<PAGE>
As filed with the Securities and Exchange Commission on October 20, 1999
REGISTRATION STATEMENT NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
AVANT IMMUNOTHERAPEUTICS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-3191702
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
119 FOURTH AVENUE
NEEDHAM, MASSACHUSETTS 02494
(781) 433-0771
(Address, including zip code, and telephone number, including area code of
Registrant's principal executive offices)
------------------------
UNA S. RYAN, PH.D., PRESIDENT AND CHIEF EXECUTIVE OFFICER
AVANT IMMUNOTHERAPEUTICS, INC.
119 FOURTH AVENUE
NEEDHAM, MASSACHUSETTS 02494
(781) 433-0771
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
Copy to:
STUART M. CABLE, P.C.
ETTORE A. SANTUCCI, P.C.
GOODWIN, PROCTER & HOAR LLP
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
(617) 570-1000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is used to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum
Amount to be Offering Price Per Proposed Maximum Amount of
Title of Shares Being Registered Registered Share(1) Aggregate Offering Price Registration Fee
<S> <C> <C> <C> <C>
Common Stock, par value $.001 5,459,375 $1.94 $10,591,187.50 $2,944.35
</TABLE>
(1) This estimate is made pursuant to Rule 457(c) under the Securities Act of
1933, as amended (the "Securities Act"), solely for the purposes of
determining the registration fee and is based upon the market value of
outstanding shares of common stock, $.001 par value per share, of Avant
Immunotherapeutics, Inc. on October 14, 1999, utilizing the average of the
high and low sale prices reported on the Nasdaq National Market for that
date.
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>
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
SUBJECT TO COMPLETION. DATED OCTOBER 20, 1999.
PROSPECTUS
5,459,375 SHARES OF COMMON STOCK
AVANT IMMUNOTHERAPEUTICS, INC.
---------------
The selling stockholders identified in this prospectus, and any of their
pledgees, donees, transferees or other successors in interest, may offer to sell
up to an aggregate of 5,459,375 shares of common stock of Avant
Immunotherapeutics, Inc. We are filing the registration statement of which this
prospectus is a part at this time to fulfill a contractual obligation to do so,
which we undertook at the time of the original issuance of these shares. We will
not receive any of the proceeds from the sale of the common stock by the selling
stockholders but, in fulfillment of our contractual obligations, we are bearing
the expenses of registration.
Our common stock is listed on the Nasdaq Stock Market, Inc.'s National
Market under the symbol "AVAN."
See "Risk Factors" beginning on page 3 for certain factors you should
consider before you invest in our common stock.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. IT IS ILLEGAL FOR ANY PERSON TO TELL
YOU OTHERWISE.
------------------------
The date of this prospectus is October , 1999.
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY ONLY HIGHLIGHTS THE MORE DETAILED INFORMATION APPEARING
ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE. AS THIS IS A
SUMMARY, IT MAY NOT CONTAIN ALL INFORMATION THAT IS IMPORTANT TO YOU. YOU SHOULD
READ THIS ENTIRE PROSPECTUS CAREFULLY BEFORE DECIDING WHETHER TO INVEST IN OUR
COMMON STOCK.
UNLESS THE CONTEXT OTHERWISE REQUIRES, ALL REFERENCES TO "AVANT," "WE," "US"
OR "OUR COMPANY" IN THIS PROSPECTUS REFER TO AVANT IMMUNOTHERAPEUTICS, INC., A
DELAWARE CORPORATION.
------------------------
ABOUT AVANT IMMUNOTHERAPEUTICS, INC.
We are engaged in the discovery, development and commercialization of
products that harness the human immune response to prevent and treat disease.
Our lead therapeutic program is focused on compounds that inhibit the
inappropriate activity of the complement cascade, which is a vital part of the
body's immune defense system. We are also engaged in the development of
Therapore,-TM- a novel system for the delivery of immunotherapeutics for chronic
viral infections and certain cancers. Avant and our collaborators are developing
vaccines using our proprietary adjuvants, Adjumer-Registered Trademark- and
Micromer.-TM- In a further collaboration, we are developing an oral human
rotavirus vaccine, and are developing our own proprietary vaccine for the
management of atherosclerosis.
Additional information regarding us, including our audited financial
statements and descriptions of our business, is contained in the documents
incorporated by reference in this prospectus. See "Where You Can Find More
Information" on page 11.
THE OFFERING
This prospectus relates to up to 5,459,375 shares of our common stock that
may be offered for sale by the selling stockholders. We originally issued these
shares to the selling stockholders in a private placement on September 22, 1999.
In connection with this private placement, we entered into a securities purchase
agreement with the selling stockholders. We are registering the common stock
covered by this prospectus in order to fulfill our contractual obligations under
the securities purchase agreement. Registration of the common stock does not
necessarily mean that all or any portion of the common stock will be offered for
sale by the selling stockholders.
We have agreed to bear the expenses of the registration of the common stock
under federal and state securities laws, but we will not receive any proceeds
from the sale of any common stock offered under this prospectus.
2
<PAGE>
RISK FACTORS
BEFORE YOU PURCHASE SHARES OF OUR COMMON STOCK FROM THE SELLING STOCKHOLDERS
YOU SHOULD BE AWARE THAT THERE ARE VARIOUS RISKS IN MAKING SUCH AN INVESTMENT,
INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CONSIDER CAREFULLY THESE RISK
FACTORS TOGETHER WITH ALL OF THE INFORMATION INCLUDED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR COMMON
STOCK. THIS SECTION INCLUDES OR REFERS TO CERTAIN FORWARD-LOOKING STATEMENTS.
YOU SHOULD REFER TO THE EXPLANATION OF THE QUALIFICATIONS AND LIMITATIONS ON
SUCH FORWARD-LOOKING STATEMENTS DISCUSSED ON PAGE 11.
RISK FACTORS
OUR THERAPEUTIC PRODUCTS ARE IN VARIOUS STAGES OF PRODUCT DEVELOPMENT AND THERE
ARE MANY UNCERTAINTIES RELATING TO CLINICAL TRIALS AND REGULATORY APPROVALS THAT
MAY HINDER EACH PRODUCT'S EVENTUAL DEVELOPMENT
WE HAVE NOT HAD COMMERCIAL REVENUES TO DATE AND CANNOT PREDICT WHEN WE WILL
All of our therapeutic product candidates are in various stages of research
and development and to date we have had no revenues from the commercialization
of these products. We cannot be certain that any of the therapeutic products we
are developing:
- will prove safe and effective in clinical trials
- will be approved by the United States Food and Drug Administration or the
competent regulatory authorities of other countries
- can be manufactured at acceptable cost with the appropriate quality
- can be successfully marketed
Before we can be in a position to commercialize any of our therapeutic product
candidates, we must complete substantial additional development work in the key
areas of preclinical and clinical testing, regulatory approvals and
manufacturing processes, among others.
PRECLINICAL AND CLINICAL TESTING DO NOT ENSURE THAT PRODUCTS WILL BE SAFE AND
EFFECTIVE
For some of our product candidates and technologies we have only performed
preclinical testing to date. Preclinical studies of product candidates may not
predict and do not ensure safety or efficacy in humans and therefore are not
necessarily indicative of the results that may be achieved in clinical trials
with humans. We cannot be sure that clinical testing will discover all side
effects of potential products in humans. Even if cleared by regulators after
clinical testing, a product may later be shown to be unsafe or to not have its
expected effect, which may prevent its widespread use, require its withdrawal
from the market or expose us to liability.
CLINICAL TRIALS TAKE TIME AND MAY NOT BE COMPLETED AS PLANNED OR AT ALL
How quickly we can complete clinical testing depends on several factors,
including how quickly we can enroll patients for the tests. Many factors affect
patient enrollment, including:
- the size of the patient population
- the nature of the clinical protocol
- the proximity of patients to clinical sites
- the eligibility criteria for the trial
If patients cannot be enrolled as planned, we face increased costs, delays
or termination of clinical trials, which may have a material adverse effect on
our business, financial condition and results of operations. We often rely on
third parties to assist in planning, conducting and monitoring clinical trials,
which may result in delays or failure to complete necessary clinical testing of
our
3
<PAGE>
product candidates if those third parties fail to perform as we expect or fail
to meet regulatory standards in their work.
OUR PRODUCT DEVELOPMENT PROGRAMS RELY ON NEW TECHNOLOGIES
The product development programs we and our collaborators conduct face the
risk of failure inherent in efforts to develop product candidates based on new
technologies. These risks include:
- the possibility that the underlying technologies will prove ineffective
- the possibility that product candidates will prove unsafe or toxic or
otherwise fail to receive necessary regulatory approvals
- the possibility that the product candidates, though safe and effective,
will be difficult to manufacture on a large scale as actual commercial
products or be uneconomical to market
- the possibility that others will claim proprietary rights to technologies
used in the products and preclude us or our collaborators from marketing
them
- the possibility that others will develop and market superior or equivalent
products before or after our products reach the market
OUR HISTORY OF LOSSES AND UNCERTAINTY OF OUR FUTURE PROFITABILITY MAKES THE
COMMON STOCK A HIGHLY SPECULATIVE INVESTMENT
We have incurred operating losses since inception and, as of June 30, 1999,
had accumulated net losses of approximately $127.1 million. Our continued
product development activities require the commitment of substantial resources
to do research, conduct preclinical and clinical testing, create manufacturing
capacity and establish sales and marketing, quality control, regulatory and
administrative capabilities. We may incur substantial operating losses over the
next several years as our pipeline of product candidates and active clinical
trials expand. Our losses may fluctuate significantly.
We cannot predict how much our future losses will be or how long they will
last. Before we can achieve profitability, we must successfully complete the
development of at least some of our product candidates, obtain the necessary
regulatory approvals and successfully manufacture and market the actual
products. It is unlikely that we will achieve profitability in the near future
and we cannot be sure that we will be able to achieve profitability at all or on
a sustained basis.
WE WILL CONTINUE TO NEED SUBSTANTIAL ADDITIONAL FUNDS WHICH WILL LIKELY BE
RAISED THROUGH EQUITY FINANCINGS WHICH MAY BE DILUTIVE TO OUR CURRENT
STOCKHOLDERS
We have funded our operations and capital expenditures to date primarily
through equity financing, strategic alliances with commercial partners, and
sales of reagent and diagnostic products. Through September 30, 1999, we had
raised net proceeds of approximately $86.7 million through equity financings.
Before we are able to commercialize any of our product candidates, we anticipate
the need to raise substantial additional funds through a combination of
additional equity or debt financings, research and development arrangements,
collaborative relationships or otherwise.
We cannot predict whether additional funding will be available to us or, if
available, that it will be on reasonable terms. Any additional funding may
result in significant dilution to existing stockholders. If adequate funds are
not available, we may be required to significantly curtail our research and
development programs or to obtain funds through arrangements with collaborative
partners that may require us to relinquish material rights to any resulting
products.
4
<PAGE>
WE ARE DEPENDENT ON THIRD PARTIES FOR CLINICAL SUPPLIES
We depend on third party manufacturers for suitable quantities of materials
necessary for clinical trials of our product candidates. If these materials are
not available in suitable quantities of appropriate quality in a timely manner,
we will face significant delays in the development and commercialization of
products, which could adversely affect our business, financial condition and
results of operations.
THE LICENSING DEVELOPMENT AND COMMERCIALIZATION OF SOME OF OUR PRODUCTS IS
HIGHLY DEPENDENT ON THIRD-PARTY COLLABORATORS.
We have entered into collaborative agreements with a variety of
pharmaceutical and biotechnology companies relating to the licensing,
development and commercialization of products based on our technologies and
proprietary information. In some cases, our collaborator has assumed substantial
responsibility to commercialize the products, which may allow the collaborator
substantial discretion in determining the amount and timing of resources to be
devoted to the development and commercialization efforts. We may continue to
enter into this kind of agreement in the future. We cannot predict whether our
collaborators will continue their development efforts using our technologies or
that their efforts will be successful. In general, many of our collaborators
face the same kinds of risks and uncertainties in their business as we face.
Should a collaborator fail to successfully develop a product for which it has
undertaken responsibility, we will need to find another collaborator, assuming
we have the right to do so and the product is still commercially viable. If a
collaborator experiences delays, setbacks or failure, the successful
commercialization of affected products may be delayed or prevented, which may
have an adverse effect on our business, financial condition and results of
operations.
Certain of our collaborative agreements, particularly in the vaccine
delivery systems area, involve product candidates in the early stages of
research and development or are subject to determination of the feasibility of
developing products using our technologies. Once specific products are targeted,
these agreements may require that further licenses and other agreements are
negotiated and executed by us and the collaborator on presently uncertain terms.
We cannot predict our ability to develop any products or negotiate and execute
any licenses, or whether the collaborator will pursue alternative technologies
or product candidates, either on its own or in collaboration with others, that
may compete with the technologies or product candidates being developed in
collaboration with us. Collaborative agreements may also require us to meet
agreed upon milestones and expend funds, and we cannot predict whether we will
achieve these milestones or have these funds available. Our failure to meet our
obligations could result in termination of collaborative agreements and could
have a material adverse effect on our business, financial condition and results
of operations.
OUR ACTIVITIES ARE SUBJECT TO COMPREHENSIVE GOVERNMENT REGULATION
REGULATORY DELAYS AND UNCERTAINTIES ARE POSSIBLE
Our research, development and clinical programs, and ultimately the
commercialization of our product candidates, are subject to extensive regulation
by numerous governmental authorities in the United States and other countries.
Most of our products will require governmental approvals for commercialization
which we have not yet obtained and do not expect to obtain for several years. We
cannot be sure that we will obtain the necessary clearances for clinical trials,
manufacturing or marketing of our product candidates.
The regulatory process, which includes preclinical, clinical and
post-clinical testing to establish the safety and efficacy of products, can take
many years and requires the expenditure of substantial resources. Data obtained
from preclinical and clinical activities are susceptible to varying
interpretations which could delay, limit or prevent regulatory approval. In
addition, we may experience delays
5
<PAGE>
or rejection based upon new or changed regulatory policies for drug approval
during the long period of product development and regulatory review. This may
result in restrictions on our ability to utilize our technologies or
commercialize our products, and consequently impact our ability to generate
commercial product revenues. There can be no assurance that we will obtain
necessary regulatory approvals within a reasonable period of time, if at all, or
that we will not encounter problems in clinical trials that delay or suspend the
trials. Moreover, when regulatory approval of a product is granted, it may
impose limitations on the indicated uses for marketing the product which
restrict the size of the potential patient population.
Even after regulatory approval is obtained, a product and its manufacturer
are subject to continuing review and periodic inspections of manufacturing
facilities. Subsequent discovery of previously unknown problems with a product
or its manufacturing may result in restrictions on the product or the
manufacturer, including withdrawal of the product from the market. Failure to
comply with the applicable regulatory requirements can result in fines,
suspensions of regulatory approvals, product recalls, operating restrictions and
criminal prosecution.
THE FOOD AND DRUG ADMINISTRATION PRODUCT APPROVAL PROCESS IS DIFFICULT AND TIME
CONSUMING
Food and Drug Administration (FDA) approval of a new product is required
after completion of clinical trials, but before commencing marketing and
manufacturing. To commercialize any product and prior to submitting the
application for marketing approval in the United States, we must sponsor and
file an investigational new drug application for each proposed product and must
initiate and oversee the clinical studies to demonstrate the safety and efficacy
that are necessary to obtain FDA approval. We expect that our products will be
regulated as biologics. Traditionally, biologics require both a product license
application and an establishment license application prior to commercial
marketing. The processing of license applications submitted to the FDA has
historically taken several years. If the FDA determines that an application is
incomplete, or that the data submitted fails to answer important issues,
approval times can be lengthened significantly. Notwithstanding the submission
of relevant data, the FDA may ultimately decide that the license application
does not satisfy its criteria for approval.
WE LACK MANUFACTURING, SALES, DISTRIBUTION AND MARKETING CAPABILITIES
We plan to rely on contract manufacturers to manufacture commercial
quantities of approved products in the future. For successful commercialization,
we must manufacture products in adequate quantities, in compliance with
regulatory requirements, and at a competitive cost. Our ability to obtain access
to suitable manufacturing facilities is uncertain. Except for research reagents
and certain diagnostic products, we have limited experience in the marketing and
distribution of commercial products. To market any of our products directly, we
must develop a substantial marketing and sales force with technical expertise
and a supporting distribution capability. When our products are ready for
commercialization, we may face delays, difficulties or unanticipated costs in
establishing the sales and distribution capabilities necessary to gain market
acceptance for those products. We may choose or find it necessary to enter into
strategic partnerships on terms we cannot presently anticipate for the
manufacture, sale, marketing and distribution of our products.
WE HAVE MANY COMPETITORS IN OUR FIELD AND WE ARE AT RISK OF TECHNOLOGICAL
OBSOLESCENCE
Biotechnology, pharmaceuticals and therapeutics are rapidly evolving fields
in which scientific and technological developments are expected to continue at a
rapid pace. We have many competitors in the United States and abroad, including
pharmaceutical, biotechnology and therapeutics companies, universities and other
private and public research institutions. Our success depends upon our ability
to develop and maintain a competitive position within the product categories and
technologies on which we focus. Many of our competitors have greater
capabilities, experience and/or financial resources than we do. Competition is
intense and is expected to increase as new
6
<PAGE>
products enter the market and new technologies become available. Our competitors
may succeed in:
- developing technologies and products that are more effective than ours
- developing technologies that render ours obsolete or otherwise
noncompetitive
- obtaining regulatory approval for products more rapidly or effectively
than we can
- obtaining patent protection or other intellectual property rights that
would block our ability to develop competitive products
WE ARE DEPENDENT ON PATENTS AND PROPRIETARY TECHNOLOGY
Our success depends in part on our ability, or, for technologies we license
from others, our licensor's ability, to obtain and maintain patent protection
for our technologies, to protect the confidentiality of our trade secrets and to
operate without infringing on the proprietary rights of others, both in the
United States and in other countries. A failure by us or our licensors to obtain
and maintain patent protection for our technologies or to protect our trade
secrets could have a material adverse effect on our business, financial
condition and results of operations.
UNCERTAIN SCOPE OF PATENT PROTECTION IN BIOTECHNOLOGY
Patent positions in the biotechnology field are highly uncertain and involve
complex legal, scientific and factual questions. To date, there has emerged no
consistent policy regarding the breadth of claims allowed in biotechnology
patents, particularly in regard to human therapeutic uses. We cannot predict
whether the patents we seek will be issued, if issued will not later be
challenged or limited in scope, or will afford effective protection against
competitors with similar technology. Even if a patent is issued to us, a
successful challenge to the validity of the patent could result in a third
party's ability to use the technology covered by the patent, in some cases
without payment to us. We face the risk that others will infringe, avoid or
circumvent our patents.
UNCERTAINTY AS TO THE STATUS OF OUR INVENTIONS RELATIVE TO OTHERS
Patent applications in the United States are maintained in secrecy until
patents issue and patent applications in some other countries generally are not
published until more than 18 months after they are filed. In addition,
publication of discoveries in scientific or patent literature often lags behind
actual discoveries. Consequently, we cannot be certain that we or our licensors
were the first creator of inventions covered by pending patent applications or
the first to file patent applications for those inventions. In cases where third
parties are first to invent a particular product or technology, it is possible
that those parties will obtain patents that are sufficiently broad so as to
prevent us from using technologies we rely upon or from further developing or
commercializing our product candidates. If licenses from third parties are
necessary, but are unattainable, commercialization of the related products would
be delayed or prevented.
RISK AND COSTS OF INTELLECTUAL PROPERTY LITIGATION
Defending against suits brought against us or in prosecuting suits against
others involving patent or other intellectual property rights may force us to
incur substantial costs. An adverse litigation result could hurt our business,
financial condition and results of operations. In addition to any potential
liability for significant damages, an adverse outcome may require us to obtain
licenses to patents or other proprietary intellectual property rights of others.
In the event we must obtain licenses from others, we cannot predict whether
licenses would be made available to us on acceptable terms, if at all. Also,
ongoing royalties and other costs associated with licenses may be substantial.
If we do not obtain licenses to the technology of others that we need, we could
face delays introducing products to the market while we attempt to design around
third-party patent or other rights, or be prevented from manufacturing and
marketing products at all.
7
<PAGE>
DIFFICULTY OF PROTECTING THE CONFIDENTIALITY OF TRADE SECRETS
We seek to protect our proprietary technology, including technology which
may not be patented or patentable, in part by confidentiality agreements and, if
applicable, inventors' rights agreements with our collaborators, advisors,
employees and consultants. We cannot predict whether these agreements will be
breached, if they are breached we will have adequate remedies, or that our trade
secrets will not otherwise be disclosed to or discovered by competitors.
Moreover, we conduct a significant amount of research through academic advisors
and collaborators who are prohibited from entering into confidentiality or
inventors' rights agreements by their academic institutions.
DEPENDENCE OF OUR PRODUCT DEVELOPMENT ON LICENSES FROM THIRD PARTIES
We license some intellectual property we need from others. The terms of
these licenses may obligate us to exercise diligence, achieve milestones or
devote minimum amounts of resources in bringing potential products to market.
They may also obligate us to make royalty and milestone payments, including a
percentage of any sublicensing income, as well as patent cost reimbursement
payments. If we fail to perform our obligations fully, the licensor can
terminate the licenses or, in certain cases, make them non-exclusive, and we may
lose our right to market and sell any products based on the licensed technology.
We cannot predict whether we will always meet our obligations under these
licenses. Furthermore, we may need to obtain licenses for additional
technologies for use in some of our products under development and, if we cannot
obtain any required licenses, we may lose our ability to market the products.
CHANGES IN HEALTH CARE DELIVERY SYSTEMS IN THE UNITED STATES AND ABROAD MAY
ADVERSELY AFFECT OUR PROFITABILITY
THE SUCCESS OF OUR PRODUCTS WILL DEPEND ON ADEQUATE REIMBURSEMENT BY THIRD-PARTY
PAYORS
In both the United States and other countries, in most cases, the volume of
sales of products like those we develop depends in large part on the
availability of reimbursement from third-party payors, such as national health
care agencies, private health insurance plans and health maintenance
organizations. Third-party payors are increasingly challenging the prices
charged for medical products and services. Accordingly, our success in
generating revenues from sales of products may partially depend on whether and
to what extent reimbursement from third-party payors for the products is
available. In the United States, the containment of health care costs has become
a top priority. The expansion of managed health care, the growth of health
maintenance organizations, both of which control or significantly influence the
purchase of health care services and products, and legislation reducing the cost
of government insurance programs may all result in lower prices for
pharmaceutical products. These developments could affect the market for our
products and have a material adverse effect on our business, financial condition
and results of operations. If we succeed in bringing products to market, there
is no means to assure that they are considered cost-effective, that
reimbursement is available or, if available, that the level of reimbursement is
sufficient to allow us to sell the products on a profitable basis. If
reimbursement is not available, the level of market acceptance of our products
is likely to suffer significantly.
HEALTH CARE REFORM MAY HAVE AN ADVERSE IMPACT ON OUR INDUSTRY
The health care industry in the United States and in Europe is undergoing
fundamental changes as the result of political, economic and regulatory
influences. Reforms proposed from time to time include:
- mandated basic health care benefits
- controls on health care spending through limitations on the growth of
private health insurance premiums and Medicare and Medicaid spending
8
<PAGE>
- creation of large medical services and products purchasing groups
- fundamental changes to the health care delivery system
We anticipate that alternative health care delivery systems and methods of
payment will continue to be reviewed and assessed both in the United States and
other countries. We cannot predict whether any particular reform initiatives
will result or, if adopted, what impact they might have on us. We cannot predict
whether the adoption of reform proposals will have a material adverse effect on
our business, financial condition and results of operations. In addition,
announcements of reform proposals, the investment community's reaction to reform
proposals and announcements by competitors and third-party payors of their
strategy in response to reform proposals are likely to result in volatility in
the trading and market price of our common stock.
OUR BUSINESS EXPOSES US TO SUBSTANTIAL PRODUCT LIABILITY CLAIMS
The risk of product liability claims, product recalls and associated adverse
publicity is inherent in the testing, manufacturing, marketing and sale of human
therapeutic products. We currently carry liability insurance with only limited
coverage, but may choose or find it necessary under our collaborative agreements
to increase it in the future. We cannot predict whether we will be able to
maintain our current insurance coverage or to secure greater or broader product
liability insurance coverage on acceptable terms or at reasonable costs when we
need it. Even if we maintain insurance coverage, our liability could exceed the
amount of coverage. A product liability claim or product recall could inhibit or
prevent commercialization of products developed by us and could generally have a
material adverse effect on our business, financial condition, results of
operations or prospects.
OUR BUSINESS REQUIRES THE USE AND HANDLING OF HAZARDOUS MATERIALS
Our research and development activities involve the controlled use of
hazardous chemicals, biological materials and radioactive compounds. We are
subject to federal, state and local laws and regulations governing the use,
manufacture, storage, handling and disposal of hazardous materials and hazardous
waste products. Although we believe that our safety procedures for handling and
disposing of hazardous materials comply with the standards prescribed by
applicable laws and regulations, we cannot completely eliminate the risk of
accidental contamination or injury from these materials. In the event of an
accident, we could be held liable for any resulting damages and the liability
could be material. The ongoing cost of complying with environmental laws and
regulations is significant and may increase in the future. In addition, in
connection with our merger with Virus Research Institute, Inc. in 1998, we
assumed the real property lease at Virus Research Institute, Inc.'s former site.
We understand that this property has a low level of oil-based and other
hazardous material contamination. We believe that the risks posed by this
contamination are low, but we cannot predict whether additional hazardous
contamination exists at that site, or that changes in applicable law will not
require us to clean up the current contamination of the property.
MANY OF OUR PRODUCT CANDIDATES ARE TESTED IN LABORATORY ANIMALS WHICH MAY BE
CURTAILED BY SOCIAL FACTORS AND REGULATORY CHANGES
The research and development efforts that we sponsor often involve the
controlled use of laboratory animals. Opposition to this practice by United
States or foreign activist groups such as People for the Ethical Treatment of
Animals may interfere with the use of animal testing. Negative publicity
generated by activist groups may have an adverse impact on companies using this
practice, including us. In addition, physical force and demonstrations may occur
against us or our collaborative partners which could delay the testing of our
products. Lobbying efforts by activist groups and other groups and individuals
against the use of animals in testing is ongoing, and may result in changes in
laws, regulations or accepted clinical procedures that would restrict the use of
animals in testing. In the event of a change in laws, regulations or accepted
clinical procedures, our
9
<PAGE>
product development may be delayed as new methods for testing are developed.
Even if new methods are developed, there is no assurance that these will be as
efficacious as animal testing.
LOSS OF KEY EXECUTIVES AND SCIENTISTS COULD AFFECT OUR ABILITY TO DEVELOP OUR
PRODUCT CANDIDATES
We are dependent on the members of our management and scientific staff,
including Una S. Ryan, Ph.D., our president and chief executive officer. The
loss of Dr. Ryan or other key members of our staff could have a material adverse
effect on us. We also depend on our scientific collaborators and advisors, all
of whom have other commitments that may limit their availability to us. In
addition, we believe that our future success will depend in large part upon our
ability to attract and retain highly skilled scientific, managerial and
marketing personnel, particularly as we expand our activities in clinical
trials, the regulatory approval process and sales and manufacturing. We face
significant competition for this type of personnel from other companies,
research and academic institutions, government entities and other organizations.
We cannot predict whether we will be successful in hiring or retaining the
personnel we require for continued growth. The failure to hire and retain this
type of personnel could materially and adversely affect our business, financial
condition, results of operations and prospects.
THE NUMBER OF SHARES AVAILABLE FOR FUTURE SALE COULD ADVERSELY AFFECT THE MARKET
PRICE OF OUR COMMON STOCK
In the past several years we have entered into several private placement
transactions. Common stock issued in these transactions may be sold in the
public securities markets over time pursuant to registration rights granted to
the investors under the Securities Act of 1933. Additional common stock reserved
under our employee benefit and other incentive plans, including stock options,
may also be sold in the public securities markets from time to time. Future
sales of our common stock in the public securities markets could adversely
affect the trading price of our common stock. We cannot predict the effect that
perception in the market that such sales may occur in the future will have on
the market price of our common stock.
OUR STOCK PRICE IS HIGHLY VOLATILE
The market price of the shares of our common stock, like that of the common
stock of many other biotechnology companies, may be highly volatile. Factors
such as announcements of technological innovations or new commercial products by
us or our competitors, disclosure of results of clinical testing or regulatory
proceedings, governmental regulation and approvals, developments in patent or
other proprietary rights, public concern as to the safety of products developed
by us, and general economic and market conditions may have a significant effect
on the market price of our common stock. In addition, the stock market has from
time to time experienced and may experience in the future extreme price and
volume fluctuations, which have affected the market price of many biotechnology
companies and which have often been unrelated to the operating performance of
these companies. These broad market fluctuations, as well as general economic
and political conditions, may adversely affect the market price of our common
stock.
WE COULD BE ADVERSELY AFFECTED IF WE HAVE UNDERESTIMATED OUR YEAR 2000 COMPUTER
PROBLEMS
The Year 2000 issue relates to how computer systems and programs will
recognize and process dates after December 31, 1999. Most computer systems and
programs that use two digits to specify a year, if not modified prior to the
year 2000, will be unable to properly recognize dates. This could result in
system failures or miscalculations that could result in disruptions of normal
business operations. The Year 2000 issue can also affect embedded technology
systems and programs on which our business relies.
10
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934 and we are required to file reports and proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
these reports, proxy statements and information at the public reference
facilities maintained by the Securities and Exchange Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
Securities and Exchange Commission's Regional Offices at 7 World Trade Center,
13th Floor, New York, New York 10048, and Citicorp Center, 500 W. Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. You may also obtain copies at
the prescribed rates from the Public Reference Section of the Securities and
Exchange Commission at its principal office in Washington, D.C. You may call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information
about the public reference rooms. The Securities and Exchange Commission
maintains a web site that contains reports, proxy and information statements and
other information regarding registrants, including, Avant, that file
electronically with the Securities and Exchange Commission. You may access the
Securities and Exchange Commission's web site at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to incorporate by reference
in this prospectus the information that we file with them. Incorporation by
reference means that we can disclose important information to you by referring
you to other documents that are legally considered to be part of this
prospectus, and later information that we file with the Securities and Exchange
Commission will automatically update and supersede the information in this
prospectus, any supplement and the documents listed below. We incorporate by
reference the specific documents listed below and any future filings made with
the Securities and Exchange Commission under Section 13(a), 13(c), 14, or 15(d)
of the Securities Exchange Act of 1934 until all of the shares are sold:
- our Annual Report on Form 10-K for the fiscal year ended December 31, 1998
- our Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999
and June 30, 1999
- our Current Report on Form 8-K filed on September 23, 1999
- the definitive Proxy Statement for our annual meeting of stockholders held
May 6, 1999
- the description of our common stock contained in our registration
statement on Form 8-A, filed on September 22, 1986, including all
amendments and reports updating that description
We will furnish without charge to each person to whom this prospectus is
delivered, upon request, a copy of any documents incorporated by reference other
than exhibits to those documents. Requests should be addressed to: 119 Fourth
Avenue, Needham, Massachusetts 02494, Attention: Corporate Secretary (telephone
number (781) 433-0771).
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone to provide you with
different information. You should not assume that the information in this
prospectus or the documents incorporated by reference is accurate as of any date
other than the date on the front of this prospectus or those documents.
FORWARD-LOOKING STATEMENTS
Some statements incorporated by reference or made under the captions "Risk
Factors" and "Our Company" and elsewhere in this prospectus are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. When we use the words
"anticipate," "assume," "believe," "estimate," "expect,"
11
<PAGE>
"intend" and other similar expressions, they generally identify forward-looking
statements. Forward-looking statements include, for example, statements relating
to development activities, business strategy and prospects, future capital
expenditures, sources and availability of capital, governmental regulations and
their effect on us and competition.
You should exercise caution in interpreting and relying on forward-looking
statements since they involve known and unknown risks, uncertainties and other
factors which are, in some cases, beyond our control and could materially affect
our actual results, performance or achievements. Some of the factors that could
cause our actual results, performance or achievements to differ materially from
those expressed or implied by forward-looking statements include, but are not
limited to, the matters discussed under the caption "Risk Factors."
We caution you that, while forward looking statements reflect our good faith
beliefs, they are not guarantees of future performance. In addition, we disclaim
any obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise.
OUR COMPANY
Avant is a biopharmaceutical company that uses novel applications of
immunology to attempt to harness the human body's immune system to develop
vaccines and immunotherapeutics that prevent or treat disease caused by
infectious organisms, and drugs and treatment vaccines that modify undesirable
activity by the body's own protein or cells. Our technology platforms are
derived from a broad set of complementary technologies with the ability to
inhibit the complement system, regulate T and B cell activity, and enable the
creation and delivery of preventative and therapeutic vaccines. Our lead
therapeutic program is focused on developing compounds that inhibit the
inappropriate activation of the complement cascade, a vital part of the body's
immune defense system. We have also established a program for the discovery and
development of small-molecule immunoregulatory therapeutic compounds, for the
prevention of immune rejection of transplanted organs and the treatment of
autoimmune disorders. Our third program targets the development of a therapeutic
vaccine for the prevention and treatment of atherosclerosis.
USE OF PROCEEDS
Avant will not receive any proceeds from the sale of the shares by the
selling stockholders.
REGISTRATION RIGHTS OF THE SELLING STOCKHOLDERS
The following is a summary of the material terms and provisions of the
securities purchase agreement relating to the registration of the common stock
covered by this prospectus. It may not contain all the information that is
important to you. You can access complete information by referring to the
securities purchase agreement.
Under the securities purchase agreement, we must file a registration
statement covering the sale by the selling stockholders of the common stock that
they purchased on September 22, 1999. We must use our best efforts to cause the
registration statement to be declared effective by the Securities and Exchange
Commission no later than January 10, 2000 and to keep the registration statement
continuously effective until the earlier of:
- the date on which the selling stockholders no longer hold any of the
purchased common stock or
- September 21, 2001.
Any common stock sold by the selling stockholders pursuant to this
prospectus will no longer be entitled to the benefits of the registration rights
provisions of the securities purchase agreement.
12
<PAGE>
The securities purchase agreement requires that we bear all expenses of
registering the common stock with the exception of brokerage and underwriting
commissions and taxes of any kind and any legal, accounting and other expenses
incurred by the selling stockholders. We also agreed to indemnify the selling
stockholders and its officers, directors and other affiliated persons and any
person who controls the selling stockholders against all losses, claims,
damages, actions, liabilities, costs and expenses arising under the securities
laws in connection with the registration statement or this prospectus, subject
to limitations specified in the securities purchase agreement. In addition, the
selling stockholders agreed to indemnify us and our directors, officers and any
person who controls our company against all losses, claims, damages, actions,
liabilities, costs and expenses arising under the securities laws if they result
from:
- written information furnished to us by the selling stockholders for use in
the registration statement or this prospectus or any amendments to the
registration statement or any prospectus supplements or
- breaches or alleged breaches by selling stockholders of any of their
representations, warranties, covenants, agreements or obligations under
the terms of the securities purchase agreement.
13
<PAGE>
SELLING STOCKHOLDERS
The following table provides the name and number of shares of common stock
owned by each selling stockholder as of September 30, 1999, the number of shares
of common stock covered by this prospectus and the total number of shares of
common stock which the selling stockholders will beneficially own upon
completion of this offering. The shares offered by this prospectus may be
offered from time to time by the selling stockholders named below, or by any of
their pledgees, donees, transferees or other successors in interest.
Because the selling stockholders may sell all, some or none of the shares,
we have assumed that the selling stockholders will sell all of the shares in
determining the number and percentage of shares of common stock that each
selling stockholder will own upon completion of the offering to which this
prospectus relates. The amounts set forth below are based upon information
provided by the selling stockholders and are accurate to the best of our
knowledge. It is possible, however, that the selling stockholders may acquire or
dispose of additional shares of common stock or units from time to time after
the date of this prospectus.
<TABLE>
<CAPTION>
Shares of
Shares of Common Stock Owned
Common Stock Shares of After the Offering(1)
Beneficially Owned Common Stock ----------------------------
Selling Stockholder as of September 30, 1999 Offered Hereby Number Percent(%)
- --------------------------------------------- ------------------------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Nomura International plc(2).................. 2,604,167 2,604,167 0 0
Kleinwort Benson Holdings, Inc(3)............ 520,833 520,833 0 0
Pictet & Cie(4).............................. 520,833 520,833 0 0
Lombard Odier & Cie(5)....................... 2,151,506 546,875 1,604,631 3.2
International BM Biomedicine Holdings
AG(6)...................................... 975,625 390,625 585,000 1.2
Apollo Medical Partners, L.P.(7)............. 260,417 260,417 0 0
Brandon Fradd(7)............................. 15,625 15,625 0 0
Bank of New Nominees Limited(8).............. 150,000 150,000 0 0
Curran Capital Partners, L.P.(9)............. 768,700 150,000 618,700 1.3
Clarion Capital Corporation(10).............. 100,000 100,000 0 0
Clarion Partners, L.P.(10)................... 39,000 39,000 0 0
Clarion Offshore Fund LTD(10)................ 11,000 11,000 0 0
Catalyst Partners, L.P.(11).................. 1,175,000 100,000 1,075,000 2.2
Peter Sears(12).............................. 50,000 50,000 0 0
</TABLE>
- --------------------------
(1) Assumes that all shares hereby offered by the selling stockholders are sold.
(2) The selling stockholder's address is Nomura House, 1 St. Martin's-le-Grand,
London ECIA 4NP UK.
(3) The selling stockholder's address is 75 Wall Street, New York, NY 10005,
USA.
(4) The selling stockholder's address is 29, Blvd. Georges-Favon, Geneva
CH-1211, Switzerland.
(5) The selling stockholder's address is 11 Rue de la Corrateria, Geneva
CH-1204, Switzerland. Includes warrants to purchase 40,000 shares of common
stock.
(6) The selling stockholder's address is Aeschen Platz 7, PO Box 136, Basel
CH-4010 Switzerland.
(7) The selling stockholders' address is 68 Jane Street, Suite 2E New York, New
York 10014, USA. Mr. Fradd is a managing director of Apollo Medical
Partners, L.P. and he may be deemed to beneficially own the 260,417 shares
of common stock held by Apollo Medical Partners, L.P.
(8) The selling stockholder's address is 30 Cannon Street London EC4M 6XH, UK.
(9) The selling stockholder's address is 237 Park Avenue, 9th Floor, New York,
New York 10017, USA.
(10) The selling stockholders' address is 1801 East 9th Street, Suite 1120,
Cleveland, OH 44104, USA.
(11) The selling stockholder's address is 350 Park Avenue, New York, New York
10022, USA.
(12) The selling stockholder's address is 8 Paul Road, St. David, PA 19087, USA.
Mr. Sears has been a director of Avant since May, 1999.
14
<PAGE>
PLAN OF DISTRIBUTION
This prospectus relates to the possible sale from time to time of up to an
aggregate of 5,459,375 shares of common stock by the selling stockholders, or
any of their pledgees, donees, transferees or other successors in interest. We
are registering the shares pursuant to our obligations under the registration
provisions of the securities purchase agreement, but the registration of the
shares does not necessarily mean that any of the shares will be offered or sold
by the selling stockholders.
The distribution of the shares may be effected from time to time in one or
more underwritten transactions at a fixed price or prices, which may be changed,
or at market prices prevailing at the time of sale, at prices related to
prevailing market prices or at negotiated prices. Any underwritten offering may
be on a "best efforts" or a "firm commitment" basis. In connection with any
underwritten offering, underwriters or agents may receive compensation in the
form of discounts, concessions or commissions from the selling stockholders.
Underwriters may sell the shares to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents.
The selling stockholders and any underwriters, dealers or agents that
participate in the distribution of the shares may be deemed to be underwriters
under the Securities Act of 1933, and any profit on the sale of the shares by
them and any discounts, commissions or concessions received by any underwriters,
dealers or agents might be deemed to be underwriting discounts and commissions
under the Securities Act. At any time a particular offer of shares is made by
the selling stockholders, a prospectus supplement, if required, will be
distributed that will, where applicable:
- identify any underwriter, dealer or agent
- describe any compensation in the form of discounts, concessions,
commissions or otherwise received by each underwriter, dealer or agent and
in the aggregate to all underwriters, dealers and agents
- identify the amounts underwritten
- identify the nature of the underwriter's obligation to take the shares
- provide any other required information
The sale of shares by the selling stockholders may also be effected by
selling the shares directly to purchasers or to or through broker-dealers. In
connection with any such sale, any broker-dealer may act as agent for the
selling stockholders or may purchase from the selling stockholders all or a
portion of the shares as principal, and may be made pursuant to any of the
methods described below. Sales may be made on the Nasdaq National Market or
other exchanges on which our common stock is then traded, in the
over-the-counter market, in negotiated transactions or otherwise at prices and
at terms then prevailing or at prices related to the then-current market prices
or at prices otherwise negotiated.
The shares may also be sold in one or more of the following transactions:
- block transactions in which a broker-dealer may sell all or a portion of
such shares as agent but may position and resell all or a portion of the
block as principal to facilitate the transaction
- purchases by any such broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to any supplement to this
prospectus
- a special offering, an exchange distribution or a secondary distribution
in accordance with applicable Nasdaq National Market or other stock
exchange rules
15
<PAGE>
- ordinary brokerage transactions and transactions in which any such
broker-dealer solicits purchasers
- sales "at the market" to or through a market maker or into an existing
trading market, on an exchange or otherwise, for such shares
- sales in other ways not involving market makers or established trading
markets, including direct sales to purchasers
In effecting sales, broker-dealers engaged by the selling stockholders may
arrange for other broker-dealers to participate. Broker-dealers will receive
commissions or other compensation from the selling stockholders in amounts to be
negotiated immediately prior to the sale that will not exceed those customary in
the types of transactions involved. Broker-dealers may also receive compensation
from purchasers of the shares which is not expected to exceed that customary in
the types of transactions involved.
To comply with applicable state securities laws, the shares will be sold, if
necessary, in such jurisdictions only through registered or licensed brokers or
dealers. In addition, the shares may not be sold in some states unless they have
been registered or qualified for sale in the state or an exemption from the
registration or qualification requirement is available and is complied with.
All expenses relating to the offering and sale of the shares, other than
commissions, discounts and fees of underwriters, broker-dealers or agents, will
be paid by us.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
1998, have been so incorporated in reliance upon the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the common stock we are offering will be passed upon for us
by Goodwin, Procter & Hoar LLP, Boston Massachusetts.
16
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS,
INCORPORATED HEREIN BY REFERENCE OR CONTAINED IN A PROSPECTUS SUPPLEMENT.
NEITHER WE NOR THE SELLING STOCKHOLDERS HAVE AUTHORIZED ANYONE ELSE TO PROVIDE
YOU WITH DIFFERENT OR ADDITIONAL INFORMATION. THE SELLING STOCKHOLDERS ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS, OR
INCORPORATED HEREIN BY REFERENCE, OR IN ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS
OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS.
------------------------
TABLE OF CONTENTS
------------------------
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
PROSPECTUS SUMMARY..................................... 2
RISK FACTORS........................................... 3
WHERE YOU CAN FIND MORE INFORMATION.................... 11
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........ 11
FORWARD LOOKING STATEMENTS............................. 11
OUR COMPANY............................................ 12
USE OF PROCEEDS........................................ 12
REGISTRATION RIGHTS OF THE SELLING STOCKHOLDERS........ 12
SELLING STOCKHOLDERS................................... 14
PLAN OF DISTRIBUTION................................... 15
EXPERTS................................................ 16
LEGAL MATTERS.......................................... 16
</TABLE>
------------------------
5,459,375 SHARES
AVANT
IMMUNOTHERAPEUTICS,
INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
OCTOBER , 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. (1)
The following are the estimated expenses of the distribution of the shares
registered hereunder on Form S-3:
<TABLE>
<S> <C>
Registration Fee--Securities and Exchange Commission.............. $ 2,944.35
Accountants Fees and Expenses..................................... 2,500
Blue Sky Fees and Expenses........................................ 1,500
Legal Fees and Expenses........................................... 15,000
Printing Expenses................................................. 5,000
Miscellaneous..................................................... 1,500
---------
Total......................................................... $ 28,444.35
---------
---------
</TABLE>
- ------------------------
(1) The amounts set forth above, except for the SEC Registration Fee, are
estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Delaware corporation. Reference is made to Section 145 of
the Delaware General Corporation Law (the "DGCL"), which enables a corporation
to eliminate or limit the personal liability of a director for monetary damages
for violations of the director's fiduciary duty, except for liability (i) for
any breach of the director's duty of loyalty to the company, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under to Section 145 or (iv) for any transaction from
which a director derived an improper personal benefit. The Company has adopted
such provisions in the company's Amended and Restated Bylaws (the "Bylaws").
The DGCL permits, but does not require, a corporation to indemnify its
directors, officers, employees or agents and expressly provides that the
indemnification provided for under the DGCL shall not be deemed exclusive of any
indemnification right under any bylaw, vote of stockholders or disinterested
directors, or otherwise. The DGCL permits indemnification against expenses and
certain other liabilities arising out of legal actions brought or threatened
against such persons for their conduct on behalf of the corporation, provided
that each such person acted in good faith and in a manner that he or she
reasonably believed was in or not opposed to the corporation's best interests
and in the case of a criminal proceeding, had no reasonable cause to believe his
or her conduct was unlawful. The DGCL does not allow indemnification of
directors in the case of an action by or in the right of the corporation
(including stockholder derivative suits) unless the directors successfully
defend the action or indemnification is ordered by the court. The Bylaws of the
company provide for indemnification to the fullest extent authorized by the DGCL
and, therefore, these statutory indemnification rights are available to the
directors, officers, employees and agents of the Companies. Insofar as
indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act") may be permitted to directors and officers of the
company pursuant to the foregoing provision or otherwise, the company has been
advised that, in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and is therefore, unenforceable.
The Company currently carries a directors' and officers' liability insurance
policy which provides for payment of expenses of the company's directors and
officers in connection with threatened, pending or completed actions, suits or
proceedings against them in their capacities as directors and officers, in
accordance with the Bylaws and the DGCL.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
5.1 Opinion of Goodwin, Procter & Hoar LLP
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Goodwin, Procter & Hoar LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature pages)
99.1 Securities Purchase Agreement dated as of September 17, 1999, between the Company and the Selling
Stockholders
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
registration statement.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and
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 15(d) of
the Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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 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.
II-2
<PAGE>
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities 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 Securities 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 Needham, Commonwealth of Massachusetts, on October
19, 1999.
AVANT IMMUNOTHERAPEUTICS, INC.
By: /s/ UNA S. RYAN
-----------------------------------------
Una S. Ryan, Ph.D.
President, Chief Executive Officer and
Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, each of the undersigned officers and
directors of Avant Immunotherapeutics, Inc. hereby severally constitutes Una S.
Ryan, Ph.D. his or her true and lawful attorney with full power to her, to sign
for the undersigned and in his or her name in the capacity indicated below, the
Registration Statement filed herewith and any and all amendments to said
Registration Statement, and generally to do all such things in his or her name
and in his or her capacity as an officer or director to enable Avant
Immunotherapeutics, Inc. to comply with the provisions of the Securities Act of
1933, and all requirements of the Securities and Exchange Commission, hereby
ratifying and confirming his or her signature as it may be signed by his or her
said attorney, or any of them, to said Registration Statement and any and all
amendments thereto.
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 dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
President, Chief Executive
/s/ UNA S. RYAN Officer and Director
- ------------------------------ (Principal Executive October 19, 1999
Una S. Ryan, Ph.D. Officer)
/s/ J. BARRIE WARD Chairman
- ------------------------------ October 19, 1999
J. Barrie Ward, Ph.D.
Chief Financial Officer
/s/ LISA MCGILLIS (Principal Financial
- ------------------------------ Officer and Principal October 19, 1999
Lisa McGillis Accounting Officer)
/s/ HARRY H. PENNER, JR. Director
- ------------------------------ October 19, 1999
Harry H. Penner, Jr.
II-4
<PAGE>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ PETER SEARS Director
- ------------------------------ October 19, 1999
Peter Sears, Esq.
/s/ THOMAS R. OSTERMUELLER Director
- ------------------------------ October 19, 1999
Thomas R. Ostermueller
/s/ JOHN L. LITTLECHILD Director
- ------------------------------ October 19, 1999
John L. Littlechild
/s/ FREDERICK W. KYLE Director
- ------------------------------ October 19, 1999
Frederick W. Kyle
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ---------------------------------------------------------------------------------
<C> <S>
5.1 -- Opinion of Goodwin, Procter & Hoar LLP
23.1 -- Consent of PricewaterhouseCoopers LLP
99.1 -- Form of Securities Purchase Agreement dated as of September 17,
1999, between the Company and the Selling Stockholders
</TABLE>
<PAGE>
EXHIBIT 5.1
[Letterhead of Goodwin, Procter & Hoar LLP]
October 19, 1999
Avant Immunotherapeutics, Inc.
119 Fourth Avenue
Needham, Massachusetts 02494
Ladies and Gentlemen:
This opinion is furnished in our capacity as counsel to Avant
Immunotherapeutics, Inc., a Delaware corporation (the "Company"), in connection
with the registration, pursuant to the Securities Act of 1933 (the "Securities
Act"), of 5,459,375 shares (the "Shares") of common stock, par value $.001 per
share, of the Company.
In connection with rendering this opinion, we have examined the Certificate
of Incorporation and the Bylaws of the Company, each as amended to date; such
records of the corporate proceedings of the Company as we have deemed material;
a registration statement on Form S-3 under the Securities Act relating to the
Shares and the prospectus contained therein; and such other certificates,
receipts, records and documents as we considered necessary for the purposes of
this opinion.
We are attorneys admitted to practice in The Commonwealth of Massachusetts.
We express no opinion concerning the laws of any jurisdiction other than the
laws of the United States of America and The Commonwealth of Massachusetts and
the Delaware General Corporation Law.
Based upon the foregoing, we are of the opinion that the shares are duly
authorized, legally issued, fully paid and nonassessable by the Company under
the Delaware General Corporation Law.
The foregoing assumes that all requisite steps will be taken to comply with
the requirements of the Securities Act and applicable requirements of state laws
regulating the offer and sale of securities.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the captions
"Legal Matters" and "Validity of Common Stock" in the prospectus.
Very truly yours,
/s/ GOODWIN, PROCTER & HOAR LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 1, 1999 relating to the
financial statements which appears in Avant Immunotherapeutics, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1998. We also consent to the
reference to us under the heading "Experts" in such registration statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
October 19, 1999
<PAGE>
Exhibit 99.1
SECURITIES PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 17,1999
BY AND BETWEEN
AVANT IMMUNOTHERAPEUTICS, INC.
AND
THE PURCHASERS NAMED ON THE SIGNATURE PAGES ATTACHED HERETO
<PAGE>
TABLE OF CONTENTS
Page
1. DEFINITIONS...............................................................2
2. PURCHASE AND SALE; PURCHASE PRICE.........................................5
3. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE PURCHASERS............6
4. REPRESENTATIONS, WARRANTIES, COVENANTS, ETC.
OF THE COMPANY............................................................8
5. CERTAIN COVENANTS........................................................13
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL...........................14
7. CONDITIONS TO THE PURCHASERS' OBLIGATION TO PURCHASE.....................14
8. REGISTRATION RIGHTS......................................................15
9. INDEMNIFICATION AND CONTRIBUTION.........................................20
10. MISCELLANEOUS............................................................22
2
<PAGE>
THIS SECURITIES PURCHASE AGREEMENT, dated as of September 17, 1999 (this
"Agreement"), by and between AVANT IMMUNOTHERAPEUTICS, INC., a Delaware
corporation, with headquarters located at 119 Fourth Avenue, Needham, MA 02494
(the "Company"), and each of the purchasers set forth on the signature pages
attached hereto (each a "Purchaser," and collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS,
(A) The Purchasers desire to purchase and the Company desires to sell, upon
the terms and conditions set forth in this Agreement, shares (the
"Shares") of common stock, $.001 par value per share, of the Company (the
"Common Stock"), that will result in the receipt by the Company of
aggregate gross proceeds of approximately US$10,000,000 or more; and
(B) Each Purchaser wishes to purchase, upon the terms and conditions stated in
this Agreement, the number of Shares set forth opposite its name on the
signature pages attached hereto.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1 DEFINITIONS
1.1 The following terms used in this Agreement shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Aggregate Purchase Price" means the aggregate price paid to the Company for the
Shares by the Purchasers.
"Blackout Period" means any period that the Company notifies the Investors that
they are required, pursuant to Section 8.4(d) hereof, to suspend offers and
sales of Registrable Securities as a result of an event or circumstance
described in Section 8.2(e)(ii) hereof during which period, by reason of Section
8.2(e)(ii) hereof, the Company is not required to amend the Registration
Statement or to supplement the Prospectus; provided, however, that the total
number of days of all Blackout Periods in the aggregate may not exceed 60
Trading Days in any 12-month period.
"Business Day" means any day other than a Saturday, Sunday or a day on which
commercial banks in The City of New York or London, England are authorized or
required by law or executive order to remain closed.
"Claims" means any losses, claims, damages, liabilities or expenses (joint or
several) incurred by a Person.
"Closing Date" means 4:00 p.m., New York City time, on September 21, 1999, or
such other time and date as the parties hereto may agree on.
"Code" means the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder and published interpretations thereof.
"Disclosure Schedule" means the Disclosure Schedule prepared by the Company and
furnished to the Purchasers prior to the date of execution and delivery of this
Agreement by the Purchasers.
1
<PAGE>
Items disclosed in response to a particular Section of this Agreement in the
Disclosure Schedule will be deemed disclosed for purposes of other Sections as
applicable without cross-references.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder and published interpretations
thereof.
"Indemnified Party" means the Company, each of its directors, each of its
officers who signs the Registration Statement, each Person, if any, who controls
the Company within the meaning of the 1933 Act or the 1934 Act, any underwriter
(as defined in the 1933 Act) and any other stockholder selling securities
pursuant to the Registration Statement or any of its directors or officers; or
any Person who controls such stockholder or underwriter within the meaning of
the 1933 Act or the 1934 Act.
"Indemnified Person" means each Investor who holds Registrable Securities and
each Investor who sells such Registrable Securities in the manner permitted
under this Agreement; the directors, if any, of such Investor; the officers, if
any, of such Investor; each Person, if any, who controls any Investor within the
meaning of the 1933 Act or the 1934 Act; any underwriter acting on behalf of an
Investor who participates in the offering of Registrable Securities of such
Investor in accordance with the plan of distribution contained in the Prospectus
included in the Registration Statement; the directors, if any, of such
underwriter and the officers, if any, of such underwriter; and each Person, if
any, who controls any such underwriter within the meaning of the 1933 Act or the
1934 Act.
"Inspector" means any attorney, accountant or other agent reasonably acceptable
to the Company retained by an Investor for the purposes provided in Section
8.2(i) hereof.
"Investors" means the Purchasers and any Permitted Transferee or assignee who
agrees to become bound by the provisions of Section 8 of this Agreement.
"Material Adverse Effect" means any material adverse effect on the business,
operations, assets, condition (financial or other) or prospects of the Company
and its Subsidiaries taken as a whole.
"Nasdaq" means the Nasdaq Stock Market.
"NASD" means the National Association of Securities Dealers, Inc.
"Nomura" means, individually and collectively, Nomura International plc and
Nomura Securities International, Inc.
"Nomura Affiliates" includes The Nomura Securities Co., Ltd., or any company in
relationship to which The Nomura Securities Co., Ltd. is entitled to exercise,
or control the exercise, of 15% or more of the voting rights (including Nomura
International plc and Nomura Securities International, Inc.), and their
respective officers, directors and agents.
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Person" means any natural person, corporation, partnership, limited liability
company, trust, incorporated government, governmental agency or political
subdivision.
"Prospectus" means the prospectus forming part of the Registration Statement at
the time the Registration Statement is declared effective and any amendment or
supplement thereto.
2
<PAGE>
"Questionnaire" means the Purchaser Questionnaire in the form of Annex A hereto
completed by each Purchaser.
"Permitted Transferee" means any Person who is (a) an "accredited investor" as
defined in Regulation D, or (b) a purchaser who is not a U.S. person within the
meaning of Regulation S, or (c) any other transferee of the Shares as permitted
under the securities law of the United States.
"Record" means all pertinent financial and other records, pertinent corporate
documents and properties of the Company subject to inspection for the purposes
provided in Section 8.2(i) of this Agreement.
"register," "registered" and "registration" refer to a registration effected by
preparing and filing a Registration Statement or Statements in compliance with
the 1933 Act and pursuant to Rule 415 thereunder, and the declaration or
ordering of effectiveness of such Registration Statement by the SEC.
"Registration Period" means the period from the SEC Effective Date to the
earlier of (i) the date which is two years after the Closing Date and (ii) the
date on which the Investors no longer own any Registrable Securities.
"Registrable Securities" means the Shares and any other securities issued to
holders of such Shares upon any reclassification, share combination, share
subdivision, share dividend, merger, consolidation or similar transaction or
event.
"Registration Statement" means a registration statement on Form S-3 of the
Company under the 1933 Act which names the Investors as selling stockholders.
"Rule 144" means Rule 144 promulgated under the 1933 Act or any other similar
rule or regulation of the SEC that may at any time permit a holder of any
securities to sell securities of the Company to the public without registration
under the 1933 Act.
"Rule 415" means Rule 415 under the 1933 Act or any successor rule providing for
offering securities on a delayed or continuous basis.
"Regulation D" means Regulation D under the 1933 Act.
"Regulation S" means Regulation S under the 1933 Act.
"SEC" means the United States Securities and Exchange Commission.
"SEC Effective Date" means the date the Registration Statement is declared
effective by the SEC.
"SEC Filing Date" means the date the Registration Statement is first filed with
the SEC pursuant to Section 8 of this Agreement.
"SEC Reports" means all periodic and other reports filed by the Company with the
SEC pursuant to the 1933 Act and 1934 Act subsequent to January 1, 1998 and
prior to the date hereof, in each case as filed with the SEC and including the
information and documents (other than exhibits) incorporated therein by
reference.
"Subsidiary" means T Cell Diagnostics, Inc., a Delaware corporation which is the
only other entity of which a majority of the capital stock or other ownership
interests having ordinary voting
3
<PAGE>
power to elect a majority of the board of directors or other persons performing
similar functions are at this time directly or indirectly owned by the Company.
"Trading Day" means at any time a day on which any of a national securities
exchange, Nasdaq or such other securities market as at such time constitutes the
principal securities market for the Common Stock is open for general trading of
securities.
"Violation" means:
(a) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment
thereof or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading;
(b) any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the
omission or alleged omission to state therein any material fact necessary
to make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading;
(c) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any state securities law or any rule or regulation under the
1933 Act, the 1934 Act or any state securities law;
(d) any breach or alleged breach by any Person other than the Purchasers of
any representation, warranty, covenant, agreement or obligation under the
terms of this Agreement; or
(e) any breach or alleged breach by any Investor of any representation,
warranty, covenant, agreement or obligation under the terms of this
Agreement.
2 PURCHASE AND SALE; PURCHASE PRICE
2.1 Sale and Purchase of the Shares Subject to all of the terms and conditions
hereof and in reliance on the representations and warranties set forth or
referred to herein, at the Closing the Company agrees to sell to each Purchaser
and each Purchaser hereby agrees to purchase, that number of Shares of Common
Stock set forth opposite the name of such Purchaser on the signature pages
attached hereto, at the respective purchase price (the "Purchase Price") set
forth opposite the name of such Purchaser on the signature pages attached
hereto. The price per share to be sold under this Agreement will be US$1.92.
2.2 Closing The closing of the purchase and sale of the Shares (the "Closing")
will take place at the offices of Weil, Gotshal & Manges LLP, New York, New York
on the Closing Date or at such other place as the parties hereto may agree upon.
The Closing shall occur when (a) the Company shall have delivered to Weil,
Gotshal & Manges LLP on behalf of the Purchasers share certificates representing
the Shares to be issued to the Purchasers; and (b) each of the Purchasers has
placed an amount equal to the Purchase Price set forth opposite the name of such
Purchaser on the signature pages attached hereto, in an escrow account
established by Weil, Gotshal & Manges LLP at Morgan Guaranty Trust Company, 500
Stanton Christiana, Newark, Delaware 19713-2107 ; ABA Number: 031-100-238;
Account Name: Weil, Gotshal & Manges LLP Special Account; Account Number:
158-37-474; Reference: 65579/0041 (the "Escrow Account"). On the Closing Date,
there shall be released to each Purchaser one or more certificates registered in
the name of that Purchaser representing the number of shares of Common Stock
purchased by it
4
<PAGE>
as set forth on the signature pages attached hereto, and all funds in the Escrow
Account shall be released to the Company pursuant to the Company's instructions;
provided that the amounts payable to Nomura in connection with the transactions
contemplated hereby and the fees and expenses of counsel of the Purchasers as
contemplated by Section 10.11 shall be deducted from such amount.
3 REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE PURCHASERS
Each of the Purchasers severally, and not jointly, represents and warrants to,
and covenants and agrees with, the Company as follows:
3.1 Purchaser Status The Purchaser is either (a) an "accredited investor," as
that term is defined in Rule 501(a) of Regulation D or (b) a purchaser who is
not a U.S. person within the meaning of Regulation S.
3.2 Investor Suitability The Purchaser is purchasing the Shares for its own
account, or for one or more investor accounts for which it is acting as a
fiduciary or agent, in each case for investment, and not with a view to, or for
offer or sale in connection with, any distribution thereof Each Purchaser that
is a U.S. person within the meaning of Regulation S further acknowledges that
(i) its commitment to purchase the Shares is reasonable in relation to its net
worth; (ii) it has the requisite knowledge or has relied upon the advice of its
own counsel, accountants or others, each of whom qualifies as an investor
representative with regard to all of the considerations involved in purchasing
the Shares; (iii) it is aware that the right to transfer the Shares is
restricted as set forth herein; (iv) it has the financial ability to bear the
economic risk of the investment in the Company (including the complete loss of
the entire investment), adequate means of providing for its current and
anticipated needs and personal contingencies, if any, and no need for liquidity
with respect to its investment in the Company; and (v) its overall commitment to
investments that are not readily marketable is not disproportionate to its net
worth and its purchasing of the Shares will not cause such overall commitment to
become excessive.
3.3 Resale Restrictions
(a) Each of the Purchasers understands and acknowledges that (i) the sale or
resale of the Shares has not been and, except as otherwise provided
herein, is not being, registered under the 1933 Act or any applicable
state securities laws, and the Shares may not be transferred unless (a)
the Shares are sold pursuant to an effective registration statement under
the 1933 Act, (b) the Purchaser shall have delivered to the Company an
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the
effect that the Shares to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration, (c) the
Shares are sold or transferred to an "affiliate" (as defined in Rule 144
(or a successor rule)) of the Purchaser who agrees to sell or otherwise
transfer the Shares only in accordance with this Section 3.3 and who is an
accredited investor or (d) the Shares are sold pursuant to Rule 144 or in
reliance on Regulation S; (ii) any sale of such Shares made in reliance on
Rule 144 or Regulation S may be made only in accordance with the terms of
said Rule or Regulation and, further, if said Rule or Regulation is not
applicable, any resale of such Shares under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be
an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any
other person is under any obligation to register such Shares under the
1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder (in each
5
<PAGE>
case, other than as provided herein). Notwithstanding the foregoing or
anything else contained herein to the contrary, the Shares may be pledged
as collateral in connection with a bona fide margin account or other
lending arrangement.
(b) Each of the Purchasers understands and acknowledges that (i) the Shares
are deemed to be "restricted securities" as defined in Rule 144 and will
continue to be deemed to be "restricted securities" notwithstanding any
resale of the Shares pursuant to Regulation S and (ii) it will not engage
in hedging transactions involving the Common Stock otherwise than in
compliance with the 1933 Act.
(c) Each of the Purchasers understands and acknowledges that until such time
as the Shares have been sold pursuant to an effective registration
statement under the 1933 Act or may otherwise be sold pursuant to Rule 144
without any restriction as to the number of securities as of a particular
date that can then be immediately sold, the Shares may bear a restrictive
legend in substantially the following form (and a stop-transfer order may
be placed against transfer of the certificates for such Shares):
"The Shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"). The
Shares may not be resold, transferred or assigned except in
accordance with the provisions of Regulation S under the 1933 Act,
pursuant to the registration requirements of the 1933 Act or
pursuant to an available exemption from registration. Hedging
transactions involving the common stock of the issuer of the Shares
may not be conducted except in compliance with the 1933 Act."
The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Shares upon which it
is stamped, if, unless otherwise required by applicable state securities
laws, (a) such Shares are sold under an effective registration statement
filed under the 1933 Act or otherwise may be sold pursuant to Rule 144
without any restriction as to the number of securities as of a particular
date that can then be immediately sold or (b) such holder provides the
Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a
public sale or transfer of such Shares may be made without registration
under the 1933 Act and such sale or transfer is effected. The Purchaser
agrees to sell all Shares, including those represented by a certificate
from which the legend has been removed, in compliance with applicable
prospectus delivery requirements, if any.
3.4 Absence of Approvals The Purchaser understands that no U.S. federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Shares.
3.5 Information Provided The Purchaser and its advisors, if any, have requested,
received and considered all information relating to the business, properties,
operations, condition (financial or other), results of operations or prospects
of the Company and information relating to the sale of the Shares deemed
relevant by them; the Purchaser and its advisors have been afforded the
opportunity to ask questions of the Company concerning the terms of the offering
of the Shares and the business, properties, operations, condition (financial or
other), results of operations or prospects of the Company and have received
satisfactory answers to any such inquiries. Without limiting the generality of
the foregoing, the Purchaser has had the opportunity to obtain and to review the
SEC Reports and the Disclosure Schedule. In connection with its decision to
purchase the Shares, the Purchaser has relied solely upon the SEC Reports, the
6
<PAGE>
Disclosure Schedule, the representations, warranties, covenants and agreements
of the Company set forth in this Agreement, as well as any investigation of the
Company completed by the Purchaser or its advisors. The Purchaser understands
that its investment in the Securities involves a high degree of risk.
3.6 Due Authorization The Purchaser has all requisite power and authority,
corporate or otherwise, to execute, deliver and perform its obligations under
this Agreement and the other agreements executed by the Purchaser in connection
herewith and to consummate the transactions contemplated hereby and thereby.
This Agreement has been duly and validly authorized, duly executed and delivered
by the Purchaser and, assuming due execution and delivery by the Company, is a
valid and binding agreement of the Purchaser enforceable in accordance with its
terms, except as the enforceability hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally and general principles of equity, regardless of whether enforcement is
considered in a proceeding in equity or at law.
4 REPRESENTATIONS, WARRANTIES, COVENANTS, ETC. OF THE COMPANY
The Company represents and warrants to the Purchasers that, except as set forth
in the Disclosure Schedule, the following matters are true and correct on the
date of execution and delivery of this Agreement and will be true and correct on
the Closing Date, and the Company covenants and agrees with the Purchasers as
follows:
4.1 Organization and Authority The Company and each of its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, and has all requisite corporate power
and authority to (i) own, lease and operate its properties and to carry on its
business as described in the SEC Reports and as currently conducted and (ii) to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The Company is duly qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions where such qualification is necessary and where failure so to
qualify could have a Material Adverse Effect.
4.2 Capitalization The authorized capital of the Company consists of 75,000,000
shares of Common Stock, of which 42,533,535 shares were outstanding on June 30,
1999; (ii) 1,163,102 shares of Class B Preferred Stock, $2.00 par value, none of
which are outstanding; and (iii) 3,000,000 shares of Class C Preferred Stock,
$.01 par value, of which 350,000 have been designated Class C-1 Junior
Participating Cumulative Preferred Stock, none of which are outstanding. The
Company is, directly or indirectly, the registered and beneficial owner of all
of the outstanding shares of capital stock of each of its Subsidiaries. Except
as set forth on the Disclosure Schedule, there are no outstanding options or
warrants for the purchase of, or other rights to purchase or subscribe for, or
securities convertible into or exchangeable for, Common Stock or other capital
stock of the Company or its Subsidiaries, or any contracts or commitments to
issue or sell Common Stock or other capital stock of the Company or its
Subsidiaries or any such options, warrants, rights or other securities. All of
such outstanding shares of capital stock of the Company and each Subsidiary have
been duly authorized and validly issued and are fully paid and nonassessable and
all of such options, warrants and other rights have been duly authorized by the
Company and such Subsidiary. None of the outstanding shares of capital stock and
options, warrants and other rights to acquire Common Stock has been issued in
violation of the preemptive rights of any security holder of the Company or any
Subsidiary. The offers and sales of the outstanding shares of capital stock of
the Company and options, warrants and other rights to acquire Common Stock or
other capital stock of the Company were at all relevant times
7
<PAGE>
either registered under the 1933 Act and applicable state securities laws or
exempt from such requirements. No holder of any of the securities of the Company
or any of its Subsidiaries has any rights ("demand," "piggy-back" or otherwise),
to have such securities registered by reason of the intention to file, filing or
effectiveness of a Registration Statement.
4.3 The Shares and the Common Stock The Shares have been duly authorized, and
when validly issued and delivered to the Purchasers by the Company against
payment of the consideration set forth herein, will be fully paid and
nonassessable and will not subject the holders thereof to personal liability by
reason of being such holders. The holders of outstanding shares of capital stock
of the Company are not entitled to preemptive or other rights to subscribe for
the Shares. The Common Stock is listed for trading on Nasdaq and (i) the Company
and the Common Stock meet the criteria for continued listing and trading on
Nasdaq; (ii) the Company has not been notified by the NASD of any failure or
potential failure to meet the criteria for continued listing and trading on
Nasdaq and (iii) no suspension of trading in the Common Stock is in effect. The
Company knows of no reason why the Shares will not be eligible for listing on
Nasdaq.
4.4 Corporate Authorization The Company's execution, delivery and performance of
this Agreement has been duly and validly authorized by all requisite corporate
action by the Company and, assuming due execution and delivery by the
Purchasers, will be a valid and binding obligation of the Company enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and general principles of equity, regardless of
whether enforcement is considered in a proceeding in equity or at law.
4.5 Non-contravention The execution and delivery of this Agreement by the
Company and the consummation by the Company of the sale of the Shares and the
other transactions contemplated by this Agreement do not and will not, with or
without the giving of notice or the lapse of time, or both (i) result in any
violation of any provision of the certificate of incorporation or by-laws of the
Company or any of its Subsidiaries; (ii) conflict with or result in a breach by
the Company or any of its Subsidiaries of any of the terms or provisions of, or
constitute a default under, or result in the modification of, or result in the
creation or imposition of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company or any of its Subsidiaries
pursuant to, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective
properties or assets are bound or affected; (iii) violate or contravene any
applicable law, rule or regulation or any applicable decree, judgment or order
of any court, United States federal or state regulatory body, administrative
agency or other governmental body having jurisdiction over the Company or any of
its properties or assets; or (iv) violate or contravene any permit,
certification, registration, approval, consent, license or franchise necessary
for the Company to own or lease and operate any of its properties and to conduct
any of its business or the ability of the Company to make use thereof.
4.6 Approvals No authorization, approval or consent of, or filing with, any
court, governmental body, regulatory agency, self-regulatory organization, stock
exchange or market or the stockholders of the Company is required to be obtained
or made by the Company in connection with the execution, delivery and
performance of this Agreement and sale of the Shares as contemplated by this
Agreement, other than (i) registration of the resale of the Shares under the
1933 Act as contemplated by Section 8 hereof, (ii) as may be required under
applicable state securities or "blue sky" laws and (iii) filing one or more
Forms D with respect to the Securities as required under Regulation D.
8
<PAGE>
4.7 Information Provided The documents listed on the Disclosure Schedule
provided by or on behalf of the Company to the Purchasers do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they are made, not misleading, it being understood that for purposes of
this Section 4.7, any statement contained in such information shall be deemed to
be modified or superseded for purposes of this Section 4.7 to the extent that a
statement in any document included in such documents which was prepared or filed
with the SEC on a later date modifies or replaces such statement, whether or not
such later prepared or filed statement so states.
4.8 SEC Filings The Company has timely filed all reports required to be filed
under the 1933 Act and the 1934 Act with the SEC since January 1, 1998. All of
such reports and documents complied, when filed, in all material respects, with
all applicable requirements of the 1933 Act and the 1934 Act. The Company meets
the requirements for the use of Form S-3 for the registration of the resale of
the Shares by the Purchasers and any other Investors and will use its best
efforts to maintain S-3 status with the SEC during the Registration Period.
4.9 Liabilities Except as and to the extent disclosed, reflected or reserved
against in the SEC Reports or in the financial statements of the Company and the
notes thereto included in the SEC Reports, the Company has no material
(individually or in the aggregate) liability, debt or obligation whether
accrued, absolute, contingent or otherwise, and whether due or to become due
that are required to be reflected on a balance sheet in accordance with
generally accepted accounting principles in the United States. Subsequent to
December 31, 1998, the Company has not incurred any liabilities, debts or
obligations of any nature whatsoever that are, individually or in the aggregate,
material to the Company that are required to be reflected on a balance sheet in
accordance with generally accepted accounting principles in the United States.
4.10 Conduct of Business Except as set forth in the SEC Reports, since December
31, 1998 there has been no Material Adverse Effect and neither the Company nor
any of its Subsidiaries has (i) incurred any material obligation or liability
(absolute or contingent) other than in the ordinary course of business; (ii)
canceled, without payment in full, any material notes, loans or other
obligations receivable or other debts or claims held by it other than in the
ordinary course of business; (iii) sold, assigned, transferred, abandoned,
mortgaged, pledged or subjected to lien any of its material properties, tangible
or intangible, or rights under any material contract, permit, license, franchise
or other agreement; (iv) conducted its business in a manner materially different
from its business as conducted on such date; or (v) declared, made or paid or
set aside for payment any cash or non-cash distribution on any shares of its
capital stock. Except as disclosed in the SEC Reports, the Company and its
Subsidiaries own, possess or have obtained all governmental, administrative and
third-party licenses, permits, certificates, registrations, approvals, consents
and other authorizations necessary to own or lease (as the case may be) and
operate their properties, whether tangible or intangible, and to conduct their
business or operations as currently conducted, except such licenses, permits,
certificates, registrations, approvals, consents and authorizations the failure
of which to obtain would not have a Material Adverse Effect.
4.11 Absence of Certain Proceedings Except as described in the SEC Reports or as
set forth on the Disclosure Schedule, there is no action, suit, proceeding,
inquiry or investigation before or by any court, public board or body pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any of its Subsidiaries wherein an unfavorable decision, ruling or finding
would have a Material Adverse Effect or which could adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement. The Company does not have pending
before the SEC any request for confidential treatment of information and to the
best of the Company's knowledge no
9
<PAGE>
such request will be made by the Company prior to the SEC Effective Date except
as set forth in the Disclosure Schedule; and to the best of the Company's
knowledge there is not pending or contemplated, and there has been no,
investigation by the SEC involving the Company or any current director or
officer of the Company.
4.12 Intellectual Property Except as set forth on the Disclosure Schedule, the
Company (i) owns or has the valid and legal right to use all patent rights,
trademarks, trade names, service marks, logos, copyrights, formulas, methods and
processes (hereinafter referred to as "Intangible Property") currently used in
connection with the conducts of its businesses; (ii) does not knowingly or
wilfully infringe upon the proprietary rights of others; (iii) has listed on the
Disclosure Schedule, to the best of its knowledge and ability, all patents,
patent applications, registered trademarks, trademark applications, trade names,
in which it has an ownership or licensed interest. Except as otherwise set forth
on the Disclosure Schedule, no royalties or fees payable by the Company to any
Person by reason of the ownership or use of any Intangible Property has not been
paid. To the best of its knowledge and belief, all items of Intangible Property
are valid and in good standing, and are adequate and sufficient to permit the
Company to conduct its business as presently conducted, and no other rights of
any kind in respect of the Intangible Property are required by the Company for
its operations as currently conducted. Except as set forth in the Disclosure
Schedule, the Company has the sole and exclusive right to use the Intangible
Property; all rights granted to other Persons to use the Intangible Property
owned or controlled by the Company are listed on the Disclosure Schedule. Except
as set forth in the Disclosure Schedule, the Company is unaware of any present
infringement upon the Intangible Property. Except as set forth in the Disclosure
Schedule, the Company, to the best of its knowledge, is unaware of any claim or
charge by any other Person that the Company infringes upon the intellectual
property rights of such Person or is in conflict with any rights or properties
owned by another Person.
4.13 Internal Accounting Controls The Company and its Subsidiaries maintain a
system of internal accounting controls sufficient, in the judgment of the
Company's board of directors, to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
4.14 Compliance with Law The Company and its Subsidiaries are in possession of
all franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease
and operate their properties and to carry on their businesses as they are now
being conducted, except those the absence of which would not have a Material
Adverse Effect (collectively, the "Permits"), and there is no action pending or,
to the knowledge of the Company, threatened regarding suspension or cancellation
of any of the Permits. To the best of the Company's knowledge, neither the
Company nor any of its Subsidiaries is in violation of any statute, law, rule,
regulation, ordinance, decision or order of any governmental agency or body or
any court, domestic or foreign, except where such violation would not
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation that would reasonably be expected to
lead to such a claim.
4.15 Properties The Company and its Subsidiaries have good and marketable title
to all property, real and personal (tangible and intangible), and other assets
owned by it and them which are individually or in the aggregate material to the
Company, free and clear of all security interests, charges, mortgages, liens or
other encumbrances, except such as are described in the
10
<PAGE>
SEC Reports or such as do not materially interfere with the use of such property
made, or proposed to be made, by the Company. To the best of the Company's
knowledge, the leases, licenses or other contracts or instruments under which
the Company leases, holds or is entitled to use any property, real or personal
(which, individually or in the aggregate, are material to the Company) are
valid, subsisting and enforceable with only such exceptions as do not materially
interfere with the use of such property made, or proposed to be made, by the
Company. The Company has not received notice of any material violation of any
applicable law, ordinance, regulation, order or requirement relating to its
owned or leased properties.
4.16 Insurance The Company maintains insurance against loss or damage by fire or
other casualty and such other insurance, including, but not limited to, product
liability insurance, in such amounts and covering such risks as is reasonably
adequate consistent with industry practice for the conduct of its business and
the value of its properties.
4.17 Tax Matters The Company has filed all federal, state and local income and
franchise tax returns required to be filed and has paid all taxes shown by such
returns to be due, and no tax deficiency has been determined adversely to the
Company which has had (nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company, might have) a Material
Adverse Effect.
4.18 Investment Company The Company is not an "investment company" within the
meaning of such term under the Investment Company Act of 1940 and the rules and
regulations of the SEC thereunder.
4.19 Absence of Brokers, Finders, etc. No broker, finder or similar Person is
entitled to any commission, fee or other compensation by reason of the
transactions contemplated by this Agreement other than Nomura International
plc/Nomura Securities Inc.; and the Company shall pay, and indemnify and hold
harmless the Purchasers from, any claim made against the Purchasers by such
entity or any other Person for any such commission, fee or other compensation.
4.20 No General Solicitation No form of general solicitation or general
advertising was used by the Company or, to the best of its knowledge, any other
Person acting on behalf of the Company, in respect of the Shares or in
connection with the offer and sale of the Shares. Neither the Company nor, to
its knowledge, any Person acting on behalf of the Company has, either directly
or indirectly, sold or offered for sale to any Person any of the Shares or,
within the six months prior to the date hereof, any other similar security of
the Company except as contemplated by this Agreement, and the Company represents
that neither the Company nor any Person authorized to act on its behalf will
sell or offer for sale any such security to, or solicit any offers to buy any
such security from, or otherwise approach or negotiate in respect thereof with,
any Person so as thereby to cause the issuance or sale of any of the Shares to
be in violation of any of the provisions of Section 5 of the 1933 Act.
4.21 No Directed Selling Efforts The Company has not engaged in any directed
selling efforts (within the meaning of Regulation S) with respect to the sale of
the Shares under this Agreement.
4.22 No Integration The Company has not sold, offered to sell, solicited offers
to buy or otherwise negotiated in respect of any "security" (as defined in the
1933 Act) that is or could be integrated with the sale of the Shares in a manner
that would require the registration of the Shares under the 1933 Act.
11
<PAGE>
4.23 Stop Transfers The Company will not register any transfer of the Shares not
made pursuant to the provisions of Regulation S, pursuant to the registration
requirements of the 1933 Act or pursuant to an available exemption from
registration under the 1933 Act.
4.24 No Registration Assuming the accuracy of the representations, warranties
made by, and compliance with the covenants of, the Purchasers in Section 3
hereof, no registration of the Shares under the 1933 Act is required in
connection with the sale of the Shares to the Purchasers as contemplated by this
Agreement.
5 CERTAIN COVENANTS
5.1 Nasdaq; Reporting Status The Company shall use its best efforts to take such
actions as may be necessary and as soon as practicable and in no event later
than 30 days after the Closing Date to file with Nasdaq an application or other
document required by Nasdaq for the listing of the Shares with Nasdaq and shall
provide evidence of such filing to the Purchasers. So long as any of the
Purchasers beneficially own any portion of the Shares, the Company will use its
best efforts to maintain the inclusion of the Common Stock on Nasdaq or the
listing of the Common Stock on a national securities exchange; provided,
however, that this will not restrict the Company from engaging in any
transaction which results in all of the capital stock of the Company being
acquired in a business combination or other acquisition transaction. During the
Registration Period, the Company shall timely file all reports required to be
filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act, and the
Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would permit such termination; provided, however, that this will not restrict
the Company from engaging in any transaction which results in all of the
outstanding capital stock of the Company being acquired in a business
combination or other acquisition transaction. During the Registration Period,
the Company shall furnish to the Purchasers copies of all reports and other
information filed by the Company with the SEC pursuant to Sections 13, 14(a),
14(c) and 15(d) of the 1934 Act promptly.
5.2 Form D The Company agrees to file one or more Forms D with respect to the
Shares on a timely basis as required under Regulation D to claim the exemption
provided by Rule 506 of Regulation D and to provide a copy thereof to the
Purchasers promptly after such filing.
5.3 State Securities Laws On or before the Closing Date, the Company shall take
such action as shall be necessary to qualify, or to obtain, an exemption for the
Shares under such of the securities laws of United States jurisdictions as shall
be necessary to qualify, or to obtain an exemption from, the sale of the Shares.
The Company shall furnish the Purchasers with copies of all filings,
applications, orders and grants or confirmations of exemptions relating to such
securities laws on or before the Closing Date.
5.4 Certain Future Financings and Related Actions
(a) The Company will not sell, offer to sell, solicit offers to buy or
otherwise negotiate in respect of any "security" (as defined in the 1933
Act) that is or could be integrated with the sale of the Shares in a
manner that would require the registration of the Shares under the 1933
Act.
(b) The Company shall not offer, sell, contract to sell or issue (or engage
any Person to assist the Company in taking any such action) any equity
securities or securities convertible into, exchangeable for or otherwise
entitling the holder to acquire, any Common Stock at a price below the
market price of the Common Stock during the period from the date of this
Agreement to the SEC Effective Date; provided, however, that nothing in
this Section
12
<PAGE>
5.4(b) shall prohibit the Company from issuing securities (v) pursuant to
compensation plans for employees, directors, officers, advisors or
consultants of the Company and in accordance with the terms of such plans
as in effect as of the date of this Agreement; (w) upon exercise of
conversion, exchange, purchase or similar rights issued, granted or given
by the Company and outstanding as of the date of this Agreement; (x)
pursuant to a public offering underwritten on a firm commitment basis
registered under the 1933 Act; (y) for the purpose of funding the
acquisition of securities or assets of any entity in a single transaction
or a series of related transactions; or (z) pursuant to a strategic
partnership or alliance or similar commercial agreement (including
licensing and similar arrangements) between the Company and industry
participants.
5.5 Use of Proceeds When commercially feasible and so long as it is in the best
interests of the Company in its management's judgement, the Company will use the
majority of the net proceeds hereof (after deducting legal, marketing and other
miscellaneous expenses in connection with the sale of the Shares) to fund TP10
clinical trials for pediatric patients. The remaining net proceeds will be used
to fund working capital needs and operating expenses.
6 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The Purchasers understand that the Company's obligation to sell the Shares to
the Purchasers pursuant to this Agreement is conditioned upon satisfaction of
the following conditions precedent on or before the Closing Date (any or all of
which may be waived by the Company in its sole discretion):
(a) the delivery by each of the Purchasers to the Escrow Account of an amount
equal to the Purchase Price as set forth opposite its name on the
signature pages attached hereto;
(b) on the Closing Date, no legal action, suit or proceeding shall be pending
or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement; and
(c) the representations and warranties of the Purchasers contained in this
Agreement and in the Questionnaire shall have been true and correct on the
date of this Agreement and on the Closing Date as if made on the Closing
Date and on or before the Closing Date the Purchasers shall have performed
all covenants and agreements of the Purchasers required to be performed by
the Purchasers on or before the Closing Date.
7 CONDITIONS TO THE PURCHASERS' OBLIGATION TO PURCHASE
The Company understands that the Purchasers' obligation to purchase the Shares
is conditioned upon satisfaction of the following conditions precedent on or
before the Closing Date (any or all of which may be waived by the Purchasers in
their sole discretion):
(a) delivery by the Company to the Escrow Account of the share certificates
representing the Shares in accordance with this Agreement;
(b) on the Closing Date, no legal action, suit or proceeding shall be pending
or threatened which seeks to restrain or prohibit the transactions
contemplated by this Agreement;
(c) the representations and warranties of the Company contained in this
Agreement shall have been true and correct on the date of this Agreement
and shall be true and correct on the Closing Date as if given on and as of
the Closing Date (except for representations given as of a specific date,
which representations shall be true and correct as of such date), and on
or before the Closing Date the Company shall have performed all covenants
13
<PAGE>
and agreements of the Company contained herein required to be performed by
the Company on or before the Closing Date;
(d) the Company shall have delivered to the Purchasers its certificate, dated
the Closing Date, duly executed by its Chief Executive Officer to the
effect set forth in subparagraphs (b) and (c) of this Section 7;
(e) the receipt by the Purchasers of a certificate, dated the Closing Date, of
the Secretary or Assistant Secretary of the Company certifying (i) the
Certificate of Incorporation and ByLaws of the Company as in effect on the
Closing Date, (ii) all resolutions of the board of directors (and
committees thereof) of the Company relating to this Agreement and the
transactions contemplated hereby and (iii) such other matters as are
reasonably requested by the Purchasers;
(f) on the Closing Date, the Purchasers shall have received an opinion of
Goodwin, Procter & Hoar LLP, counsel for the Company, dated the Closing
Date, addressed to the Purchasers, in form, scope and substance reasonably
satisfactory to the Purchasers, substantially in the form of Annex B
hereto; and
(g) on the Closing Date, (i) trading in securities on the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. or Nasdaq shall not have
been suspended or materially limited and (ii) a general moratorium on
commercial banking activities in the Commonwealth of Massachusetts or the
State of New York shall not have been declared by either federal or state
authorities.
8 REGISTRATION RIGHTS
8.1 Mandatory Registration
(a) The Company shall prepare and, on or prior to the date which is 30 days
after the Closing Date, file with the SEC a Registration Statement on Form
S-3 which on the SEC Filing Date covers the resale by the Purchasers of
the Registrable Securities by the Purchasers from time to time.
(b) Prior to the SEC Effective Date and during any time subsequent to the SEC
Effective Date when the Registration Statement for any reason is not
available for use by any Investor for the resale of any Registrable
Securities, the Company shall not file any other registration statement or
any amendment thereto with the SEC under the 1933 Act or request the
acceleration of the effectiveness of any other registration statement
previously filed with the SEC, other than (i) any registration statement
on Form S-8 and (ii) any registration statement or amendment that the
Company is required to file or as to which the Company is required to
request acceleration pursuant to any obligation in effect on the date of
execution and delivery of this Agreement.
8.2 Obligations of the Company In connection with the registration of the
Registrable Securities, the Company shall:
(a) use its best efforts to cause the Registration Statement referred to in
Section 8.1(a) to become effective as promptly as possible after the
Closing Date, and keep the Registration Statement effective pursuant to
Rule 415 at all times during the Registration Period. The Company shall
submit to the SEC, within three Business Days after the Company learns
that no review of the Registration Statement will be made by the staff of
the SEC or that the staff of the SEC has no further comments on the
Registration
14
<PAGE>
Statement, as the case may be, a request for acceleration of effectiveness
of the Registration Statement to a time and date not later than 48 hours
after the submission of such request; provided, however, that if the
Company determines that a development which has not been publicly
disclosed and which occurred subsequent to the date of execution and
delivery of this Agreement and prior to the SEC Effective Date would
require public disclosure prior to the Registration Statement being
declared effective and that such public disclosure at such time would not
be in the best interests of the Company, the Company may refrain from
making such public disclosure for up to 40 consecutive Trading Days and by
so refraining from making such public disclosure the Company shall not be
deemed to have failed to use its best efforts and in connection therewith
the Company shall not be obligated to submit an acceleration request for
the Registration Statement during the period the Company refrains from
making such public disclosure in accordance with this provision. The
Company represents and warrants to the Investors that (i) the Registration
Statement (including any amendments or supplements thereto and
prospectuses contained therein), at the time it is first filed with the
SEC, at the time it is ordered effective by the SEC and at all times
during which it is required to be effective hereunder (and each such
amendment and supplement at the time it is filed with the SEC and at all
times during which it is available for use in connection with the offer
and sale of the Registrable Securities) shall not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading and (ii) the Prospectus, at the time the Registration Statement
is declared effective by the SEC and at all times that the Prospectus is
required by this Agreement to be available for use by any Investor and, in
accordance with Section 8.2(c) hereof, any Investor is entitled to sell
Registrable Securities pursuant to the Prospectus, shall not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading;
(b) subject to Sections 8.2(a) and (e) hereof, prepare and file with the SEC
such amendments (including post-effective amendments) and supplements to
the Registration Statement and the Prospectus as may be necessary to keep
the Registration Statement effective, and the Prospectus current, at all
times during the Registration Period and, during the Registration Period,
comply with the provisions of the 1933 Act applicable to the Company in
order to permit the disposition by the Investors of all Registrable
Securities covered by the Registration Statement;
(c) furnish to each Investor whose Registrable Securities are included in the
Registration Statement and its legal counsel, (i) promptly after the same
is prepared and publicly distributed, filed with the SEC or received by
the Company, one copy of the Registration Statement and any amendment
thereto, each Prospectus and each amendment or supplement thereto, (ii)
each letter written by or on behalf of the Company to the SEC or the staff
of the SEC and each item of correspondence from the SEC or the staff of
the SEC relating to such Registration Statement (other than any portion
thereof that contains information for which the Company has sought
confidential treatment), each of which the Company hereby determines to be
confidential information and which the Purchasers hereby agree to keep as
a confidential Record in accordance with Section 8.2(i) hereof such number
of copies of a Prospectus and all amendments and supplements thereto and
such other documents as such Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Investor;
(d) subject to Section 8.2(e) hereof, use its best efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement
under the securities or blue sky laws of such United States jurisdictions
as the Investors who hold a majority in
15
<PAGE>
interest of the Registrable Securities reasonably request, (ii) prepare
and file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as
may be necessary to maintain the effectiveness thereof at all times during
the Registration Period and (iii) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale by
the Investors in such jurisdictions;
(e) (i) subject to Section 8.2(e)(ii) hereof, as promptly as practicable
after becoming aware of such event or circumstance, notify each
Investor of the occurrence of an event or circumstance of which the
Company has knowledge (x) as a result of which the Prospectus
included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading or (y) which requires the Company to amend
or supplement the Registration Statement due to the receipt from an
Investor of new or additional information about an Investor or its
intended plan of distribution of its Shares, and use its best
efforts promptly to prepare a supplement or amendment to the
Registration Statement and Prospectus to correct such untrue
statement or omission or to add any new or additional information,
and deliver a number of copies of such supplement or amendment to
each Investor as such Investor may reasonably request;
(ii) notwithstanding Section 8.2(e)(i) above, if at any time the Company
notifies the Investors as contemplated by Section 8.2(e)(i) that the
event giving rise to such notice relates to a development involving
the Company which occurred subsequent to the later of (x) the SEC
Effective Date and (y) the latest date prior to such notice on which
the Company has amended or supplemented the Registration Statement,
then the Company shall not be required to use best efforts to make
such amendment during a Blackout Period;
(f) as promptly as practicable after becoming aware of such event, notify each
Investor who holds Registrable Securities being sold of the issuance by
the SEC of any stop order or other suspension of effectiveness of the
Registration Statement at the earliest possible time;
(g) permit the Investors who hold Registrable Securities being included in the
Registration Statement, at such Investors' sole cost and expense (except
as otherwise specifically provided in Section 10.11 hereof to review and
have a reasonable opportunity to comment on the Registration Statement and
all amendments and supplements thereto at least three Business Days prior
to their filing with the SEC; provided, however, that all comments by such
Investors shall be given to Weil, Gotshal & Manges (or such other counsel
as designated by Investors who hold a majority in interest of the
Registrable Securities proposed to be offered) to convey to the Company;
(h) make generally available to its security holders as soon as practical, but
not later than 90 days after the close of the period covered thereby, an
earnings statement (in form complying with the provisions of Rule 158
under the 1933 Act) covering a 12-month period beginning not later than
the first day of the Company's fiscal quarter next following the SEC
Effective Date;
(i) make available for inspection by any Investor and any Inspectors retained
by any such Investor at such Investor's sole expense, all Records as shall
be reasonably necessary to enable each Investor to exercise its due
diligence responsibility with respect to Section 11
16
<PAGE>
of the 1933 Act as it relates to the Registration Statement or any
amendment thereof, and cause the Company's officers to supply all
information which any Inspector may reasonably request for purposes of
such due diligence; provided, however, that each Inspector shall hold in
confidence and shall not make any disclosure (except to an Investor) of
any Record or other information which the Company determines in good faith
to be confidential, and of which determination the Inspectors are so
notified, unless (1) the disclosure of such Records is necessary to avoid
or correct a misstatement or omission in any Registration Statement unless
and for so long as the Company has the right to decide not to make such
disclosure under the terms of this Agreement, (2) the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction or (3) the information in such
Records has been made generally available to the public other than by
disclosure in violation of this or any other agreement; provided further,
however, that each Investor understands that in the course of exercising
the rights provided in this Section 8(2)(i) such Investor may come into
possession of material non-public information about the Company and that
by reason of the requirements of the 1934 Act any such Investor who
possesses such material nonpublic information may be restricted in making
purchases and sales of the Common Stock unless such information has been
publicly disclosed. The Company shall not be required to disclose any
confidential information in such Records to any Inspector until and unless
such Inspector shall have entered into confidentiality agreements (in form
and substance satisfactory to the Company) with the Company with respect
thereto, substantially in the form of this Section 8(2)(i). Each Investor
agrees that it shall, upon learning that disclosure of such Records is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. The Company shall hold in confidence and shall not
make any disclosure of information concerning an Investor provided to the
Company pursuant to this Agreement unless (A) disclosure of such
information is necessary to comply with federal or state securities laws,
(B) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (C) the release of
such information is ordered pursuant to a subpoena or other order from a
court or governmental body of competent jurisdiction or (D) such
information has been made generally available to the public other than by
disclosure in violation of this Agreement or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such
information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give
prompt notice to such Investor and allow such Investor, at such Investor's
expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information;
(j) use its best efforts to cause all the Registrable Securities covered by
the Registration Statement as of the SEC Effective Date to be listed on
Nasdaq or such other principal securities market on which securities of
the same class or series issued by the Company are then listed or traded;
(k) cooperate with the Investors who hold Registrable Securities being offered
to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing Registrable Securities to be
offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts as the Investors may
reasonably request and registered in such names as the Investors may
request.
8.3 Penalty for Delay of Registration Statement's Effective Date In the event
the Registration Statement has not (i) been filed with the SEC within 30 days
after the Closing Date
17
<PAGE>
or (ii) become effective within 120 days after the initial filing thereof, for
all or part of each thirty (30) day period (a "Penalty Period") during which the
Shares remain unregistered, the Company shall issue or pay, as applicable, to
the Purchasers within three (3) Trading Days of the end of each such Penalty
Period, at the Purchaser's election, either: (i) a number of additional shares
of Common Stock equal to (A) 0.5% for the first Penalty Period, (B) 1.0% for the
second Penalty Period and (C) 1.5% for the third Penalty Period and any
subsequent Penalty Period until the SEC Effective Date (the "Payment Amount") of
the Aggregate Purchase Price paid for all Shares purchased by such Purchasers
hereunder, divided by the Market Value (as defined hereinafter), as of the last
trading day of the Penalty Period, of a share of Common Stock (the "Penalty
Shares") or (ii) a cash payment equal to the Payment Amount; provided, however,
that in no event will the number of Shares issued pursuant to this Agreement in
the aggregate exceed 19.9% of the total number of shares of Common Stock
outstanding on the Closing Date (the "Maximum Percentage"), and if such number
of Shares to be issued pursuant to this Agreement in the aggregate exceeds the
Maximum Percentage, the Company shall pay the Purchasers a cash payment equal to
the Market Value, as of the last trading day of the Penalty Period, of a share
of Common Stock multiplied by the number of Penalty Shares which would have
resulted in exceeding the Maximum Percentage; and provided further, however,
that in no event shall the total amount of all payments under this Section
(whether consisting of Penalty Shares or cash) exceed 7.5% of the aggregate
Purchase Price paid for all Shares purchased by such Purchasers hereunder, with
Penalty Shares valued as of the date of issuance as provided herein. For
purposes of this Agreement, the "Market Value" of a share of Common Stock shall
be the average high and low sales prices of the Common Stock on the Nasdaq
National Market on the last trading day in the relevant Penalty Period.
8.4 Obligations of the Purchasers and Other Investors In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to
effect the registration of such Registrable Securities and shall execute
such documents in connection with such registration as the Company may
reasonably request.
(b) Each Investor by such Investor's acceptance of the Registrable Securities
agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company of such
Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
(c) Each Investor agrees that it will not effect any disposition of the
Registrable Securities except as contemplated in the Registration
Statement or as otherwise in compliance with applicable securities laws
and that it will promptly notify the Company of any material changes in
the information set forth in the Registration Statement regarding such
Investor or its plan of distribution. Each Investor agrees (i) to notify
the Company in the event that such Investor enters into any material
agreement with a broker or dealer for the sale of the Registrable
Securities through a block trade, special offering, exchange distribution
or a purchase by a broker or dealer and (ii) in connection with such
agreement, to provide to the Company in writing the information necessary
to prepare any supplemental prospectus pursuant to Rule 424(c) under the
1933 Act which is required with respect to such transaction.
18
<PAGE>
(d) Each Investor acknowledges that during the times specified in Section
8.2(e) or 8.2(f) the Company must suspend the use of the Prospectus until
such time as an amendment to the Registration Statement has been filed by
the Company and declared effective by the SEC, the Company has prepared a
supplement to the Prospectus or the Company has filed an appropriate
report with the SEC pursuant to the 1934 Act. Each Investor hereby
covenants that it will not sell any Registrable Securities pursuant to the
Prospectus in accordance with Section 8.2(e) or 8.2(f) hereof during the
period commencing at the time at which the Company gives such Investor
notice of the suspension of the use of the Prospectus and ending at the
time the Company gives such Investor notice that such Investor may
thereafter effect sales pursuant to the Prospectus, or until the Company
delivers to such Investor an amended or supplemented Prospectus.
(e) In connection with any sale of Registrable Securities that is made by an
Investor pursuant to the Registration Statement (i) if such sale is made
through a broker or brokers, such Investor shall instruct its broker or
brokers to deliver the Prospectus to the purchaser or purchasers in
connection with such sale, and shall supply copies of such Prospectus to
such broker or brokers; (ii) if such sale is made in a transaction
directly with a purchaser and not through the facilities of any securities
exchange or market, such Investor shall deliver, or cause to be delivered,
the Prospectus to such purchaser; and (iii) if such sale is made by any
means other than those described in the immediately preceding clauses (i)
and (ii), such Investor shall otherwise use its reasonable best efforts to
comply with the prospectus delivery requirements of the 1933 Act
applicable to such sale.
(f) Each Investor agrees to notify the Company promptly after the event of the
completion of the sale by such Investor of all Registrable Securities to
be sold by such Investor pursuant to the Registration Statement.
8.5. Rule 144 With a view to making available to the Investors the benefits of
Rule 144, during the Registration Period the Company agrees to:
(a) promptly furnish to each Investor so long as such Investor owns
Registrable Securities, such information as may be necessary to permit the
Investors to sell Registrable Securities pursuant to Rule 144 without
registration; and
(b) if at any time the Company is not required to file reports with the SEC
under Sections 13 or 15(d) of the 1934 Act, use its best efforts to, upon
the request of an Investor, make publicly available other information so
long as is necessary to permit publication by brokers and dealers of
quotations for the Common Stock and sales of the Registrable Securities in
accordance with Rule 15c2-11 under the 1934 Act.
9 INDEMNIFICATION AND CONTRIBUTION
9.1 Indemnification
(a) To the extent not prohibited by applicable law, the Company will indemnify
and hold harmless each Indemnified Person against any Claims to which any
of them may become subject under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any
Violation (other than an event described in clause (e) of the definition
of "Violation"). The Company shall reimburse the Investors and each such
controlling Person, promptly as such expenses are incurred and are due and
payable, for any documented reasonable legal fees or other documented and
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding
19
<PAGE>
anything to the contrary contained herein, the indemnification agreement
contained in this Section 9.1(a) shall not apply to: (i) a Claim arising
out of or based upon a Violation that occurs in reliance upon and in
conformity with information relating to an Indemnified Person furnished in
writing to the Company by such Indemnified Person or underwriter for such
Indemnified Person expressly for use in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement
thereto, if such Prospectus was timely made available by the Company
pursuant to Section 8.2(c) hereof and (ii) an Indemnified Person with
respect to a Claim that arises solely from the failure of such Indemnified
Person to comply in any material respect with Section 8.4(d) or 8.4(e)
hereof. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors.
(b) In connection with the Registration Statement, each Investor agrees to
indemnify and hold harmless, to the same extent and in the same manner set
forth in Section 9.1(a) hereof, each Indemnified Party against any Claim
to which any of them may become subject, under the 1933 Act, the 1934 Act
or otherwise, insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs (i) in reliance upon and in conformity with written
information furnished to the Company by such Investor expressly for use in
connection with such Registration Statement or (ii) by reason of any event
described in clause (e) of the definition of "Violation"; and such
Investor will reimburse any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section
9.1(b) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor,
which consent shall not be unreasonably withheld. Such indemnity shall
remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 9.1(b) with respect to any preliminary prospectus shall not inure
to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the Prospectus, as then amended or
supplemented.
(c) Promptly after receipt by an Indemnified Person or Indemnified Party under
this Section 9.1 of notice of the commencement of any action (including
any governmental action), such Indemnified Person or Indemnified Party
shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 9.1, deliver to the indemnifying
party a notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
reasonably satisfactory to the Indemnified Person or the Indemnified
Party, as the case may be; provided, however, that an Indemnified Person
or Indemnified Party shall have the right to retain its own counsel with
the fees and expenses to be paid by the indemnifying party, if, in the
reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified
Party and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding; provided further, however, that no indemnifying person shall
be responsible for the fees and expenses of more than one separate counsel
for all Indemnified Persons hereunder and one separate counsel in each
20
<PAGE>
jurisdiction in which a claim is pending or threatened. The failure to
deliver notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party
of any liability to the Indemnified Person or Indemnified Party under this
Section 9.1, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action. The indemnification
required by this Section 9.1 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.
9.2 Contribution To the extent any indemnification by an indemnifying party as
set forth in Section 9.1 above is applicable by its terms but is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
9.1 above to the fullest extent permitted by law. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the relative fault of each party, the parties' relative knowledge of
and access to information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement or omission
and any other equitable considerations appropriate under the circumstances;
provided, however, that (i) no contribution shall be made under circumstances
where the maker would not have been liable for indemnification under the fault
standards set forth in Section 9.1 above, (ii) no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any other Person who was not guilty of such
fraudulent misrepresentation and (iii) contribution by any seller of Registrable
Securities shall be limited to the amount by which the proceeds received by such
seller from the sale of such Registrable Securities exceeds the amount paid by
such Investor for such Registrable Securities.
9.3 Other Rights The indemnification and contribution provided in this Section
shall be in addition to any other rights and remedies available at law or in
equity.
10 MISCELLANEOUS
10.1 Governing Law THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK OF THE UNITED STATES.
10.2 Headings The headings and captions used in this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
10.3 Severability If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
10.4 Notices Any notices required or permitted to be given under the terms of
this Agreement shall be in writing and shall be sent by mail, personal delivery,
by telephone line facsimile transmission or courier and shall be effective five
(5) days after being placed in the mail, if mailed, or upon receipt, if
delivered personally, by telephone line facsimile transmission or by courier, in
each case addressed to a party at such party's address (or telephone line
facsimile transmission number) shown in the introductory paragraph or on the
signature page of this Agreement or such other address (or telephone and
facsimile transmission numbers) as a party shall have provided by notice to the
other parties in accordance with this provision. In the case of any notice to
the Company, such notice should be addressed to the Company at its address shown
in the introductory paragraph of this Agreement, Attention: Dr. Una S. Ryan,
Ph.D.
21
<PAGE>
(telephone and facsimile transmission numbers: 001-781-433-3101,
001-781-433-3191), and a copy shall also be given to: Goodwin, Proctor & Hoar
LLP, Attention: Stuart Cable, P.C., (telephone and facsimile transmission
numbers: 001-617-570-1322, 001-617-523-1231), and in the case of any notice to
the Purchasers, a copy shall be given to: Nomura International plc, Attention:
Legal Department (telephone and facsimile transmission numbers: 44-207-521-2000,
44-207-521-3655 Attention: Denise Pollard-Knight/Mark Horncastle), in each case
with a copy to: Weil, Gotshal & Manges at One South Place, London EC2M 2WG,
Attention: Douglas Warner Esq. (telephone and facsimile transmission numbers:
44-207-903-1000, 44-207-9030990).
10.5 Counterparts This Agreement may be executed in counterparts and by the
parties hereto on separate counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the same instrument.
A telephone line facsimile transmission of this Agreement bearing a signature on
behalf of a party hereto shall be legal and binding on such party.
10.6 Entire Agreement; Benefit This Agreement together with the Annexes and
Disclosure Schedule constitute the entire agreement among the parties hereto
with respect to the subject matter hereof. There are no restrictions, promises,
warranties or undertakings other than those set forth or referred to herein and
therein. This Agreement, including the Annexes hereto and Disclosure Schedule
supersede all prior agreements and understandings, whether written or oral,
between the parties hereto with respect to the subject matter hereof. This
Agreement and the terms and provisions hereof are for the sole benefit of only
the Company, the Purchasers and their respective successors and permitted
assigns.
10.7 Waiver Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
or course of dealing between the parties shall not operate as a waiver thereof
or an amendment hereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce such a
right or power, preclude any other or further exercise thereof or exercise of
any other right or power.
10.8 Amendment No amendment, modification, waiver, discharge or termination of
any provision of this Agreement or consent to any departure by the Purchasers or
the Company therefrom shall in any event be effective unless the same shall be
in writing and signed by the party to be charged with enforcement, and then
shall be effective only in the specific instance and for the purpose for which
given. No course of dealing between the parties hereto shall operate as an
amendment of this Agreement.
10.9 Further Assurances Each party to this Agreement will perform any and all
acts and execute any and all documents as may be necessary and proper under the
circumstances in order to accomplish the intents and purposes of this Agreement
and to carry out its provisions.
10.10 Assignment of Certain Rights and Obligations The rights and obligations of
an Investor under this Agreement shall be automatically assigned by such
Investor to any transferee of all or any portion of such Investor's Registrable
Securities who is a Permitted Transferee only if: (i) such Investor agrees in
writing with such transferee to assign such rights and obligations and such
transferee agrees to assume them, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer, furnished with notice of (1) the
name and address of such transferee and (2) the securities with respect to which
such rights and obligations are being transferred; (iii) immediately following
such transfer or assignment the further disposition of Registrable Securities by
the transferee or assignee is restricted under the 1933 Act and
22
<PAGE>
applicable state securities laws; (iv) at or before the time the Company
received the notice contemplated by clause (ii) of this sentence the transferee
agrees in writing with the Company to be bound by all of the provisions hereof,
and (v) immediately after such transfer such transferee holds at least 50,000
shares of Common Stock. Upon any such transfer, the Company shall be obligated
to such transferee to perform all of its covenants under this Agreement as if
such transferee were the Purchasers. In connection with any such transfer the
Company shall, at its sole cost and expense, promptly after such transfer take
such actions as shall be reasonably acceptable to the transferring Investor and
such transferee to assure that the Registration Statement and related Prospectus
are available for use by such transferee for sales of the Registrable Securities
in respect of which such rights and obligations have been so transferred.
10.11 Expenses Each of the Company and the Purchasers shall bear its own
expenses in connection with the preparation and negotiation of this Agreement
and the consummation of the transactions contemplated hereby; provided that the
Company shall reimburse the Purchasers for legal fees and expenses plus any
applicable value added tax as previously agreed between the Company and Nomura
International plc. All reasonable expenses incurred in connection with
registrations, filings or qualifications pursuant to this Agreement shall be
paid by the Company, including, without limitation, all registration, listing
and qualifications fees, printers' and accountants' fees and the fees and
disbursements of counsel for the Company and the fees and disbursements of one
counsel for the Purchasers in an amount not to exceed $15,000, plus any
applicable value added tax, but excluding (i) fees and expenses of investment
bankers retained by any Investor, (ii) brokerage commissions incurred by any
Investor and (iii) fees and disbursements of other counsel for the Investors.
The Company shall pay on demand all reasonable expenses incurred by the
Purchasers, including reasonable attorneys' fees and expenses, as a consequence
of or in connection with, (1) any default or breach of any of the Company's
obligations set forth in this Agreement and (2) the enforcement or restructuring
of any right of, including the collection of any payments due the Purchasers
under, this Agreement, including any action or proceeding relating to such
enforcement or any order, injunction or other process seeking to restrain the
Company from paying any amount due the Purchasers.
10.12 Termination The Purchasers shall have the right to terminate this
Agreement by giving notice to the Company at any time at or prior to the Closing
Date if:
(a) any condition to the Purchasers' obligations hereunder is not fulfilled;
or
(b) the closing shall not have occurred on a Closing Date on or before
September 21, 1999, other than solely by reason of a breach of this
Agreement by the Purchasers.
Any such termination shall be effective upon the giving of notice thereof by the
Purchasers. Upon such termination, the Purchasers shall have no further
obligation to the Company hereunder and the Company shall remain liable for any
breach of this Agreement or the other documents contemplated hereby which
occurred on or prior to the date of such termination.
10.13 Survival The respective representations, warranties, covenants and
agreements of the Company and the Purchasers contained in this Agreement and the
documents delivered in connection with this Agreement shall survive the
execution and delivery of this Agreement and the closing hereunder and delivery
of and payment for the Shares, and shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Purchasers or
any Person controlling or acting on behalf of the Purchasers or by the Company
or any Person controlling or acting on behalf of the Company.
10.14 Public Statements, Press Releases, etc. The Company and the Purchasers
shall have the right to approve before issuance any press releases or any other
public statements with respect to
23
<PAGE>
the transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of the Purchasers, to make any press
release or other public disclosure with respect to such transactions as is
required by applicable law and regulations, including the 1933 Act and the rules
and regulations promulgated thereunder (although the Purchasers shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release and shall be provided with a copy
thereof).
10.15 Construction The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.
10.16 No Culpability Each of the Purchasers (other than Nomura International
plc) (the "Other Purchasers") represent and warrant to Nomura and the Nomura
Affiliates on their own behalf and on behalf of any beneficial owner which they
may represent as follows:
(a) that they have sufficient knowledge and experience and have taken such
professional advice as they think necessary to make their own evaluation
of the merits and risks involved in making the investment envisaged by
this Agreement;
(b) that they have been, and will at all times continue to be, solely
responsible for making their own independent appraisal of and
investigation into the business, financial condition, prospects,
creditworthiness, status and affairs of the Company;
(c) that they are sophisticated investors capable of bearing the economic risk
of losing their entire investment in the Company;
(d) that they understand that Nomura is at all times, and will at all times
be, acting on their own behalf and not on behalf of the Other Purchasers
or any of them;
(e) they have not relied, and will not at any time rely, on Nomura or any of
its subsidiaries or any parent of any subsidiaries or any parent company
to provide them with any information relating to, or to keep under review
on their behalf, any business, financial conditions, prospects,
creditworthiness or status of affairs of the Company or conducting any
investigation or due diligence into the Company; and
(f) that they understand that they are not clients of Nomura and will not
receive the protections that such clients are afforded.
24
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers hereunto duly authorized as of the date
first set forth above.
AVANT IMMUNOTHERAPEUTICS, INC.
By:
-------------------------------
Name: Una S. Ryan
Title: President and CEO
NOMURA INTERNATIONAL PLC
Nomura House
1 St. Martin's-le-Grand
London EC1A 4NP
UK
By:
-------------------------------
Name:
Title:
PICTET & CIE.
29, blvd. Georges-Favon
Geneva
CH-121
Switzerland
By:
-------------------------------
Name:
Title:
KLEINWORT BENSON GLOBAL PRIVATE
EQUITY
PO Box 18075
River Bank House
2 Swan Lane
London EC4R 3UX
UK
By:
-------------------------------
Name:
Title:
REABOURNE, LTD.
Alderman's House
Alderman's Walk
London
By:
-------------------------------
Name:
Title:
25
<PAGE>
LOMARD ODIER
11 Rue de la Corraterie
Geneva
CH-1204
Switzerland
By:
-------------------------------
Name:
Title:
INTERNATIONAL BIOMEDICINE
Aeschen Platz 7
PO Box 136
Basel
CH-4010
Switzerland
By:
-------------------------------
Name:
Title:
APOLLO MEDICAL PARTNERS
68 Jane Street, Suite 2E
New York
New York
USA
By:
-------------------------------
Name:
Title:
CURRAN CAPITAL
237 Park Avenue
New York
New York 10017
USA
By:
-------------------------------
Name:
Title:
26
<PAGE>
CATALYST PARTNERS
900 Third Avenue, 27th Floor
New York
New York 10022
USA
By:
-------------------------------
Name:
Title:
DR BRANDON FADD
68 Jane Street, Suite 2E
New York
New York
USA
By:
-------------------------------
Name:
Title:
PETER SEARS
8 Paul Road
St. David
PA 19087
USA
By:
-------------------------------
Name:
Title:
27
