<PAGE>
As filed with the Securities and Exchange Commission on June 30, 1995
Registration No. 33-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
Carrington Laboratories, Inc.
(Exact name of registrant as specified in its charter)
Texas 75-1435663
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 Walnut Hill Lane
Irving, Texas 75038
(214) 518-1300
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
----------------------------------------
CHRISTOPHER S. RECORD Copy to:
Vice President, Finance and Administration NORMAN R. ROGERS
Carrington Laboratories, Inc. Thompson & Knight,
2001 Walnut Hill Lane A Professional Corporation
Irving, Texas 75038 1700 Pacific Avenue, Suite 3300
(214) 518-1300 Dallas, Texas 75201
(Name, address, including zip code,
and telephone number, including
area code, of agent for service)
---------------------------
Approximate date of commencement of proposed sale to the public:
From time to time after this registration statement becomes effective as
determined by market conditions.
---------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ X ]
CALCULATION OF REGISTRATION FEE
===============================================================================
<TABLE>
<CAPTION>
Title of each class Amount Proposed maximum Proposed maximum Amount
of securities to be to be offering price aggregate of
registered registered per share (1) offering price (1) registration fee
<S> <C> <C> <C> <C>
Common Stock, par 417,000 shares(2) $21.625 $9,017,625 $3,110
value $.01 per share
</TABLE>
================================================================================
(1) Estimated pursuant to Rule 457(c) solely for purposes of calculating the
registration fee based on the average of the high and low prices of the Common
Stock on the NASDAQ National Market System on June 23, 1995.
(2) Includes an equal number of preferred share purchase rights issuable
pursuant to the registrant's share purchase rights plan, which rights are
transferable with shares of Common Stock.
----------------------------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
===============================================================================
<PAGE>
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 30, 1995
PROSPECTUS
417,000 SHARES
CARRINGTON LABORATORIES, INC.
COMMON STOCK
All the 417,000 shares (the "Shares") of Common Stock, par value $.01 per
share ("Common Stock"), of Carrington Laboratories, Inc., a Texas corporation
("Carrington" or the "Company"), offered hereby are being offered by and for the
account of certain shareholders of the Company (the "Selling Shareholders"). The
Company will receive none of the proceeds from sales of the Shares.
The Common Stock is listed on the NASDAQ National Market System
("NASDAQ") under the symbol "CARN". On July , 1995, the closing price of the
Common Stock on NASDAQ was $ per share.
The Shares may be sold from time to time by the Selling Shareholders, or
by their pledgees, donees or other successors in interest. Such sales may be
made on NASDAQ or otherwise at prices and on terms related to the then current
market price of the Common Stock or in negotiated transactions. The Shares may
be sold by any one or more of the following methods: (a) a block trade in which
the broker or dealer so engaged will attempt to sell the Shares as agent, but
may position and resell a portion of a block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal, and resale by
such broker or dealer, for its account pursuant to this Prospectus; (c) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
and (d) privately negotiated transactions. See "Plan of Distribution".
The Company has agreed with the Selling Shareholders to register the
Shares offered hereby. The Company has also agreed to pay all fees and expenses
incident to such registration, other than any brokerage discounts and
commissions payable in respect of sales of the Shares, the fees and expenses of
any attorneys and accountants employed by the Selling Shareholders and any other
costs directly incurred by the Selling Shareholders in connection with the
offering of the Shares, all of which will be paid by the Selling Shareholders.
It is estimated that the fees and expenses payable by the Company in connection
with the registration of the Shares will be approximately $25,000. The
Company intends to keep the Registration Statement (as hereinafter defined), of
which this Prospectus is a part, effective for a period of no longer than 120
days from the date of this Prospectus.
------------------------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS."
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-------------------------------
The date of this Prospectus is July , 1995.
<PAGE>
No person is authorized in connection with the offering made hereby to
give any information or to make any representation not contained or incorporated
by reference in this Prospectus, and any information or representation not
contained or incorporated by reference herein must not be relied upon as having
been authorized by the Company or any Selling Shareholder. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information herein is correct as of any time subsequent
to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices at 7 World Trade Center, Suite 1300, New York,
New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can also be obtained from the Commission at
prescribed rates through its Public Reference Section at 450 Fifth Street, N.W.,
Washington, D.C. 20549.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended, with respect to the
Common Stock offered hereby (including all amendments or supplements thereto,
the "Registration Statement"). This Prospectus, which forms a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. Statements contained herein
concerning the provisions of certain documents are not necessarily complete and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File
No. 0-11997) pursuant to the Exchange Act are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
November 30, 1994;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995;
(3) The Company's Current Report on Form 8-K dated February 21, 1995
(Date of Event: February 9, 1995);
(4) The description of the Common Stock contained in the Registration
Statement on Form 8-A of the Company heretofore filed by the Company with the
Commission, including any amendments or reports filed for the purpose of
updating such description; and
(5) All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Shares.
Any statement contained herein or in a document or information
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document which also is,
or is deemed to be, incorporated by reference herein, modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
2
<PAGE>
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any and all of the foregoing documents or information that has been
incorporated by reference in this Prospectus, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests should be directed to Christopher S. Record, Vice
President, Finance and Administration, Carrington Laboratories, Inc., 2001
Walnut Hill Lane, Irving, Texas 75038, telephone (214) 518-1300.
THE COMPANY
Carrington is a research based pharmaceutical company engaged in the
development, manufacturing and marketing of carbohydrate-based therapeutics for
the treatment of major illnesses and the dressing and management of wounds. The
Company is engaged in the sale of nonprescription pharmaceutical, consumer and
veterinary pharmaceutical products through a network of distributors. The
Company's research and product portfolio are based on complex carbohydrate
technology stemming from the Aloe vera plant.
The Company's principal executive offices are located at 2001 Walnut Hill
Lane, Irving, Texas 75038, telephone (214) 518-1300.
RISK FACTORS
The shares of Common Stock offered hereby involve a high degree of risk.
Prospective purchasers should carefully consider the following risk factors, in
addition to the other information contained or incorporated by reference in this
Prospectus.
No Assurance of Profits. The Company incurred a net loss in each of the
fiscal years 1983, the year of its initial public offering, through 1990 and had
to rely on outside sources of funds to maintain its liquidity during this
period. The Company has reported net income in each of the past four fiscal
years; however, the Company reported a net loss of approximately $497,000 for
the quarter ended March 31, 1995. There is no assurance that the Company will
operate profitably in the future.
No Assurance of Regulatory Approvals. The commercialization of certain
of the Company's proposed products will require approvals from the Food and Drug
Administration (the "FDA") and comparable regulatory agencies in most foreign
countries. To obtain such approvals, the safety and efficacy of the products
must be demonstrated through extensive preclinical testing and human clinical
trials. There is no assurance that the safety or efficacy of a product, to the
extent demonstrated in preclinical testing, will be pertinent to the development
of, or indicative of the safety or efficacy of, a product for the human market.
In addition, there is no assurance that the results of clinical trials of a
product will be consistent with results obtained in preclinical tests.
Furthermore, there is no assurance that any product will be shown to be safe and
effective or that regulatory approval for any product will be obtained on a
timely basis, if at all.
No Assurance Pharmaceutical Products Will be Commercialized. The Company
currently derives no revenue from the sale of prescription pharmaceutical
products. The Company currently has several complex carbohydrate pharmaceutical
compounds under development, which are in preclinical and clinical trials.
There is no assurance that the Company's product development efforts will be
successfully completed or that required approvals can be obtained. Even if
products are approved, they may not achieve commercial success. Furthermore,
although the Company has an established sales force experienced in the marketing
of nonprescription pharmaceutical products, the Company's sales force has very
limited experience in the marketing of prescription-only drugs. There is no
assurance that the Company will be able to establish an experienced sales force
for this purpose.
3
<PAGE>
Need for Additional Funds. Substantial additional funding will be
required to complete the development of and to commercialize the Company's
proposed prescription pharmaceutical products. No assurances are given as to
the Company's success in obtaining additional funding or as to the terms of any
such funding.
Limited Manufacturing Experience. Although members of the Company's
management have extensive experience in the business of developing,
manufacturing and marketing human and animal health products, the Company does
not have experience in the large scale manufacture of bulk or finished dosage
forms of complex carbohydrates or any other pharmaceutical compound. In
addition, the Company will be required to expand its current manufacturing
facilities or contract with third parties to meet any requirement to produce
commercial quantities of finished oral dosage forms of its complex carbohydrates
and to meet any long-term requirement to produce commercial quantities of
finished injectable dosage forms.
Government Regulation. The Company is subject to regulation by numerous
governmental authorities in the United States and other countries. Certain of
the Company's proposed products will require governmental approval or licensing
prior to commercial use. The approval process applicable to prescription
pharmaceutical products usually takes several years and typically requires
substantial expenditures. The Company and any licensees of the Company may
encounter significant delays or excessive costs in their respective efforts to
secure necessary approvals or licenses. Future United States or foreign
legislative or administrative acts could also prevent or delay regulatory
approval of the Company's or its licensees' products. Failure to obtain
requisite governmental approvals or failure to obtain approvals of the scope
requested could delay or preclude the Company and any licensees of the Company
from marketing their products, or could limit the commercial use of the
products, and thereby have a material adverse effect on the Company's liquidity
and financial condition.
Highly Competitive Industry. There is substantial competition in the
pharmaceutical industry. Potential competitors in the United States are
numerous and include pharmaceutical, chemical and biotechnology companies. Many
of these companies have substantially greater capital resources, research and
development staffs, facilities and expertise (including in research and
development, manufacturing, testing, obtaining regulatory approvals and
marketing) than the Company. Furthermore, some competitors may achieve product
commercialization earlier than the Company.
Volatility of Stock Price. Since the Company's initial public offering
in 1983, the market price of the Common Stock has fluctuated over a wide range,
and it is likely that the price of the Common Stock will fluctuate in the
future. Announcements of a positive or negative nature regarding technical
innovations, new commercial products, regulatory approvals, patent or
proprietary rights or other developments concerning the Company or its
competitors could have a significant impact on the market price of the Common
Stock.
Shares Eligible for Future Sale. Future sales of shares of Common Stock
by existing shareholders, or by shareholders who receive shares of Common Stock
through the exercise of options or warrants, the conversion of preferred stock
or otherwise, could have an adverse effect on the price of the Common Stock.
No Dividends Anticipated in the Foreseeable Future. The Company has not
paid any cash dividends on the Common Stock since its initial public offering in
1983 and does not anticipate paying cash dividends on the Common Stock in the
foreseeable future. Declaration of cash dividends on the Common Stock will
depend upon, among other things, future earnings, the operating and financial
condition of the Company, its capital requirements and general business
conditions. Under the terms of a bank loan agreement, the Company is prohibited
from declaring or paying cash dividends on any of its capital stock.
Product Liability Exposure. The Company could be subject to product
liability claims in connection with the use of products that the Company and its
licensees are currently manufacturing, testing or selling or that the Company
and any licensees may manufacture, test or sell in the future. There is no
assurance that the Company would have sufficient resources to satisfy any
liability resulting from these claims or would be able to have its customers
indemnify or insure the Company against such claims. The Company currently
carries product liability insurance in the amount of $3,000,000, but there is no
assurance that such coverage will be adequate in terms and scope to protect it
against material adverse effects in the event of a successful product liability
claim.
4
<PAGE>
Patents. The Company has obtained patents or filed patent applications
in the United States and approximately 24 other countries in three series
regarding the compositions of acetylated mannan derivatives, the processes by
which they are produced and the methods of their use. The Company believes that
the patents it has obtained and those it is seeking constitute valuable assets.
However, patent rights resulting from issued patents are not self-enforcing.
The Company must enforce the rights if and when they are infringed.
Accordingly, there are no assurances that any patents issued to the Company give
significant commercial protection.
Obsolescence. The pharmaceutical industry has undergone rapid and
significant change. The Company expects that this field will continue to
develop rapidly, and the Company's future success will depend, in large part, on
its ability to maintain a competitive position. Rapid technological development
may result in the Company's products or processes becoming obsolete before
marketing of those products or before the Company recovers a significant portion
of the research, development and commercialization expenses incurred with
respect to those products.
Dependence Upon Key Personnel. The Company's success depends in large
part upon its ability to attract and retain highly qualified scientific,
manufacturing, marketing and management personnel. The Company believes that it
employs highly qualified personnel in all these areas. The Company, however,
faces competition for such personnel from other companies, academic
institutions, government entities and other organizations. There is no
assurance that the Company will be successful in hiring or retaining the
requisite personnel.
Antitakeover Matters. Certain provisions of the Company's Restated
Articles of Incorporation and Bylaws may be deemed to have an antitakeover
effect and may delay, defer or prevent a tender offer or takeover attempt that a
shareholder of the Company might consider in such shareholder's best interest,
including attempts that might result in the payment of a premium over the market
price for shares of Common Stock. These provisions include a provision in the
Company's Restated Articles of Incorporation authorizing the issuance of "blank
check" preferred stock by the Board of Directors of the Company without further
shareholder approval. They also include provisions in the Company's Bylaws that
divide the directors of the Company into three classes that are elected for
staggered three-year terms and that establish advance notice procedures with
respect to submissions by shareholders of proposals to be acted on at
shareholder meetings and of nominations of candidates for election as directors.
In addition, the Company has instituted a shareholder rights plan, which may
have the effect of discouraging an unsolicited takeover proposal.
5
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to the
ownership of the Common Stock, as of June 15, 1995, and as adjusted to reflect
the sale of the Shares offered hereby, by each of the Selling Shareholders.
Except as otherwise indicated, each Selling Shareholder has sole voting and
investment power with respect to all shares indicated as being beneficially
owned by such person.
<TABLE>
<CAPTION>
Ownership of Number of Ownership of
Common Stock Before Shares Common Stock After
the Offering Being Offered the Offering/(1)/
------------------------- ------------- -------------------
Number of Number of
Name Shares Percent Shares Percent
- ---------------------------------------- ------------- ------- --------- --------
<S> <C> <C> <C> <C> <C>
Bank One Wisconsin Trust Company, 5,000 /(2)/ * 5,000 /(3)/ None --
NA, as Trustee for the Brian
Nicholas Fitzgerald Trust
Bank One Wisconsin Trust Company, 19,300 /(2)/ * 10,000 /(3)/ 9,300 *
NA as Trustee for the Carolyn J.
Fitzgerald Trust
Bank One Wisconsin Trust Company, 5,000 /(2)/ * 5,000 /(3)/ None --
NA as Trustee for the Christopher
James DeWitz Trust
Bank One Wisconsin Trust Company, 5,000 /(2)/ * 5,000 /(3)/ None --
NA as Trustee for the Conner W.
Fitzgerald Trust
Bank One Wisconsin Trust Company, 19,300 /(2)/ * 10,000 /(3)/ 9,300 *
NA as Trustee for the Ellen P.
Fitzgerald Trust
Bank One Wisconsin Trust Company, 5,000 /(2)/ * 5,000 /(3)/ None --
NA as Trustee for the Jaimie Ty
Fitzgerald Trust
Bank One Wisconsin Trust Company, 5,000 /(2)/ * 5,000 /(3)/ None --
NA as Trustee for the James F.
Fitzgerald III Trust
Bank One Wisconsin Trust Company, 5,000 /(2)/ * 5,000 /(3)/ None --
NA as Trustee for the Michael Ryan
Fitzgerald Trust
Bank One Wisconsin Trust Company, 5,000 /(2)/ * 5,000 /(3)/ None --
NA as Trustee for the Parker Henry
Fitzgerald Trust
Bank One Wisconsin Trust Company, 5,000 /(2)/ * 5,000 /(3)/ None --
NA as Trustee for the Shannon
Fitzgerald Trust
Bank One Wisconsin Trust Company, 5,000 /(2)/ * 5,000 /(3)/ None --
NA as Trustee for the Sarah K.
O'Loughlin Trust
Dr. Gerald R. Bratton 5,000 * 5,000 /(4)/ None --
David L. Busbee 5,000 * 5,000 /(4)/ None --
Robert H. Carpenter 9,500 * 9,500 /(4)/ None --
J.P. Cullen 40,000 * 40,000 /(3)/ None --
James F. Fitzgerald, Sr. Trustee of 50,000 /(5)/ * 50,000 /(3)/ None --
the James F. Fitzgerald Charitable
Remainder Trust
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Ownership of Number of Ownership of
Common Stock Before Shares Common Stock After
the Offering Being Offered the Offering/(1)/
------------------------- ------------- -------------------
Number of Number of
Name Shares Percent Shares Percent
- ---------------------------------------- ------------- ------- --------- --------
<S> <C> <C> <C> <C> <C>
James F. Fitzgerald, Sr. or Marilyn 20,000 /(6)/ * 20,000 /(3)/ None --
C. Fitzgerald, Trustees of Fitzgerald
Trust UA 3/08/94
Michael D. Fitzgerald 10,000 * 10,000 /(3)/ None --
J. Harold Helderman, M.D. 20,000 * 20,000 /(4)/ None --
T.H. Holloway 12,000 * 10,000 /(4)/ 2,000 *
JCC Ltd. 20,000 * 20,000 /(3)/ None --
Maurice C. Kemp, Ph.D. 10,000 * 10,000 /(4)/ None --
Meredith Ann Marquez Trust, 107,368 /(7)/ 1.42% 5,000 /(3)/ 102,368 1.36%
Richard N. Mercurio, Trustee
Marquez Family Trust, Thomas J. 44,300 /(8)/ * 5,000 /(3)/ 39,300 *
Marquez, Trustee, and Richard A.
Mercurio, Trustee
H. Reginald McDaniel, M.D. 98,445 /(9)/ * 25,000 /(4)/ 73,445 *
Vance Kirkland Meares 5,650 * 2,500 /(4)/ 3,150 *
James T. O'Brien 15,000 /(10)/ * 10,000 /(4)/ 5,000 *
Melissa O'Loughlin 5,000 * 5,000 /(3)/ None --
John T. Oxley 50,000 * 50,000 /(3)/ None --
George K. Steil, Sr. 14,000 * 10,000 /(3)/ 4,000 *
John L. Strauss 15,000 * 15,000 /(3)/ None --
Ian R. Tizard 20,000 * 20,000 /(4)/ None --
Carlton E. and Mary Ann DuPuy
Turner 33,168 /(11)/ * 5,000 /(3)/ 28,168 *
</TABLE>
---------------------------
* Less than 1%.
/(1)/ Assumes that all Shares being offered are sold.
/(2)/ Does not include shares held by Bank One Wisconsin Trust Company, as
trustee for the other trusts named in the table.
/(3)/ The shares being offered by the Selling Shareholder were purchased by the
Selling Shareholder from the Company pursuant to the terms of a stock
purchase agreement (the "Stock Purchase Agreement") dated April 5, 1995,
between the Company and the Selling Shareholder. The Stock Purchase
Agreement granted the Selling Shareholder certain registration rights with
respect to these shares. The Company has registered such shares for sale
pursuant to this Prospectus as required by the Stock Purchase Agreement.
/(4)/ Consists of shares the Selling Shareholder presently has the right to
acquire through the exercise of warrants granted to such person by the
Company. The Company granted these Selling Shareholders the right to
include such shares in this offering as consideration for their agreement
to exercise their warrants with respect to such shares not later than the
45th day following the effectiveness of the Registration Statement of
which this Prospectus is a part.
7
<PAGE>
/(5)/ Does not include 107,800 shares held by Mr. Fitzgerald directly or 53,500
shares held by trusts for which Mr. Fitzgerald serves as trustee.
/(6)/ Does not include 107,800 shares held by Mr. Fitzgerald directly or 83,500
shares held by trusts for which Mr. Fitzgerald serves as trustee.
/(7)/ Includes 102,368 shares held either directly or indirectly by the
Meredith Ann Marquez Trust, Richard N. Mercurio, Trustee.
/(8)/ Includes 39,300 shares held either directly or indirectly by the Marquez
Family Trust, Thomas J. Marquez, Trustee, and Richard N. Mercurio,
Trustee. Mr. Marquez currently serves as a director of the Company.
/(9)/ Includes 41,292 shares held by the H. Reginald McDaniel, M.D. &
Associates Defined Benefit Plan, as Trustee.
/(10)/ Mr. O'Brien currently serves as a director of the Company.
/(11)/ Includes 28,168 shares either held by Dr. Turner, or that Dr. Turner has
the right to acquire pursuant to presently exercisable options. Dr.
Turner is the Chief Executive Officer, President and a director of the
Company.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Shareholders, or by
their pledgees, donees or other successors in interest. Such sales may be made
by the Selling Shareholders on NASDAQ or otherwise at prices and on terms
related to the then current market price of the Common Stock or in negotiated
transactions. The Shares may be sold by any one or more of the following
methods:
(a) a block trade in which the broker or dealer so engaged will attempt to
sell the Shares as agent, but may position and resell a portion of a block as
principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal, and resale by such broker
or dealer, for its account pursuant to this Prospectus;
(c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
(d) privately negotiated transactions.
The Selling Shareholders may effect such transactions by selling the Shares
to or through brokers or dealers. Such brokers or dealers will receive
compensation in the form of discounts or commissions from the Selling
Shareholders, and they may also receive commissions from the purchasers of the
Shares for whom they may act as agents. Such discounts or commissions from the
Selling Shareholders or such purchasers are not expected to exceed those
customary in the types of transactions involved.
The Company will pay all fees and expenses incident to the registration of
the Shares, other than any brokerage discounts and commissions payable in
respect of sales of the Shares, the fees and expenses of any attorneys and
accountants employed by the Selling Shareholders and any other costs directly
incurred by the Selling Shareholders in connection with the offering of the
Shares, all of which will be paid by the Selling Shareholders. It is estimated
that the fees and expenses payable by the Company in connection with the
registration of the Shares will be approximately $25,000. The Company
will receive none of the proceeds from sales of the Shares.
In the event the Shares are offered to the public by the Selling
Shareholders, they may be deemed "underwriters" within the meaning of the
Securities Act of 1933. Any broker-dealer selling the Shares as agent for a
Selling Shareholder and any broker-dealer purchasing and reselling the Shares
for its own account may also be deemed an "underwriter".
8
<PAGE>
LEGAL MATTERS
The legality of the Shares offered hereby will be passed upon for the
Company by Thompson & Knight, A Professional Corporation, Dallas, Texas.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company incorporated in this Prospectus by reference to the Annual Report on
Form 10-K of the Company for the year ended November 30, 1994 have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and have been so incorporated in reliance upon the
authority of said firm as experts giving said reports.
9
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses, other than brokerage discounts
and commissions, expected to be incurred in connection with the offering of the
Shares registered hereby. All amounts, except the Securities and Exchange
Commission registration fee, are estimated.
Securities and Exchange Commission Registration Fee............... $ 3,110
Accounting Fees and Expenses...................................... 5,000
Legal Fees and Expenses........................................... 13,500
Miscellaneous Expenses............................................ 3,390
-------
Total....................................................... $25,000
=======
- ---------------------
Pursuant to the terms of the agreements filed as Exhibits 2.1 and 2.2 to
this Registration Statement, under which the Selling Shareholders have been
granted registration rights in connection with the registration being effected
hereby, the Selling Shareholders will pay any brokerage discounts and
commissions payable in respect of sales of the Shares, the fees and expenses of
any attorneys and accountants employed by the Selling Shareholders and any other
costs directly incurred by the Selling Shareholders in connection with the
offering of the Shares. The Company will bear all other fees and expenses
incurred in connection with the offering and sale of the Shares.
Item 15. Indemnification of Directors and Officers.
The Company is a Texas corporation. Article 1302-7.06 of the Texas
Miscellaneous Corporation Laws Act authorizes Texas corporations, such as the
Company, to eliminate or limit, pursuant to a provision in their articles of
incorporation, the liability of directors thereof to the corporation and its
shareholders for certain acts or omissions in the director's capacity as a
director, subject to certain limitations. Reference is made to Article Fifteen
of the Company's Restated Articles of Incorporation, which are filed as Exhibit
3.1 hereto, that eliminates the liability of directors of the Company for
monetary damages for certain acts or omissions, subject to certain limitations.
Article 2.02-1 of the Texas Business Corporation Act permits (and in
certain circumstances requires) Texas corporations, such as the Company, to
indemnify directors and officers thereof under certain conditions and subject to
certain limitations. Reference is made to Article Nine of the Company's Bylaws,
which are filed as Exhibit 3.2 hereto, that provides for indemnification of
directors and officers of the Company, subject to certain limitations.
The Company maintains a directors' and officers' liability insurance policy
insuring its directors and officers against certain liabilities and expenses
incurred by them in their capacities as such and insuring the Company, under
certain circumstances, in the event that indemnification payments are made by
the Company to such directors and officers.
Pursuant to the terms of the agreements filed as Exhibits 2.1 and 2.2 to
this Registration Statement, the Selling Shareholders have agreed to indemnify
the Company and its directors, officers and controlling persons against certain
liabilities, including liabilities under the Securities Act of 1933.
II-1
<PAGE>
The foregoing summaries are necessarily subject to the complete text of the
statutes, Restated Articles of Incorporation, Bylaws, insurance policy and
agreements referred to above and are qualified in their entirety by reference
thereto.
Item 16. Exhibits.
The information required by this Item 16 is set forth in the Index to
Exhibits accompanying this Registration Statement.
Item 17. Undertakings.
(a) Rule 415 Offering
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to the Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Acceleration of Effectiveness
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification
II-2
<PAGE>
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on the 30th day of June,
1995.
Carrington Laboratories, Inc.
(Registrant)
By: /s/ CHRISTOPHER S. RECORD
----------------------------------
Christopher S. Record
Vice President, Finance
and Administration
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated. Each person whose signature appears below
constitutes and appoints Carlton E. Turner and Christopher S. Record, and each
of them (with full power to act alone), his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities to sign on his behalf
individually and in each capacity stated below any amendment, including post-
effective amendments, to this Registration Statement, and to file the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Signature Title Date
- --------- ----- ----
/s/ GEORGE DEMOTT
- ---------------------------- Chairman of the Board June 30, 1995
George DeMott
II-4
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ CARLTON E.TURNER, Ph.D. Chief Executive Officer, June 30, 1995
- ---------------------------- President and Director
Carlton E. Turner, Ph.D. (Principal Executive Officer)
/s/ CHRISTOPHER S. RECORD Vice President, Finance June 30, 1995
- ---------------------------- and Administration
Christopher S. Record (Principal Financial Officer
and Accounting Officer)
/s/ SELVI VESCOVI Director June 30, 1995
- ----------------------------
Selvi Vescovi
/s/ THOMAS J. MARQUEZ Director June 30, 1995
- ----------------------------
Thomas J. Marquez
/s/ ROBERT A. FILDES, Ph.D. Director June 30, 1995
- ----------------------------
Robert A. Fildes, Ph.D.
/s/ JAMES T. O'BRIEN Director June 30, 1995
- ----------------------------
James T. O'Brien
/s/ R. DALE BOWERMAN Director June 30, 1995
- ----------------------------
R. Dale Bowerman
II-5
<PAGE>
INDEX TO EXHIBITS
Sequentially
Numbered
Number Exhibit Page
- ------ ---------------------------------------------------------- ------------
2.1* --Form of Stock Purchase Agreement dated April 5, 1995,
between the Company and the persons whose names are set
forth on Annex I thereto.
2.2* --Form of Registration Rights Agreement dated June 20, 1995,
between the Company and the persons whose names are set
forth on Annex I thereto.
3.1 --Restated Articles of Incorporation of the Company
(incorporated herein by reference to Exhibit 3.1 to the
Company's 1988 Annual Report on Form 10-K).
3.2 --Bylaws of the Company, as amended through October 26, 1993
(incorporated herein by reference to Exhibit 3.6 to the
Company's 1993 Annual Report on Form 10-K).
5.1* --Opinion of Thompson & Knight, A Professional Corporation.
23.1* --Consent of Arthur Andersen & Co.
23.2* --Consent of Thompson & Knight, A Professional Corporation
(included in Exhibit 5.1).
24.1* --Power of Attorney (included in Part II of the Registration
Statement).
______________________
* Filed herewith.
II-6
<PAGE>
EXHIBIT 2.1
FORM OF
-------
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of April 5,
1995, between Carrington Laboratories, Inc., a Texas corporation (the
"Company"), and the persons whose names are set forth on Annex I hereto (such
-------
persons being referred to herein individually as a "Buyer" and collectively as
"Buyers").
WHEREAS, the Company desires to sell to Buyers, and Buyers desire to
purchase from the Company, shares of Common Stock, par value $.01 per share, of
the Company ("Common Stock");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company and Buyers hereby agree as follows:
ARTICLE I
TERMS OF THE TRANSACTION
1.1 Agreement to Sell and to Purchase Shares. At the Closing (as
----------------------------------------
hereinafter defined), and on the terms and subject to the conditions set forth
in this Agreement, the Company shall sell and deliver to each Buyer, and each
Buyer shall purchase and accept from the Company, the number of shares of Common
Stock set forth opposite the name of such Buyer on Annex I hereto (collectively,
-------
the "Shares").
1.2 Purchase Price and Payment. The purchase price for the Shares
--------------------------
shall be $10.00 per Share (the "Purchase Price"). The total Purchase Price
payable by each Buyer for the Shares to be purchased by it is set forth opposite
the name of such Buyer on Annex I. Such total Purchase Price shall be paid by
-------
each Buyer to the Company at the Closing either (a) in immediately available
funds by confirmed wire transfer to a bank account designated by the Company or
(b) in the form of a certified or bank cashier's check payable to the order of
the Company.
ARTICLE II
CLOSING AND CLOSING DATE
The closing of the transactions contemplated hereby (the "Closing")
shall take place (i) at the offices of Thompson & Knight, A Professional
Corporation, 1700 Pacific Avenue, Suite 3300, Dallas, Texas, at 9:00 a.m., local
time, on April 5, 1995, or (ii) at such other time or place or on such other
date as the parties hereto shall agree. The date on which the Closing is
required to take place is herein referred to as the "Closing Date".
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Buyer that:
3.1 Corporate Organization. The Company is a corporation duly
----------------------
organized, validly existing, and in good standing under the laws of the State of
Texas and has all requisite corporate power and corporate authority to own,
lease, and operate its properties and to carry on its business as now being
conducted.
3.2 Qualification. The Company is duly qualified or licensed to do
-------------
business and is in good standing in each jurisdiction in which the property
owned, leased, or operated by it or the conduct of its business requires such
qualification or licensing, except jurisdictions in which the failure to be so
qualified or licensed would not, individually or in the aggregate, have a
material adverse effect on the business, assets, results of operations, or
financial condition of the Company.
3.3 Capitalization of the Company.
-----------------------------
(a) The authorized capital stock of the Company consists of (i)
30,000,000 shares of Common Stock, of which, as of March 15, 1995, 7,362,727
shares are outstanding, and (ii) 1,000,000 shares of Preferred Stock, par value
$100 per share, of which, as of March 15, 1995, 11,840 shares designated as
Series C Cumulative Convertible Preferred Stock are outstanding. All
outstanding shares of capital stock of the Company have been validly issued and
are fully paid and nonassessable, and no shares of capital stock of the Company
are subject to, nor have any been issued in violation of, preemptive or similar
rights. As of March 15, 1995, (i) an aggregate of 979,945 shares of Common
Stock are issuable upon the exercise of outstanding options granted under the
Company's 1985 Stock Option Plan, (ii) an aggregate of 1,500,000 shares of
Common Stock are reserved for issuance under the Company's 1995 Stock Option
Plan, subject to approval of such plan by the shareholders of the Company at the
1995 annual meeting of shareholders scheduled to be held on April 27, 1995 (the
"1995 Annual Meeting of Shareholders"), (iii) an aggregate of 250,000 shares of
Common Stock are reserved for issuance under the Company's 1995 Management
Compensation Plan, subject to approval of such plan by the shareholders of the
Company at the 1995 Annual Meeting of Shareholders, (iv) an aggregate of 236,000
shares of Common Stock are reserved for issuance and issuable upon the exercise
of outstanding warrants issued by the Company, (v) an aggregate of 156,201
shares of Common Stock are reserved for issuance and issuable upon conversion of
(A) outstanding shares of the Company's Series C Cumulative Convertible
Preferred Stock and (B) shares of such series of preferred stock issuable as
dividends on such series, and (vi) an aggregate of 300,000 shares of a series of
the Company's Preferred Stock designated as Series D Preferred Stock are
reserved for issuance upon the exercise of certain preferred share purchase
rights associated with the Common Stock, which rights become exercisable by the
holders thereof upon the occurrence of certain events, including the acquisition
of, or the announcement of the intention to acquire, more than 20% of the
outstanding Common Stock by any person or group. Each share of Series D
-2-
<PAGE>
Preferred Stock would have 100 votes, voting together with the Common Stock, and
other rights superior to those of the Common Stock. The Company has the right,
at its option, to exchange each such preferred share purchase right for one
share of Common Stock or one one-hundredth of a share of Series D Preferred
Stock under certain circumstances.
b) Except as set forth above in this Section 3.3 and as contemplated
by this Agreement, as of March 15, 1995, there are outstanding (i) no shares of
capital stock or other voting securities of the Company, (ii) no securities of
the Company convertible into or exchangeable for shares of capital stock or
other voting securities of the Company, (iii) no options or other rights to
acquire from the Company, and no obligation of the Company to issue or sell, any
shares of capital stock or other voting securities of the Company or any
securities of the Company convertible into or exchangeable for such capital
stock or voting securities, and (iv) no equity equivalents, interests in the
ownership or earnings, or other similar rights of or with respect to the
Company.
3.4 Authority Relative to This Agreement. The Company has full
------------------------------------
corporate power and corporate authority to execute, deliver, and perform this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery, and performance by the Company of this Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action of the Company. This Agreement has
been duly executed and delivered by the Company and constitutes a valid and
legally binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting creditors' rights generally, (ii) equitable principles which may limit
the availability of certain equitable remedies (such as specific performance) in
certain instances, and (iii) public policy considerations with respect to the
enforceability of rights of indemnification.
3.5 Noncontravention. The execution, delivery, and performance by
----------------
the Company of this Agreement and the consummation by it of the transactions
contemplated hereby do not and will not (i) conflict with or result in a
violation of any provision of the Restated Articles of Incorporation or Bylaws
of the Company, (ii) conflict with or result in a violation of any provision of,
or constitute (with or without the giving of notice or the passage of time or
both) a default under, or give rise (with or without the giving of notice or the
passage of time or both) to any right of termination, cancellation, or
acceleration under, any bond, debenture, note, mortgage, indenture, lease,
agreement, or other instrument or obligation to which the Company is a party or
by which the Company or any of its properties may be bound, (iii) result in the
creation or imposition of any lien or encumbrance upon the properties of the
Company, or (iv) assuming compliance with the matters referred to in Section
3.6, violate any Applicable Law (as hereinafter defined) binding upon the
Company, except, in the case of clauses (ii), (iii), and (iv) above, for any
such conflicts, violations, defaults, terminations, cancellations,
accelerations, liens, or encumbrances which would not, individually or in the
aggregate, have a material adverse effect on the business, assets, results of
operations, or financial condition of the Company or on the ability of the
Company to consummate the transactions contemplated hereby.
-3-
<PAGE>
3.6 Governmental Approvals. No consent, approval, order, or
----------------------
authorization of, or declaration, filing, or registration with, any Governmental
Entity (as hereinafter defined) is required to be obtained or made by the
Company in connection with the execution, delivery, or performance by the
Company of this Agreement or the consummation by it of the transactions
contemplated hereby, other than (i) compliance with any applicable requirements
of the Securities Act (as hereinafter defined); (ii) compliance with any
applicable requirements of the Exchange Act (as hereinafter defined); (iii)
compliance with any applicable state securities laws; and (iv) such consents,
approvals, orders, or authorizations which, if not obtained, and such
declarations, filings, or registrations which, if not made, would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, results of operations, or financial condition of the Company
or on the ability of the Company to consummate the transactions contemplated
hereby. The representations and warranties of the Company contained in this
Section 3.6, insofar as such representations and warranties pertain to
compliance by the Company with the requirements of the Securities Act and
applicable state securities laws, are based on the representations and
warranties of Buyers contained in Sections 4.5, 4.6, 4.7, 4.8, and 4.9.
3.7 Authorization of Issuance. The Shares have been duly authorized
-------------------------
for issuance and, when issued and delivered by the Company in accordance with
the provisions of this Agreement, will be validly issued, fully paid, and
nonassessable. The issuance of the Shares is not subject to any preemptive or
similar rights.
3.8 Private Offering Memorandum; SEC Filings.
----------------------------------------
(a) None of the information contained in the Company's Confidential
Private Offering Memorandum dated March 24, 1995 relating to the private
offering of the Shares (the "Private Offering Memorandum"), as of such date or
as of the date hereof, contains any untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary in order
to make the statements contained therein, in light of the circumstances under
which they are made, not misleading.
(b) The Company has delivered to each Buyer accurate and complete
copies of (i) the Company's Annual Report on Form 10-K for the fiscal year ended
November 30, 1994, (ii) the Company's Annual Report to Shareholders for the
fiscal year ended November 30, 1994, and (iii) the Company's Proxy Statement
dated March 22, 1995, relating to the 1995 Annual Meeting of Shareholders, in
each case in the form filed by the Company with the Securities and Exchange
Commission (collectively, the "SEC Filings"). None of the SEC Filings,
including, without limitation, any financial statements or schedules included
therein, as of the date of filing thereof, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Filings present fairly, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of the Company as of the dates thereof and its consolidated
results of operations and cash flows
-4-
<PAGE>
for the periods then ended (subject to normal year-end audit adjustments in the
case of any unaudited interim financial statements).
3.9 Absence of Undisclosed Liabilities. Except as and to the extent
----------------------------------
disclosed in the Private Offering Memorandum and the SEC Filings, (a) as of
November 30, 1994, the Company had no liabilities or obligations (whether
accrued, absolute, contingent, unliquidated, or otherwise) material to the
Company, and (b) since November 30, 1994, the Company has not incurred any such
material liabilities or obligations, other than those incurred in the ordinary
course of business.
3.10 Absence of Certain Changes. Except as disclosed in the Private
--------------------------
Offering Memorandum and the SEC Filings, since November 30, 1994, there has not
been any material adverse change in the business, assets, results of operations,
or financial condition of the Company.
3.11 Scope of Representations and Warranties. Except as set forth in
---------------------------------------
this Agreement, the Company makes no representations or warranties to Buyers and
hereby disclaims all liability and responsibility for any representation,
warranty, statement, or information made or communicated (orally or in writing)
to any Buyer (including but not limited to any opinion, information, projection,
or advice that may have been provided to Buyers by any officer, director,
employee, agent, consultant or representative of the Company).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYERS
Each Buyer severally (and not jointly) represents and warrants to the
Company that:
4.1 Organization. If Buyer is a corporation, such Buyer is duly
------------
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. If Buyer is a partnership, such Buyer is
duly formed and validly existing as a partnership under the laws of the
jurisdiction of its formation. If Buyer is a Trust, such Buyer has been duly
established by a trust agreement and is validly existing as a trust under the
laws of the jurisdiction of its formation.
4.2 Authority Relative to This Agreement. Buyer has full power and
------------------------------------
authority to execute, deliver, and perform this Agreement and to consummate the
transactions contemplated hereby. If Buyer is a corporation, partnership or
trust, the execution, delivery, and performance by Buyer of this Agreement, and
the consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate, partnership or trust action of Buyer.
This Agreement has been duly executed and delivered by Buyer and constitutes a
valid and legally binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except that such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting creditors'
-5-
<PAGE>
rights generally, (ii) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances,
and (iii) public policy considerations with respect to the enforceability of
rights of indemnification.
4.3 Noncontravention. The execution, delivery, and performance by
----------------
Buyer of this Agreement and the consummation by it of the transactions
contemplated hereby do not and will not (i) if Buyer is a corporation,
partnership or trust, conflict with or result in a violation of any provision of
the charter, bylaws, or similar organizational documents of Buyer, (ii) conflict
with or result in a violation of any provision of, or constitute (with or
without the giving of notice or the passage of time or both) a default under, or
give rise (with or without the giving of notice or the passage of time or both)
to any right of termination, cancellation, or acceleration under, any bond,
debenture, note, mortgage, indenture, lease, agreement, or other instrument or
obligation to which Buyer is a party or by which Buyer or any of its properties
may be bound, (iii) result in the creation or imposition of any lien or
encumbrance upon the properties of Buyer, or (iv) violate any Applicable Law
binding upon Buyer, except, in the case of clauses (ii), (iii), and (iv) above,
for any such conflicts, violations, defaults, terminations, cancellations,
accelerations, liens, or encumbrances which would not, individually or in the
aggregate, have a material adverse effect on the business, assets, results of
operations, or financial condition of Buyer or on the ability of Buyer to
consummate the transactions contemplated hereby.
4.4 Governmental Approvals. No consent, approval, order, or
----------------------
authorization of, or declaration, filing, or registration with, any Governmental
Entity is required to be obtained or made by Buyer in connection with the
execution, delivery, or performance by Buyer of this Agreement or the
consummation by it of the transactions contemplated hereby.
4.5 Investment Intent. Buyer is acquiring the Shares to be purchased
-----------------
by it for its own account for investment and not with a view to, or for sale or
other disposition in connection with, any distribution of all or any part
thereof, except (i) in an offering covered by a registration statement filed
with the Securities and Exchange Commission under the Securities Act covering
such Shares, or (ii) pursuant to an applicable exemption under the Securities
Act. In acquiring such Shares, Buyer is not offering or selling, and will not
offer or sell, for the Company in connection with any distribution thereof, and
Buyer does not have a participation and will not participate in any such
undertaking or in any underwriting of such an undertaking except in compliance
with applicable federal and state securities laws.
4.6 Disclosure of Information. Buyer acknowledges that it or its
-------------------------
representatives have been furnished with substantially the same kind of
information regarding the Company and its business, assets, results of
operations, and financial condition as would be contained in a registration
statement prepared in connection with a public sale of the Shares. Buyer
further represents that it has had an opportunity to ask questions of and
receive answers from the Company regarding the Company and its business, assets,
results of operations, and financial condition and the terms and conditions of
the issuance of the Shares.
4.7 Investment Experience. Buyer acknowledges that it is able to
---------------------
fend for itself, can bear the economic risk of its investment in the Shares, and
has such knowledge and
-6-
<PAGE>
experience in financial and business matters that it is capable of evaluating
the merits and risks of a prospective investment in the Shares. [Buyer
represents that it is an "accredited investor" (as such term is defined in Rule
501 of Regulation D promulgated under the Securities Act).]* If Buyer is a
corporation[,] [or]* partnership [or trust]*, Buyer further represents that it
has not been organized for the purpose of acquiring the Shares.
4.8 Restricted Securities. Buyer understands that, upon the issuance
---------------------
thereof, the Shares purchased by it will not have been registered pursuant to
the Securities Act or any applicable state securities laws, that such securities
will be characterized as "restricted securities" under federal securities laws,
and that under such laws and applicable regulations such securities cannot be
sold or otherwise disposed of without registration under the Securities Act or
an exemption therefrom. In this connection, Buyer represents that it is
familiar with Rule 144 promulgated under the Securities Act, as currently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act. Stop transfer instructions may be issued to the transfer agent
for securities of the Company (or a notation may be made in the appropriate
records of the Company) in connection with the Shares.
4.9 Legend. It is agreed and understood by Buyer that the certificates
------
representing the Shares to be purchased by it shall each conspicuously set forth
on the face or back thereof, in addition to any other legends required by
agreement or Applicable Law, a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THESE SHARES MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY ARE FIRST SO
REGISTERED OR UNLESS COUNSEL FOR THE CORPORATION OR OTHER COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION SHALL HAVE RENDERED AN OPINION
REASONABLY SATISFACTORY TO THE CORPORATION TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Public Announcements. Neither Buyers nor any of their respective
--------------------
affiliates shall issue any press release or otherwise make any public statement
with respect to this Agreement or the transactions contemplated hereby without
the prior written consent of the Company.
- --------------
* Contained in certain of the Agreements signed by investors.
-7-
<PAGE>
5.2 Stock Exchange Listing. The Company shall use its reasonable best
----------------------
efforts to list, subject to official notice of issuance, the Shares on the
NASDAQ National Market System.
5.3 Registration Rights.
-------------------
(a) Registration of Shares. Subject to the occurrence of the Closing and
----------------------
the terms and provisions of this Agreement, the Company shall use its reasonable
best efforts to register the Shares with the Securities and Exchange Commission
(the "Commission") under the Securities Act to the extent requisite to permit
the sale or other disposition thereof by Buyers.
(b) Registration Procedures. The reasonable best efforts of the Company
-----------------------
under Section 5.3(a) shall mean that the Company will, subject to the terms and
provisions of this Section 5.3, use its reasonable best efforts to:
(A) prepare and file with the Commission within 90 days following the
Closing a registration statement (the "Registration Statement") covering
the Shares and cause the Registration Statement to become effective and to
remain effective for so long as may reasonably be necessary to complete the
sale or other disposition of the Shares, provided that the Company shall
not in any event be required to use its reasonable best efforts to maintain
the effectiveness of the Registration Statement for a period in excess of
120 days;
(B) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus contained
therein as may be necessary to keep the Registration Statement effective,
and comply with the provisions of the Securities Act, with respect to the
sale or other disposition of the Shares whenever Buyers shall desire to
sell or otherwise dispose of the same, but only to the extent provided in
this Section 5.3;
(C) furnish to each Buyer such numbers of copies of the Registration
Statement, the prospectus contained therein (including each preliminary
prospectus), and each amendment and supplement to the Registration
Statement and such prospectus, in conformity with the requirements of the
Securities Act, as such Buyer may reasonably request in order to facilitate
the sale or other disposition of the Shares;
(D) register or qualify the Shares for sale under the securities or
blue sky laws of such states as Buyers may reasonably request (except to
the extent exemptions from such registration or qualification are
available), and do any and all other acts and things that may reasonably be
necessary under such securities or blue sky laws to enable Buyers to
consummate the sale or other disposition of the Shares in such states,
provided that the Company shall not in any event be required to register or
qualify the Shares for sale under the securities or blue sky laws of more
than a total of eight states, and provided further, that the Company shall
not in any event be required to keep any such registration or qualification
in effect after the expiration of the period during which the Company
maintains the effectiveness of the Registration Statement
-8-
<PAGE>
and shall not for any such purpose be required to qualify to do business as
a foreign corporation in any state wherein it is not so qualified or to
subject itself to taxation in any such state; and
(E) before filing the Registration Statement, any prospectus to be
used in connection with the offering to be conducted pursuant to the
Registration Statement, or any amendments or supplements to the
Registration Statement or such prospectus with the Commission, furnish
counsel to each Buyer with copies of all such documents proposed to be
filed.
(c) Required Information. The Company shall not be required to use its
--------------------
reasonable best efforts to register, or maintain the effectiveness of any
registration of, Shares of a Buyer under the Securities Act or the securities or
blue sky laws of any states unless and until such Buyer furnishes to the Company
such information regarding such Buyer and its Shares and the intended method of
disposition of such Shares as the Company may reasonably request in order to
satisfy the requirements applicable to such registration.
(d) Limitations on Registration. The rights of Buyers pursuant to this
---------------------------
Section 5.3 shall be subject to the following limitations:
(A) If at any time or from time to time during the effectiveness of
the Registration Statement, the Company is engaged in or proposes to engage
in a registered public offering of securities of the Company or any other
transaction or activity which, in the good faith determination of the Board
of Directors of the Company, would be adversely affected by offers or sales
of the Shares pursuant to the Registration Statement to the detriment of
the Company, then Buyers shall, upon the written request of the Company,
cease making offers and sales of the Shares pursuant to the Registration
Statement (including sales pursuant to Rule 144 under the Securities Act)
for the period of time specified by the Company, which period shall not (i)
in the case of a registered public offering, exceed the period beginning
ten days prior to the effective date of the registration statement relating
to such offering and ending 120 days after such effective date, and (ii) in
the case of any other transaction or activity, exceed the period beginning
ten days prior to, and ending 120 days after, the date of commencement of
such other activity or date of consummation of such other transaction.
Buyers agree to enter into such further agreements with the Company or any
underwriter of securities of the Company deemed necessary by the Company or
any such underwriter to carry out the purposes of this paragraph (A). The
period of time that the Company is obligated to maintain the effectiveness
of the Registration Statement hereunder shall be tolled during the period
Buyers must cease making offers and sales of the Shares pursuant to the
Company's request under this paragraph (A).
(B) The obligations of the Company pursuant to Sections 5.3(a) and (b)
shall cease (i) as to Shares sold or otherwise disposed of pursuant to the
Registration Statement or Section 4(1) of the Securities Act, or sold or
otherwise disposed of in any manner to a person which, by virtue of this
Section 5.3, is not entitled to the rights provided by this Section 5.3,
and (ii) as to Shares eligible for sale pursuant to
-9-
<PAGE>
Rule 144 promulgated under the Securities Act, as amended from time to
time, or any similar rule that may hereafter be adopted.
(C) In no event shall the Company be obligated to effect more than one
registration of Shares under the Securities Act.
(D) The rights and obligations of Buyers under this Section 5.3 may
not be assigned or transferred to any person without the prior written
consent of the Company.
(e) Expenses of Registration. In connection with any registration of the
------------------------
Shares pursuant to the provisions of this Section 5.3, each Buyer shall pay any
brokerage and underwriting discounts and commissions payable in respect of the
Shares sold on such Buyer's behalf, all fees and expenses of any attorneys and
accountants employed by such Buyer, and any other costs directly incurred by
such Buyer, and the Company shall pay or cause to be paid and shall indemnify
and hold harmless Buyers from and against any and all other costs and expenses
incurred in connection with such registration and related blue sky registrations
and qualifications.
(f) Indemnification. In connection with any registration of the Shares
---------------
pursuant to the provisions of this Section 5.3, the Company shall, to the extent
permitted by Applicable Law, indemnify and hold harmless Buyers to the extent
that companies generally indemnify and hold harmless underwriters in connection
with public offerings under the Securities Act, and each Buyer shall indemnify
and hold harmless the Company, each director and officer of the Company, and
each person who controls the Company within the meaning of the Securities Act to
the extent that selling shareholders generally indemnify and hold harmless
issuers of securities in connection with public offerings under the Securities
Act with respect to the information provided by such Buyer for use by the
Company in the preparation of the Registration Statement.
(g) Inclusion of Other Securities. Buyers acknowledge that the
-----------------------------
Registration Statement, and any prospectus used in connection with the offering
conducted pursuant thereto, may cover, in addition to the Shares, other shares
of Common Stock or other securities of the Company to be sold by the Company or
other persons.
5.4 Fees and Expenses. Except as otherwise expressly provided in this
-----------------
Agreement, all fees and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
fee or expense.
5.5 Indemnification of Brokerage. Each of the parties hereto agrees to
----------------------------
indemnify and hold harmless each other party from and against any claim or
demand for a commission or other compensation by any financial advisor, broker,
agent, finder, or similar intermediary claiming to have been employed by or on
behalf of such indemnifying party and to bear the cost of legal fees and
expenses incurred in defending against any such claim or demand.
-10-
<PAGE>
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
6.1 Representations and Warranties True. All the representations and
-----------------------------------
warranties of Buyers contained in this Agreement shall be true and correct on
and as of the Closing Date, except to the extent that any such representation or
warranty is made as of a specified date, in which case such representation or
warranty shall have been true and correct as of such specified date.
6.2 Covenants and Agreements Performed. Buyers shall have performed and
----------------------------------
complied with all covenants and agreements required by this Agreement to be
performed or complied with by them on or prior to the Closing Date.
6.3 Stock Exchange Listing. The Shares shall have been approved for
----------------------
listing, subject to official notice of issuance, by the NASDAQ National Market
System.
6.4 Legal Proceedings. No Proceeding (as hereinafter defined) shall, on the
-----------------
Closing Date, be pending or threatened seeking to restrain, prohibit, or obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby.
6.5 Other Documents. The Company shall have received such certificates,
---------------
instruments, and documents as may be reasonably requested by the Company to
carry out the intent and purposes of this Agreement.
6.6 Approval of Counsel to the Company. All legal matters in connection
----------------------------------
with the consummation of the transactions contemplated hereby and all
agreements, instruments, and documents delivered in connection therewith shall
be reasonably satisfactory in form and substance to Thompson & Knight, A
Professional Corporation, legal counsel to the Company.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYERS
The obligations of Buyers to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
-11-
<PAGE>
7.1 Representations and Warranties True. All the representations and
-----------------------------------
warranties of the Company contained in this Agreement shall be true and correct
on and as of the Closing Date, except as affected by transactions contemplated
or permitted by this Agreement and except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of such specified
date.
7.2 Covenants and Agreements Performed. The Company shall have performed
----------------------------------
and complied with all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
7.3 Stock Exchange Listing. The Shares shall have been approved for
----------------------
listing, subject to official notice of issuance, by the NASDAQ National Market
System.
7.4 Legal Proceedings. No Proceeding shall, on the Closing Date, be
-----------------
pending or threatened seeking to restrain, prohibit, or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
7.5 Other Documents. Each Buyer shall have received a stock certificate or
---------------
certificates in definitive form representing the Shares purchased by it,
registered in the name of such Buyer and duly executed by the Company.
ARTICLE VIII
TERMINATION, AMENDMENT, AND WAIVER
8.1 Termination. This Agreement may be terminated and the transactions
-----------
contemplated hereby abandoned at any time prior to the Closing in the following
manner:
(a) by mutual written consent of the Company and Buyers; or
(b) by the Company, if, on the Closing Date, any of the conditions set
forth in Article VI shall not have been satisfied and shall not have been
waived by the Company; or
(c) by Buyers, if, on the Closing Date, any of the conditions set
forth in Article VII shall not have been satisfied and shall not have been
waived by Buyers.
8.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement pursuant to Section 8.1 by the Company, on the one hand, or Buyers, on
the other, written notice thereof shall forthwith be given to the other party
specifying the provision hereof pursuant to which such termination is made, and
this Agreement shall become void and have no effect, except that the agreements
contained in this Section and in Sections 5.1, 5.4, and
-12-
<PAGE>
5.5 and Article IX shall survive the termination hereof. Nothing contained in
this Section shall relieve any party from liability for any breach of this
Agreement.
8.3 Amendment. This Agreement may not be amended except by an instrument
---------
in writing signed by or on behalf of all the parties hereto.
8.4 Waiver. No failure or delay by a party hereto in exercising any
------
right, power, or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege. The provisions
of this Agreement may not be waived except by an instrument in writing signed by
or on behalf of the party against whom such waiver is sought to be enforced.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS;
INDEMNIFICATION
9.1 Survival. The representations and warranties of the parties hereto
--------
contained in this Agreement or in any certificate, instrument, or document
delivered pursuant hereto shall survive the Closing, regardless of any
investigation made by or on behalf of any party.
9.2 Indemnification by Company. The Company shall indemnify, defend, and
--------------------------
hold harmless Buyers from and against any and all claims, actions, causes of
action, demands, losses, damages, liabilities, costs, and expenses (including
reasonable attorneys' fees and expenses) (collectively, "Damages"), asserted
against, resulting to, imposed upon, or incurred by Buyers, directly or
indirectly, by reason of or resulting from any breach by the Company of any of
its representations, warranties, covenants, or agreements contained in this
Agreement or in any certificate, instrument, or document delivered pursuant
hereto.
9.3 Indemnification by Buyers. Each Buyer severally (but not jointly)
-------------------------
shall indemnify, defend, and hold harmless the Company from and against any and
all Damages asserted against, resulting to, imposed upon, or incurred by the
Company, directly or indirectly, by reason of or resulting from any breach by
such Buyer of any of its representations, warranties, covenants, or agreements
contained in this Agreement or in any certificate, instrument, or document
delivered pursuant hereto.
9.4 Procedure for Indemnification. Promptly after receipt by an
-----------------------------
indemnified party under Section 9.2 or 9.3 of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under such Section, give written notice to
the indemnifying party of the commencement thereof, but the failure so to notify
the indemnifying party shall not relieve it of any liability that it may have to
any indemnified party except to the extent the indemnifying party demonstrates
that the defense of such action is prejudiced thereby. In case any such action
shall be brought against an indemnified party and it shall give written notice
to the indemnifying party of the
-13-
<PAGE>
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it may wish, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party. If the indemnifying
party elects to assume the defense of such action, the indemnified party shall
have the right to employ separate counsel at its own expense and to participate
in the defense thereof. If the indemnifying party elects not to assume (or
fails to assume) the defense of such action, the indemnified party shall be
entitled to assume the defense of such action with counsel of its own choice, at
the expense of the indemnifying party. If the action is asserted against both
the indemnifying party and the indemnified party and there is a conflict of
interests which renders it inappropriate for the same counsel to represent both
the indemnifying party and the indemnified party, the indemnifying party shall
be responsible for paying for separate counsel for the indemnified party;
provided, however, that if there is more than one indemnified party, the
indemnifying party shall not be responsible for paying for more than one
separate firm of attorneys to represent the indemnified parties, regardless of
the number of indemnified parties. The indemnifying party shall have no
liability with respect to any compromise or settlement of any action effected
without its written consent (which shall not be unreasonably withheld).
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices, requests, demands, and other communications
-------
required or permitted to be given or made hereunder by any party hereto shall be
in writing and shall be deemed to have been duly given or made if delivered
personally or transmitted by first class registered or certified mail, postage
prepaid, return receipt requested, to the parties at the addresses set forth
opposite their names on the signature page hereof (in the case of the Company)
and on Annex I hereto (in the case of Buyers) (or at such other addresses as
-------
shall be specified by the parties by like notice).
10.2 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
10.3 Binding Effect; Assignment; No Third Party Benefit. This Agreement
--------------------------------------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors, and permitted assigns.
Except as otherwise provided in this Agreement, neither this Agreement nor any
of the rights, interests, or obligations hereunder shall be assigned by any of
the parties hereto. Except as provided in Section 5.3, nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
other than the parties hereto, and their respective heirs, legal
representatives, successors, and permitted assigns, any rights, benefits, or
remedies of any nature whatsoever under or by reason of this Agreement.
-14-
<PAGE>
10.4 Severability. If any provision of this Agreement is held to be
------------
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided
however, that if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by applicable law.
10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
-------------
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
10.6 Counterparts. This Agreement may be executed by the parties hereto in
------------
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same agreement. Each counterpart may
consist of a number of copies hereof each signed by less than all, but together
signed by all, the parties hereto.
ARTICLE XI
DEFINITIONS
As used in this Agreement, each of the following terms has the meaning
given it in this Article:
"Applicable Law" means any statute, law, rule, or regulation or any
judgment, order, writ, injunction, or decree of any Governmental Entity to
which a specified person or property is subject.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Governmental Entity" means any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental, or regulatory body,
agency, department, commission, board, bureau, or other authority or
instrumentality (domestic or foreign).
"Proceedings" means all proceedings, actions, suits, investigations,
and inquiries by or before any arbitrator or Governmental Entity.
"Securities Act" means the Securities Act of 1933, as amended.
-15-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their duly authorized representatives, all as
of the day and year first above written.
CARRINGTON LABORATORIES, INC.
Address:
2001 Walnut Hill Lane
Irving, Texas 75038 By: _______________________________________________
BUYER:
____________________________________________________
-16-
<PAGE>
ANNEX I
-------
Purchase
Shareholder Shares Price
----------- ------ --------
Mr. J.P. Cullen 40,000 $400,000
c/o George K. Steil, Sr.
1 E. Milwaukee Street
Janesville, Wisconsin 53545
Mr. Michael D. Fitzgerald 10,000 100,000
9313 N. 96th Place
Scottsdale, Arizona 85258
James F. Fitzgerald, Sr. Trustee of the James F. Fitzgerald 50,000 500,000
Charitable Remainder Trust
P.O. Box 348
Janesville, Wisconsin 53547
James F. Fitzgerald, Sr. or Marilyn C. Fitzgerald, 20,000 200,000
Trustees of Fitzgerald Trust UA 3/08/94
P.O. Box 348
Janesville, Wisconsin 53547
Bank One Wisconsin Trust Company NA, as Trustee for the 5,000 50,000
Brian Nicholas Fitzgerald Trust
100 W. Milwaukee Street
Janesville, Wisconsin 53545
Bank One Wisconsin Trust Company NA, as Trustee for the 10,000 100,000
Carolyn J. Fitzgerald Trust
100 W. Milwaukee Street
Janesville, Wisconsin 53545
Bank One Wisconsin Trust Company NA, as Trustee for the 5,000 50,000
Christopher James DeWitz Trust
100 W. Milwaukee Street
Janesville, Wisconsin 53545
Bank One Wisconsin Trust Company NA, as Trustee for the 5,000 50,000
Conner W. Fitzgerald Trust
100 W. Milwaukee Street
Janesville, Wisconsin 53545
Bank One Wisconsin Trust Company NA, as Trustee for the 10,000 100,000
Ellen P. Fitzgerald Trust
100 W. Milwaukee Street
Janesville, Wisconsin 53545
-17-
<PAGE>
Purchase
Shareholder Shares Price
----------- ------ --------
Bank One Wisconsin Trust Company NA, as Trustee for the 5,000 50,000
Jaimie Ty Fitzgerald Trust
100 W. Milwaukee Street
Janesville, Wisconsin 53545
Bank One Wisconsin Trust Company NA, as Trustee for the 5,000 50,000
James F. Fitzgerald Trust III
100 W. Milwaukee Street
Janesville, Wisconsin 53545
Bank One Wisconsin Trust Company NA, as Trustee for the 5,000 50,000
Michael Ryan Fitzgerald Trust
100 W. Milwaukee Street
Janesville, Wisconsin 53545
Bank One Wisconsin Trust Company NA, as Trustee for the 5,000 50,000
Parker Henry Fitzgerald Trust
100 W. Milwaukee Street
Janesville, Wisconsin 53545
Bank One Wisconsin Trust Company NA, as Trustee for the 5,000 50,000
Shannon Fitzgerald Trust
100 W. Milwaukee Street
Janesville, Wisconsin 5354
Bank One Wisconsin Trust Company NA, as Trustee for the 5,000 50,000
Sarah K. O'Loughlin Trust
100 W. Milwaukee Street
Janesville, Wisconsin 53545
Melissa A. O'Loughlin 5,000 50,000
c/o Nedrebo's
5237 Verona Road
Madison, Wisconsin 53704
Mr. John T. Oxley 50,000 500,000
Williams Center Tower
Suite 1305
One West Third Street
Tulsa, Oklahoma 7410
Mr. John L. Strauss 15,000 150,000
4009 Gillon Avenue
Dallas, Texas 75205
-18-
<PAGE>
Purchase
Shareholder Shares Price
----------- ------ --------
JCC Ltd. 20,000 200,000
c/o Samuel H. Kaminsky,
President
Medallion Partners
3200 Cherry Creek South Drive
Suite 570
Denver, Colorado 80209
Carlton E. and Mary Ann DuPuy Turner 5,000 50,000
1508 Nelson Drive
Irving, Texas 75038
Richard N. Mercurio, Trustee 5,000 50,000
Meredith Ann Marquez Trust
5526 Deloache
Dallas, Texas 75220
Marquez Family Trust 5,000 50,000
Thomas J. Marquez, Trustee, and Richard N. Mercurio, Trustee
5526 Deloache
Dallas, Texas 75220
Mr. George K. Steil, Sr. 10,000 100,000
1 E. Milwaukee Street
Janesville, Wisconsin 53545
-19-
<PAGE>
EXHIBIT 2.2
FORM OF
-------
CARRINGTON LABORATORIES, INC.
2001 Walnut Hill Lane
Irving, Texas 75038
June 20, 1995
See Annex I attached hereto.
Dear Warrantholder:
As you know, Carrington Laboratories, Inc. (the "Company") intends to file
a registration statement (the "Registration Statement") this month with the
Securities and Exchange Commission (the "Commission") covering shares of Common
Stock of the Company sold to investors in connection with a private placement by
the Company in April 1995 (the "Proposed Registration"). In consideration of
your agreement to purchase from the Company _________ shares of Common Stock
(the "Shares") through the exercise in full, within 45 days of the effectiveness
of the Registration Statement, of a warrant previously issued to you dated
________________, the Company desires to grant to you the right, subject to the
terms and conditions set forth below, to have the Shares included in the
Registration Statement.
Accordingly, the Company, for the consideration specified above, agrees,
subject to your acceptance of this letter, as follows:
1. The Company will use its reasonable best efforts to cause the Shares to
be included in the Registration Statement and, if such Shares are included at
the time of effectiveness, will, as expeditiously as possible:
A. use its reasonable best efforts to cause the Registration
Statement to become effective and to remain effective for so long as may
reasonably be necessary to complete the sale or other disposition of the Shares,
provided that the Company shall not in any event be required to maintain the
effectiveness of the Registration Statement for a period in excess of 120 days;
<PAGE>
June 20, 1995
Page 2
B. prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus contained therein
as may be necessary to keep the Registration Statement effective, and to comply
with the provisions of the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the sale or other disposition of the Shares whenever you
shall desire to sell or otherwise dispose of the same, but only to the extent
provided in this Paragraph 1;
C. furnish to you such number of copies of the Registration
Statement, the prospectus contained therein (including each preliminary
prospectus), and each amendment and supplement to the Registration Statement and
such prospectus, in conformity with the requirements of the Securities Act, as
you may reasonably request in order to facilitate the sale or other disposition
of the Shares; and
D. use its reasonable best efforts to register or qualify the Shares
for sale under the securities or "blue sky" laws of such states as you may
request (except to the extent exemptions from such registration or qualification
are available), and do any and all other acts and things that may reasonably be
necessary under such securities or "blue sky" laws to enable you to consummate
the sale or other disposition of the Shares in such states, provided that the
Company shall not be required to register or qualify the Shares for sale under
the securities or "blue sky" laws of more than a total of five states, and
provided further, that the Company shall not be required to keep any such
registration or qualification in effect for a period in excess of 120 days and
shall not for any such purpose be required to qualify to do business as a
foreign corporation in any state wherein it is not so qualified or to subject
itself to taxation in any such state.
2. Notwithstanding the provisions of Paragraph 1 hereof, the Company shall
not be required to include the Shares in the Registration Statement, or to
maintain the effectiveness of any registration of the Shares, unless and until
you furnish to the Company such information regarding yourself and the Shares
and the intended method of disposition of the Shares as the Company shall
reasonably request in order to satisfy the requirements applicable to the
Proposed Registration.
3. Your rights under Paragraph 1 hereof shall be subject to the following
limitations:
A. If at any time or from time to time during the effectiveness of
the Registration Statement, the Company is
<PAGE>
June 20, 1995
Page 3
engaged in or proposes to engage in a registered public offering of securities
of the Company or any other transaction or activity which, in the good faith
determination of the Board of Directors of the Company, would be adversely
affected by offers or sales of the Shares pursuant to the Registration Statement
to the detriment of the Company, then you shall, upon the written request of the
Company, cease making offers and sales of the Shares pursuant to the
Registration Statement (including sales pursuant to Rule 144 under the
Securities Act) for the period of time specified by the Company, which period
shall not (i) in the case of a registered public offering, exceed the period
beginning ten days prior to the effective date of the registration statement
relating to such offering and ending 120 days after such effective date, and
(ii) in the case of any other transaction or activity, exceed the period
beginning ten days prior to, and ending 120 days after, the date of commencement
of such other activity. You agree to enter into such further agreements with
the Company or any underwriter of securities of the Company deemed necessary by
the Company or any such underwriter to carry out the purposes of this Paragraph
3A. The period of time that the Company is obligated to maintain the
effectiveness of the Registration Statement hereunder shall be tolled during the
period you must cease making offers and sales of the Shares pursuant to the
Company's request under this Paragraph 3A.
B. The obligations of the Company pursuant to Paragraph 1 hereof
shall cease (i) as to Shares sold or otherwise disposed of pursuant to the
Registration Statement or Section 4(1) of the Securities Act, and (ii) as to
Shares eligible for sale pursuant to Rule 144 under the Securities Act, as
amended from time to time, or any similar rule that may hereafter be adopted.
4. In connection with the registration of the Shares pursuant to the
provisions of Paragraph 1 hereof, you shall pay any brokerage and underwriting
discounts and commissions payable in respect of the Shares sold on your behalf,
all fees and expenses of any attorneys and accountants employed by you, and any
other costs directly incurred by you, and, except as otherwise provided in
Paragraph 5 hereof, the Company shall pay or cause to be paid and shall
indemnify and hold you harmless from and against any and all other costs and
expenses incurred in connection with such registration.
5. A. In connection with the Proposed Registration, the Company (i) shall
indemnify and hold harmless you and each person, if any, who controls you within
the meaning of the Securities Act against any losses, claims, damages, and
<PAGE>
June 20, 1995
Page 4
liabilities, joint or several, to which you or such controlling person may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, as amended at the time when it
becomes effective (the "Securities Act Registration Statement"), the prospectus,
as then amended, included as a part of the Securities Act Registration Statement
(the "Prospectus"), any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon 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, and (ii) shall
reimburse you and each such controlling person for any legal or other expenses
reasonably incurred by you or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in any of such documents in reliance upon and in conformity with
information furnished in writing to the Company by you specifically for use
therein.
B. You (i) shall indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of the
Securities Act, against any losses, claims, damages, or liabilities to which the
Company or any such director, officer, or controlling person may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the Securities Act Registration Statement, the Prospectus, or any amendment
or supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon 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, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any of such documents in reliance upon and in conformity with information
furnished in writing to the Company by you specifically for use therein, and
(ii) shall reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, or action.
<PAGE>
June 20, 1995
Page 5
C. Promptly after receipt by an indemnified party under this
Paragraph 5 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Paragraph 5, notify the indemnifying party of the commencement
thereof, but the failure so to notify the indemnifying party shall not relieve
it from any liability that it may have to the indemnified party otherwise than
under this Paragraph 5.
D. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein, and, to the extent
that it may wish, to assume the defense thereof, with counsel reasonably
satisfactory to 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 shall not be liable to such indemnified party
under this Paragraph 5 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than the
reasonable costs of investigation. The 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 if the indemnifying party has assumed the defense of
the action with counsel reasonably satisfactory to the indemnified party;
provided, however, that the fees and expenses of the indemnified party's counsel
shall be at the expense of the indemnifying party if (i) the employment of such
counsel has been specifically authorized in writing by the indemnifying party or
(ii) the named parties to such action (including any impleaded parties) include
both the indemnified party and the indemnifying party and such indemnified party
shall have been advised by counsel that there may be one or more legal defenses
available to such indemnified party that are not available to the indemnifying
party (in which case the indemnifying party shall not have the right to assume
the defense of such action on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys for the indemnified party, which firm shall be
designated in writing by the indemnified party). The indemnifying party shall
not be liable for any settlement of any such action or proceeding effected
without its written consent, but if settled with its written consent, or if
there be a final judgment for the plaintiff in any such action or proceeding,
the indemnifying
<PAGE>
June 20, 1995
Page 6
party agrees to indemnify and hold harmless the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
6. All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been effectively given
when delivered personally or, if mailed by first class registered or certified
mail, postage prepaid, three days after deposit in the mails, to the address of
the party set forth on the first page of this letter.
7. This agreement sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof. This agreement may not be
modified or amended except by a writing signed by the party against whom the
modification or amendment is sought to be enforced.
8. This agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of the directors, officers, and controlling persons referred to in
Paragraph 5 hereof; provided, however, that neither of the parties hereto shall
assign or transfer this agreement or any rights or obligations hereunder without
the prior written consent of the other party.
9. This agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.
To signify your approval of all the foregoing and your acceptance of this
agreement, please sign and return to the Company the enclosed copy of this
letter.
Very truly yours,
CARRINGTON LABORATORIES, INC.
By:________________________________________
Carlton E. Turner, Ph.D.,
Chief Executive Officer and
President
Accepted and Agreed to as of
June ___, 1995.
____________________________
<PAGE>
ANNEX I
-------
Number Date
of of
Warrantholder Shares Grant
------------- ------ -----
Dr. Gerald R. Bratton 5,000 September 19, 1991
3000 Bolero
College Station, TX 77845
Dr. David L. Busbee, Ph.D. 5,000 September 19, 1991
BioChem Bio Physics Bldg.
Room 328 TAMU
College Station, TX 77843
Robert H. Carpenter 9,500 January 24, 1991
1303 Decan Street March 28, 1991
Bastrop, TX 78602 February 28, 1989
July 12, 1988
J. Harold Helderman, M.D. 20,000 September 19, 1991
Professor of Medicine
Medical Director
Vanderbilt University
Transplant Center
Division of Nephrology
S-3223 Medical Center
North
Nashville, TN 37232-2372
Mr. T.H. Holloway 10,000 February 1, 1991
President
1600 Wallace Blvd.
Amarillo, TX 79106
Maurice C. Kemp, Ph.D. 10,000 September 19, 1991
6904 Springmont Drive
Elk Grove, CA 95758
H. Reginald McDaniel, M.D. 25,000 September 5, 1991
2701 Osler Drive, Suite 6B
Grand Prairie, TX 75051
Mr. Vance Kirkland Meares 2,500 April 29, 1992
9437 Huntingdon Court
Montgomery, AL 36117
Mr. James T. O'Brien 10,000 June 18, 1992
5720 Oakwood Hills
Mission Hills, KS 66208
<PAGE>
Number Date
of of
Warrantholder Shares Grant
------------- ------ -----
Mr. Ian R. Tizard 20,000 September 19, 1991
Texas A & M University
Professor and Head
Dept. of Vet Microbiology
& Parasitology
College of Vet Medicine
College Station, TX 77842
<PAGE>
EXHIBIT 5.1
[Thompson & Knight, P.C. Letterhead]
(214) 969-1700
June 30, 1995
Carrington Laboratories, Inc.
2001 Walnut Hill Lane
Irving, Texas 75038
Re: Registration Statement on Form S-3
Gentlemen:
We have acted as counsel for Carrington Laboratories, Inc., a Texas
corporation (the "Company"), in connection with the preparation of the Company's
Registration Statement on Form S-3 (the "Registration Statement"), filed with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"), in connection with the proposed
sale of up to 418,500 shares (the "Shares") of Common Stock of the Company by
certain shareholders of the Company (the "Selling Shareholders"). The Shares
are proposed to be sold by the Selling Shareholders in the manner set forth in
the Prospectus constituting Part I of the Registration Statement under the
caption "Plan of Distribution". Certain of the Shares (the "Warrant Shares")
are not currently outstanding but are issuable upon exercise of certain
outstanding warrants (the "Warrants").
In connection with the foregoing, we have examined the originals or copies,
certified or otherwise authenticated to our satisfaction, of such corporate
records of the Company, certificates of public officials and other instruments
and documents as we have deemed necessary to require as a basis for the opinions
hereinafter expressed. As to questions of fact material to such opinions, we
have, where relevant facts were not independently established, relied upon
statements of officers of the Company.
On the basis of the foregoing and in reliance thereon, we advise you that
in our opinion the Shares that may be sold by the Selling Shareholders pursuant
to the Registration Statement have been duly and validly authorized by the
Company and are, or, in the case of the Warrant Shares, when issued upon
exercise of the Warrants in accordance with the terms of the Warrants will be,
legally issued, fully paid and nonassessable.
<PAGE>
Carrington Laboratories, Inc.
June 30, 1995
Page 2
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 of the Registration Statement and to the reference to us in the
Prospectus under the caption "Legal Matters". In giving this consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act or the rules or regulations of
the Commission thereunder.
Respectfully submitted,
THOMPSON & KNIGHT
A Professional Corporation
By: /s/ PAUL M. JOHNSTON
______________________________________
Paul M. Johnston
Attorney
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
in this Registration Statement of our report dated January 12, 1995, included in
the Carrington Laboratories, Inc. Form 10-K for the year ended November 30,
1994, and to all references to our Firm included in this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Dallas, Texas
June 30, 1995
