but unissued shares of
capital stock of the Company or any security directly or indirectly convertible
into or exchangeable for any capital stock of the Company or under which any
such option, warrant or convertible security may be issued in the future. None
of the shares of Common Stock is reserved for any purpose, and the Company is
neither subject to any obligation (contingent or otherwise), nor has any option
to repurchase or otherwise acquire or retire any shares of its capital stock.
6.4. Subsidiaries. The Company has no wholly or partially
owned subsidiaries and does not control, directly or indirectly, any other
corporation, business trust, firm, partnership, association, joint venture,
entity or organization. The Company does not own any shares of stock,
partnership interest, joint venture interest or any other security or interest
in any other corporation or other organization or entity.
6.5. Authorization; No Breach. The Company has the full
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder, and the execution, delivery and performance of this
Agreement and all other transactions contemplated hereby have been duly
authorized by the Company, and this Agreement constitutes a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as the enforceability hereof may be limited by (a) bankruptcy,
insolvency, moratorium and similar laws affecting creditors' rights generally
and (b) the availability of remedies under general equitable principles. The
execution and delivery by the Company of this Agreement, the offering, sale and
issuance of the Shares pursuant to this Agreement, and the performance and
fulfillment of the Company, do not and will not (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a default
under, or event which, with notice or lapse of time or both, would constitute a
breach of or default under, (iii) result in the creation of any lien, security
interest, charge or encumbrance upon the capital stock or assets of the Company
pursuant to, (iv) give any third party the right to accelerate any obligation
under or terminate, (v) result in a violation of, (vi) result in the loss of any
license, certificate, legal privilege or legal right enjoyed or possessed by the
Company under, or (vii) require any authorization, consent, approval, exemption
or other action by or notice to any court or administrative or governmental body
pursuant to or require the consent of any other person under, the Certificate of
Incorporation or By-Laws of the Company or any law, statute, rule or regulation
to which the Company is subject or by which any of its properties are bound, or
any agreement, instrument, order, judgment or decree to which the Company is
subject or by which its properties are bound.
-5-
<PAGE>
6.6. Financial Statements. Annexed hereto as
Schedule 6.6 are (a) the audited financial statements of the Company for the
fiscal year ended January 31, 1995, including balance sheet as at the end of
such fiscal year and the related statements of income and cash flow statements
for such fiscal year, reported on by Mortenson & Associates, and (b) the
unaudited financial statements of the Company for the nine (9) month period
ended October 31, 1995, including a balance sheet as at the end of such period
(together with any related notes, the "Company Balance Sheet") and the related
statements of income and retained earnings and cash flow statements for such
nine (9) month period (the financial statements referred to in Clauses (a) and
(b) collectively, the "Financial Statements"). For purposes of this Agreement,
October 31, 1995, shall be hereinafter referred to as the "Balance Sheet Date".
The Financial Statements have been prepared in accordance with generally
accepted accounting principles, applied consistently with the past practices of
the Company (except as otherwise noted in such Financial Statements), reflect
all known liabilities of the Company, including all known contingent
liabilities, as of their respective dates, and present fairly the financial
position of the Company and the results of its operations as of the time and for
the period indicated therein.
6.7. No Material Adverse Changes. Except as set forth on
Schedule 6.7 hereto, since the Balance Sheet Date there has not at any time been
(a) any material adverse change in the financial condition, operating results,
business prospects, employee relations or customer relations of the Company, or
(b) other adverse changes, which in the aggregate have been materially adverse
to the Company.
6.8 Absence of Certain Developments. Except as contemplated by
this Agreement, and except as set forth in Schedule 6.8 hereto, since the
Balance Sheet Date, the Company has not, nor will have prior to the First
Closing; (a) issued any corporate securities; (b) borrowed any amount or
incurred or became subject to any liabilities (absolute or contingent), other
than liabilities incurred in the ordinary course of business and liabilities
under contracts entered into in the ordinary course of business, none of which
are or shall be material; (c) discharged or satisfied any lien or encumbrance or
paid any obligation or liability (absolute or contingent), other than current
liabilities paid in the ordinary course of business; (d) declared or made any
payment or distribution of cash or other property to the stockholders of the
Company with respect to the Common Stock or purchased or redeemed any shares of
Common Stock; (e) mortgaged, pledged or subjected to any lien, charge or any
other encumbrance, any of its properties or assets, except for liens for taxes
not yet due and payable; (f) sold, assigned or transferred any of its assets,
tangible or
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<PAGE>
intangible, except in the ordinary course of business, or disclosed any
proprietary confidential information to any person, firm or entity; (g) suffered
any extraordinary losses or waived any rights of material value; (h) made any
capital expenditures or commitments therefor; (i) entered into any other
transaction other than in the ordinary course of business or entered into any
material transaction, whether or not in the ordinary course of business; (j)
made any charitable contributions or pledges; (k) suffered damages, destruction
or casualty loss, whether or not covered by insurance, affecting any of the
properties or assets of the Company or any other properties or assets of the
Company which could have a material adverse effect on the business or operations
of the Company; or (l) made any change in the nature or operations of the
business of the Company.
6.9 Properties. The Company has good and marketable title to
all of the real property and good title to all of the personal property and
assets it purports to own, including those reflected as owned on the Company
Balance Sheet or acquired thereafter, and a good and valid leasehold interest in
all property indicated as leased on the Company Balance Sheet, whether such
property is real or personal, free and clear of all liens, charges, encumbrances
or restrictions of any nature whatsoever, except (a) such as are reflected on
the Company Balance Sheet or described in Schedule 6.9 hereto and (b) for
receivables and charges collected in the ordinary course of business. Except as
disclosed in Schedule 6.9 hereto, the Company owns or leases all such properties
as are necessary to its operations as now conducted and as presently proposed to
be conducted and all such properties are, in all material respects, in good
operating condition and repair.
6.10. Taxes. Except as referred to in
Schedule 6.10 hereto, the Company has filed all federal, state, local and
foreign tax returns and reports required to be filed, and all taxes, fees,
assessments and governmental charges of any nature shown by such returns and
reports to be due and payable have been paid except for those amounts being
contested in good faith and for which appropriate amounts have been reserved in
accordance with generally accepted accounting principles and are reflected on
the Company Balance Sheet. There is no tax deficiency which has been, or, to the
knowledge of the Company might be, asserted against the Company which would
adversely affect the business or operations, or proposed business or operations,
of the Company. All such tax returns and reports were prepared in accordance
with the relevant rules and regulations of each taxing authority having
jurisdiction over the Company and are true and correct. The Company has neither
given nor been requested to give any waiver of any statute of limitations
relating to the payment of federal, state, local or foreign taxes. The Company
has not been, nor is it now being,
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<PAGE>
audited by any federal, state, local or foreign tax authorities. The Company has
made all required deposits for taxes applicable to the current tax year.
6.11. Litigation. Except as set forth on
Schedule 6.11 hereto, there are no actions, suits, proceedings, orders,
investigations or claims pending or threatened against or affecting the Company,
at law or in equity or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality;
there are no arbitration proceedings pending under collective bargaining
agreements or otherwise; and, to the knowledge of the Company, there is no basis
for any of the foregoing.
6.12. Compliance with Law. The Company has complied in all
respects with all applicable statutes and regulations of the United States and
of all states, municipalities and agencies in respect of the conduct of its
business and operations, and the failure, if any, by the Company to have fully
complied with any such statute or regulation does not and will not materially
adversely affect the business or operations of the Company.
6.13. Trademarks and Patents. Schedule 6.13 annexed hereto
contains a true and correct list of all trademarks, trade names, patents and
copyrights (and applications therefor) if any, heretofore or presently used or
required to be used by the Company in connection with its business; and each
such trademark, trade name, patent and copyright (and application therefor)
listed in Schedule 6.13 as being owned by the Company is not subject to any
license, royalty arrangement or dispute. To the knowledge of the Company, none
of the trademarks, trade names, patents or copyrights used by the Company in
connection with its business infringe any trademark, trade name, patent or
copyright of others in the United States or in any other country, in any way
which materially adversely affects or which in the future may materially
adversely affect the business or operations of the Company. Except as set forth
in Schedule 6.13, no stockholder, officer or director of the Company or any
other person owns or has any interest in any trademark, trade name, patent,
copyright or application therefor, or trade secret, invention or process, if
any, used by the Company in connection with its business. To the knowledge of
the Company, the business of the Company does not and will not cause the Company
to violate any trademark, trade name, patent, copyright, trade secret, license
or proprietary interest of any other person, in any way which materially
adversely affects or which in the future may materially adversely affect the
business or operations of the Company. Except as disclosed in Schedule 6.13
hereto, the Company possesses all proprietary technology necessary for the
conduct of
-8-
<PAGE>
business by the Company, both as presently conducted and as presently proposed
to be conducted.
6.14. Insurance. Schedule 6.14 annexed hereto contains a brief
description of each insurance policy maintained by the Company with respect to
its properties, assets and business; each such policy is in full force and
effect; and the Company is not in default with respect to its obligations under
any of such insurance policies. The insurance coverage of the Company is in
amounts not less than is customarily maintained by corporations engaged in the
same or similar business and similarly situated, including, without limitation,
insurance against loss, damage, fire, theft, public liability and other risks.
The activities and operations of the Company have been conducted in a manner so
as to conform to all applicable provisions of these insurance policies and the
Company has not taken or failed to take any action which would cause any such
insurance policy to lapse.
6.15. Agreements. Except as set forth in
Schedule 6.15 hereto, the Company is neither a party to nor bound by any
agreement or commitment, written or oral, which obligates the Company to make
payments to any person, or which obligates any person to make payments to the
Company, in the case of each such agreement in an amount exceeding $5,000, or in
the aggregate in an amount exceeding $10,000, or which is otherwise material to
the conduct and operation of the Company's business or proposed business or any
of its properties or assets, including, without limitation, all shareholder,
employment, non-competition and consulting agreements and employee benefit plans
and arrangements and collective bargaining agreements to which the Company is a
party or by which it is bound. All such agreements are legal, valid and binding
obligations of the Company, in full force and effect, and enforceable in
accordance with their respective terms, except as the enforceability thereof may
be limited by (a) bankruptcy, insolvency, moratorium, and similar laws affecting
creditors' rights generally and (b) the availability of remedies under general
equitable principles. The Company has performed all obligations required to be
performed by it, and is not in default, or in receipt of any claim, under any
such agreement or commitment, and the Company has no present expectation or
intention of not fully performing all of such obligations, nor does the Company
have any knowledge of any breach or anticipated breach by the other parties to
any such agreement or commitment. The Company is not a party to any contract,
agreement, instrument or understanding which materially adversely affects the
business, properties, operations, assets or condition (financial or otherwise)
of the Company. Dominion has been furnished with a true and correct copy of each
written agreement referred to in Schedule 6.15, together with all amendments,
waivers or other changes thereto.
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<PAGE>
6.16. Undisclosed Liabilities. Except as set forth on
Schedule 6.16 hereto, the Company has no obligation or liability (whether
accrued, absolute, contingent, unliquidated, or otherwise, whether or not known
to the Company, whether due or to become due) arising out of transactions
entered into at or prior to the First Closing of this Agreement, or any action
or inaction at or prior to the First Closing of this Agreement, or any state of
facts existing at or prior to the First Closing of this Agreement, except (a)
liabilities reflected on the Company Balance Sheet; (b) liabilities incurred in
the ordinary course of business since the Balance Sheet Date (none of which is a
liability for breach of contract, breach of warranty, torts, infringements,
claims or lawsuits); and (c) liabilities or obligations disclosed in the
schedules hereto.
6.17. Conflicting Agreements. Except as set forth on
Schedule 6.17, no stockholder, director, officer or key employee of the Company
is a party to or bound by any agreement, contract or commitment, or subject to
any restrictions in connection with any previous or current employment of any
such person, which adversely affects, or which in the future may adversely
affect, the business or the proposed business of the Company.
6.18. Disclosure. Neither this Agreement nor any of the
schedules, exhibits, written statements, documents or certificates prepared or
supplied by the Company with respect to the transactions contemplated hereby
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained herein or therein not misleading.
Except as disclosed in Schedule 6.18 hereto, there exists no fact or
circumstance which, to the knowledge of the Company, materially adversely
affects, or which could reasonably be anticipated to have a material adverse
effect on, the existing or expected financial condition, operating results,
assets, customer relations, employee relations or business prospects of the
Company.
6.19. Closing Date. The representations and warranties of the
Company contained in this Agreement, and all information contained in any
exhibit, schedule or attachment hereto or in any writing delivered by the
Company to Dominion, will be true and correct in all material respects on the
date of the First Closing as though then made and as though the date of the
First Closing were substituted for the date of this Agreement throughout this
Agreement, except as affected by the transactions expressly contemplated by this
Agreement.
6.20. Compliance with the Securities Laws. Except as set forth
on Schedule 6.20 hereto, neither the Company nor anyone acting on its behalf has
directly or indirectly offered the Shares or any part thereof or any similar
security of the Company (or any
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<PAGE>
other securities convertible or exchangeable for the Shares or any similar
security), for sale to, or solicited any offer to buy the same from, anyone
other than Dominion. All securities of the Company heretofore sold and issued by
it were sold and issued, and the Shares were offered and will be sold and
issued, in compliance with all applicable federal and state securities laws.
6.21. Brokers. No finder, broker, agent, financial person or
other intermediary has acted on behalf of the Company in connection with the
offering of the Shares or the consummation of this Agreement or any of the
transactions contemplated hereby.
7. Representations and Warranties of Dominion. Dominion hereby
represents and warrants to the Company as follows:
7.1. Investment Intent. Dominion is acquiring the Shares for
its own account and not with a present view to, or for sale in connection with,
any distribution thereof in violation of the registration requirements of the
Securities Act. Dominion consents to the placing of a legend on the certificates
representing the Shares to the effect that such shares of Common Stock have not
been registered under the Securities Act and may not be transferred unless (a) a
registration statement under such Act shall have become effective with respect
thereto, (b) a written opinion of William S. Clarke, P.A., or counsel for the
holder reasonably acceptable to the Company, has been obtained to the effect
that no such registration is required or (c) a no-action letter or its
equivalent has been issued by the staff of the Securities and Exchange
Commission to the effect that registration under such Act is not required in
connection with such proposed transfer.
7.2. Authorization. Dominion has the power and authority to
execute and deliver this Agreement and to perform all of its obligations
hereunder, having obtained all required consents, if any.
7.3. Brokers. No finder, broker, agent, financial person or
other intermediary has acted on behalf of Dominion in connection with the
offering of the Shares or the consummation of this Agreement or any of the
transactions contemplated hereby.
7.4. Closing Date. The representations and warranties of
Dominion contained in this Agreement or in any writing delivered by Dominion to
the Company will be true and correct on the date of the First Closing as though
then made and as though the date of the First Closing were substituted for the
date of this Agreement throughout this Agreement, except as affected by the
transactions expressly contemplated by this Agreement.
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8. Covenants of the Company. The Company covenants and agrees with
Dominion as follows:
8.1. Books and Accounts. The Company will and will cause each
Subsidiary hereafter formed or acquired to: (a) make and keep books, records and
accounts, which, in reasonable detail, accurately and fairly reflect its
transactions and dispositions of its assets; and (b) devise and maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorization, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and in accordance with the Company's past
practices or any other criteria applicable to such statements, and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
8.2. Periodic Reports.
(a) The Company will furnish to Dominion as soon as
practicable, and in any event within ninety (90) days after the end of each
fiscal year of the Company (commencing with the fiscal year ended January 31,
1996), a consolidated and consolidating annual report of the Company and its
Subsidiaries, including a consolidated and consolidating balance sheet as at the
end of such fiscal year and consolidated and consolidating statements of income
and retained earnings, and changes in consolidated financial position for such
fiscal year, together with the related notes thereto, setting forth in each case
in comparative form corresponding figures for the preceding fiscal year, all of
which will be correct and complete and will present fairly the consolidated
financial position of the Company and its Subsidiaries and the consolidated
results of their operations and changes in their financial position as of the
time and for the period then ended. The consolidated portions of such financial
statements shall be accompanied by an unqualified report (other than
qualifications contingent upon the Company's ability to obtain additional
financing), in form and substance reasonably satisfactory to Dominion, of
independent public accountants reasonably satisfactory to Dominion to the effect
that such financial statements have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior years
(except as otherwise specified in such report), and present fairly the
consolidated financial position of the Company and its Subsidiaries and the
consolidated results of
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their operations and changes in their consolidated financial position as of the
time and for the period then ended. The Company will use its best efforts to
conduct its business so that such report of the independent public accountants
will not contain any qualifications as to the scope of the audit, the
continuance of the Company and its Subsidiaries, or with respect to the
Company's compliance with generally accepted accounting principles consistently
applied, except for changes in methods of accounting in which such accountants
concur.
(b) The Company will furnish to Dominion, as soon as
practicable and in any event within forty-five (45) days after the end of each
of the first three (3) fiscal quarters of the Company, a quarterly report of the
Company and its Subsidiaries consisting of an unaudited consolidated and
consolidating balance sheet as at the end of such quarter and an unaudited
consolidated and consolidating statement of income and retained earnings and
changes in consolidated financial position for such quarter and the portion of
the fiscal year then ended, setting forth in each case in comparative form
corresponding figures for the preceding fiscal year. All such reports shall be
certified by the chief financial officer of the Company to be correct and
complete, to present fairly the consolidated financial position of the Company
and its Subsidiaries and the consolidated results of their operations and
changes in their consolidated financial position as of the time and for the
period then ended and to have been prepared in accordance with generally
accepted accounting principles.
8.3. Certificates of Compliance. Concurrently with the
furnishing of the reports pursuant to Sections 8.2(a) and 8.2(b) hereof, the
Company will furnish to Dominion an Officer's Certificate stating that neither
the Company nor any Subsidiary is in default under, or has breached, any
material agreement or obligation, including, without limitation, this Agreement,
or if any such default or breach exists, specifying the nature thereof and what
actions the Company has taken and proposes to take with respect thereto. The
Company covenants that promptly after the occurrence of any default hereunder or
any default under or breach of any material agreement, or any other material
adverse event or circumstance affecting the Company or any of its Subsidiaries,
it will deliver to Dominion an Officers' Certificate specifying in reasonable
detail the nature and period of existence thereof, and what actions the Company
has taken and proposes to take with respect thereto.
8.4. Other Reports and Inspection. The Company will furnish to
Dominion (a) as soon as practicable after issuance, copies of any financial
statements or reports prepared by the Company or its Subsidiaries for, or
otherwise furnished to, its
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stockholders or the Securities and Exchange Commission and (b) promptly, such
other documents, reports and financial data as Dominion may reasonably request.
In addition the Company will, upon reasonable prior notice, make available
during regular business hours to Dominion or its representatives or designees
(a) all assets, properties and business records of the Company and its
Subsidiaries for inspection and/or copying and (b) the directors, officers and
employees of the Company and its Subsidiaries for interviews concerning the
business, affairs and finances of the Company and its Subsidiaries, provided,
however, nothing herein shall require the Company to provide Dominion with
copies of or access to its scientific data.
8.5. Insurance. The Company will at all times maintain valid
policies of worker's compensation insurance and such insurance with respect to
its properties and business and the properties and business of its Subsidiaries
of the kinds and in amounts not less than is customarily maintained by
corporations engaged in the same or similar business and similarly situated,
including, without limitation, insurance against fire, loss, damage, theft,
public liability and other risks.
8.6. Use of Proceeds. After the date of each respective
Closing, the Company will use the proceeds from the sale of the Shares for the
purposes set forth on Schedule 8.6 hereto.
8.7. Material Changes. The Company will promptly notify
Dominion of any material adverse change in the business, properties, assets or
condition, financial or otherwise, of the Company or any of its Subsidiaries, or
any other material adverse event or circumstance affecting the Company or any of
its Subsidiaries, and of any litigation or governmental proceeding pending or,
to the knowledge of the Company or any Subsidiary, threatened against the
Company or any of its Subsidiaries or against any director or officer of the
Company or any of its Subsidiaries.
8.8. Transactions with Affiliates. Except for the transactions
contemplated by this Agreement, neither the Company nor any Subsidiary shall (a)
engage in any transaction with, (b) make any loans to, nor (c) enter into any
contract, agreement or other arrangement (i) providing for (x) the employment
of, (y) the furnishing of services by, or (z) the rental of real or personal
property from, or (ii) otherwise requiring payments to, any officer, director or
key employee of the Company or any Subsidiary or any relative of such persons or
any other "affiliate" or "associate" of such persons (as such terms are defined
in the rules and regulations promulgated under the Securities Act), without the
prior approval of the Company's Board of Directors.
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8.9. Corporate Existence, Licenses and Permits;
Maintenance of Properties; New Businesses. The Company will at all times conduct
its business in the ordinary course and cause to be done all things necessary to
maintain, preserve and renew its existence and the corporate existence of each
of its Subsidiaries and will preserve and keep in force and effect, and cause
each Subsidiary to preserve and keep in force and effect, all licenses, permits
and authorizations necessary to the conduct of its and their respective
businesses. The Company will also maintain and keep, and cause each Subsidiary
to maintain and keep, its and their respective properties in good repair,
working order and condition, and from time to time, to make all needful and
proper repairs, renewals and replacements, so that the business carried on in
connection therewith may be properly conducted at all times.
8.10. Other Material Obligations. The Company will comply
with, and will cause each Subsidiary to comply with, (a) all material
obligations which it or its Subsidiaries are subject to, or become subject to,
pursuant to any contract or agreement, whether oral or written, as such
obligations are required to be observed or performed, unless and to the extent
that the same are being contested in good faith and by appropriate proceedings
and the Company and its Subsidiaries have set aside on their books adequate
reserves with respect thereto, and (b) all applicable laws, rules, and
regulations of all governmental authorities, the violation of which could have a
material adverse effect upon the business of the Company or any Subsidiary.
8.11. Amendment to the Certificate of Incorporation and the
By-Laws. The Company will perform and be in compliance with and observe all of
the provisions set forth in its Certificate of Incorporation and By-Laws to the
extent that the performance of such obligations is legally permissible; provided
that the fact that performance is not legally permissible will not prevent such
nonperformance from constituting an event of default under this Agreement. The
Company will not amend its Certificate of Incorporation or By-Laws so as to
adversely affect the rights of Dominion under this Agreement, the Certificate of
Incorporation or the By-Laws.
8.12. Board of Directors. Commencing as of the date of the
First Closing and so long as Dominion holds more than 500,000 Shares, Dominion
may, by written notice to the Company, designate one representative to be
elected as a member of the Company's Board of Directors and the Company hereby
agrees to include such representative among management's nominees and to cause
such representative to be elected to, and at all times to be a member of, the
Company's Board of Directors. At all times the Company's Certificate of
Incorporation or By-Laws will contain provisions
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authorizing not more than five members of the Company's Board of Directors. If
any director designated by Dominion shall be removed, resign or otherwise fail
to be a director for the whole term for which elected, the Company will use its
best efforts to cause such vacancy to be filled in accordance with this Section
8.12. The Company agrees to reimburse the director designated by Dominion
pursuant to this Section 8.12 for their out-of-pocket expenses incurred by such
director in attending meetings of the Board of Directors. Meetings of the Board
of Directors shall be held no less frequently than once every three (3) months.
8.13. Merger; Sale of Assets. Neither the Company nor any
Subsidiary will become a party to any merger or consolidation, or sell, lease or
otherwise dispose of any of its assets, other than sales and leases of assets in
the ordinary course of business, without the prior approval of Dominion's
representative on the Company's Board of Directors, except that (a) any
Subsidiary may merge or consolidate with any other Subsidiary or Subsidiaries,
(b) any Subsidiary may merge or consolidate with the Company so long as the
Company is the surviving entity of such merger or consolidation, and (c) any
Subsidiary may lease, sell, transfer or otherwise dispose of all or any part of
its properties and assets to the Company or any other Subsidiary.
8.14. Acquisition. The Company will not acquire, or permit any
Subsidiary to acquire, any interest in any business from any person, firm or
entity (whether by a purchase of assets, purchase of stock, merger or otherwise)
without the prior approval of Dominion's representative on the Company's Board
of Directors, except the acquisition of 1% or less of any class of outstanding
securities of a company whose securities are listed on a national securities
exchange or which has not fewer than 1,000 stockholders and except as otherwise
specifically permitted pursuant to the provisions of this Agreement.
8.15. Dividends; Distributions; Repurchases of Common Stock;
Treasury Stock. The Company shall not declare or pay any dividends on, or make
any other distribution with respect to, its capital stock, whether now or
hereafter outstanding, other than dividends payable in shares of such stock, or
purchase, acquire, redeem or retire any shares of its capital stock, without the
consent of Dominion's representative on the Company's Board of Directors,
provided, however, the foregoing shall not prohibit the Company from
repurchasing any shares of its Common Stock from any present or former officer,
Director or employee of the Company.
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8.16. Consents. Prior to the First Closing the Company shall
obtain all consents needed to enable it to perform all of its obligations under
this Agreement and the transactions contemplated hereby.
8.17. Taxes and Liens. The Company will duly pay and
discharge, and will cause each of its Subsidiaries to duly pay and discharge,
when payable, all taxes, assessments and governmental charges imposed upon or
against the Company or its Subsidiaries or their respective properties, or any
part thereof or upon the income or profits therefrom, in each case before the
same become delinquent and before penalties accrue thereon, as well as all
claims for labor, materials or supplies which if unpaid might by law become a
lien upon any of its property or any property of any Subsidiary, unless and to
the extent that the same are being contested in good faith and by appropriate
proceedings and the Company and its Subsidiaries have set aside on their books
adequate reserves with respect thereto.
8.18. Restrictive Agreement. The Company covenants and agrees
that subsequent to the First Closing, neither it nor any of its Subsidiaries
will be a party to any agreement or instrument which by its terms would restrict
the Company's performance of its obligations pursuant to this Agreement.
9. Registration of Common Stock.
9.1. Demand Registration. Upon the written request of one or
more registered holders of Securities, which request will state the intended
method of disposition by such holders and will request that the Company effect
the registration under the Securities Act of all or part of the Registrable
Common Stock (as defined in Section 10.5 hereof) of such holders, the Company
will, within ten (10) days after the receipt of such request give written notice
of such requested registration to all registered holders of Securities and
thereupon (except as expressly provided herein) will use reasonable efforts to
effect the registration ("Demand Registration") under the Securities Act of (x)
the shares of Registrable Common Stock included in the initial request for
registration (for disposition in accordance with the intended method of
disposition stated in such request) and (y) all other shares of Registrable
Common Stock the holders of which have made written request to the Company for
registration thereof within 15 days after the receipt of such written notice
from the Company, provided that:
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(a) the Company shall be required to effect only two
Demand Registrations hereunder, each of which shall have been initially
requested by holders of at least 60% of the Securities outstanding at the time
of such request, except that, upon request of any holder of Securities
(regardless of the number of Securities held by such holder), the Company shall
be required to effect an unlimited number of registrations on Form S-3, or a
similar short form registration statement, which registrations (hereinafter
referred to as "Short Form Registrations") shall not be included for purposes of
this Section 9.1(a) in the total of two Demand Registrations which the Company
is required to effect;
(b) if a Demand Registration is in connection with an
underwritten public offering, the underwriters will be selected by holders of a
majority of Registrable Common Stock being included in such offering, subject to
the approval of the Company (which approval shall not be unreasonably withheld),
and each holder of Securities agrees by acquisition of such Securities not to
effect any public sale or distribution of such Securities or Registrable Common
Stock (other than as part of such underwritten public offering) during the
period commencing seven days prior to, and expiring ninety (90) days after, such
underwritten public offering has become effective;
(c) the Company shall not include and shall not
permit third parties to include additional securities in any Demand Registration
without the consent of the holders of a majority of the shares of Registrable
Common Stock sought to be included in such Demand Registration;
(d) if a Demand Registration is in connection with an
underwritten public offering, and if the managing underwriters advise the
Company in writing that in their opinion the amount of Registrable Common Stock
requested to be included in such registration exceeds the amount of such
Registrable Common Stock which can be sold in such offering, the Company will
nevertheless include such Registrable Common Stock in such registration prior to
the inclusion of any securities which are not Registrable Common Stock
(notwithstanding any consent obtained in accordance with Section 9.1(c) hereof)
pro rata among the holders of Registrable Common Stock requesting inclusion on
the basis of the number of shares of Registrable Common Stock of such holders;
and
(e) registrations under this Section 9.1 will be on a
form permitted by the rules and regulations of the Securities and Exchange
Commission selected by the underwriters if the Demand Registration is in
connection with an underwritten public offering or otherwise by the Company.
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9.2. Incidental Registrations.
(a) If the Company at any time proposes to register
any of its securities under the Securities Act (other than pursuant to Section
9.1) whether of its own accord or at the demand of any holder of such securities
pursuant to an agreement with respect to the registration thereof, and if the
form of registration statement proposed to be used may be used for the
registration of Registrable Common Stock, the Company will give notice to all
holders of Securities not less than fifteen (15) days prior to the filing of
such registration statement of its intention to proceed with the proposed
registration (the "Incidental Registration"), and, upon the written request of
any such holder made within ten (10) days after the receipt of any such notice
(which request will specify the Registrable Common Stock intended to be disposed
of by such holder and state the intended method of disposition thereof), the
Company will use reasonable efforts to cause all Registrable Common Stock as to
which registration has been requested to be registered under the Securities Act,
provided that if such registration is in connection with an underwritten public
offering, such holder's Securities to be included in such registration shall be
offered upon the same terms and conditions as apply to any other securities
included in such registration.
(b) If an Incidental Registration is a primary
registration on behalf of the Company and is in connection with an underwritten
public offering, and if the managing underwriters advise the Company in writing
that in their opinion the amount of securities requested to be included in such
registration (whether by the Company, the holders of Securities pursuant to
Section 9.2(a) or other holders of its securities pursuant to any other rights
granted by the Company to demand inclusion of any such securities in such
registration) exceeds the amount of such securities which can be sold in such
offering, the Company will include in such registration the amount of securities
requested to be included which in the opinion of such underwriters can be sold,
in the following order (i) first, all of the securities the Company proposes to
sell, (ii) second, subject to the terms of any other agreement to which the
Company is a party, all of the Registrable Common Stock requested to be included
in such registration, pro rata among the holders thereof on the basis of the
number of shares of Registrable Common Stock then owned by such holders, and
(iii) third, any other securities requested to be included in such registration,
pro rata among the holders thereof on the basis of the amount of such securities
then owned by such holders.
(c) If an Incidental Registration is a secondary
registration on behalf of holders of securities of the Company and is in
connection with an underwritten public offering, and if the
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managing underwriters advise the Company in writing that in their opinion the
amount of securities requested to be included in such registration (whether by
such holders, by holders of Securities pursuant to Section 9.2(a) or by holders
of its securities pursuant to any other rights granted by the Company to demand
inclusion of securities in such registration) exceeds the amount of such
securities which can be sold in such offering, the Company will include in such
registration, the amount of securities requested to be included which in the
opinion of such underwriters can be sold, in the following order (i) first, all
of the securities requested to be included by holders demanding or requesting
such registration, (ii) second, subject to the terms of any other agreement to
which the Company is a party, all of the Registrable Common Stock requested to
be included in such registration, pro rata among the holders thereof on the
basis of the number of shares of Registrable Common Stock then owned by such
holders; and (iii) third, any other securities requested to be included in such
registration, pro rata among the holders thereof on the basis of the amount of
such securities then owned by such holders.
9.3. Registration Procedures. If and whenever the Company is
required to use reasonable efforts to effect or cause the registration of any
Registrable Common Stock under the Securities Act as provided in this Section 9,
the Company will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Common
Stock and use reasonable efforts to cause such registration statement to become
effective;
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than nine (9) months
or such shorter period in which the disposition of all securities in accordance
with the intended methods of disposition by the seller or sellers thereof set
forth in such registration statement shall be completed, and to comply with the
provisions of the Securities Act (to the extent applicable to the Company) with
respect to such dispositions;
(c) furnish to each seller of such Registrable Common
Stock such number of copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits), such
number of copies of the prospectus included in such registration statement
(including each preliminary prospectus), in conformity with the requirements of
the Securities
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Act, and such other documents, as such seller may reasonably request, in order
to facilitate the disposition of the Registrable Common Stock owned by such
seller;
(d) use its reasonable efforts to register or qualify
such Registrable Common Stock covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as any seller reasonably
requests, and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Common Stock owned by such seller, except
that (i) the Company will not be required to register or qualify such
Registrable Common Stock in any jurisdiction in which the officers or Directors
of the Company would be required by the relevant securities commission or its
equivalent in such jurisdiction to enter into an agreement restricting their
rights to transfer their shares of Common Stock, and (ii) the Company will not
for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not, but for the
requirements of this Section 9.3(d) be obligated to be qualified, to subject
itself to taxation in any such jurisdiction, or to consent to general service of
process in any such jurisdiction;
(e) provide a transfer agent and registrar for all
such Registrable Common Stock covered by such registration statement not later
than the effective date of such registration statement;
(f) notify each seller of such Registrable Common
Stock at any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company will prepare
a supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Common Stock, such prospectus will not
contain an untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading;
(g) cause all such Registrable Common Stock to be
listed on each securities exchange or automated over-the-counter trading system
on which similar securities issued by the Company are then listed;
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(h) enter into such customary agreements (including
an underwriting agreement in customary form) and take all such other actions as
reasonably required in order to expedite or facilitate the disposition of such
Registrable Common Stock; and
(i) make available for inspection by any seller of
Registrable Common Stock, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant or other
agent retained by any such seller and/or representative of such seller or
underwriter, all financial and other records, pertinent corporation documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement, provided, however, nothing herein shall require the Company to
provide Dominion with copies of or access to its scientific data.
<PAGE>
9.4. Registration and Selling Expenses.
(a) All expenses incurred by the Company in
connection with the Company's performance of or compliance with this Section 9,
including, without limitation (i) all registration and filing fees (including
all expenses incident to filing with the National Association of Securities
Dealers, Inc.), (ii) blue sky fees and expenses, (iii) all necessary printing
and duplicating expenses and (iv) all fees and disbursements of counsel and
accountants for the Company (including the expenses of any audit of financial
statements), retained by the Company (all such expenses being herein called
"Registration Expenses"), will be paid by the Company except as otherwise
expressly provided in this Section 9.4.
(b) The Company will, in any event, in connection
with any registration statement, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal, accounting or other duties in connection therewith and expenses of audits
of year-end financial statements), the expense of liability insurance and the
expenses and fees for listing the securities to be registered on one or more
securities exchanges or automated over-the-counter trading systems on which
similar securities issued by the Company are then listed.
(c) The Company shall bear the Registration Expenses
of the first Demand Registration (which is not a Short Form Registration) and of
each Short Form Registration hereunder. Nothing herein shall be construed to
prevent any holder or holders from retaining such counsel as they shall choose,
the expenses of which shall be borne by such holder or holders.
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(d) The holders of Registrable Common Stock covered
by the second Demand Registration (which is not a Short Form Registration) shall
pay or reimburse the Company for the Registration Expenses in connection
therewith, provided that they shall not be liable for expenses which would
otherwise have been incurred by the Company in the ordinary course of business
or in excess of an aggregate of $60,000; and provided further that to the extent
securities of the Company or third parties are included in such registration,
the Registration Expenses of such registration shall be borne pro rata by the
Company and selling security holders in proportion to the dollar value of the
securities being sold by each such person.
(e) The holders of Registrable Common Stock covered
by any Incidental Registration shall pay or reimburse the Company for any
incremental Registration Expenses incurred by reason of the inclusion of such
Registrable Common Stock in such registration.
(f) Notwithstanding any of the foregoing, all
underwriting discounts, selling commissions and stock transfer taxes applicable
to sales of Registrable Common Stock in connection with any Demand Registration
or Incidental Registration shall be borne by all persons who are selling
Registrable Common Stock pursuant to such Registration Statement in proportion
to the dollar value of the securities being sold by each such person, or in such
other proportion as they may agree.
(g) All fees and expenses required to be paid by the
holders of Registrable Common Stock in connection with any Demand Registration
or Incidental Registration hereunder shall be borne by said holders in
proportion to the dollar value of the securities of such holder covered by such
Demand Registration or Incidental Registration.
9.5. Other Public Sales and Registrations. The Company agrees
that if it has previously filed a registration statement with respect to
Registrable Common Stock in connection with a Demand Registration or Incidental
Registration hereunder, and if such previous registration has not been withdrawn
or abandoned, the Company will not file or cause to become effective any other
registration of any of its securities under the Securities Act or otherwise
effect a public sale or distribution of its securities (except pursuant to
registration on Form S-8 or any successor form relating to a special offering to
the employees or security holders of the Company or any Subsidiary), whether on
its own behalf or at the request of any holder of such securities, until at
least ninety (90) days have elapsed after the effective date of such previous
registration.
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9.6. Transferees of Securities. Notwithstanding anything else
set forth in this Section 9, no person to whom Securities are transferred shall
have any rights under this Section 9 as a holder of such Securities unless such
person agrees to be bound by the terms and conditions of this Agreement.
9.7. Indemnification.
(a) The Company hereby agrees to indemnify, to the
extent permitted by law, each holder of Registrable Common Stock, its officers
and directors, if any, and each person, if any, who controls such holder within
the meaning of the Securities Act, against all losses, claims, damages,
liabilities and expenses (under the Securities Act 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 has furnished any amendments or supplements thereto)
or any preliminary prospectus, which registration statement, prospectus or
preliminary prospectus shall be prepared in connection with a Demand
Registration or Incidental Registration, 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 not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any untrue
statement or alleged untrue statement contained in or by any omission or alleged
omission from information furnished to the Company by such holder in connection
with a Demand Registration or Incidental Registration, provided the Company will
not be liable pursuant to this Section 9.7 if such losses, claims, damages,
liabilities or expenses have been caused by any selling security holder's
failure to deliver a copy of the registration statement or prospectus, or any
amendments or supplements thereto, after the Company has furnished such holder
with a sufficient amount of copies of the same.
(b) In connection with any registration statement in
which a holder of Registrable Common Stock is participating, each such holder
shall furnish to the Company in writing such information as is reasonably
requested by the Company for use in any such registration statement or
prospectus and shall indemnify, to the extent permitted by law, the Company, its
directors and officers and each person, if any, who controls the Company within
the meaning of the Securities Act, 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 or any
amendment thereof or supplement thereto or necessary to make the statements
therein not misleading, but only to the extent such losses, claims,
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damages, liabilities or expenses are caused by an untrue statement or alleged
untrue statement contained in or by an omission or alleged omission from
information so furnished by such holder in connection with the Demand
Registration or Incidental Registration. If the offering pursuant to any such
registration is made through underwriters, each such holder agrees to enter into
an underwriting agreement in customary form with such underwriters and to
indemnify such underwriters, their officers and directors, if any, and each
person who controls such underwriters within the meaning of the Securities Act
to the same extent as hereinabove provided with respect to indemnification by
such holder of the Company.
(c) Promptly after receipt by an indemnified party
under Section 9.7(a) or Section 9.7(b) of notice of the commencement of any
action or proceeding, such indemnified party will, if a claim in respect thereof
is made against the indemnifying party under such Section, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under such Section. In case any
such action or proceeding is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and, to the extent that it
wishes, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel approved by such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under such Section for any legal or any other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof (other than reasonable costs of investigation) unless incurred at the
written request of the indemnifying party. Notwithstanding the above, the
indemnified party will have the right to employ counsel of its own choice in any
such action or proceeding if the indemnified party has reasonably concluded that
there may be defenses available to it which are different from or additional to
those of the indemnifying party, or counsel to the indemnified party is of the
opinion that it would not be desirable for the same counsel to represent both
the indemnifying party and the indemnified party because such representation
might result in a conflict of interest (in either of which cases the
indemnifying party will not have the right to assume the defense of any such
action or proceeding on behalf of the indemnified party or parties and such
legal and other expenses will be borne by the indemnifying party). An
indemnifying party will not be liable to any indemnified party for any
settlement of any such action or proceeding effected without the consent of such
indemnifying party.
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(d) If the indemnification provided for in Section
9.7(a) or Section 9.7(b) is unavailable under applicable law to an indemnified
party in respect of any losses, claims, damages or liabilities referred to
therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities in
such proportion as is appropriate to reflect the relative fault of the Company
on the one hand and of the holders of Registrable Common Stock on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
holders of Registrable Common Stock on the other 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 Company or by the holders of Registrable Common
Stock and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages and liabilities
referred to above shall be deemed to include, subject to the limitations set
forth in Section 9.7(c), any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any action or claim.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation.
(e) Promptly after receipt by the Company or any
holder of Securities of notice of the commencement of any action or proceeding,
such party will, if a claim for contribution in respect thereof is to be made
against another party (the "contributing party"), notify the contributing party
of the commencement thereof; but the omission so to notify the contributing
party will not relieve it from any liability which it may have to any other
party other than for contribution hereunder. In case any such action, suit, or
proceeding is brought against any party, and such party notifies a contributing
party of the commencement thereof, the contributing party will be entitled to
participate therein with the notifying party and any other contributing party
similarly notified.
10. Certain Definitions. For the purposes of this Agreement the
following terms have the
respective meanings set forth below:
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10.1. "Affiliate" means any person, corporation, firm or
entity which directly or indirectly controls, is controlled by, or is under
common control with the indicated person, corporation, firm or entity.
10.2. "Common Stock" means the Company's Common Stock.
10.3. "Generally Accepted Accounting Principles" means
generally accepted accounting principles consistently applied.
10.4. "Officers' Certificate" means a certificate executed on
behalf of the Company by its President, Chairman of the Board, Chief Financial
Officer, Secretary or one of its Vice- Presidents.
10.5. "Registrable Common Stock" means any Common Stock owned
by, or any Common Stock issuable upon exercise of any options, warrants or other
rights to purchase Common Stock owned by, a holder of Securities.
10.6. "Securities" means the Shares, whether issued at the
First Closing or thereafter, but shall not include any such Shares or Common
Stock sold or distributed by the Company in any public offering.
10.7. "Securities Act" means, as of any given time, the
Securities Act of 1933, as amended, or any similar federal law then in force.
10.8. "Securities Exchange Act" means, as of any given time,
the Securities Exchange Act of 1934, as amended, or any similar federal law then
in force.
10.9. "Securities and Exchange Commission" includes any
governmental body or agency succeeding to the functions thereof.
10.10. "Subsidiary" means any person, corporation, firm or
entity at least the majority of the equity securities (or equivalent interest)
of which are, at the time as of which any determination is being made, owned of
record or beneficially by the Company, directly or indirectly, through any
Subsidiary or otherwise.
11. Miscellaneous.
11.1. Survival of Representations, Warranties and Covenants.
All representations, warranties, covenants and agreements contained in this
Agreement, or in any document, exhibit, schedule or certificate by any party
delivered in
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connection herewith shall survive the execution and delivery of
this Agreement and the date of each Closing and the consummation of the
transactions contemplated hereby, regardless of any investigation made by
Dominion or on its behalf, provided that, except as otherwise provided herein,
the obligations of the Company to perform the covenants and agreements set forth
in Section 8 hereof will continue only so long as any holder owns in excess of
25% of the Securities or until the Securities have been registered under the
Securities Act and distributed to the public, and, further provided that, such
representations and warranties shall survive until December 31, 1996.
11.2. Expenses. The Company agrees to pay, and save Dominion
harmless against liability for the payment of (a) fees and expenses (including,
without limitation, attorneys' fees) incurred with respect to any amendments or
waivers (whether or not the same shall become effective) under or with respect
to this Agreement and the transactions contemplated hereby, (b) stamp and other
taxes which may be payable in respect of the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby including
the issuance, delivery and acquisition of the Shares, and (c) fees and expenses
(including, without limitation, reasonable attorneys' fees) incurred in respect
of the enforcement of the rights granted under this Agreement and the
transactions contemplated hereby.
11.3. Amendments and Waivers. This Agreement and all exhibits
and schedules hereto set forth the entire agreement and understanding among the
parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements and understandings of any and every nature among them.
This Agreement may be amended, the Company may take any action herein prohibited
or omit to take any action herein required to be performed by it, and any breach
of any covenant, agreement, warranty or representation may be waived, only if
the Company has obtained the written consent or waiver of (a) Dominion, if the
amendment, action, omission or waiver is one which affects its rights or
obligations under this Agreement and (b) the holders of 51% of the Securities
then outstanding if the amendment, action, omission or waiver is one which
affects their rights or obligations under this Agreement. No course of dealing
between or among any persons having any interest in this Agreement will be
deemed effective to modify, amend or discharge any part of this Agreement or any
rights or obligations of any person under or by reason of this Agreement.
11.4. Successors and Assigns. This Agreement may not be
assigned by the Company except with the prior written consent of the holders of
51% of the Securities then outstanding. This Agreement shall be binding upon and
inure to the benefit of the
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Company and its permitted successors and assigns and
Dominion and its successors and assigns. The provisions hereof which are for
Dominion's benefit as purchaser or holder of the Shares, are also for the
benefit of, and enforceable by, any subsequent holder of such Shares.
11.5. Notices. All notices, demands and other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given personally or when
mailed by certified or registered mail, return receipt requested and postage
prepaid, and addressed to the addresses of the respective parties set forth
below or to such changed addresses as such parties may have fixed by notice;
provided, however, that any notice of change of address shall be effective only
upon receipt:
To the Company:
Immunotherapeutics, Inc.
3233 Fifteenth Street South
Fargo, North Dakota 58104
Attention: Dr. Gerald Vosika
With a Copy to:
William S. Clarke, P.A.
5 Independence Way
Princeton, New Jersey 08540
To Dominion:
Dominion Resources, Inc.
The Abbey
355 Madison Avenue
Morristown, New Jersey 07960
With a Copy to:
William E. McManus, III, Esquire
Spencer's Corner
90 Main Street - Suite 211
Centerbrook, Connecticut 06409-1058
11.6. Governing Law. The validity, performance, construction
and effect of this Agreement shall be governed by the internal laws of the State
of New Jersey without giving effect to principles of conflicts of law.
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11.7 Counterparts. This Agreement may be executed in any
number of counterparts and, notwithstanding that any of the parties did not
execute the same counterpart, each of such counterparts shall, for all purposes,
be deemed an original, and all such counterparts shall constitute one and the
same instrument binding on all of the parties thereto.
11.8 Headings. The headings of the Sections hereof are
inserted as a matter of convenience and for reference only and in no way define,
limit or describe the scope of this Agreement or the meaning of any provision
hereof.
11.9. Severability. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless the provision
held invalid shall substantially impair the benefit of the remaining portion of
this Agreement.
11.10. Approval of Dominion. Whenever the approval of
Dominion's representatives on the Company's Board of Directors is required
pursuant to this Agreement, if, at such time, Dominion has no such
representatives, then the approval of Dominion shall be required in lieu
thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Immunotherapeutics, Inc.
By: /s/ Gerald Vosika, Chairman
Name: Gerald Vosika
Title: Chairman
Dominion Resources, Inc.
By: /s/ Gene Mulvihill
Name: Gene Mulvihill
Title: Chairman
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