SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act 1934
Date of Report: August 16, 1995
INTERNEURON PHARMACEUTICALS, INC.
(Exact name of registrant as specified in charter)
DELAWARE
(State of other jurisdiction of incorporation)
0-18728 043047911
(Commission File Number) (IRS Employer Identification No.)
ONE LEDGEMONT CENTER, 99 HAYDEN AVENUE, LEXINGTON, MASSACHUSETTS 02173
(Address of principal executive offices) (Zip Code)
Registrant's telephone no. including area code: (617) 861-8444
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Item 5. OTHER EVENTS
In August and September 1995, the Company sold an aggregate of
1,384,045 shares of Common Stock in private placements to four accredited
institutional investors for aggregate net proceeds of approximately $14,900,000,
after deducting placement fees. One investor also received warrants to purchase
62,500 shares of Common Stock exercisable until August 16, 2000 at $12.765 per
share, subject to adjustment in certain conditions. Each investor was granted
demand and piggyback registration rights (the earliest of which requires
registration by January 2, 1996) provided that the effective per share purchase
price of the shares sold in these transactions may be adjusted through the
issuance by the Company to the investor of additional shares of Common Stock in
the event a registration statement covering the resale of the shares purchased
by such investor is not filed by the Company with the Securities and Exchange
Commission or declared effective by specified dates or, in certain cases, if the
Company sells shares in subsequent transactions at prices below a specified
price. In connection with one transaction, the Company also issued warrants to
purchase an aggregate of 8,000 shares to designees of the financial advisor to
the transaction. The agreements between the Company and each investor are
attached hereto as exhibits and are incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) EXHIBITS
10.74 Securities Purchase Agreement dated as of August 16, 1995 between
the Registrant and BT Holdings (New York), Inc., including Warrant
issued to Momint (nominee of BT Holdings).
10.75 Stock Purchase Agreement dated as of August 23, 1995 between the
Registrant and Paresco, Inc.
10.76 Stock Purchase Agreement dated as of September 15, 1995 between the
Registrant and Silverton International Fund Limited.
10.77 Subscription Agreement dated September 21, 1995, as of August 31,
1995, including Registration Rights Agreement between Registrant
and GFL Advantage Fund Limited.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERNEURON PHARMACEUTICALS INC.
By: /S/ THOMAS F. FARB
-------------------------------------------
Thomas F. Farb, Senior Vice President, Finance
Dated: September 26, 1995
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EXHIBIT INDEX
10.74 Securities Purchase Agreement dated as of August 16, 1995 between the
Registrant and BT Holdings (New York), Inc., including Warrant issued
to Momint (nominee of BT Holdings.
10.75 Stock Purchase Agreement dated as of August 23, 1995 between the
Registrant and Paresco, Inc.
10.76 Stock Purchase Agreement dated as of September 15, 1995 between the
Registrant and Silverton International Fund Limited.
10.77 Subscription Agreement dated September 21, 1995, as of August 31,
1995, including Registration Rights Agreement between Registrant and
GFL Advantage Fund Limited.
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Exhibit 10.74
SECURITIES PURCHASE AGREEMENT
Securities Purchase Agreement (the "Agreement") dated as of August 16,
1995, between Interneuron Pharmaceuticals, Inc., a Delaware corporation (the
"Corporation"), and BT Holdings (New York), Inc., a New York corporation (the
"Purchaser").
The Corporation and the Purchaser hereby agree as follows:
SECTION 1
PURCHASE OF SHARES AND WARRANTS
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, the Purchaser will
purchase from the Corporation and the Corporation will issue and sell to the
Purchaser 250,000 shares (the "Shares") of the Corporation's Common Stock, $.001
par value ("Common Stock"), and common stock purchase warrants to purchase
62,500 shares of Common Stock (the "Warrants") for an aggregate purchase price
of $2,553,125 (the "Total Purchase Price"), or $10.2125 per share (the "Per
Share Price"). The Shares and Warrants are collectively referred to herein as
the "Securities".
SECTION 2
CLOSING PAYMENT AND DELIVERY
2.1 CLOSING DATE AND PLACE OF CLOSING. The closing shall be held as
soon as practicable, and in no event later than August 17, 1995 (the "Closing"),
on such date as the Corporation and the Purchaser may agree to (the "Closing
Date") and shall be held at the offices of the Corporation or such other place
as the Corporation and Purchaser agree to.
2.2 PAYMENT AND DELIVERY. At the Closing, the Purchaser will pay or
cause to be paid to the Corporation by wire funds transfer the Total Purchase
Price. The Corporation will deliver at the Closing certificates, registered in
such name or names as Purchaser may designate at least 24 hours prior to the
Closing Date, representing the Shares and Warrants so purchased.
2.3 COVENANT OF BEST EFFORTS AND GOOD FAITH. The Corporation and the
Purchaser agree to use their respective best efforts and to act in good faith to
cause to occur all conditions to Closing which are in their respective control.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants to the Purchaser that:
3.1 CORPORATE POWER QUALIFICATION AND STANDING. The Corporation and
the subsidiaries listed on Schedule A hereto (the "Subsidiaries") are duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and each of
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them is qualified to transact business and is in good standing in each
jurisdiction in which its ownership of property or conduct of activities
requires such qualification, except where the failure to so qualify would not
materially adversely affect the operations of the Corporation and its
Subsidiaries, taken as a whole. The Corporation has all requisite corporate
power and authority to enter into and to carry out and perform its obligations
under this Agreement.
3.2 S.E.C. REPORTS; FINANCIAL STATEMENTS. The Common Stock of the
Corporation is registered under Section 12(b) or (g) of the Securities Exchange
Act of 1934 (the "1934 Act"). The Corporation has delivered to Purchaser its
Annual Report to shareholders and its Annual Reports on Form 10-K for its last
two fiscal years, and its quarterly reports on Form 10-Q and each other report,
registration statement, definitive proxy statement or other document filed with
the S.E.C. since the filing of the most recent Form 10-K (collectively, the "SEC
Reports"). The SEC Reports did not (as of their respective dates) 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 under which they were made, not misleading. The audited and
unaudited financial statements of the Corporation included in the SEC Reports
(the "Financial Statements") have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as stated
in such Financial Statements or the notes thereto) and fairly present the
financial position of the Corporation and its consolidated subsidiaries as of
the dates thereof and the results of their operations and changes in financial
position for the periods then ended. The Corporation has timely filed with the
SEC all reports required to be filed by the Corporation under the 1934 Act since
January 1, 1995.
3.3 AUTHORIZATION; NO CONFLICT. The Corporation's execution and
delivery of this Agreement and issuance and sale of the Shares and the Warrants
have been duly authorized by all necessary corporate action, and the Shares,
when issued and paid for on the Closing Date, will be validly issued, fully paid
and non-assessable. The Warrants have been duly authorized by all necessary
corporate action and, when issued on the Closing Date, will have been duly
executed, issued and delivered and will constitute valid and legally binding
obligations of the Corporation entitled to the applicable benefits of this
Agreement and enforceable in accordance with their terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
creditor's rights generally and the application of equitable principles in any
action, legal or equitable, and except as rights to indemnity or contribution
may be limited by applicable law). The shares of Common Stock issuable upon
exercise of the Warrants have been reserved for issuance upon the exercise of
the Warrants and, when issued in accordance with the terms of the Warrants will
be duly authorized, validly issued, fully paid and non-assessable. The
execution, delivery and performance by the Corporation of its obligations under
this Agreement do not and will not conflict with or violate (i) the charter
documents or bylaws of the Corporation, (ii) in any material respect any
indenture, loan agreement, lease, mortgage or other material agreement binding
on the Corporation, (iii) any order of a court or administrative agency binding
on the Corporation, or (iv) any applicable law or governmental regulation; and
such performance does not and will not require the permission or approval of any
governmental agency, and will not result in the imposition or creation of any
lien or charge against any assets of the Corporation.
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3.4 BINDING EFFECT. This Agreement has been duly executed and delivered
by the Corporation and is a legal, valid and binding obligation of the
Corporation, enforceable against the Corporation in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to creditor's rights generally and the application of
equitable principles in any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable law).
3.5 NO DEFAULTS OR VIOLATIONS. The Corporation is not, and immediately
after the Closing will not be, in default under or in violation of (a) its
Certificate of Incorporation or Bylaws, as amended, (b) any indenture, mortgage,
or other material agreement to which it is a party and which has been filed by
the Corporation with the SEC (the "Material Agreements"), (c) any statute, rule,
writ, injunction, judgment, decree, order or regulation of any court or
governmental authority having jurisdiction over it, or (d) any license, permit,
certification or approval requirement of any governmental authority or other, in
each case, in any way that could reasonably be expected to have a material
adverse effect on the business or condition (financial or otherwise) of the
Corporation, or the Corporation's ability to perform its obligations under this
Agreement or the Warrants.
3.6 NO MATERIAL ADVERSE CHANGE. Since June 30, 1995, there have been no
material adverse changes in the business or condition (financial or otherwise)
of the Company that are not reflected in the SEC Reports and the Financial
Statements, except that the Company has continued to incur losses from
operations and decreases in working capital.
3.7 NO OTHER REGISTRATION OR ANTIDILUTION RIGHTS. Immediately after the
Closing there will be (a ) no agreements or other instruments providing
registration rights to stockholders or holders of other securities of the
Corporation, except this Agreement and the agreements and instruments referred
to on SCHEDULE B hereto or in the Registration Rights Letter (as defined herein)
and (b) no options, warrants or other rights outstanding that would involve the
issuance of any additional shares of capital stock of the Corporation, or that
provide holders of Common Stock or other equity securities protection against
dilution from additional issuances of Common Stock, except as identified in
SCHEDULE B hereto or in the Registration Rights Letter and except pursuant to
the Company's 1989 Stock Option Plan, 1994 Long-Term Incentive Plan and 1995
Stock Purchase Plan.
3.8 NO CONFLICTING REGISTRATION RIGHTS. Except to the extent identified
in the Registration Rights Letter, (i) there are currently no agreements which
restrict or limit the Corporation's registration of Shares on demand by the
Purchaser in accordance with the terms of Section 7(b) of this Agreement, (ii)
permit other holders of the Corporation's securities to participate in a
registration of the Purchaser's Shares under Section 7(b), or (iii) preclude the
Purchaser from participating in other registrations or registered offerings of
the Corporation's securities as permitted by the terms of Section 7(c).
3.9 MATERIAL LIABILITIES. Except for liabilities disclosed in the
Financial Statements or the SEC Reports, and obligations under the Material
Agreements, the Corporation and its
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subsidiaries have no material liabilities or obligations, absolute or
contingent, other than liabilities arising in the ordinary course of business,
subsequent to the date of the most recent Financial Statements or SEC Reports.
3.10 PROPERTIES. The Corporation and its Subsidiaries (i) have good
title to the properties and assets reflected in the Financial Statements as
owned by them, (ii) have valid leasehold interests in the properties leased by
them, and (iii) own or have the right to use under valid license agreements all
trademarks, trade names, copyrights, patents and other intellectual property
rights material to its business and regularly utilized by them; subject in each
case to no material liens, security interests or adverse claims except as
disclosed in the Financial Statements or the SEC Reports.
3.11 LITIGATION. There are no material legal actions, arbitrations, or
administrative proceedings pending against the Corporation, except for the
matters disclosed in the SEC Reports and no actions or proceedings are pending
which question the validity of this Agreement, the Warrants or the Shares.
3.12 TAX MATTERS. The Corporation has filed on a timely basis all tax
returns required to be filed by it and has paid its taxes prior to delinquency,
and has made adequate accruals for tax liabilities on the Financial Statements
in accordance with generally accepted accounting principles.
3.13 BROKERS. Other than a placement fee of 4% of the Total Purchase
Price to be paid by the Corporation to Montgomery Securities, Inc., the
Corporation has not entered into any agreements requiring the Corporation or
Purchaser to pay any broker's, finder's or similar fee or commission in
connection with the transaction contemplated hereby.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Corporation that:
4.1 CORPORATE POWER AND AUTHORITY. It is validly existing and in good
standing with all requisite power and authority to enter into this Agreement and
carry out its obligations hereunder and has taken all actions necessary to
authorize it to enter into this Agreement and carry out such obligations.
4.2 INVESTMENT. It is acquiring the Securities for its own account for
investment and not with the view to, or for resale in connection with, any
distribution thereof. It is an "accredited investor" within the meaning of the
Securities Act of 1933 (the "Act") and the rules thereunder, it has assets in
excess of $5,000,000 and it was not formed for the specific purpose of acquiring
the Securities. Purchaser has been afforded the opportunity during the course of
negotiating the transactions contemplated by this Agreement to ask questions of
and secure such information for the Corporation and its officers and directors
as it deems necessary to evaluate
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the merits of entering into this agreement. It understands that the Securities
have not been registered under the Act by reason of specified exemptions
therefrom which depend upon, among other things, the bona fide nature of its
investment intent as expressed herein.
4.3 RULE 144. It acknowledges that the Securities must be held
indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is available. Purchaser is aware of the
provisions of Rule 144 promulgated under the Act and that the Securities are
"restricted" securities under Rule 144.
4.4 TRANSACTIONS IN THE COMMON STOCK. The Purchaser has not sold,
offered to sell, granted any option or purchased any contract to sell, or
granted any option or purchased any contract to buy, any Common Stock during the
period commencing 20 trading days prior to the Closing Date.
SECTION 5
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligation of the Purchaser to purchase the Securities is subject
to the fulfillment on or prior to the Closing Date of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Corporation shall be true and correct in all material respects on the
Closing Date.
(b) PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Corporation on or prior
to the Closing Date shall have been performed or complied with in all material
respects.
(c) OPINION OF CORPORATION'S COUNSEL. The Purchaser shall have received
from counsel to the Corporation an opinion in the form attached hereto as
Exhibit I.
(d) REGISTRATION RIGHTS LETTER. The Purchaser shall have received from
the Corporation a letter representing as to the outstanding registration rights
and warrants that the Corporation is subject to or has granted prior to the date
of this Agreement (the "Registration Rights Letter").
(e) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in form and
substance to the Purchaser and its counsel.
SECTION 6
CONDITIONS TO OBLIGATIONS OF THE CORPORATION
The Corporation's obligation to sell the Securities is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
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(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Purchaser shall be true and correct in all material respects on the
Closing Date.
(b) LEGAL ISSUANCE. At the time of the Closing, the issuance and
purchase of the Securities shall be legally permitted by all laws and
regulations to which the Purchaser and the Corporation are subject.
(c) PAYMENT. The Corporation shall concurrently receive payment for the
Securities as provided in Section 2 hereof.
SECTION 7
REGISTRATION RIGHTS
(a) For purposes of this Section 7, the following definitions shall
apply:
(i) The terms "register", "registered", and "registration"
refer to a registration under the Securities Act of 1933, as
amended (the "Act") effected by preparing and filing a
registration statement (the "Registration Statement") or
similar document in compliance with the Act or an amendment
thereto, and the declaration or ordering by the SEC of
effectiveness of such registration statement, document or
amendment thereto.
(ii) The term "Registrable Securities" means (i) the Shares
and any securities of the Corporation or securities of any
successor corporation issued as, or issuable upon the
conversion or exercise of any warrant, right or other security
that is issued as, a dividend or other distribution with
respect to, or in exchange for or in replacement of, the
Shares and (ii) shares of Common Stock issued upon exercise of
the Warrants (or, if the Corporation is eligible as a
registrant to use Form S-3 for a primary offering and if
permitted by other applicable law, the shares of Common Stock
issuable upon exercise of the Warrants).
(b) (i) Subject to the provisions of Subsection (b)(ii) hereof, the
Purchaser shall have the right, commencing February 16, 1996
(the "Obligation Date") until such time as the Purchaser is
eligible to sell the Shares under Rule 144(k) under the Act (or
a successor rule) to request that the Corporation file a
Registration Statement on Form S-3 covering the resale of all
the Registrable Securities PROVIDED , HOWEVER, that if the
Corporation files a registration statement covering the resale
of the Registrable Securities which is declared effective by
the Securities and Exchange Commission ("SEC") prior to the
Obligation Date, Purchaser agrees not to sell any Registrable
Securities pursuant to the Registration Statement prior to the
Obligation Date. If the Corporation has not filed a
registration statement within 30 days of the Purchaser's
request (except if the provisions of Subsection (b)(ii)(A) or
(B) are applicable or the Registrable Securities are included
in an underwritten public offering as set forth in the proviso
to Subsection (b)(iii)(C)), the Corporation's sole liability
shall be to issue
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to Purchaser 4,000 shares of Common Stock for each 30 day
period after the Obligation Date that the Registration
Statement is not filed.
(ii) The Corporation shall not be obligated to effect a
registration under Subsection (b)(i) hereof (A) if all of the
Registrable Securities held by Purchaser which are intended to
be covered by the registration are included in an effective
registration statement and the Corporation is in compliance
with the obligations under Subsection (d)(i) through (v)
hereof with respect to such registration statement; (B) within
120 days after the effective date of any other Registration
Statement as to which Purchaser was given piggy-back rights
pursuant to subsection (c) hereof and in which Purchaser was
able to register and sell at least eighty percent (80%) of the
Registrable Securities requested by Purchaser to be included
in such registration; (C) if the Corporation is engaged in,
has plans to engage in, as evidenced by a resolution of its
Board of Directors, or has become party to a letter of intent
contemplating a public offering of Common Stock for its own
account or for the account of any security holder through one
or more underwriters (PROVIDED, that (i) if the underwriters
of such public offering agree to include the Registrable
Securities in such underwritten public offering on the same
terms and conditions as the other securities being sold in
such offering, and the Purchaser agrees to include the
Registrable Securities in such offering on such terms and
conditions, the Corporation's obligation to effect a
registration under Subsection (b)(i) hereof shall be satisfied
and (ii) if either the underwriters or the Purchaser do not
agree to include the Registrable Securities in such
underwritten offering on the same terms and conditions as the
other securities being offered, then the Corporation's
obligation to file a registration statement under Subsection
(b)(i) hereof shall be delayed until 120 days after the
effective date of the underwritten offering), or (D) if
precluded by the agreements or other documents referred to on
SCHEDULE B or in the Registration Rights Letter.
(c) (i) If at any time after the Obligation Date and until such
time as Purchaser is free to sell the Registrable Securities
pursuant to Rule 144(k) under the Act (including for this
purpose a registration effected by the Corporation for
shareholders other than the Purchaser) the Corporation proposes
to register any of its Common Stock or other securities under
the Act in connection with a public offering of such securities
(other than a registration on Form S-4, Form S-8 or other
limited purpose form) and the Registrable Securities have not
theretofore been included in a registration statement under
Subsection (b) which remains effective, the Corporation shall,
at such time, promptly give the Purchaser written notice of
such registration. Upon the written request of the Purchaser
given within ten (10) days after receipt of such notice by the
Purchaser, the Corporation shall use its best efforts to cause
to be registered for resale under the Act all of the
Registrable Securities that the Purchaser has requested to be
registered on the same terms and conditions as the securities
being sold in such offering, subject to the rights under the
agreements or documents referred to on Schedule B or in the
Registration Rights Letter. The Corporation shall have no
obligation under this Subsection (c) to the extent that, with
respect to a public offering registration, any
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underwriter of such public offering reasonably requests that
the Registrable Securities or a portion thereof be excluded
therefrom.
(ii) If the Registrable Securities are being included in an
underwritten offering of the Corporation's securities which
includes securities of the Corporation held by stockholders
other than Purchaser, and the managing underwriter of such
underwritten offering shall advise the Corporation in writing
that, in its opinion, the distribution of some or all of the
Registrable Securities which the Purchaser has requested the
Corporation to register in accordance with this Section 7(c)
concurrently with the securities being distributed by such
underwriters will jeopardize the distribution of such
securities by such underwriters, then the Corporation will
promptly furnish the Purchaser a copy of such opinion, and may
deny, by written notice to the Purchaser accompanying such
opinion, the registration of a specified number or all of such
Registrable Securities, PROVIDED THAT the number of excluded
Shares shall not exceed the number which is in the same
proportion to the total number of shares of Common Stock to be
excluded from such offering as the aggregate number of Shares
sought to be registered by the Purchaser bears to the
aggregate number of shares of Common Stock sought to be
registered by the Purchaser and all other stockholders
participating in such offering, subject to the rights under
existing contracts or other documents referred to in SCHEDULE
B or in the Registration Rights Letter.
(d) Whenever required under this Section 7 to effect the registration
of any Registrable Securities, the Corporation shall, as expeditiously as
reasonably possible:
(i) Prepare and file within 30 days of the request with the
SEC a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration
to become effective as soon as practicable and, upon the
request of the Purchaser, keep such registration statement
effective for so long as Purchaser desires to dispose of the
securities covered by such registration statement (but not
after Purchaser is free to sell such securities under the
provisions of Rule 144(k) under the Act).
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statements and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with
respect to the disposition of all securities covered by such
registration statement.
(iii) Permit the Purchaser the right to review and comment as
to information relating to Purchaser or the Registrable
Securities included in the registration statement and furnish
to the Purchaser such numbers of conformed copies of the
registration statement and each amendment or supplement,
including each prospectus and preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such
other documents as the Purchaser may reasonably request in
order to facilitate the disposition of Registrable Securities
owned by Purchaser
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for so long as Purchaser desires to dispose of the securities
covered by such registration statement (but not after
Purchaser is free to sell such securities under the provisions
of Rule 144(k) under the Act).
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as shall be
reasonably requested by Purchaser, PROVIDED that the
Corporation shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a
general consent to service and process in any such states or
jurisdictions.
(v) Notify Purchaser of the happening of any event as a result
of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.
(vi) Furnish, at the request of Purchaser, an opinion of
counsel of the Corporation, dated the effective date or the
closing date, as the case may be, of the registration
statement, as to the due authorization and issuance of the
securities being registered.
(vii) Notify the Purchaser promptly after the Corporation
shall have received notice thereof of the issuance of any stop
order by the SEC suspending the effectiveness of such
registration and use its best efforts to obtain withdrawal if
such stop order should be issued.
(e) The Purchaser will furnish to the Corporation in connection with
any registration under this Section 7 such information regarding itself, the
Registrable Securities and other securities of the Corporation held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of the Registrable Securities held by Purchaser.
(f) (i) The Corporation shall indemnify, defend and hold harmless
each holder of Registrable Securities which are included in a
registration statement pursuant to the provisions of
Subsections (b) or (c), any underwriter (as defined in the Act)
for such holder, and the directors, officers and controlling
persons of such holder or underwriter from and against any and
all claims, suits, demands, causes of action, losses, damages,
liabilities, costs or expenses ("Liabilities") to which any of
them may become subject under the Act or otherwise, arising
from or relating to (A) any untrue statement or alleged untrue
statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or
supplement thereto, or (B) the omission or alleged omission to
state therein 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;
PROVIDED, HOWEVER, that the Corporation shall not be liable in
any such case to the extent that any such Liability arises
out of or is based upon an
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untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with written
information furnished by such person specifically for use in
the preparation thereof. This indemnification will survive the
transfer of the Securities.
(ii) Each holder of Registrable Securities included in a
registration pursuant to the provisions of Subsection (b) or
(c) shall indemnify, defend, and hold harmless the
Corporation, its directors, officers and controlling persons
with respect to, any and all Liabilities to which any of them
may become subject under the Act or otherwise, arising from or
relating to (A) any untrue statement or alleged untrue
statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment
or supplement thereto, or (B) the omission or alleged omission
to state therein 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, in each
case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged
omission was so made in reliance upon and in conformity with
written information furnished by or on behalf of such holder
for use in the preparation thereof. This indemnification shall
survive the transfer of the Securities.
(iii) Promptly after receipt by an indemnified party pursuant
to the provisions of Subsection (f) (i) or (f) (ii) of notice
of the commencement of any action involving the subject matter
of the foregoing indemnity provisions, such indemnified party
shall, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of Subsection
(f)(i) or (f)(ii), promptly notify the indemnifying party of
the commencement thereof; PROVIDED, HOWEVER, that the failure
to so notify the indemnifying party shall not relieve it from
its indemnification obligations hereunder except to the extent
that the indemnifying party is materially prejudiced by such
failure. If such action is brought against any indemnified
party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the
right to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to
such indemnified party; PROVIDED, HOWEVER, if the defendants
in any action include both the indemnified party and the
indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses
different from or in addition to those available to the
indemnifying party, or if there is conflict of interest which
would prevent counsel for the indemnifying party from also
representing the indemnified party, the indemnified party
shall have the right to select separate counsel to participate
in the defense of such action on behalf of such indemnified
party at the expense of the indemnifying party. After notice
from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party pursuant
to Subsection (f) (i) or (f) (ii) for any expense of counsel
subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of
investigation, unless (A) the indemnified
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party shall have employed counsel in accordance with the
provisions of the preceding sentence, or (B) the indemnifying
party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after the notice of the commencement of the
action. An indemnifying party shall not be responsible for
amounts paid in settlement without its consent, provided that
its consent may not be unreasonably withheld. Upon any
settlement or entry of final judgment, the indemnifying party
will promptly indemnify the indemnified party.
(g) (i) With respect to the inclusion of Registrable Securities in
a registration statement pursuant to subsections (b) or (c),
all fees, costs and expenses of and incidental to such
registration, inclusion and public offering shall be borne by
the Corporation; PROVIDED, HOWEVER, that any securityholders
participating in such registration shall bear their pro rata
share of the underwriting discounts and commissions, if any.
(ii) The fees, costs and expenses of registration to be borne
by the Corporation as provided in this Subsection (g) shall
include, without limitation, all registration, filing and NASD
fees, printing expenses, fees and disbursements of counsel and
accountants for the Corporation, and all legal fees and
disbursements and other expenses of complying with state
securities or Blue Sky laws of any jurisdiction or
jurisdictions in which securities to be offered are to be
registered and qualified. Fees and disbursements of counsel
and accountants for the selling securityholders shall,
however, be borne by the respective selling securityholder.
SECTION 8
PURCHASE PRICE ADJUSTMENT
8.1. SUBSEQUENT SALE AT LOWER PRICE. If prior to December 31, 1995, the
Corporation sells shares of Common Stock (the "Additional Shares") in a
transaction in which at least 200,000 shares of Common Stock are sold, other
than in an Excluded Transaction (as defined below), for a selling price lower
than 66 2/3% of the Per Share Price set forth in Section 1 hereof, the Per Share
Price of the Shares sold to Purchaser hereunder shall be adjusted downward to
equal the price determined by multiplying the current Per Share Price by a
fraction (a) the numerator of which shall be (i) the number of shares of Common
Stock outstanding immediately prior to such sale plus (ii) the number of shares
of Common Stock which the aggregate consideration received by the Corporation
for the total number of Additional Shares sold would purchase at the then
current Per Share Price and (b) the denominator shall be the number of shares of
Common Stock outstanding immediately after such sale. The Corporation shall give
to the Purchaser prompt written notice of any such sale.
8.2. ADJUSTMENT MECHANISM. If an adjustment of the Per Share Price is
required pursuant to this Section, the Corporation shall deliver to Purchaser
such number of additional shares of Common Stock as will cause (i) the total
number of shares of common stock delivered to Purchaser hereunder, multiplied by
(ii) the adjusted Per Share Price, to equal (iii) the Total Purchase Price set
forth in Section 1 hereof; PROVIDED, HOWEVER, that the number of additional
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shares delivered in respect of such adjustment shall be limited to a maximum of
137,500 shares of Common Stock.
8.3 CAPITAL ADJUSTMENTS. In case of any stock split or reverse stock
split, stock dividend, reclassification of the common stock, recapitalization,
merger or consolidation, or like capital adjustment affecting the Common Stock,
the provisions of this Section shall be applied as if such capital adjustment
event had occurred immediately prior to the Closing Date and the original Total
Purchase Price had been fairly allocated to the stock resulting from such
capital adjustment.
8.4. EXCLUSIONS. An Excluded Transaction shall include (i) conversion
or exercise of any convertible securities, options or warrants outstanding on
the date hereof, (ii) sales of Common Stock pursuant to any stock option or
incentive plan, stock purchase plan or any shareholder-approved employee benefit
or incentive plan heretofore or hereafter adopted by the Corporation, (iii)
shares of Common Stock issued in connection with a licensing, joint venture,
research collaboration, acquisition, corporate partnership or other transaction
which is not primarily a financing transaction, and (iv) shares of Preferred
Stock or Common Stock issued or issuable or sold pursuant to the existing
obligations and agreements listed in SCHEDULE B hereto or in the Registration
Rights Letter.
8.5. DEFINITIONS. For purposes of Section 8.1 hereof, a sale of
Additional Shares shall mean and include in addition to the sale of Common
Stock, the sale or issuance of options, warrants or convertible securities under
which the Corporation is or may become obligated to issue shares of Common
Stock, and the "selling price" of the Common Stock covered thereby shall be the
exercise or conversion price thereof plus the consideration (if any) received by
the Corporation upon such sale or issuance. If Additional Shares are issued for
a consideration other than cash, the "selling price" shall be the fair value of
such consideration as determined in good faith by the Board of Directors of the
Corporation. The term "Shares" as used in this Agreement shall include Shares
issued pursuant to this Section.
SECTION 9
COVENANTS
For so long as Purchaser owns at least 50% of the Shares purchased
hereunder (but not after Purchaser is free to sell such securities under the
provisions of Rule 144(k) under the Act) the Corporation covenants and agrees
to:
(a) File and keep available adequate current public information as is
required to be filed and kept available for holders of restricted securities to
be able to sell such securities pursuant to Rule 144 under the 1933 Act and any
successor regulation; and
(b) File with the SEC in a timely manner all reports and other
documents required to be filed under the 1934 Act;
(c) File such reports and take such other action as is required to
maintain the listing of the Corporation's Common Stock on Nasdaq or on a
national securities exchange.
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SECTION 10
JUDICIAL PROCEEDINGS
10.1 JURISDICTION. The Corporation irrevocably submits to the
non-exclusive jurisdiction of any New York State or Federal court sitting in the
City of New York over any suit, action or proceeding brought by any Purchaser
arising out of or relating to this Agreement, the Shares or the Warrants. To the
fullest extent it may effectively do so under applicable law, the Corporation
irrevocably waives and agrees not to assert, by way of motion, as a defense or
otherwise, any claim that it is not subject to the jurisdiction of any such
court, any objection that it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought by any Purchaser in any
such court and any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.
10.2 ENFORCEMENT. The Corporation agrees, to the fullest extent it may
effectively do so under applicable law, that a judgment in any suit, action or
proceeding of the nature referred to in Section 10.1 brought in any such court
shall, subject to such rights of appeal on issues other than jurisdiction as may
be available, be conclusive and binding upon the Corporation and may be enforced
in the courts of the United States of America or the State of New York (or any
other courts to the jurisdiction of which the Corporation is or may be subject)
by a suit upon such judgment.
10.3 CONSENT TO SERVICE. The Corporation consents to service of process
in any suit, action or proceeding of the nature referred to in Section 10.1 by
mailing a copy thereof by registered or certified mail, postage prepaid, return
receipt requested, to its address specified in or designated pursuant to Section
12.5 herein. Such service (i) shall be deemed in every respect effective service
of process upon the Corporation in any such suit, action or proceeding and (ii)
shall, to the fullest extent permitted by law, by taken and held to be valid
personal service upon and personal delivery to the Corporation.
10.4 NON-EXCLUSIVE JURISDICTION. Nothing in this Section 10 shall
affect the right of the Purchaser to serve process in any manner permitted by
law, or limit any right that the Purchaser may have to bring proceedings against
the Corporation in the courts of any jurisdiction or to enforce in any lawful
manner a judgment obtained in one jurisdiction in any other jurisdiction in any
other jurisdiction.
10.5 THE CORPORATION HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE NOW
OR HEREAFTER TO A JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE
PURCHASER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE SHARES OR
THE WARRANTS.
SECTION 11
LEGEND ON SECURITIES
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Each certificate representing the Shares and the Warrants shall be
stamped or otherwise imprinted with a legend substantially in the following form
(in addition to any legend required under any applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
Upon request of a holder of Shares the Corporation shall remove the
foregoing legend or issue to such holder a new certificate therefor free of any
such legend, if the Corporation shall have received either an opinion of counsel
or a "no-action" letter of the S.E.C., in either case reasonably satisfactory in
substance to the Corporation and its counsel, to the effect that such legend is
no longer required.
SECTION 12
MISCELLANEOUS
12.1 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
12.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of and be binding upon
the successors and assigns of the parties.
12.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof and supersedes the letter dated July 19, 1995
between the parties. Neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated except by a written instrument signed by the
Corporation and the Purchaser.
12.4 EXPENSES. The Corporation agrees to pay, and save the Purchaser
harmless against liability for the payment of, all out-of-pocket expenses
arising in connection with the negotiation, preparation, execution and delivery
of, and any amendment, supplement or modification to, or waiver of any provision
of, this Agreement, the Shares and the Warrants, including without limitation
the fees and disbursements of Messrs. Eaton & Van Winkle, such fees and
disbursements in respect of such preparation, execution and delivery to be paid
by the Corporation on the Closing Date, and to be limited to an amount not
exceeding $15,000 provided that such fees and disbursements are documented to
the reasonable satisfaction of the Corporation.
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12.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given when actually
delivered by hand, messenger, facsimile or courier service or, if mailed, three
days after deposit in the U.S. mail, addressed (a) if to the Purchaser, as
indicated below the Purchaser's signature, or at such other address as the
Purchaser shall have furnished to the Corporation in writing, or (b) if to any
other holder of any Shares, at the address of such holder as shown on the
records of the Corporation, or (c) if to the Corporation, at its address set
forth below or at such other address as the Corporation shall have furnished to
the Purchaser and each such other holder in writing.
12.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement (including any holder of
Shares), upon any breach or default of another party under this Agreement, shall
impair any such right, power or remedy of such party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
12.7 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
12.8 TITLES AND SUBTITLES. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
12.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
12.10 FURTHER ASSURANCES. The Corporation agrees to take such actions
and execute such other documents which the Purchaser may reasonably request to
carry out the intent of this Agreement and the transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first written above.
INTERNEURON PHARMACEUTICALS, INC.
By:___________________________________
Address: One Ledgemont Center
99 Hayden Avenue
Lexington, MA 02173
BT HOLDINGS (NEW YORK), INC.
By:___________________________________
Address: One Bankers Trust Plaza
New York, New York 10006
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SCHEDULE A
Subsidiaries
Progenitor, Inc.
Transcell Technologies, Inc.
Intercardia, Inc.
InterNutria, Inc.
Cardiovascular Pharmacology Engineering & Consultants, Inc.
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SCHEDULE B
OTHER EXISTING OBLIGATIONS AND AGREEMENTS TO ISSUE SECURITIES PRIOR TO
DECEMBER 31, 1995
(i) an indeterminate number of shares are issuable upon conversion of $3.5
million of additional series of preferred stock which may be issued to American
Home Products (formerly American Cyanamid Company), with such number of shares
to be based upon the market price of the Corporation's Common Stock on the dates
of issuance of such additional series of preferred stock.
(ii) a maximum of 340,790 shares are issuable pursuant to anti-dilution
rights held by funds managed by Dimensional Fund Advisors, Inc.
(iii) 150,000 shares may be issuable in connection with the acquisition of
Cardiovascular Pharmacology Engineering & Consultants, Inc.
(iv) up to 15,000 shares and 75,000 warrants with an exercise price of
$7.00 to be issued to an investment banking firm for services previously
rendered.
In addition up to $2.4 million of common stock is proposed to be issued
in connection with a planned acquisition of certain assets of an affiliated
company. This stock will have registration rights expected to commence one year
after the acquisition date.
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EXHIBIT I
[Letterhead of Bachner, Tally, Polevoy & Misher LLP]
August , 1995
BT Holdings (New York), Inc.
130 Liberty Street
New York, New York 10006
RE: INTERNEURON PHARMACEUTICALS, INC.
Gentlemen:
We have acted as counsel to Interneuron Pharmaceuticals, Inc., a
Delaware corporation (the "Corporation"), in connection with the sale by the
Corporation to you, as purchaser (the "Purchaser") of 250,000 shares (the
"Shares") of the Corporation's Common Stock, par value $.001 per share ("Common
Stock") and warrants to purchase 62,500 shares of Common Stock (the "Warrants")
pursuant to the Securities Purchase Agreement dated the date hereof (the
"Purchase Agreement") between the Corporation and Purchaser.
The Purchase Agreement, the Shares and the Warrants are hereinafter
collectively referred to as the "Transaction Documents". Capitalized terms not
otherwise defined herein shall have the meanings given thereto in the Purchase
Agreement.
As counsel to the Corporation, we have examined such documents and made
such other investigations as we have deemed necessary or appropriate for the
purposes of rendering this opinion. In such examination, we have assumed the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents; and we
have assumed the incumbency and authority of all public officials signing as
such and the accuracy of all certificates and similar documents issued by public
officials and representatives of the Corporation and have relied on such
certificates as to facts relevant to the opinions expressed herein. To the
extent it may be relevant to the opinions expressed herein, we have
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BT Holdings (New York, Inc.
August , 1995
Page
assumed that all documents have been duly authorized, executed and delivered by,
and constitute the legal, valid and binding obligations of, the respective
parties thereto other than the Corporation.
The legal opinions expressed herein are subject to the following
qualifications:
(a) the enforceability of any agreement or instrument against any
particular party thereto is subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws from to time to
time in effect which affect the enforcement of creditors' rights generally;
(b) the availability of the remedy of specific performance or any other
equitable remedy for the enforcement of any provision of any agreement or
instrument (regardless of whether enforcement is sought in a proceeding at law
or in equity) may be subject to the discretion of the court before which any
proceeding for the enforcement of any such provisions may be brought; and
(c) we express no opinion as to enforceability of any indemnification
provisions contained in the Transaction Documents.
In connection with this opinion, the only laws we reviewed are the laws
of the United States of America, the State of New York and the State of Delaware
and, accordingly, we express no opinion as to the laws of any other
jurisdiction. Based upon and subject to the foregoing, and subject to the
qualifications set forth below, it is our opinion that:
1. The Corporation is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and is duly
qualified to do business and in good standing as a foreign corporation in
Massachusetts.
2. The Corporation has the corporate power and authority to enter into
and perform the Agreement and to issue the Shares and the Warrants to the
Purchaser. The execution, delivery and performance of the Transaction Documents,
including the issuance and delivery of the Shares and the Warrants, and the
issuance and delivery of the Warrant Shares upon exercise of the Warrants, have
been duly authorized by all requisite corporate action. The Corporation has duly
executed and delivered the Agreement and the Warrants and has duly issued and
delivered the Shares. The Shares are, and when issued in accordance with the
terms of the
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BT Holdings (New York, Inc.
August , 1995
Page
Warrants the Warrant Shares will be, duly authorized, validly issued, fully-paid
and nonassessable.
3. The issuance and delivery of the Shares and the Warrants and the
execution, delivery and performance of the Transaction Documents by the
Corporation do not and will not conflict with or violate (i) the Restated
Certificate of Incorporation or the bylaws of the Corporation or, to our
knowledge (ii) any material term of any indenture, loan agreement, lease,
mortgage, or other material agreement binding on the Corporation, (iii) any
order of a court or administrative agency binding on the Corporation, or (iv)
any applicable law or governmental regulation; to our knowledge, the issuance
and delivery of the Shares and Warrants and the execution, delivery and
performance of the Transaction Documents do not and will not require the
Corporation to obtain the consent, permission or approval of any governmental
authority or result in the imposition or creation of any lien or charge against
any assets of the Corporation.
4. There are no material legal actions, arbitrations, or administrative
proceedings pending against the Corporation, except for the matters disclosed in
the SEC Reports, which might result in a material adverse change in the business
or financial condition of the Corporation, and no such actions or proceedings
are pending which question the validity of the Agreement, the Warrants or the
Shares.
5. Assuming the accuracy of Purchaser's representations contained in
the Agreement, the offer, issuance and sale of the Shares and the Warrants do
not require registration under Section 5 of the Securities Act of 1933, as
amended.
Very truly yours,
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************************************************************************
STOCK PURCHASE WARRANT
To Purchase Common Stock of
INTERNEURON PHARMACEUTICALS, INC.
************************************************************************
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Void after 5:00 p.m. New York Time, on August 16, 2000.
Warrant to Purchase 62,500 Shares of Common Stock.
WARRANT TO PURCHASE COMMON STOCK
OF
INTERNEURON PHARMACEUTICALS, INC.
This is to Certify That, FOR VALUE RECEIVED, Momint or assigns
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from INTERNEURON PHARMACEUTICALS, INC., a Delaware corporation ("Company"),
sixty-two thousand five hundred (62,500) fully paid, validly issued and
nonassessable shares of Common Stock, par value $.001 per share, of the Company
("Common Stock") at a price of $12.765 per share at any time or from time to
time during the period from August 17, 1995 to August 16, 2000, but not later
than 5:00 p.m. New York City Time, on August 16, 2000. The number of shares of
Common Stock to be received upon the exercise of this Warrant and the price to
be paid for each share of Common Stock may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes referred
to as "Warrant Shares" and the exercise price of a share of Common Stock in
effect at any time and as adjusted from time to time is hereinafter sometimes
referred to as the "Exercise Price". This Warrant, together with warrants of
like tenor, constituting in the aggregate common stock purchase warrants (the
"Warrants") to purchase 62,500 shares of Common Stock, was originally issued
pursuant to a securities purchase agreement between the Company and BT Holdings
(New York), Inc. (the "Purchase Agreement"), dated as of August 16, 1995 in
connection with the purchase by BT Holdings (New York), Inc. of 250,000 shares
of Common Stock and the Warrants, in consideration of $2,553,125.
(a) EXERCISE OF WARRANT. This Warrant may be exercised in
whole or in part at any time or from time to time on or after August 17, 1995
and until August 16, 2000 (the "Exercise Period"); provided, however, that if
either such day is a day on which banking institutions in the State of New York
are authorized by law to close, then on the next succeeding day which shall not
be such a day. This Warrant may be exercised by presentation and surrender
hereof to the Company at its principal office, or at the office of its stock
transfer agent, if any, with the Purchase Form annexed hereto duly executed and
accompanied by payment of the Exercise Price for the number of Warrant Shares
specified in such form. As soon as practicable after each such exercise of the
warrants, the Company shall issue and deliver to the Holder a certificate or
certificate for the Warrant Shares issuable upon such exercise, registered in
the name of the Holder or its designee. If this Warrant should be exercised in
part only, the
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Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof to purchase
the balance of the Warrant Shares purchasable thereunder. Upon receipt by the
Company of this Warrant at its office, or by the stock transfer agent of the
Company at its office, in proper form for exercise, the Holder shall be deemed
to be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such shares of Common Stock
shall not then be physically delivered to the Holder.
(b) RESERVATION OF SHARES. The Company shall at all times
reserve for issuance and/or delivery upon exercise of this Warrant such number
of shares of its Common Stock as shall be required for issuance and delivery
upon exercise of the Warrants.
(c) FRACTIONAL SHARES. No fractional shares or script
representing fractional shares shall be issued upon the exercise of this
Warrant. With respect to any fraction of a share called for upon any exercise
hereof, the Company shall pay to the Holder an amount in cash equal to such
fraction multiplied by the current market value of a share, determined as
follows:
(1) If the Common Stock is listed on a national
securities exchange or admitted to unlisted trading privileges
on such exchange or listed for trading on the Nasdaq National
Market, the current market value shall be the last reported
sale price of the Common Stock on such exchange or market on
the last business day prior to the date of exercise of this
Warrant or if no such sale is made on such day, the average
closing bid and asked prices for such day on such exchange or
market; or
(2) If the Common Stock is not so listed or admitted
to unlisted trading privileges, but is traded on the Nasdaq
Small Cap Market, the current Market Value shall be the
average of the closing bid and asked prices for such day on
such market and if the Common Stock is not so traded, the
current market value shall be the mean of the last reported
bid and asked prices reported by the National Quotation
Bureau, Inc. on the last business day prior to the date of the
exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and asked prices are
not so reported, the current market value shall be an amount,
not less than book value thereof as at the end of the most
recent fiscal year of the Company ending prior to the date of
the exercise of the Warrant, determined in such reasonable
manner as may be prescribed by the Board of Directors of the
Company.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
This Warrant is exchangeable, without expense, at the option of the Holder,
upon presentation
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and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Upon surrender of this Warrant to the Company at
its principal office or at the office of its stock transfer agent, if any, with
the Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be cancelled. This Warrant may be divided or
combined with other warrants which carry the same rights upon presentation
hereof at the principal office of the Company or at the office of its stock
transfer agent, if any, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the Holder
hereof. The term "Warrant" as used herein includes any Warrants into which this
Warrant may be divided or exchanged. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in the
Warrant and are not enforceable against the Company except to the extent set
forth herein.
(f) ANTI-DILUTION PROVISIONS. The Exercise Price in effect at
any time and the number and kind of securities purchasable upon the exercise of
the Warrants shall be subject to adjustment from time to time upon the happening
of certain events as follows:
(1) In case the Company shall (i) declare a dividend
or make a distribution on its outstanding shares of Common
Stock in shares of Common Stock, (ii) subdivide or reclassify
its outstanding shares of Common Stock into a greater number
of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for
such dividend or distribution or as of the effective date of
such subdivision, combination or reclassification shall be
adjusted so that it shall equal the price determined by
multiplying the Exercise Price by a fraction, the denominator
of which shall be the number of shares of Common Stock
outstanding after giving effect to such action, and the
numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such action. Such
adjustment shall be made successively whenever any event
listed above shall occur.
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(2) Whenever the Exercise Price payable upon exercise
of each Warrant is adjusted pursuant to Subsection (1) above,
the number of Shares purchasable upon exercise of this Warrant
shall simultaneously be adjusted by multiplying the number of
Shares initially issuable upon exercise of this Warrant by the
Exercise Price in effect on the date hereof and dividing the
product so obtained by the Exercise Price, as adjusted.
(3) No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or
decrease of at least five cents ($0.05) in such price;
provided, however, that any adjustments which by reason of
this Subsection (3) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment required to be made hereunder. All calculations
under this Section (f) shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be.
Anything in this Section (f) to the contrary notwithstanding,
the Company shall be entitled, but shall not be required, to
make such changes in the Exercise Price, in addition to those
required by this Section (f), as it shall determine, in its
sole discretion, to be advisable in order that any dividend or
distribution in shares of Common Stock, or any subdivision,
reclassification or combination of Common Stock, hereafter
made by the Company shall not result in any Federal Income tax
liability to the holders of Common Stock or securities
convertible into Common Stock (including Warrants).
(4) Whenever the Exercise Price is adjusted, as
herein provided, the Company shall promptly cause a notice
setting forth the adjusted Exercise Price and adjusted number
of Shares issuable upon exercise of each Warrant, and, if
requested, information describing the transactions giving rise
to such adjustments, to be mailed to the Holders at their last
addresses appearing in the Warrant Register, and shall cause a
certified copy thereof to be mailed to its transfer agent, if
any. The Company may retain a firm of independent certified
public accountants selected by the Board of Directors (who may
be the regular accountants employed by the Company) to make
any computation required by this Section (f), and a
certificate signed by such firm shall be conclusive evidence
of the correctness of such adjustment.
(5) In the event that at any time, as a result of an
adjustment made pursuant to Section (i) below, the Holder of
this Warrant thereafter shall become entitled to receive any
shares of the Company, other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of
this Warrant shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Common Stock contained
in Subsection (1) above.
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(6) Irrespective of any adjustments in the Exercise
Price or the number or kind of shares purchasable upon
exercise of this Warrant, Warrants theretofore or thereafter
issued may continue to express the same price and number and
kind of shares as are stated in the similar Warrants initially
issued pursuant to this Agreement.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall
be adjusted as required by the provisions of the foregoing Section, the Company
shall forthwith file in the custody of its Secretary or an Assistant Secretary
at its principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein provided,
setting forth in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of Common Stock, if
any, and such other facts as shall be necessary to show the reason for and the
manner of computing such adjustment. Each such officer's certificate shall be
made available at all reasonable times for inspection by the holder or any
holder of a Warrant executed and delivered pursuant to Section (a) and the
Company shall, forthwith after each such adjustment, mail a copy by certified
mail of such certificate to the Holder or any such holder.
(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall
be outstanding, (i) if the Company shall pay any dividend or make any
distribution upon the Common Stock or (ii) if the Company shall offer to the
holders of Common Stock for subscription or purchase by them any share of any
class or any other rights or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least fifteen days prior the
date specified in (x) or (y) below, as the case may be, a notice containing a
brief description of the proposed action and stating the date on which (x) a
record is to be taken for the purpose of such dividend, distribution or rights,
or (y) such reclassification, reorganization, consolidation, merger, conveyance,
lease, dissolution, liquidation or winding up is to take place and the date, if
any is to be fixed, as of which the holders of Common Stock or other securities
shall receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant) or in case of any sale, lease or conveyance to another corporation of
the property of the Company as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be made so that the
Holder shall have the right thereafter by exercising
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this Warrant at any time prior to the expiration of the Warrant, to purchase the
kind and amount of shares of stock and other securities and property receivable
upon such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which might have been purchased upon exercise of this Warrant
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance. Any such provision shall include provision for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant. The foregoing provisions of this Section (i) shall
similarly apply to successive reclassifications, capital reorganizations and
changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances. In the event that in connection with any such capital
reorganization or reclassification, consolidation, merger, sale or conveyance,
additional shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for a security of the Company
other than Common Stock, any such issue shall be treated as an issue of Common
Stock covered by the provisions of Subsection (1) of Section (f) hereof.
(j) REGISTRATION UNDER THE SECURITIES ACT OF 1933.
(1) Except as otherwise permitted by this Section (j), each Warrant
(including each Warrant issued upon the transfer of any Warrant) shall be
stamped with a legend in substantially the following form:
"This Warrant and any shares acquired upon the exercise of
this Warrant have not been registered under the Securities Act of 1933,
as amended, and may not be transferred in the absence of such
registration or any exemption therefrom under such Act. This Warrant
and such shares may be transferred only in compliance with the
conditions specified in this Warrant."
Except as otherwise permitted by this Section (j), each certificate for Common
Stock issued upon the exercise of any Warrant, and each certificate issued upon
the transfer of any such Common Stock shall be stamped with a legend in
substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be transferred
in the absence of such registration or an exemption therefrom under
such laws. Such shares may be transferred only in compliance with the
conditions specified in certain Warrants issued by Interneuron
Pharmaceuticals, Inc. pursuant to the Securities Purchase Agreement,
dated as of August 16, 1995, between Interneuron Pharmaceuticals, Inc.
and BT Holdings (New York ), Inc. A complete and correct copy of the
form of such Warrant is available for inspection at the principal
office of Interneuron Pharmaceuticals, Inc. or at the office or agency
maintained by Interneuron Pharmaceuticals, Inc. as provided in such
Warrants and will be furnished to the holder of such shares upon
written request and without charge."
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(2) Prior to any transfer of any Common Stock issued upon exercise of
the Warrants (the "Restricted Securities") which (x) are not registered under an
effective registration statement under the Securities Act of 1933 (the "Act") or
(y) if the transferor is not an affiliate of the Company, have not been held for
three years, the holder thereof will give written notice to the Company of such
holder's intention to effect such transfer and to comply in all other respects
with this Section (2). Each such notice (a) shall describe the manner and
circumstances of the proposed transfer in sufficient detail to enable counsel to
render the opinions referred to below, and (b) shall designate counsel for the
holder giving such notice (who may be in-house counsel for such holder). The
holder giving such notice will submit a copy thereof to the counsel designated
in such notice and the Company will promptly submit a copy thereof to its
counsel.
The following provisions shall then apply:
(i) If (a) in the written opinion of such counsel for the
holder the proposed transfer may be effected without registration of
such Restricted Securities under the Act, and (b) counsel for the
Company shall not have rendered an opinion that such registration is
required, such holder shall thereupon be entitled to transfer such
Restricted Securities in accordance with the terms of the notice
delivered by such holder to the Company. Each Warrant or certificate,
if any, issued upon or in connection with such transfer shall bear the
appropriate restrictive legend set forth in Section (1), unless in the
opinion of each such counsel such legend is no longer required to
insure compliance with the Act.
(ii) If in the opinion of either or both of such counsel the
proposed transfer may not legally be effected without registration of
such Restricted Securities under the Act (such opinion or opinions to
state the basis of the legal conclusions reached therein), the Company
will promptly so notify the holder thereof and thereafter such holder
shall not be entitled to transfer such Restricted Securities until
receipt of a further notice from the Company under clause (i) above or
until registration of such Restricted Securities under the Act has
become effective.
Notwithstanding the foregoing provisions of this section (2), the Holder shall
be permitted to transfer any Restricted Securities to a limited number of
institutional investors, provided that such transfer complies with the
provisions of the Purchase Agreement and that each such investor represents in
writing that it is acquiring such Restricted Securities for investment and not
with a view to the distribution thereof (subject, however, to any requirement of
law that the disposition thereof shall at all times be within the control of
such transferee).
(3) REGISTRATION RIGHTS. The Common Stock issued upon exercise of the
Warrants is entitled to the benefits of the registration provisions contained in
Section 7 of the Purchase Agreement.
(k) GOVERNING LAW; AMENDMENTS AND WAIVERS. The validity,
interpretation and performance of this Warrant and each its terms and provisions
shall be governed by the laws of the State of New York. No provision of this
Warrant may be changed, waived, discharged or
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terminated except by an instrument in writing signed by the party against which
enforcement of the same is sought.
(l) NOTICES. Any notice or other document required or
permitted to be given or delivered to the Holder shall be delivered at, or sent
by certified or registered mail to the Holder at 130 Liberty Street, New York,
New York 10006, or to such other address as shall have been furnished to the
Company in writing by the Holder. Any notice or other document required or
permitted to be given or delivered to the Company shall be delivered at, or sent
by certified or registered mail to the principal office of the Company at 99
Hayden Avenue, Lexington, MA 02173, or such other address or addresses as shall
have been furnished to the Holder by the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer under its corporate seal, duly attested by
its authorized officer, and to be dated as of August 17, 1995.
INTERNEURON PHARMACEUTICALS, INC.
By: /s/ Thomas Farb
______________________________
Name: Thomas Farb
Title: Senior Vice-President
Finance
[SEAL]
Dated: August 17, 1995
Attest:
/s/ Jill Cohen
Secretary
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PURCHASE FORM
Dated , 19
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing ---- shares of Common Stock and
hereby makes payment of ---- in payment of the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
----------------------------------------------
(Please typewrite or print in block letters)
Address:
-------------------------------------------
Signature:
-----------------------------------------
ASSIGNMENT FORM
FOR VALUE RECEIVED,---------------- hereby sells, assigns and
transfers unto
Name:
----------------------------------------------
(Please typewrite or print in block letters)
Address:
-------------------------------------------
the right to purchase Common Stock represented by this Warrant to the extent of
- ---- shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint ---- Attorney, to transfer the same on the books of the
Company with full power of substitution in the premises.
Date , 19
Signature:
---------------------------
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Exhibit 10.75
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement (the "Agreement") dated as of August 23, 1995,
between Interneuron Pharmaceuticals, Inc. a Delaware corporation, (the
"Corporation"), and Paresco Inc., a Delaware corporation (the "Purchaser").
The Corporation and the Purchaser hereby agree as follows:
SECTION 1
PURCHASE OF SHARES AND WARRANTS
At the Closing, subject to the terms and conditions hereof and in
reliance upon the representations, warranties and agreements contained herein,
the Purchaser will purchase from the Corporation, and the Corporation will sell
to the purchaser, 200,000 shares (the "Shares") of the Corporation's Common
Stock, $.001 par value ("Common Stock") for an aggregate purchase price of
$1,540,000 (the "Total Purchase Price"), or $7.70 per share (the "Per Share
Price").
SECTION 2
CLOSING PAYMENT AND DELIVERY
2.1 CLOSING DATE AND PLACE OF CLOSING. The closing shall be held as
soon as practicable, and in no event later than August 23, 1995, on such date
and time as the Corporation and the Purchaser may agree to (the "Closing Date")
and shall be held at the offices of the Corporation or such other place as may
be agreed to between the Purchaser and the Corporation.
2.2 PAYMENT AND DELIVERY. At the Closing, the Purchaser will pay or
cause to be paid to the Corporation by wire funds transfer the Total Purchase
Price. The Corporation will deliver at the Closing certificates, registered in
such name or names as Purchaser may designate at least 24 hours prior to the
Closing Date, representing the Shares so purchased.
2.3 COVENANT OF BEST EFFORTS AND GOOD FAITH. The Corporation and the
Purchaser agree to use their respective best efforts and to act in good faith to
cause to occur all conditions to Closing which are in their respective control.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants to and agrees with the
Purchaser that:
3.1 CORPORATE POWER QUALIFICATION AND STANDING. The Corporation and the
subsidiaries listed on Schedule A hereto (the "Subsidiaries") are validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation and each of them is
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qualified to transact business in each jurisdiction in which its ownership of
property or conduct of activities requires such qualification, except where the
failure to so qualify would not materially adversely affect the operations of
the Corporation and its Subsidiaries, taken as a whole. The Corporation has all
requisite corporate power and authority to enter into and to carry out and
perform its obligations under this Agreement.
3.2 S.E.C. REPORTS; FINANCIAL STATEMENTS. The Common Stock of the
Corporation is registered under Section 12(b) or (g) of the Securities Exchange
Act of 1934. The Corporation has delivered to Purchaser its Annual Report to
shareholders and its Annual Reports on Form 10- K for its last two fiscal years,
and its quarterly reports on Form 10-Q and each other report, registration
statement and definitive proxy statement filed with the S.E.C. since the filing
of the most recent Form 10-K (collectively, the "SEC Reports"). The SEC Reports
did not (as of their respective dates) 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 under
which they were made, not misleading. The audited and unaudited financial
statements of the Corporation included in the SEC Reports (the "Financial
Statements") have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as stated in such Financial
Statements or the notes thereto) and fairly present the financial position of
the Corporation and its consolidated subsidiaries as of the dates thereof and
the results of their operations and changes in financial position for the
periods then ended.
3.3 AUTHORIZATION; NO CONFLICT. Execution and delivery of this
Agreement and performance of the Corporation's obligations under this Agreement
and issuance and sale of the Shares have been duly authorized by all necessary
action required to be taken under the Delaware General Corporation Law and the
Shares, when issued and paid for in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable, free and clear of all
liens, claims and encumbrances and restrictions on transfer (except under the
securities laws) and free of preemptive rights, and no personal liability will
attach to the ownership thereof. Performance by the Corporation of its
obligations under this Agreement will not conflict with or violate or result in
a default under (i) the charter documents or bylaws of the Corporation, (ii) any
indenture, loan agreement, lease, mortgage, stock purchase agreement, warrant,
option or other material agreement binding on the Corporation, except as set
forth on Schedule B hereto (iii) any order of a court or administrative agency
binding on the Corporation, or (iv) any applicable law or governmental
regulation; and such performance does not and will not require the permission or
approval of, or consents from, any governmental agency (except as may be
required under the securities laws under Section 7 hereof) and will not result
in the imposition or creation of any lien or charge against any assets of the
Corporation. The Corporation is not a party to any agreement that would prohibit
or restrict the Corporation from effecting the demand registration contemplated
by Section 7(b)(i) except that the agreement referred to on Schedule B hereof
may restrict the Corporation's ability to effect such registration during
specified periods, as set forth in Schedule B.
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3.4 CAPITALIZATION. The authorized capital stock of the Corporation
immediately prior to the Closing Date consists of the following:
(a) 60,000,000 shares of the Corporation Common Stock of which
as of the date of this Agreement: (i) 32,097,374 shares are
outstanding; (ii) 2,438,616 shares are issuable upon exercise of
outstanding Class B Warrants; (iii) 5,335,440 shares are reserved for
issuance under the Corporation's stock option plans; (iv) 2,465,438
shares are reserved for issuance upon exercise of other options and
warrants; (v) 100,000 shares are reserved for issuance under the
Corporation's 1995 Stock Purchase Plan; (vi) 622,220 shares are
issuable upon conversion of outstanding Series B and Series C Preferred
Stock; (vii) an indeterminate number of shares are issuable upon
conversion of $3.5 million of additional series of preferred stock
which may be issued to American Home Products (formerly American
Cyanamid Company), with such number of shares to be based upon the
market price of the Corporation's Common Stock on the dates of issuance
of such additional series of preferred stock; (viii) a maximum of
4,094,969 shares are issuable in connection with "put protection
rights" issued by the Corporation to date in connection with financings
by Subsidiaries of the Corporation; (ix) a maximum of 478,290 shares
are issuable pursuant to anti-dilution rights held by certain
institutional investors (the "Institutional Investors"); (x) 150,000
shares are issuable in connection with the acquisition of
Cardiovascular Pharmacology Engineering & Consultants, Inc.; and (xi)
an indeterminate number of additional shares which may be issued (A) to
the Institutional Investors as payment to extend certain registration
rights and (B) pursuant to antidilution provisions of outstanding
warrants and options.
(b) 5,000,000 shares of Preferred Stock, par value $.001 per
share, of which as of the date of this Agreement, 239,425 shares are
outstanding and designated Series B Preferred Stock and 5,000 shares
are outstanding and designated Series C Preferred Stock.
3.5 BINDING EFFECT. This Agreement is a legal, valid and binding
obligation of the Corporation and, assuming due execution by the Purchaser, is
enforceable against the Corporation in accordance with its terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to creditor's rights generally and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
may be limited by applicable law).
3.6 MATERIAL AGREEMENTS; NO DEFAULTS. No material default on the part
of the Corporation (including any event which, with notice or the passage of
time, would constitute a default) exists under any material indenture, loan
agreement, lease, mortgage or other material agreement to which the Corporation
is a party (the "Material Agreements")
3.7 MATERIAL LIABILITIES. Except for liabilities or obligations
disclosed in or contemplated by the Financial Statements or the SEC Reports, and
obligations under the Material Agreements, the Corporation and its subsidiaries
have no material liabilities or
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obligations, absolute or contingent, other than liabilities arising in the
ordinary course of business, subsequent to the date of the most recent Financial
Statements or SEC Reports.
3.8 PROPERTIES. The Corporation and its Subsidiaries (i) have good
title to the properties and assets reflected in the Financial Statements as
owned by them, (ii) have valid leasehold interests in the properties leased by
them, and (iii) own or have the right to use under valid license agreements all
trademarks, trade names, copyrights, patents and other intellectual property
rights material to its business and regularly utilized by them; subject in each
case to no material liens, security interests or adverse claims except as
disclosed in the Financial Statements or the SEC Reports.
3.9 LITIGATION. There are no material legal actions, arbitrations, or
administrative proceedings pending against the Corporation, except for the
matters disclosed in the SEC Reports, and there are no legal actions pending or
threatened against the Corporation which relate to any registration rights
granted by the Corporation prior to the date of this Agreement.
3.10 TAX MATTERS. The Corporation has filed on a timely basis all tax
returns required to be filed by it and has paid its taxes prior to delinquency,
and has made adequate accruals for tax liabilities on the Financial Statements
in accordance with generally accepted accounting principles.
3.11 BROKERS. Other than a placement fee of 4% of the Total Purchase
Price to be paid by the Corporation to TAC Equities, the Corporation is not
required to pay any broker's, finder's or similar fee or commission in
connection with the transaction contemplated hereby.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Corporation that:
4.1 CORPORATE POWER AND AUTHORITY. It is validly existing and in good
standing with all requisite power and authority to enter into this Agreement and
carry out its obligations hereunder and has taken all actions necessary to
authorize it to enter into this Agreement and carry out such obligations.
4.2 INVESTMENT. It is acquiring the Shares for its own account for
investment and not with the view to, or for resale in connection with, any
distribution thereof. It is an "accredited investor" within the meaning of the
Securities Act of 1933 (the "Act") and the rules thereunder, it has assets in
excess of $5,000,000 and it was not formed for the specific purpose of acquiring
the Shares. Purchaser has been afforded the opportunity during the course of
negotiating the transactions contemplated by this Agreement to ask questions of
and secure such information from the Corporation and its officers and directors
as it deems necessary to evaluate the merits of entering into this agreement. It
understands that the Shares have not been registered under the Act nor qualified
under any State blue sky law by reason of specified exemptions therefrom
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which depend upon, among other things, the bona fide nature of its investment
intent as expressed herein.
4.3 Performance by Purchaser under this Agreement will not conflict
with or violate (i) Purchaser's certificate of incorporation or by-laws (ii) any
indenture, loan agreement, lease, mortgage or other material agreement binding
on the Purchaser, (iii) any order of a court or administrative agency binding on
the Purchaser, or (iv) any applicable law or governmental regulation; and such
performance does not and will not require the permission or approval of any
governmental agency.
4.4 RULE 144. It acknowledges that the Shares must be held indefinitely
unless they are subsequently registered under the Act or an exemption from such
registration is available. Purchaser is aware of the provisions of Rule 144
promulgated under the Act and that the Shares are "restricted" securities under
Rule 144.
4.5 TRANSACTIONS IN THE COMMON STOCK. Purchaser has not sold (including
any short sale), offered to sell, granted any option or purchased any contract
to sell, or granted any option or purchased any contract to buy, any Common
Stock during the period commencing 20 trading days prior to the Closing Date.
SECTION 5
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligation of the Purchaser to purchase the Shares is subject to
the fulfillment on or prior to the Closing Date of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Corporation shall be true and correct in all material respects on the
Closing Date.
(b) PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Corporation on or prior
to the Closing Date shall have been performed or complied with in all material
respects.
(c) OPINION OF CORPORATION'S COUNSEL. The Purchaser shall have received
from counsel to the Corporation an opinion confirming the representations set
forth in the first sentence of Section 3.3 hereof, and on the basis of such
counsel's review of the Material Agreements and certificates of officers of the
Corporation as to factual matters, confirming the representations set forth in
the second sentence of Section 3.3 hereof.
(d) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in form and
substance to the Purchaser and its counsel.
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SECTION 6
CONDITIONS TO OBLIGATIONS OF THE CORPORATION
The Corporation's obligation to sell the Shares is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Purchaser shall be true and correct in all material respects on the
Closing Date.
(b) LEGAL ISSUANCE. At the time of the Closing, the issuance and
purchase of the Shares shall be legally permitted by all laws and regulations to
which the Purchaser and the Corporation are subject.
(c) PAYMENT. The Corporation shall concurrently receive payment for the
Shares as provided in Section 2 hereof.
SECTION 7
REGISTRATION RIGHTS
(a) For purposes of this Section 7, the following definitions
shall apply:
(i) The terms "register", "registered", and "registration"
refer to a registration under the Securities Act of 1933, as
amended (the "Act") effected by preparing and filing a
registration statement (the "Registration Statement") or
similar document in compliance with the Act or an amendment
thereto, and the declaration or ordering of effectiveness of
such registration statement, document or amendment thereto.
(ii) The term "Registrable Securities" means the Shares and
any Additional Shares and any securities of the Corporation or
securities of any successor corporation issued as, or issuable
upon the conversion or exercise of any warrant, right or other
security that is issued as, a dividend or other distribution
with respect to, or in exchange for or in replacement of, the
Shares or the Additional Shares.
(b) (i) Subject to the provisions of Subsection (b)(ii) hereof,
the Purchaser shall have the right, on one occasion commencing
February 23, 1996 until such time as the Purchaser is eligible
to sell the Shares under Rule 144(k) under the Act (or a
successor rule) to request that the Corporation file a
Registration Statement on Form S-3 (or, if the Corporation is
not eligible to use Form S-3 for such resale, on Form S-1), or
any successor form, covering the resale of all the Registrable
Securities; PROVIDED , HOWEVER, that if the Corporation files
a Registration Statement (whether pursuant to Purchaser's
request as provided above or otherwise) which would otherwise
permit the resale of the Registrable Securities
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and which is declared effective by the Securities and Exchange
Commission ("SEC") prior to May 23, 1996 (the "Obligation
Date"), Purchaser agrees not to sell any Registrable
Securities pursuant to such Registration Statement prior to
the Obligation Date (but shall be eligible to sell all of the
Registrable Securities commencing immediately after the
Obligation Date pursuant to such Registration Statement,
subject to Subsection b(ii) hereof). If the Purchaser has
requested such registration and the Registration Statement so
requested to be filed has not been declared effective by the
SEC at or prior to the Obligation Date (except if the
provisions of Subsection (b)(ii)(A) or (B) are applicable),
the Corporation's sole liability to Purchaser for such delay
shall be to issue, without the payment of additional
consideration, 7,500 shares of Common Stock to Purchaser for
each 30 day period after the Obligation Date that the
Registration Statement is not declared effective (on a pro
rata basis for portions of 30 day periods), up to a maximum of
67,500 shares (the "Additional Shares"), PROVIDED that the
Corporation will continue to have the obligation to register
the Registrable Securities as set forth in this Section 7.
(ii) The Corporation shall not be obligated to effect a
registration under Subsection (b)(i) hereof
(A) if all of the Registrable Securities
held by Purchaser which are intended to be covered by
the registration are included (with the agreement of
Purchaser) in an effective registration statement
which permits the resale of such Registrable
Securities commencing no later than the Obligation
Date and the Corporation is in compliance with the
obligations under Subsection (d)(i) through (v)
hereof with respect to such registration statement;
(B) within 120 days after the effective date
of any other Registration Statement as to which
Purchaser was given piggy-back rights pursuant to
subsection (c) hereof and in which at least eighty
percent (80%) of the Registrable Securities requested
by Purchaser to be included in such registration were
so registered;
(C) if the Corporation is engaged in, has
plans to engage in or has become party to a letter of
intent (as evidenced by a resolution of the
Corporation's Board of Directors) contemplating a
public offering of its securities for its own account
or for the account of any security holder through one
or more underwriters, for a period of 120 days after
the effective date of the registration statement
relating to such underwritten public offering (unless
the underwriters agree to include all of the
Registrable Securities in such underwritten offering
on the same terms and conditions as the other
securities being sold in such offering and Purchaser
has agreed, which it is under no obligation to do, to
include the
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Registrable Securities in such underwritten offering
on such terms and conditions), but in no event later
than August 22, 1997, or
(D) Purchaser has not requested that the
Corporation file a Registration Statement pursuant to
Subsection (b)(i) hereof within the time period
provided for in such subsection and the restrictions
referred to in Schedule B hereto are applicable,
PROVIDED, that the Corporation's obligation will be
reinstated upon the expiration of such restriction.
(c) If at any time after the Obligation Date and until such time as
Purchaser is free to sell the Registrable Securities pursuant to Rule 144(k)
under the Act (including for this purpose a registration effected by the
Corporation for shareholders other than the Purchaser) the Corporation proposes
to register any of its Common Stock or other securities under the Act in
connection with a public offering of such securities (other than a registration
on Form S-4, Form S-8 or other limited purpose form) and the Registrable
Securities have not theretofore been included in a registration statement under
Subsection (b) which remains effective, the Corporation shall, at such time,
promptly give the Purchaser written notice of such registration. Upon the
written request of the Purchaser given within ten (10) days after receipt of
such notice by the Purchaser, the Corporation shall use its best efforts to
cause to be registered for resale under the Act all of the Registrable
Securities that the Purchaser has requested to be registered on the same terms
and conditions as the securities being sold in such offering, subject to rights
held by third parties under contracts existing prior to the date of this
agreement. The Corporation shall have no obligation under this Subsection (c) to
the extent that, with respect to an underwritten public offering registration,
any underwriter of such public offering reasonably requests that the Registrable
Securities or a portion thereof be excluded therefrom, PROVIDED THAT the number
of excluded Shares shall not exceed the number which is in the same proportion
to the total number of shares of Common Stock to be excluded from such offering
as the aggregate number of Shares sought to be registered by the Purchaser bears
to the aggregate number of shares of Common Stock sought to be registered by the
Purchaser and all other stockholders participating in such offering, subject to
rights held by third parties pursuant to contracts existing prior to the date of
this Agreement.
(d) Whenever required under this Section 7 to effect the registration
of any Registrable Securities, the Corporation shall, as expeditiously as
reasonably possible:
(i) Prepare and file with the SEC a Registration Statement
with respect to such Registrable Securities and use its best
efforts to cause such registration to become effective and,
upon the request of the Purchaser, keep such Registration
Statement effective for so long as Purchaser desires to
dispose of the securities covered by such Registration
Statement (but not after Purchaser is free to sell such
securities under the provisions of Rule 144(k) under the Act).
(ii) Prepare and file with the SEC such amendments and
supplements to such Registration Statements and the prospectus
used in connection with such
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Registration Statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement.
(iii) Furnish to the Purchaser such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity
with the requirements of the Act, and such other documents as
the Purchaser may reasonably request in order to facilitate
the disposition of Registrable Securities owned by Purchaser.
(iv) Use its best efforts to register and qualify the
securities covered by such Registration Statement under such
other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by Purchaser.
(v) Notify Purchaser of the happening of any event as a result
of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.
(vi) Furnish, at the request of Purchaser, an opinion of
counsel of the Corporation, dated the effective date of the
registration statement, as to the due authorization and
issuance of the securities being registered and covering
substantially similar matters as are reasonably requested and
customarily covered in opinions of issuer's counsel in
connection with such offerings and PROVIDED that Purchaser's
counsel delivers an opinion covering matters reasonably
requested and customarily covered in opinions of counsel to
the selling securityholder in such offerings.
(e) The Purchaser will furnish to the Corporation in connection with
any registration under this Section 7 such information regarding itself, the
Registrable Securities and other securities of the Corporation held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of the Registrable Securities held by Purchaser.
(f) (i) The Corporation shall indemnify, defend and hold harmless
each holder of Registrable Securities which are included in a
registration statement pursuant to the provisions of
Subsections (b) or (c), any underwriter (as defined in the
Act) for such holder, and the directors, officers and
controlling persons of such holder or underwriter from and
against any and all claims, suits, demands, causes of action,
losses, damages, liabilities, costs or expenses, including
reasonable attorneys' fees ("Liabilities") to which any of
them may become subject under the Act or otherwise, arising
from or relating to (A) any untrue statement or alleged untrue
statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment
or supplement thereto, or (B) the omission or alleged omission
to state therein a material fact required to be stated
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therein or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading;
PROVIDED, HOWEVER, that the Corporation shall not be liable in
any such case to the extent that any such Liability arises out
of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in
conformity with information furnished by such person in
writing expressly for use in the preparation thereof.
(ii) Each holder of Registrable Securities included in a
registration pursuant to the provisions of Subsection (b) or
(c) shall indemnify, defend, and hold harmless the
Corporation, its directors, officers and controlling persons
with respect to, any and all Liabilities to which any of them
may become subject under the Act or otherwise, arising from or
relating to (A) any untrue statement or alleged untrue
statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment
or supplement thereto, or (B) the omission or alleged omission
to state therein 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, in each
case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged
omission was so made in reliance upon and in conformity with
information furnished by or on behalf of such holder in
writing expressly for use in the preparation thereof.
(iii) Promptly after receipt by an indemnified party pursuant
to the provisions of Subsection (f) (i) or (f) (ii) of notice
of the commencement of any action involving the subject matter
of the foregoing indemnity provisions, such indemnified party
shall, if a claim for indemnification is to be made against
the indemnifying party pursuant to the provisions of
Subsection (f)(i) or (f)(ii), promptly notify the indemnifying
party of the commencement thereof; PROVIDED, HOWEVER, that the
failure to so notify the indemnifying party shall not relieve
it from its indemnification obligations hereunder except to
the extent that the indemnifying party is materially
prejudiced by such failure. If such action is brought against
any indemnified party and it notifies the indemnifying party
of the commencement thereof, the indemnifying party shall have
the right to participate at its expense in, and, to the extent
that it may wish to assume the defense thereof, with counsel
satisfactory to such indemnified party; PROVIDED, HOWEVER, if
the defendants in any action include both the indemnified
party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal
defenses different from or in addition to those available to
the indemnifying party, or if there is conflict of interest
which would prevent counsel for the indemnifying party from
also representing the indemnified party, the indemnified party
shall have the right, at the expense of the indemnifying
party, to select separate counsel to participate in the
defense of such action on behalf of such indemnified party.
After notice from the indemnifying party to
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such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to
such indemnified party pursuant to Subsection (f) (i) or (f)
(ii) for any expense of counsel subsequently incurred by such
indemnified party in connection with the defense thereof other
than reasonable costs of investigation, unless (A) the
indemnified party shall have employed counsel in accordance
with the provisions of the preceding sentence, or (B) the
indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of
the commencement of the action. An indemnifying party shall
not be responsible for amounts paid in settlement without its
consent, provided that its consent may not be unreasonably
withheld.
(g) (i) With respect to the inclusion of Registrable Securities in
a registration statement pursuant to subsections (b) or (c),
all fees, costs and expenses of and incidental to such
registration, inclusion and public offering shall be borne by
the Corporation; PROVIDED, HOWEVER, that any securityholders
participating in such registration shall bear their pro rata
share of the underwriting discounts and commissions, if any,
in any offering in which they select the underwriter or agree
to include the Shares in any underwritten public offering on
the same terms and conditions as the other securities being
sold in such offering.
(ii) The fees, costs and expenses of registration to be borne
by the Corporation as provided in this Subsection (g) shall
include, without limitation, all registration, filing and NASD
fees, printing expenses, fees and disbursements of counsel and
accountants for the Corporation, and all legal fees and
disbursements and other expenses of complying with state
securities or Blue Sky laws of any jurisdiction or
jurisdictions in which securities to be offered are to be
registered and qualified. Fees and disbursements of counsel
and accountants for the selling securityholders shall,
however, be borne by the respective selling securityholder.
SECTION 8
LEGEND ON SECURITIES
Each certificate representing the Shares shall be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to any
legend required under any applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
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Upon request of a holder of Shares the Corporation shall remove the
foregoing legend or issue to such holder a new certificate therefor free of any
such legend, if the Corporation shall have received either an opinion of counsel
or a "no-action" letter of the SEC, in either case reasonably satisfactory in
substance to the Corporation and its counsel, to the effect that such legend is
no longer required.
SECTION 9
MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
conflicts of laws provisions.
9.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of and be binding upon
the parties hereof and the successors and assigns of the parties.
9.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and supersedes the letter dated August 11, 1995 between the
parties. Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated except by a written instrument signed by the
Corporation and the Purchaser.
9.4 EXPENSES. The Corporation agrees to pay Purchaser's legal fees and
disbursements, and fees of any escrow agent in connection with this Agreement
and the transactions contemplated hereby, on the Closing Date, up to a maximum
of $10,000, provided that such fees and disbursements are documented to the
reasonable satisfaction of the Corporation.
9.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given when actually
delivered by hand, messenger, facsimile (with a copy by mail) or courier service
or mail (if by first class mail, postage prepaid, certified receipt requested,
five business days after deposit in the U.S. mail), addressed (a) if to the
Purchaser, as indicated below the Purchaser's signature, or at such other
address as the Purchaser shall have furnished to the Corporation in writing, or
(b) if to any other holder of any Shares, at the address of such holder as shown
on the records of the Corporation, or (c) if to the Corporation, at its address
set forth below or at such other address as the Corporation shall have furnished
to the Purchaser and each such other holder in writing.
9.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement (including any holder of
Shares), upon any breach or default of another party under this Agreement, shall
impair any such right, power or remedy of such party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any
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waiver of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
9.7 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
9.8 TITLES AND SUBTITLES. The titles of the Sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
9.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.10 PUBLICITY. Except as required by law or United States regulatory
authorities (including the filing of this Agreement with the SEC), no public
announcements or other disclosures of this Agreement shall be made by either
party without the other party's consent, which consent will not be unreasonably
withheld and shall be promptly given.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first written above.
INTERNEURON PHARMACEUTICALS, INC.
By: /s/ Thomas F. Farb
---------------------------
Name: Thomas F. Farb
Title: Senior Vice President - Finance
Address: One Ledgemont Center
99 Hayden Avenue
Lexington, MA 02173
PARESCO INC.
By: /s/ Philip R. Spray
--------------------------
Name: Philip R. Spray
Title: President
Address: 101 Hudson Street, Suite 3700
Jersey City, NJ 07302
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SCHEDULE A
Subsidiaries
Progenitor, Inc.
Transcell Technologies, Inc.
Intercardia, Inc.
InterNutria, Inc.
Cardiovascular Pharmacology Engineering & Consultants, Inc.
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SCHEDULE B
The Corporation is a party to an agreement which provides that
after a registration is requested on or after June 2, 1996 by the other party
(the "Requesting Party") to such agreement, the Corporation may not (i) file a
Registration Statement until the effective date of the registration requested by
the Requesting Party or (ii) have a Registration Statement declared effective
until 90 days after the effective date of the registration requested by the
Requesting Party, or such shorter period as any underwriter of such offering may
agree to.
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Exhibit 10.76
STOCK PURCHASE AGREEMENT
Stock Purchase Agreement (the "Agreement") dated as of September 15,
1995, between Interneuron Pharmaceuticals, Inc. a Delaware corporation, (the
"Corporation"), and Silverton International Fund Ltd., a Bermuda corporation
(the "Purchaser").
The Corporation and the Purchaser hereby agree as follows:
SECTION 1
PURCHASE OF SHARES AND WARRANTS
At the Closing, subject to the terms and conditions hereof and in
reliance upon the representations, warranties and agreements contained herein,
the Purchaser will purchase from the Corporation 400,000 shares (the "Shares")
of the Corporation's Common Stock, $.001 par value ("Common Stock") and for an
aggregate purchase price of $5,232,000 (the "Total Purchase Price"), or $13.08
per share (the "Initial Per Share Price").
SECTION 2
CLOSING PAYMENT AND DELIVERY
2.1 CLOSING DATE AND PLACE OF CLOSING. The closing shall be held as
soon as practicable, and in no event later than September 19, 1995, on such date
as the Corporation and the Purchaser may agree to (the "Closing Date") and shall
be held at the offices of the Corporation or such other place as Purchaser and
the Corporation may agree to.
2.2 PAYMENT AND DELIVERY. At the Closing, the Purchaser will pay or
cause to be paid to the Corporation by wire funds transfer the Total Purchase
Price. The Corporation will deliver at the Closing certificates, registered in
such name or names as Purchaser may designate at least 24 hours prior to the
Closing Date, representing the Shares so purchased.
2.3 COVENANT OF BEST EFFORTS AND GOOD FAITH. The Corporation and the
Purchaser agree to use their respective best efforts and to act in good faith to
cause to occur all conditions to Closing which are in their respective control.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants to the Purchaser that:
3.1 CORPORATE POWER QUALIFICATION AND STANDING. The Corporation is
validly existing and in good standing under the laws of its jurisdiction of
incorporation and is qualified to transact business in each jurisdiction in
which its ownership of property or conduct of activities requires such
qualification, except where the failure to so qualify would not materially
adversely
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affect the operations of the Corporation. The Corporation has all requisite
corporate power and authority to enter into and to carry out and perform its
obligations under this Agreement.
3.2 S.E.C. REPORTS; FINANCIAL STATEMENTS. The Common Stock of the
Corporation is registered under Section 12(b) or (g) of the Securities Exchange
Act of 1934. Purchaser has received the Corporation's Annual Report on Form 10-K
for its fiscal year ended September 30, 1994 and its quarterly reports on Form
10-Q and definitive proxy statement filed with the SEC since the filing of such
Form 10-K (collectively, the "SEC Reports"). The SEC Reports did not (as of
their respective dates) 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 under which they were made,
not misleading. The audited and unaudited financial statements of the
Corporation included in the SEC Reports (the "Financial Statements") have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as stated in such Financial Statements or the notes
thereto) and fairly present the financial position of the Corporation and its
consolidated subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended.
3.3 AUTHORIZATION; NO CONFLICT. Execution and delivery of this
Agreement and issuance and sale of the Shares have been duly authorized and the
Shares, when issued and paid for on the Closing Date, will be validly issued,
fully paid and non-assessable. Performance by the Corporation of its obligations
under this Agreement will not conflict with or violate (i) the charter documents
or bylaws of the Corporation, (ii) any indenture, loan agreement, lease,
mortgage or other material agreement binding on the Corporation, (iii) any order
of a court or administrative agency binding on the Corporation, or (iv) any
applicable law or governmental regulation; except in each case for any such
conflicts or violations which would not have a material adverse affect on the
Corporation; and such performance does not and will not require the permission
or approval of any governmental agency, and will not result in the imposition or
creation of any lien or charge against any assets of the Corporation.
3.4 MATERIAL AGREEMENTS; NO DEFAULTS. No material default on the part
of the Corporation (including any event which, with notice or the passage of
time, would constitute a default) exists under any material indenture, loan
agreement, lease, mortgage or other material agreement to which the Corporation
is a party (the "Material Agreements")
3.5 MATERIAL LIABILITIES. Except for liabilities or obligations
disclosed in or contemplated by the Financial Statements or the SEC Reports, and
obligations under the Material Agreements, the Corporation has no material
liabilities or obligations other than liabilities arising in the ordinary course
of business, subsequent to the date of the most recent Financial Statements or
SEC Reports.
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Corporation that:
4.1 CORPORATE POWER AND AUTHORITY. It is validly existing and in good
standing with all requisite power and authority to enter into this Agreement and
carry out its obligations hereunder and has taken all actions necessary to
authorize it to enter into this Agreement and carry out such obligations.
4.2 INVESTMENT. It is acquiring the Shares for its own account for
investment and not with the view to, or for resale in connection with, any
distribution thereof. Purchaser has no present intention to sell the shares and
has no arrangement to sell the shares to or through any person or entity. It is
an "accredited investor" within the meaning of the Securities Act of 1933 (the
"Act") and the rules thereunder, it has assets in excess of $5,000,000 and it
was not formed for the specific purpose of acquiring the Shares. Purchaser has
been afforded the opportunity during the course of negotiating the transactions
contemplated by this Agreement to ask questions of and secure such information
from the Corporation and its officers and directors as it deems necessary to
evaluate the merits of entering into this agreement. It understands that the
Shares have not been registered under the Act nor qualified under any State blue
sky law by reason of specified exemptions therefrom which depend upon, among
other things, the bona fide nature of its investment intent as expressed herein.
4.3 NO CONFLICT. Performance by Purchaser under this Agreement will not
conflict with or violate (i) Purchaser's certificate of incorporation or
by-laws, (ii) any indenture, loan agreement, lease, mortgage or other material
agreement binding on the Purchaser, (iii) any order of a court or administrative
agency binding on the Purchaser, or (iv) any applicable law or governmental
regulation; and such performance does not and will not require the permission or
approval of any governmental agency.
4.4 RULE 144. It acknowledges that the Shares must be held indefinitely
unless they are subsequently registered under the Act or an exemption from such
registration is available. Purchaser is aware of the provisions of Rule 144
promulgated under the Act and that the Shares are "restricted" securities under
Rule 144.
4.5 TRANSACTIONS IN THE COMMON STOCK. Purchaser has not sold (including
any short sale), offered to sell, granted any option or purchased any contract
to sell, or granted any option or purchased any contract to buy, any Common
Stock during the period commencing 20 trading days prior to the Closing Date and
shall not engage in any of such activities with respect to the Common Stock
prior to the date that Registrable Securities are first registered.
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SECTION 5
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
The obligation of the Purchaser to purchase the Shares is subject to
the fulfillment on or prior to the Closing Date of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Corporation shall be true and correct in all material respects on the
Closing Date.
(b) PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Corporation on or prior
to the Closing Date shall have been performed or complied with in all material
respects.
(c) OPINION OF CORPORATION'S COUNSEL. The Purchaser shall have received
from counsel to the Corporation an opinion confirming the representations set
forth in the first sentence of Section 3.3 hereof, and on the basis of such
counsel's review of the Material Agreements and certificates of officers of the
Corporation as to factual matters, confirming the representations set forth in
the second sentence of Section 3.3 hereof.
(d) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in form and
substance to the Purchaser and its counsel.
SECTION 6
CONDITIONS TO OBLIGATIONS OF THE CORPORATION
The Corporation's obligation to sell the Shares is subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Purchaser shall be true and correct in all material respects on the
Closing Date.
(b) LEGAL ISSUANCE. At the time of the Closing, the issuance and
purchase of the Shares shall be legally permitted by all laws and regulations to
which the Purchaser and the Corporation are subject.
(c) PAYMENT. The Corporation shall concurrently receive payment for
the Shares as provided in Section 2 hereof.
SECTION 7
REGISTRATION RIGHTS
(a) For purposes of this Agreement, the following definitions shall
apply:
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(i) The terms "register", "registered", and "registration"
refer to a registration under the Securities Act of 1933, as amended (the "Act")
effected by preparing and filing a registration statement (the "Registration
Statement") or similar document in compliance with the Act or an amendment
thereto, and the declaration or ordering of effectiveness of such registration
statement, document or amendment thereto.
(ii) The term "Registrable Securities" means the Shares, and
any Penalty Shares, and any securities of the Corporation or securities of any
successor corporation issued as, or issuable upon the conversion or exercise of
any warrant, right or other security that is issued as, a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
Shares.
(iii) The term "Market Price" shall mean the average of the
closing prices of the Common Stock during the five trading days ending on the
day immediately preceding the date on which Registrable Securities are first
registered.
(b) (i) Subject to the provisions of Subsection (b)(ii) hereof, the
Corporation shall file a Registration Statement on Form S-3 covering the resale
of all the Registrable Securities PROVIDED , HOWEVER, that (i) if the
Corporation files a registration statement covering the resale of the
registrable securities which is declared effective by the Securities and
Exchange Commission ("SEC") prior to March 31, 1996 (the "Obligation Date"),
Purchaser agrees not to sell any Registrable Securities pursuant to the
Registration Statement prior to the Obligation Date and (ii) if the registration
statement has not been declared effective by the SEC at or prior to the
Obligation Date (except if the provisions of Subsection (b)(ii) are applicable),
the Corporation's sole liability to Purchaser shall be, at the Corporation's
option, either (A) to issue Purchaser 12,000 shares of Common Stock (the
"Penalty Shares") for each 30 day period after the Obligation Date that the
Registration Statement is not declared effective, on a pro rata basis for any
partial period, up to a maximum of 72,000 Payment Shares or (B) to repurchase
the Registrable Securities held by Purchaser at the Market Price.
(ii) The Corporation shall not be obligated to effect a
registration under Subsection (b)(i) hereof (A) if all of the Registrable
Securities held by Purchaser which are intended to be covered by the
registration are included in an effective registration statement and the
Corporation is in compliance with the obligations under Subsection (d)(ii)
through (v) hereof with respect to such registration statement; (B) within 120
days after the effective date of any other Registration Statement as to which
Purchaser was given piggy-back rights pursuant to subsection (c) hereof and in
which Purchaser was able to register and sell at least eighty percent (80%) of
the Registrable Securities requested by Purchaser to be included in such
registration; (C) if the Corporation is engaged in, has plans to engage in or
has become party to a letter of intent contemplating a public offering of Common
Stock for its own account or for the account of any security holder through one
or more underwriters (unless the underwriters agree to include the Registrable
Securities in such underwritten offering on the same terms and conditions as the
other securities being sold in such offering in which case the Purchaser will
agree to include the Registrable Securities in such offering on such terms and
conditions)
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through the period ending 90 days after the closing of such public offering; or
(D) if precluded by agreements entered into prior to the date of this agreement.
(c) If at any time after the Obligation Date and until such time as
Purchaser is free to sell the Registrable Securities pursuant to Rule 144(k)
under the Act (including for this purpose a registration effected by the
Corporation for shareholders other than the Purchaser) the Corporation proposes
to register any of its Common Stock or other securities under the Act in
connection with a public offering of such securities (other than a registration
on Form S-4, Form S-8 or other limited purpose form) and the Registrable
Securities have not theretofore been included in a registration statement under
Subsection (b) which remains effective, the Corporation shall, at such time,
promptly give the Purchaser written notice of such registration. Upon the
written request of the Purchaser given within ten (10) days after receipt of
such notice by the Purchaser, the Corporation shall use its best efforts to
cause to be registered for resale under the Act all of the Registrable
Securities that the Purchaser has requested to be registered on the same terms
and conditions as the securities being sold in such offering, subject to rights
held by third parties under contracts existing prior to the date of this
agreement. The Corporation shall have no obligation under this Subsection (c) to
the extent that, with respect to a public offering registration, any underwriter
of such public offering reasonably requests that the Registrable Securities or a
portion thereof be excluded therefrom.
(d) Whenever required under this Section 7 to effect the registration
of any Registrable Securities, the Corporation shall, as expeditiously as
reasonably possible:
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration to become effective and, upon the request of the Purchaser,
keep such registration statement effective for so long as Purchaser desires to
dispose of the securities covered by such registration statement (but not after
Purchaser is free to sell all of such securities during any one three month
period under Rule 144 under the Act or to sell such securities under the
provisions of Rule 144(k) under the Act).
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statements and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement.
(iii) Furnish to the Purchaser such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as the Purchaser may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by Purchaser.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by
Purchaser, provided that the Corporation shall not be required in
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connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service and process in any such states or
jurisdictions.
(v) Notify Purchaser of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
(vi) Furnish, at the request of Purchaser, an opinion of
counsel of the Corporation, dated the effective date of the registration
statement, as to the due authorization and issuance of the securities being
registered.
(e) The Purchaser will furnish to the Corporation in connection with
any registration under this Section 7 such information regarding itself, the
Registrable Securities and other securities of the Corporation held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of the Registrable Securities held by Purchaser.
(f) (i) The Corporation shall indemnify, defend and hold harmless each
holder of Registrable Securities which are included in a registration statement
pursuant to the provisions of Subsections (b) or (c) from and against any and
all claims, suits, demands, causes of action, losses, damages, liabilities,
costs or expenses ("Liabilities") to which any of them may become subject under
the Act or otherwise, arising from or relating to (A) any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or supplement
thereto, or (B) the omission or alleged omission to state therein 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; PROVIDED,
HOWEVER, that the Corporation shall not be liable in any such case to the extent
that any such Liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by such person for use in the preparation thereof.
(ii) Each holder of Registrable Securities included in a
registration pursuant to the provisions of Subsection (b) or (c) shall
indemnify, defend, and hold harmless the Corporation, its directors, officers
and controlling persons with respect to, any and all Liabilities to which any of
them may become subject under the Act or otherwise, arising from or relating to
(A) any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or (B) the omission or alleged omission to
state therein 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, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
so made in reliance upon and in conformity with information furnished by or on
behalf of such holder for use in the preparation thereof.
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(iii) Promptly after receipt by an indemnified party pursuant
to the provisions of Subsection (f) (i) or (f) (ii) of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party shall, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of Subsection
(f)(i) or (f)(ii), promptly notify the indemnifying party of the commencement
thereof; PROVIDED, HOWEVER, that the failure to so notify the indemnifying party
shall not relieve it from its indemnification obligations hereunder except to
the extent that the indemnifying party is materially prejudiced by such failure.
If such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; PROVIDED, HOWEVER,
if the defendants in any action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses different from or in addition to those
available to the indemnifying party, or if there is conflict of interest which
would prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party shall have the right to select separate
counsel to participate in the defense of such action on behalf of such
indemnified party. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party pursuant to Subsection (f) (i) or
(f) (ii) for any expense of counsel subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation, unless (A) the indemnified party shall have employed counsel in
accordance with the provisions of the preceding sentence, or (B) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action. An indemnifying party shall
not be responsible for amounts paid in settlement without its consent, provided
that its consent may not be unreasonably withheld.
(g) (i) With respect to the inclusion of Registrable Securities in a
registration statement pursuant to subsections (b) or (c), all fees, costs and
expenses of and incidental to such registration, inclusion and public offering
shall be borne by the Corporation; PROVIDED, HOWEVER, that any securityholders
participating in such registration shall bear their pro rata share of the
underwriting discounts and commissions, if any.
(ii) The fees, costs and expenses of registration to be borne
by the Corporation as provided in this Subsection (g) shall include, without
limitation, all registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Corporation, and all legal fees
and disbursements and other expenses of complying with state securities or Blue
Sky laws of any jurisdiction or jurisdictions in which securities to be offered
are to be registered and qualified. Fees and disbursements of counsel and
accountants for the selling securityholders shall, however, be borne by the
respective selling securityholder.
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SECTION 8
PURCHASE PRICE ADJUSTMENT
8.1. SUBSEQUENT SALE AT LOWER PRICE. If prior to the fifth business day
immediately preceding the filing of a Registration Statement covering the resale
of at least 80% of the Shares, the Corporation sells shares of Common Stock (the
"Additional Shares") in a transaction in which at least 250,000 shares of Common
Stock are sold, other than in an Excluded Transaction (as defined below), for a
selling price lower than 62.5% of the Initial Per Share Price set forth in
Section 1 hereof, the Initial Per Share Price of the Shares sold to Purchaser
hereunder shall be adjusted downward to equal the price (the "Adjusted Per Share
Price") determined by multiplying the Initial Per Share Price by a fraction (a)
the numerator of which shall be (i) the number of shares of Common Stock
outstanding immediately prior to such sale plus (ii) the number of shares of
Common Stock which the aggregate consideration received by the Corporation for
the total number of Additional Shares sold would purchase at the Initial Per
Share Price and (b) the denominator shall be the number of shares of Common
Stock outstanding immediately after such sale. The Corporation shall give to the
Purchaser prompt written notice of any such sale.
8.2. ADJUSTMENT MECHANISM. If an adjustment of the Initial Per Share
Price is required pursuant to this Section, the Corporation shall deliver to
Purchaser such number of additional shares of Common Stock as will cause (i) the
total number of shares of common stock delivered to Purchaser hereunder,
multiplied by (ii) the Adjusted Per Share Price, to equal (iii) the Total
Purchase Price set forth in Section 1 hereof; PROVIDED, HOWEVER, that the number
of additional shares delivered in respect of such adjustment shall be limited to
a maximum of 200,000 shares of Common Stock.
8.3 CAPITAL ADJUSTMENTS. In case of any stock split or reverse stock
split, stock dividend, reclassification of the common stock, recapitalization,
merger or consolidation, or like capital adjustment affecting the Common Stock,
the provisions of this Section shall be applied as if such capital adjustment
event had occurred immediately prior to the Closing Date and the original Total
Purchase Price had been fairly allocated to the stock resulting from such
capital adjustment.
8.4. EXCLUSIONS. An Excluded Transaction shall include (i) conversion
or exercise of any convertible securities, options or warrants outstanding on
the date hereof, (ii) sales of Common Stock pursuant to any stock option or
incentive plan, stock purchase plan or any shareholder-approved employee benefit
or incentive plan heretofore or hereafter adopted by the Corporation, (iii)
shares of Common Stock issued in connection with a licensing, joint venture,
research collaboration, acquisition, corporate partnership or other transaction
which is not primarily a financing transaction, and (iv) shares of Preferred
Stock or Common Stock issued or issuable or sold pursuant to existing
obligations and agreements.
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8.5. DEFINITIONS. For purposes of Section 8.1 hereof, a sale of
Additional Shares shall mean and include in addition to the sale of Common
Stock, the sale or issuance of options, warrants or convertible securities under
which the Corporation is or may become obligated to issue shares of Common Stock
(except in an Excluded Transaction), and the "selling price" of the Common Stock
covered thereby shall be the exercise or conversion price thereof plus the
consideration (if any) received by the Corporation upon such sale or issuance.
If Additional Shares are issued for a consideration other than cash, the
"selling price" shall be the fair value of such consideration as determined in
good faith by the Board of Directors of the Corporation. The term "Shares" as
used in this Agreement shall include Shares issued pursuant to this Section.
SECTION 9
LEGEND ON SECURITIES
Each certificate representing the Shares shall be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to any
legend required under any applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
Upon request of a holder of Shares the Corporation shall remove the
foregoing legend or issue to such holder a new certificate therefor free of any
such legend, if the Corporation shall have received either an opinion of counsel
or a "no-action" letter of the SEC, in either case reasonably satisfactory in
substance to the Corporation and its counsel, to the effect that such legend is
no longer required.
SECTION 10
MISCELLANEOUS
10.1 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
10.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of and be binding upon
the successors and assigns of the parties.
10.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subjects hereof. Neither this
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Agreement nor any term hereof may be amended, waived, discharged or terminated
except by a written instrument signed by the Corporation and the Purchaser.
10.4 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be mailed by first-class mail, postage prepaid, or
delivered either by hand or by messenger, addressed (a) if to the Purchaser, as
indicated below the Purchaser's signature, or at such other address as the
Purchaser shall have furnished to the Corporation in writing, or (b) if to any
other holder of any Shares, at the address of such holder as shown on the
records of the Corporation, or (c) if to the Corporation, at its address set
forth below or at such other address as the Corporation shall have furnished to
the Purchaser and each such other holder in writing. All such notices or
communications shall be deemed given when actually delivered by hand, messenger,
facsimile or courier service or, if mailed, three days after deposit in the U.S.
mail.
10.5 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement (including any holder of
Shares), upon any breach or default of another party under this Agreement, shall
impair any such right, power or remedy of such party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
10.6 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
10.7 TITLES AND SUBTITLES. The titles of the Sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
10.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first written above.
INTERNEURON PHARMACEUTICALS, INC.
By: /S/ THOMAS F. FARB
-------------------------
Name: Thomas F. Farb
Title: Senior Vice President, Finance
Address: One Ledgemont Center
99 Hayden Avenue
Lexington, MA 02173
SILVERTON INTERNATIONAL FUND LIMITED
By: /S/ MICHAEL J. BERNER
-------------------------
Name: Michael J. Berner
Title: Vice President
Paloma Advisors Limited
Attorney-in-Fact
Address: 129 Front Street
Hamilton HM12 Bermuda
Copy to: Paloma Partners Management Company
Two American Lane
Greenwich, CT 06836-2571
Attn.: Nicholas Maounis
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Exhibit 10.77
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of August 31, 1995, by
and between INTERNEURON PHARMACEUTICALS INC., a Delaware corporation, with
headquarters located at One Ledgemont Center, 99 Hayden Avenue, Lexington,
Massachusetts 02173 (the "Company"), and
the undersigned (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by Section 4(2) of the Securities Act of 1933, as amended
(the "1933 Act"); and
WHEREAS, the Buyer wishes to subscribe for and purchase shares
of Common Stock, $.001 par value (the "Common Stock"), of the Company upon the
terms and subject to the conditions of this Agreement, subject to acceptance of
this Agreement by the Company;
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. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
A. SUBSCRIPTION. The undersigned hereby subscribes for and
agrees to purchase the number of shares of Common Stock determined as set forth
on the signature page of this Agreement (the "Shares") at the price per Share
determined as set forth on the signature page of this Agreement. The aggregate
purchase price for the Shares shall be as set forth on the signature page hereto
and shall be payable in United States Dollars.
B. FORM OF PAYMENT. The Buyer shall pay the purchase price for
the Shares by delivering good funds in United States Dollars to the escrow agent
(the "Escrow Agent") identified in the Joint Escrow Instructions attached hereto
as ANNEX I (the "Joint Escrow Instructions"). Such delivery of funds shall be
made against delivery by the Company of a certificate for the Shares. Promptly
following payment by the Buyer to the Escrow Agent of the subscription price for
the Shares, the Company shall deliver a certificate for the Shares to the Escrow
Agent. By signing this
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Agreement, the Buyer and the Company each agrees to all of the terms and
conditions of, and becomes a party to, the Joint Escrow Instructions, all of the
provisions of which are incorporated herein by this reference as if set forth in
full.
C. METHOD OF PAYMENT. Payment of the purchase price
for the Shares shall be made by wire transfer of funds to:
Citibank, N.A.
153 East 53rd Street
New York, New York 10043
ABA#021000089
For Further Credit to A/C#37179446
for credit to the account of Brian W. Pusch
Attorney Escrow Account
Reference: Interneuron
Not later than 4:00 p.m., New York City time, on the date which is five New York
Stock Exchange trading days after the Company shall have accepted this Agreement
and returned a signed counterpart of this Agreement to the Buyer, the Buyer
shall deposit with the Escrow Agent the aggregate subscription price for the
Shares.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO
INFORMATION; INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees
with, the Company as follows:
a. The Buyer is purchasing the Shares for its own account for
investment only and not with a view towards the public sale or distribution
thereof;
b. The Buyer is an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the 1933 Act by
reason of Rule 501(a)(3);
c. All subsequent offers and sales of the Shares by the
Buyer shall be made pursuant to registration of the Shares under
the 1933 Act or pursuant to an exemption from registration;
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d. The Buyer understands that the Shares are being offered and
sold to it in reliance on specific exemptions from the registration requirements
of United States federal and state securities laws and that the Company is
relying upon the truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Shares;
e. The Buyer and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Shares which have
been requested by the Buyer. The Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries. Without limiting the
generality of the foregoing, the Buyer has had the opportunity to obtain and to
review the Company's (1) Annual Report on Form 10-K for the year ended September
30, 1994 the ("1994 Form 10-K"), (2) Quarterly Reports on Form 10-Q for the
quarters ended December 31, 1994, March 31, 1995 and June 30, 1995, (3) Proxy
Statement for the Company's 1994 Annual Meeting and (4) Current Reports on Form
8-K, dated May 16, 1995 and June 2, 1995, in each case as filed with the U.S.
Securities and Exchange Commission (the "SEC"), and referred to herein
collectively as the "SEC Reports". The Buyer understands that its investment in
the Shares involves a high degree of risk;
f. The Buyer understands that no United States federal
or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Shares;
g. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Buyer and is a valid and binding
agreement of the Buyer enforceable in accordance with its terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally; and
h. The execution and delivery of this Agreement by the Buyer
and the consummation by the Buyer of the purchase of the Shares and the other
transactions contemplated by this Agreement do not and will not conflict with or
result in a breach by the Buyer of any of the terms or provisions of, or
constitute a default under, the certificate of incorporation or by-laws of the
Buyer, the investment policies and investment restrictions of the Buyer, or any
indenture, mortgage, deed of trust or other material
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agreement or instrument to which the Buyer is a party or by which
it or any of its properties or assets are bound.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
a. CONCERNING THE SHARES AND THE COMMON STOCK. The Shares,
when issued, delivered and paid for in accordance with this Agreement, will be
duly and validly authorized and issued, fully paid and non-assessable and will
not subject the holder thereof to personal liability by reason of being such
holder. There are no preemptive rights of any stockholder of the Company, as
such, to acquire the Shares. The Common Stock is authorized for trading on the
Nasdaq National Market and no suspension of trading in the Common Stock is in
effect.
b. SUBSCRIPTION AGREEMENT. This Agreement and the Registration
Rights Agreement in the form attached hereto as ANNEX II (the "Registration
Rights Agreement") have been duly and validly authorized by the Company, this
Agreement has been duly executed and delivered by the Company and this Agreement
is, and the Registration Rights Agreement, when executed and delivered by the
Company, will be, valid and binding agreements of the Company enforceable in
accordance with their respective terms, subject as to enforceability to general
principles of equity and to bankruptcy, insolvency, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and except as
rights to indemnity and contribution may be limited by applicable law or public
policy.
c. NON-CONTRAVENTION. The execution and delivery of this
Agreement and the Registration Rights Agreement by the Company and the
consummation by the Company of the issuance of the Shares and the other
transactions contemplated by this Agreement and the Registration Rights
Agreement do not and will not conflict with or result in a breach by the Company
of any of the terms or provisions of, or constitute a default under, the
certificate of incorporation or by-laws of the Company, or any indenture,
mortgage, deed of trust or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or assets are bound,
or any existing 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.
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d. APPROVALS. No authorization, approval or consent of any
governmental body or the stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Shares as contemplated by this
Agreement.
e. INFORMATION PROVIDED. The SEC Reports did not, as of the
respective dates of filing with the SEC, 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 were
made, not misleading; since the date of the filing of the 1994 Form 10-K with
the SEC the Company has filed all reports and information required to be filed
by the Company with the SEC and has publicly disclosed all information required
to be disclosed by the Company, in each case by applicable laws and the
requirements of the National Association of Securities Dealers, Inc. (the
"NASD"); and since June 30, 1995 there has been no report or information
required to be filed by the Company with the SEC or to be publicly disclosed by
the Company, in each case by applicable laws or the requirements of the NASD
(other than the SEC Reports and reports on SEC Form 10-C).
f. ABSENCE OF CERTAIN CHANGES. Since September 30, 1994, there
has been no material adverse change and no material adverse development in the
business, properties, operations, financial condition, results of operations or
prospects of the Company, except as disclosed in or contemplated by the SEC
Reports and except that the Company has continued to incur losses from
operations since June 30, 1995.
g. ABSENCE OF LITIGATION. Except for applications by the
Company to, and proceedings by the Company scheduled before, the Food and Drug
Administration (the "FDA") and the Drug Enforcement Administration (which are
disclosed in the SEC Reports in accordance with applicable law, including,
without limitation, the restrictions imposed by the FDA on disclosure), 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 the Company or any of its subsidiaries, wherein an unfavorable decision,
ruling or finding would have a material adverse effect on the properties,
business, condition (financial or other), results of operations or prospects of
the Company and its subsidiaries taken as a whole or the transactions
contemplated by this Agreement or any of the documents contemplated hereby or
which would adversely affect the validity or enforceability of, or the authority
or ability of the Company to perform its obligations under, this Agreement or
any of such other documents.
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4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. TRANSFER RESTRICTIONS. The Buyer acknowledges that (1) the
Shares to be issued to it hereunder have not been and are not being registered
under the provisions of the 1933 Act (except as provided in the Registration
Rights Agreement), and may not be transferred unless (A) the Shares are
subsequently registered thereunder or (B) the Buyer shall have delivered to the
Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Shares may be sold or
transferred pursuant to an exemption from such registration; (2) any sale of the
Shares made in reliance on Rule 144 promulgated under the 1933 Act may be made
only in accordance with the terms of said Rule and further, if said Rule 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 used 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 (3) neither the Company nor any other person is under any obligation to
register the Shares (other than pursuant to the Registration Rights Agreement)
under the 1933 Act or to comply with the terms and conditions of any exemption
thereunder.
b. RESTRICTIVE LEGEND. The Buyer acknowledges and agrees that,
until such time as the shares have been registered for resale under the 1933 Act
as contemplated by the Registration Rights Agreement, the certificates for 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 the
Shares):
The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
shares have been acquired for investment and may not be sold,
transferred or assigned in the absence of an effective
registration statement for these shares under the Securities
Act of 1933, as amended, or an opinion of counsel that
registration is not required under said Act.
c. REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to
enter into the Registration Rights Agreement in the form attached hereto as
ANNEX II on or before the Closing Date.
d. AUTHORIZATION FOR TRADING; REPORTING STATUS. The Company
shall cause the Shares to be authorized for trading on the
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Nasdaq National Market at such time as shall be required by the NASD in order
for (1) the Company to avoid removal of the listing of the Common Stock on the
Nasdaq National Market or suspension of trading of the Common Stock on the
Nasdaq National Market and (2) there to be no impairment of the validity of the
issuance of the Shares and no limitation arising under the rules or requirements
of the NASD on the transferability of the Shares on the Nasdaq National Market.
So long as the Buyer beneficially owns at least 100,000 of the Shares and until
such time as the Shares are eligible for sale pursuant to Rule 144(k) under the
1933 Act, the Company shall file all reports required to be filed with the SEC
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (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.
e. CERTAIN EXPENSES. Whether or not the closing occurs, the
Company shall pay or reimburse the Buyer for the reasonable fees and expenses of
legal counsel to the Buyer for the preparation and negotiation of this Agreement
and the other documents contemplated hereby, the closing contemplated hereby and
the expenses of the Escrow Agent in connection therewith; PROVIDED, HOWEVER,
that if the Closing Date (as hereinafter defined) occurs on or before September
30, 1995 the maximum amount payable by the Company pursuant to this sentence
shall be $10,000.00. The Buyer shall provide to the Company written
documentation of the amount of such legal fees and expenses and, if such
documentation is provided to the Company on or before the Closing Date, the
amount thereof shall be paid at such time and in such manner as provided in the
Joint Escrow Instructions. The obligations of the Company under the provisions
of this Section 4(e) shall be in addition to the obligations of the Company for
expenses under the Registration Rights Agreement.
5. TRANSFER AGENT INSTRUCTIONS.
Promptly following the delivery by the Buyer of the aggregate
subscription price for the Shares in accordance with Section 1(c) hereof, the
Company will instruct its transfer agent to issue one or more certificates for
the Shares, bearing the restrictive legend specified in Section 4(b) of this
Agreement, registered in the name of the Buyer or its nominee and in such
denominations to be specified by the Buyer at least one business day prior to
the date of the closing. The Company warrants that no instruction other than
such instructions referred to in this Section 5 and stop transfer instructions
to give effect to Section 4(a) hereof will be given by the Company to the
transfer agent with respect to the Shares and that the Shares shall otherwise be
freely
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transferable on the books and records of the Company as and to the extent
provided in this Agreement. Nothing in this Section shall affect in any way the
Buyer's obligations and agreement to comply with all applicable securities laws
upon resale of the Shares. If the Buyer provides the Company with an opinion of
counsel reasonably acceptable to the Company that registration of a resale by
the Buyer of any of the Shares in accordance with clause (1)(B) of Section 4(a)
of this Agreement is not required under the 1933 Act, the Company shall permit
the transfer of the Shares and promptly instruct the Company's transfer agent to
issue one or more share certificates in such name or names and in such
denominations as specified by the Buyer.
6. STOCK DELIVERY INSTRUCTIONS.
The certificate for the Shares shall be delivered by the
Company to the Escrow Agent pursuant to Section 1(b) hereof on a delivery
against payment basis at the closing.
7. CLOSING DATE.
The date and time of the issuance and sale of the Shares (the
"Closing Date") shall be 12:00 noon, New York City time, on the date which is
two New York Stock Exchange trading days after the date on which the Buyer has
deposited the aggregate subscription price for the Shares with the Escrow Agent
in accordance with Section 1(c) hereof, or such other mutually agreed to time.
The closing shall occur on the Closing Date at the offices of the Escrow Agent.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell
the Shares to the Buyer pursuant to this Agreement is conditioned upon:
a. The receipt and acceptance by the Company of the
Buyer's subscription for the Shares as evidenced by execution of
this Agreement by the Company;
b. Delivery by the Buyer to the Escrow Agent of
immediately available good funds as payment in full of an amount
equal to the aggregate subscription price for the Shares in
accordance with Section 1(c) hereof; and
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c. The accuracy in all material respects on the Closing Date
of the representations and warranties of the Buyer contained in this Agreement
as if made on the Closing Date and the performance by the Buyer on or before the
Closing Date of all covenants and agreements of the Buyer required to be
performed on or before such Closing Date.
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Shares is conditioned upon:
a. Delivery by the Company to the Escrow Agent of one or more
certificates for the Shares in accordance with this Agreement;
b. The accuracy in all material respects on the Closing Date
of the representations and warranties of the Company contained in this Agreement
as if made on the Closing Date and the performance by the Company on or before
the Closing Date of all covenants and agreements of the Company required to be
performed on or before such Closing Date; and
c. Receipt by the Buyer on the Closing Date of an opinion of
counsel for the Company, dated the Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer, to the effect set forth in ANNEX III
attached hereto.
10. GOVERNING LAW; MISCELLANEOUS. This Agreement shall be
governed by and interpreted in accordance with the laws of the State of New
York. The Company and the Buyer hereby consent to the non-exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of
Manhattan, over any dispute arising under this Agreement. A facsimile
transmission of this signed agreement shall be legal and binding on all parties
hereto. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement. 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. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement. Although this Agreement is dated as of the date set forth
above, the actual dates of execution hereof are set forth below the signatures
of the parties hereto and this Agreement shall become effective and binding on
the later of such
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dates. Any notices required or permitted to be given under the terms of this
Agreement shall be sent by mail or delivered personally or by courier and shall
be effective five days after being placed in the mail, if mailed, or upon
receipt, if delivered personally or by courier, in each case addressed to a
party at such party's address shown in the introductory paragraph or on the
signature page of this Agreement or such other address as a party shall have
provided by notice to the other party in accordance with this provision.
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IN WITNESS WHEREOF, this Agreement has been duly executed by
the Buyer or one of its officers thereunto duly authorized as of the date set
forth below.
PRICE PER SHARE: $11.235 per share
NUMBER OF SHARES: 534,045
AGGREGATE SUBSCRIPTION PRICE: $6,000,000
NAME OF BUYER: GFL ADVANTAGE FUND LIMITED
SIGNATURE: /S/ A.P. DE GROOT
----------------------
Title: President
Date: September 21, 1995
Address: c/o CITCO
Kaya Flamboyan 9
Curacao
Netherlands Antilles
INTERNEURON PHARMACEUTICALS, INC.
By: /S/ THOMAS F. FARB
-------------------------
Title: Senior Vice President
Date: September 21, 1995
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ANNEX I
TO
SUBSCRIPTION
AGREEMENT
JOINT ESCROW INSTRUCTIONS
Dated as of the date of the
Subscription Agreement to Which
These Joint Escrow Instructions Are
Attached
Brian W. Pusch, Esq.,
as Escrow Agent
Penthouse Suite
29 West 57th Street
New York, New York 10019
Dear Mr. Pusch:
As Escrow Agent for both Interneuron Pharmaceuticals, Inc., a
Delaware corporation (the "Corporation"), and the purchaser of shares (the
"Shares") of Common Stock, $.001 par value, of the Corporation (the "Buyer"),
who is named in the Subscription Agreement between the Corporation and the Buyer
to which a copy of these Joint Escrow Instructions is attached as ANNEX I (the
"Agreement"), the Escrow Agent is hereby authorized and directed to hold the
documents and funds (together with any interest thereon, the "Escrow Funds")
delivered to the Escrow Agent pursuant to the terms of the Agreement in
accordance with the following instructions:
1. After receipt of written or oral notice from the
Corporation and the Buyer to the Escrow Agent that their respective conditions
precedent to the purchase and sale of the Shares have been satisfied or waived
by the Corporation and the Buyer, the Escrow Agent shall, subject to the next
succeeding sentence of this paragraph, release the Escrow Funds (less amounts
disbursed or to be disbursed pursuant to the next succeeding sentence of this
paragraph) to or upon the order of the Corporation and shall release the
certificates for the Shares to the Buyer. After receipt of such notice, a
portion of the Escrow Funds shall be delivered by the Escrow Agent as follows:
an amount equal to the
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expenses of the Buyer payable by the Corporation pursuant to Section 4(e) of the
Agreement, such amount to be specified in writing by the Buyer to the Escrow
Agent prior to release of the Escrow Funds, shall be paid to or upon the order
of the Buyer. If the Corporation or the Buyer notifies the Escrow Agent that on
the Closing Date (as defined in the Agreement), the conditions precedent to the
obligations of the Corporation or the Buyer, as the case may be, under the
Agreement were not satisfied or waived, then the Escrow Agent shall return the
Escrow Funds to the Buyer and, following notice to the Escrow Agent from the
Buyer that the Buyer has received, or receipt by the Escrow Agent for the
account of the Buyer, in either case from the Corporation of funds in an amount
equal to the expenses of the Buyer payable by the Corporation pursuant to
Section 4(f) of the Agreement, such amount to be specified in writing by the
Buyer to the Escrow Agent, the Escrow Agent shall return the certificates for
the Shares to the Corporation. Prior to return of the Escrow Funds to the Buyer,
the Buyer shall furnish such tax reporting or other information as shall be
appropriate for the Escrow Agent to comply with applicable United States laws.
The Escrow Agent shall deposit all funds received hereunder in the Escrow
Agent's attorney escrow account at Citibank, N.A.
2. The Escrow Agent's duties hereunder may be altered,
amended, modified or revoked only by a writing signed by the Corporation, the
Buyer and the Escrow Agent.
3. The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein and may rely and
shall be protected in relying or refraining from acting on any instrument
reasonably believed by the Escrow Agent to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall not be
personally liable for any act the Escrow Agent may do or omit to do hereunder as
Escrow Agent while acting in good faith, and any act done or omitted by the
Escrow Agent pursuant to the advice of the Escrow Agent's attorneys-at-law shall
be conclusive evidence of such good faith.
4. The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person, firm or corporation, excepting only orders or process of courts of
law and is hereby expressly authorized to comply with and obey orders, judgments
or decrees of any court. In case the Escrow Agent obeys or complies with any
such order, judgment or decree, the Escrow Agent shall not be liable to any of
the parties hereto or to any other person, firm or corporation by reason of such
decree being subsequently reversed, modified,
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annulled, set aside, vacated or found to have been entered without
jurisdiction.
5. The Escrow Agent shall not be liable in any respect on
account of the identity, authorities or rights of the parties executing or
delivering or purporting to execute or deliver the Agreement or any documents or
papers deposited or called for hereunder.
6. The Escrow Agent shall not be liable for the outlawing of
any rights under the Statute of Limitations with respect to these Joint Escrow
Instructions or any documents or Escrow Funds deposited with or held by the
Escrow Agent.
7. The Escrow Agent shall be entitled to employ such legal
counsel and other experts as the Escrow Agent may deem necessary properly to
advise the Escrow Agent in connection with the Escrow Agent's obligations
hereunder, may rely upon the advice of such counsel, and may pay such counsel
reasonable compensation therefor. The Escrow Agent has acted as legal counsel
for the Buyer in connection with the transactions contemplated by the Agreement
and may continue to act as legal counsel for the Buyer notwithstanding its
duties as Escrow Agent hereunder.
8. The Escrow Agent's responsibilities as Escrow Agent
hereunder shall terminate if the Escrow Agent shall resign by written notice to
the Corporation and the Buyer. In the event of any such resignation, the Buyer
shall appoint a successor Escrow Agent.
9. If the Escrow Agent reasonably requires other or further
instruments in connection with these Joint Escrow Instructions or obligations in
respect hereto, the necessary parties hereto shall join in furnishing such
instruments.
10. It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of the
documents or Escrow Funds held by the Escrow Agent hereunder, the Escrow Agent
is authorized and directed, in its sole discretion (a) to retain in the Escrow
Agent's possession without liability to anyone all or any part of said documents
or Escrow Funds until such disputes shall have been settled either by mutual
written agreement of the parties concerned or by a final order, decree or
judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but the Escrow Agent shall be under no
duty whatsoever to institute or defend any such proceedings or (b) at any time,
to
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deposit the documents or Escrow Funds with any court of competent jurisdiction
in the state of New York, in which event the Escrow Agent shall give notice
thereof to the Buyer and the Company and shall thereupon be relieved and
discharged from all further obligations hereunder.
11. The Corporation and the Buyer jointly and severally agree
to indemnify and hold harmless the Escrow Agent from any and all claims,
liabilities, costs or expenses in any way arising from or relating to the duties
or performance of the Escrow Agent hereunder other than any such claim,
liability, cost or expense to the extent the same shall have been determined by
final, unappealable judgment of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the Escrow Agent.
12. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given upon personal delivery or three business days after deposit in the United
States Postal Service, by registered or certified mail with postage and fees
prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other addresses as a party may designate by ten
days advance written notice to each of the other parties hereto.
CORPORATION: At the address set forth in the introductory
paragraph of the Agreement
Attention: President
BUYER: At the address set forth in the
Subscription Agreement to which
these Joint Escrow Instructions
are attached
ESCROW AGENT: Brian W. Pusch
Penthouse Suite
29 West 57th Street
New York, New York 10019
13. By signing these Joint Escrow Instructions, the Escrow
Agent becomes a party hereto only for the purpose of these Joint Escrow
Instructions; the Escrow Agent does not become a party to the Agreement. The
Corporation and the Buyer have become
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parties hereto by their execution and delivery of the Agreement, as
provided therein.
14. This instrument shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and permitted
assigns and shall be governed by the laws of the State of New York.
15. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings provided in the Agreement.
ACCEPTED BY ESCROW AGENT:
/S/ BRIAN W. PUSCH
- -----------------------------
Brian W. Pusch
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ANNEX II
TO
SUBSCRIPTION
AGREEMENT
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of September 21,
1995 (this "Agreement"), is made by and between INTERNEURON PHARMACEUTICALS,
INC., a Delaware corporation (the "Company"), and the person named on the
signature page hereto (the "Initial Investor").
W I T N E S S E T H:
WHEREAS, in connection with the Subscription Agreement, dated
as of August 31, 1995, between the Initial Investor and the Company (the
"Subscription Agreement"), the Company has agreed, upon the terms and subject to
the conditions of the Subscription Agreement, to issue and sell to the Initial
Investor shares (the "Shares") of Common Stock, $.001 par value (the "Common
Stock"); and
WHEREAS, to induce the Initial Investor to execute and deliver
the Subscription Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws with respect to the
Shares;
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 Company and the
Initial Investor hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall
have the following meanings:
(i) "Investor" means the Initial Investor and any
transferee or assignee who acquires at least 20 percent of the
Registrable Securities and agrees to become bound by the provisions
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of this Agreement in accordance with, and meets the requirements
of, Section 9 hereof.
(ii) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(iii)"Registrable Securities" means the Shares and any
additional shares of Common Stock issued by the Company pursuant to Section 2(d)
of this Agreement.
(iv) "Registration Statement" means a registration
statement of the Company under the Securities Act.
(b) As used in this Agreement, the term Investor includes (i)
each Investor (as defined above) and (ii) each person who is a permitted
transferee or assignee of the Registrable Securities pursuant to Section 9 of
this Agreement.
(c) Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Subscription
Agreement.
2. REGISTRATION.
(A) PIGGY-BACK REGISTRATIONS. If at any time on or after March
31, 1996 the Company shall file with the SEC a Registration Statement relating
to an offering for its own account or the account of others under the Securities
Act of any of its equity securities (other than on Form S-4 or Form S-8 or their
then equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans), prior to filing
such Registration Statement the Company shall send to each Investor, who is
entitled to registration rights under this Section 2(a) written notice of such
proposed filing (stating the deadline for responding thereto as provided in this
Agreement) and, if within ten (10) days after receipt of such notice, such
Investor shall so request in writing, the Company shall, subject to the terms of
any written agreement of the Company as in effect on the date of this Agreement,
include in
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such Registration Statement on the same terms and conditions as the other
securities being offered in such offering all or any part of the Registrable
Securities such Investor requests to be registered, except that if, in
connection with any underwritten public offering for the account of the Company
or any stockholder of the Company whose securities are included in such
Registration Statement the managing underwriter(s) thereof shall impose a
limitation on the number of shares of Common Stock which may be included in the
Registration Statement because, in such underwriter(s)' judgment, such
limitation is necessary to effect an orderly public distribution, then the
Company shall be obligated to include in such Registration Statement only such
limited portion, if any, of the Registrable Securities with respect to which
such Investor has requested inclusion hereunder. Subject to the terms of any
written agreement of the Company as in effect on the date hereof, any exclusion
of Registrable Securities shall be made pro rata among the Investors seeking to
include Registrable Securities, in proportion to the number of Registrable
Securities sought to be included by such Investors; PROVIDED, HOWEVER, that the
Company shall not exclude any Registrable Securities unless the Company has
first excluded all outstanding securities the holders of which are not entitled
by right to inclusion of securities in such Registration Statement; and PROVIDED
FURTHER, HOWEVER, that, after giving effect to the immediately preceding
proviso, subject to the terms of any written agreement of the Company as in
effect on the date of this Agreement, any exclusion of Registrable Securities
shall be made pro rata with holders of other securities having the right to
include such securities in the Registration Statement. No right to registration
of Registrable Securities under this Section 2(a) shall be construed to limit
any registration required under Section 2(b) hereof, PROVIDED, HOWEVER, that if
at any time after September 30, 1997 the Investors shall hold less than 100,000
Registrable Securities which have not theretofore been registered under the
Securities Act, the Company shall have no further obligation to register
Registrable Securities under this Section 2(a). The obligations of the Company
under this Section 2(a) may be waived by Investors holding a majority in
interest of the Registrable Securities and shall expire after the Company has
afforded the opportunity for the Investors to exercise registration rights under
this Section 2(a) for two registrations; PROVIDED, HOWEVER, that any Investor
who shall have had any Registrable Securities excluded from any Registration
Statement in accordance with this Section 2(a) shall be entitled to include in
an additional Registration Statement filed by the Company the Registrable
Securities so excluded in accordance with the provisions of this Section 2(a);
PROVIDED FURTHER, HOWEVER, that the Company shall not be required to afford
further rights to registration under this Section 2(a) if all Registrable
Securities are eligible for sale pursuant to Rule 144(k) under the Securities
Act.
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(b) REGISTRATION. The Company shall prepare and shall file
with the SEC a Registration Statement covering such of the Registrable
Securities as may be requested by the Initial Investor or any Investors who, in
accordance with Section 9 hereof, are entitled to registration rights under this
Section 2(b) and shall use its best efforts to cause such Registrable Securities
to be registered, on one occasion only for all Investors, under the Securities
Act and applicable state laws as expeditiously as possible after such filing.
(c) If any offering pursuant to a Registration Statement
pursuant to Section 2(b) hereof involves an underwritten offering, the Investors
who hold a majority in interest of the Registrable Securities subject to such
underwritten offering shall have the right to select one legal counsel for all
Investors whose Registrable Securities are to be included in such Registration
Statement and an investment banker or bankers and manager or managers to
administer the offering, which investment banker or bankers or manager or
managers shall be reasonably satisfactory to the Company. The Investors who hold
the Registrable Securities to be included in such underwriting shall pay all
underwriting discounts and commissions and other fees and expenses of such
investment banker or bankers and manager or managers so selected in accordance
with this Section 2(c) (other than fees and expenses relating to registration of
Registrable Securities under federal or state securities laws, which are payable
by the Company pursuant to Section 5 hereof) with respect to their Registrable
Securities and the fees and expenses of such legal counsel so selected by the
Investors.
(d) PAYMENTS BY THE COMPANY. If the Registration Statement
covering the Registrable Securities for which a registration is required to be
made pursuant to Section 2(b) hereof is not effective on or before January 2,
1996, then the Company will issue additional shares or make payments to the
Initial Investor in such amounts and at such times as shall be determined
pursuant to this Section 2(d).
(1) If the Registration Statement covering the Registrable
Securities for which a registration is required to be made pursuant to
Section 2(b) hereof first becomes effective with the SEC after January
2, 1996 and on or before April 1, 1996, then the Company shall issue
additional shares of Common Stock to the Initial Investors in an amount
determined as of each Computation Date in the period after January 2,
1996 and on or before April 1, 1996 as follows: (A) in the case of the
first Computation Date, 21,362 shares, and
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(B) in the case of each other Computation Date during the period after
January 2, 1996 and on or before April 1, 1996, 16,021 shares; and
(2) if the Registration Statement covering the Registrable
Securities for which a registration is required to be made pursuant to
Section 2(b) hereof first becomes effective with the SEC after April 1,
1996, in the case of each Computation Date after April 1, 1996 until
such Registration Statement is ordered effective, five percent (5%) of
the aggregate subscription price paid by the Initial Investor for the
Shares pursuant to the Subscription Agreement
(each such amount of shares of Common Stock to be so issued or the amount of
each such payment in respect of each Computation Date being a "Periodic
Amount"); PROVIDED, HOWEVER, that if any Computation Date is less than 30 days
subsequent to another Computation Date, then the Periodic Amount issuable or
payable on the later Computation Date shall be pro rated and the latest
Computation Date shall be September 30, 1996, which means that no Periodic
Amount shall accrue for any period after September 30, 1996. The Periodic Amount
shall be issued or paid by the Company within five business days after each
Computation Date and, in the case of the preceding clause (2), shall be payable
in cash; PROVIDED, HOWEVER, that in lieu of payment in cash of any Periodic
Amount payable pursuant to the preceding clause (2) in respect of a Computation
Date which occurs after April 1, 1996, the Company may elect to deliver to the
Initial Investor on or before the due date for payment of such Periodic Amount
shares of Common Stock having an Aggregate Market Value equal to the amount of
the Periodic Amount; PROVIDED FURTHER HOWEVER, that on any date on which any
Periodic Amount is due and payable, in lieu of payment of such Periodic Amount,
the Company shall have the right, exercisable by five days advance written
notice to the Initial Investor and exercisable only if at the time of exercise
the Company shall not be in material breach or default of its obligations under
this Agreement or the Subscription Agreement, to repurchase from the Initial
Investor all Registrable Securities then held by the Initial Investor at a price
(the "Repurchase Price") equal to the sum for all classes of Registrable
Securities held by the Initial Investor of the product obtained by multiplying
(1) the mean average of the highest bid and lowest asked prices of the class of
securities which includes the Registrable Securities on the principal trading
market for such class of securities on the trading day immediately preceding
such purchase by (2) the number of Registrable Securities of such class to be
repurchased by the Company. The right provided in the second proviso to the
immediately preceding sentence is referred to herein as the
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"Purchase Right". In any case in which the Company shall exercise the Purchase
Right (1) by exercising such right the Company represents and warrants to the
Initial Investor that such repurchase is lawful, valid and will not subject the
Initial Investor to any liability or cost under all applicable laws, other than
income, gains or similar taxes imposed on the Initial Investor in connection
with such repurchase, (2) the closing date for such repurchase shall be the due
date for the payment of the Periodic Amount otherwise due, (3) on the closing
date for such repurchase the Company shall deliver to the Initial Investor good
funds by bank cashier's check or wire transfer of immediately available funds to
an account designated by the Initial Investor in an amount equal to the
Repurchase Price against delivery of the certificates for the Registrable
Securities to be repurchased, (4) time shall be of the essence in the Company's
performance of its obligations once the Company has exercised its right to
repurchase and (5) if the Company shall perform in full on a timely basis its
obligations in respect of such repurchase the Company shall have no further
obligation to pay any Periodic Amount to the Initial Investor or to afford
Registration Rights for the Shares repurchased and if the Company shall fail to
perform on a timely basis any of its obligations in respect of such repurchase
the Company shall continue to remain liable for all Periodic Amounts which
become due hereunder as if such right had not been exercised by the Company. The
Purchase Right may, with the prior written consent of the Initial Investor
(which consent will not be unreasonably withheld), be assigned by the Company
contemporaneous with the exercise of such right; PROVIDED, HOWEVER, that the
Initial Investor shall be entitled to receive such information, written
assurances and written representations and warranties from the Company and any
assignee of such right as the Initial Investor reasonably requires in connection
with such assignment and if any such assignee shall fail to complete the
purchase, the Company shall continue to remain liable for all Periodic Amounts
which become due hereunder as if such right had not been exercised or assigned.
As used in this Section 2(d), the following terms shall have
the following meanings:
"Aggregate Market Value" of any shares of Common Stock as of
any Computation Date means the product obtained by multiplying (a) such number
of shares of Common Stock times (b) the Average Market Price of the Common Stock
for the Measurement Period for such Computation Date.
"Average Market Price" of any security for any period shall be
computed as the mean average of the daily mean average of the high and low sales
prices of such security (or the mean average of the high and low bid prices for
such security on any trading day
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for which no sales are reported) for each trading day in such period on the
principal trading market for such security, as reported by Nasdaq; PROVIDED,
HOWEVER, that if the Average Market Price of the Common Stock computed as
aforesaid would be less than $7.50 per share then the Average Market Price shall
be deemed to be $7.50 per share and if the Average Market Price of the Common
Stock computed as aforesaid is more than $20.00 per share then the Average
Market Price of the Common Stock shall be deemed to be $20.00 per share (such
amounts being subject to equitable adjustment for stock splits, stock dividends,
combinations, reclassifications and reverse stock splits of the Common Stock
occurring after the date of this Agreement).
"Computation Date" means (1) February 1, 1996, (2) if the
Registration Statement required to be filed by the Company pursuant to Section
2(b) has not theretofore been declared effective by the SEC, each date which is
30 days after a Computation Date and (3) if the Registration Statement required
to be filed by the Company pursuant to Section 2(b) is not declared effective by
the SEC on or before January 2, 1996, the date on which such Registration
Statement is declared effective; PROVIDED, HOWEVER, that if such Registration
Statement is declared effective after April 1, 1996, then April 1, 1996 shall be
a Computation Date; and PROVIDED FURTHER, however, that the latest Computation
Date shall be September 30, 1996, which means that no Periodic Amount shall
accrue for any period after September 30, 1996.
"Measurement Period" means the period of ten consecutive
trading days for the Common Stock ending on (or, if such Computation Date is not
a trading day, on the last trading day preceding) each Computation Date.
Any shares of Common Stock issued or delivered by the Company
pursuant to this Section 2(d) shall, at the time of delivery thereof to the
Initial Investor, be fully paid and nonassessable shares of Common Stock. So
long as the Company is otherwise in compliance in all material respects with its
obligations under this Agreement, the payment of the amounts provided in this
Section 2(d) or the issuance of shares of Common Stock in lieu thereof in
accordance with the terms of this Section 2(d), the sole liability of the
Company to the Initial Investor for the future to register the Registrable
Securities pursuant to Section 2(b) hereof prior to September 30, 1996 shall be
the obligation to pay such amounts or to issue such shares of Common Stock, as
the case may be.
(e) ELIGIBILITY FOR FORM S-3. The Company represents
and warrants that it meets the requirements for the use of Form S-3
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for registration of the sale by the Initial Investor and any Investor of the
Registrable Securities and, until the later of (1) the date which is two years
after the closing under the Subscription Agreement and (2) the date on which the
Investors own an aggregate of less than 100,000 Registrable Securities, the
Company shall file all reports required to be filed by the Company with the SEC
in a timely manner so as to maintain such eligibility for the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY. In connection with the
registration of the Registrable Securities, the Company shall:
(a) prepare promptly, and file with the SEC a Registration
Statement or Statements with respect to all Registrable Securities to be
included therein, and thereafter use its best efforts to cause the Registration
Statement to become effective as soon as reasonably possible after such filing,
and keep the Registration Statement effective pursuant to Rule 415 at all times
until the earlier of (1) such date as all of the Registrable Securities shall be
eligible for sale pursuant to Rule 144 under the Securities Act in a period of
three consecutive months or (2) the date on which all Registrable Securities may
be sold pursuant to Rule 144(k) under the Securities Act, which Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) 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 at all times, other than during any period from the date of
any notice of an event contemplated by Section 3(f) of this Agreement to the
date the Company is required to amend or supplement the Registration Statement
in accordance with Section 3(f) of this Agreement; PROVIDED, HOWEVER, that,
subject to the conditions set forth in Section 4(a) below, each Investor may
notify the Company in writing that it wishes to exclude all or a portion of its
Registrable Securities from such Registration Statement;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times until such
date as is provided in Section 3(a) of this Agreement, and, during such period,
comply with the provisions of the Securities Act applicable to the Company with
respect to the disposition of all Registrable Securities of the Company covered
by the Registration Statement until the earlier of (1) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
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methods of disposition by the seller or sellers thereof as set forth in the
Registration Statement or (2) the end of the period provided in Section 3(a) of
this Agreement;
(c) furnish to each Investor whose Registrable Securities are
included in the Registration Statement and its legal counsel, (1) 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 preliminary prospectus and prospectus and each amendment or supplement
thereto, 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 of any
thereof which contains information for which the Company has sought confidential
treatment) and (2) such number of copies of a prospectus, including a
preliminary 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) use reasonable efforts to (i) register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Investors who hold a
majority in interest of the Registrable Securities being offered reasonably
request, (ii) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements, (iii) take such other actions as may
be necessary to maintain such registrations and qualifications in effect at all
times until the date as such Registration Statement is required to be kept
effective as provided in Section 3(a) of this Agreement and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; PROVIDED, HOWEVER, that the Company shall not be
required in connection therewith or as a condition thereto to (I) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (II) subject itself to general taxation in any such
jurisdiction, (III) file a general consent to service of process in any such
jurisdiction, (IV) provide any undertakings that cause more than nominal expense
or burden to the Company or (V) make any change in its charter or by-laws, which
in each case the Board of Directors of the Company determines to be contrary to
the best interests of the Company and its stockholders;
(e) in the event Investors who hold a majority in interest of
the Registrable Securities being offered in the offering select underwriters for
the offering, enter into and perform its obligations under an underwriting
agreement, in usual
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and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriters
of such offering;
(f) as promptly as practicable after becoming aware of such
event, notify each Investor of the happening of any event of which the Company
has knowledge, 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, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement to correct such untrue statement or
omission, and deliver a number of copies of such supplement or amendment to each
Investor as such Investor may reasonably request;
(g) as promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities being sold (or, in
the event of an underwritten offering, the managing underwriters) of the
issuance by the SEC of any stop order or other suspension of effectiveness of
the Registration Statement at the earliest possible time;
(h) permit a single firm of counsel designated as selling
stockholders' counsel by the Investors who hold a majority in interest of the
Registrable Securities being sold to review the Registration Statement and all
amendments and supplements thereto a reasonable period of time prior to their
filing with the SEC, and shall not file any document containing information
concerning the Subscription Agreement, this Agreement or the transactions
contemplated thereby or hereby, or concerning any Investor or the plan of
distribution in a form to which such counsel reasonably objects;
(i) make generally available to its security holders as soon
as practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the Securities Act) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next following the
effective date of the Registration Statement;
(j) at the request of the Investors who hold a majority in
interest of the Registrable Securities being sold, furnish on the date that
Registrable Securities are delivered to an underwriter for sale in connection
with the Registration Statement
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(i) a letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters; and (ii) an opinion, dated such date, from
counsel representing the Company for purposes of such Registration Statement, in
form and substance as is customarily given in an underwritten public offering,
addressed to the underwriters and the Investors;
(k) make available for inspection during regular business
hours upon reasonable prior notice by any Investor, any underwriter
participating in any disposition pursuant to the Registration Statement, and any
attorney, accountant or other agent retained by any such Investor or underwriter
(collectively, the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably necessary to enable each Inspector to
exercise its due diligence responsibility, and cause the Company's officers and
employees 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
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction or (iii) 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. 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 3(k). The Investors shall, to
the extent practical and consistent with the protection of their interests,
endeavor to coordinate the exercise of their inspection rights under this
Section 3(k) so as to reduce the burden to the Company of making Records
available to Inspectors. 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 its 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
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to Section 4(e) hereof unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other order from a court or governmental body of
competent jurisdiction or (iv) such information has been made generally
available to the public other than by disclosure in violation of this 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, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such information;
(l) use its best efforts either (A) to (i) cause all the
Registrable Securities covered by the Registration Statement to be listed on a
national securities exchange and on each additional national securities exchange
on which similar securities issued by the Company are then listed, if any, if
the listing of such Registrable Securities is then permitted under the rules of
such exchange or (ii) secure designation of all the Registrable Securities
covered by the Registration Statement as either a National Association of
Securities Dealers Automated Quotations System ("Nasdaq") "national market
system security" within the meaning of Rule 11Aa2-1 of the SEC under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
quotation of the Registrable Securities on the Nasdaq National Market System or
for trading in The Nasdaq SmallCap Market (whichever is at the time the
principal trading market for the Common Stock) or (B) if, despite the Company's
best efforts to satisfy the preceding clause (i) or (ii), the Company is
unsuccessful in satisfying the preceding clause (i) or (ii), to secure listing
on a national securities exchange or Nasdaq authorization and quotation for such
Registrable Securities and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register with the National Association
of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable
Securities;
(m) maintain a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective date
of the Registration Statement;
(n) cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing Registrable Securities to be offered
pursuant to the
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Registration Statement and enable such certificates to be in such denominations
or amounts as the case may be, as the managing underwriter or underwriters, if
any, or the Investors may reasonably request and registered in such names as the
managing underwriter or underwriters, if any, or the Investors may request, in
each case at least two business days prior to the closing of such offering; and,
within three business days after a Registration Statement which includes
Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel selected by the Company to deliver, to
the transfer agent for the Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement) an
instruction substantially in the form attached hereto as EXHIBIT 1 and an
opinion of such counsel substantially in the form attached hereto as EXHIBIT 2;
PROVIDED, HOWEVER, that if a stop order as to the effectiveness of such
Registration Statement is issued or if the prospectus becomes stale under
Section 10(a)(3) of the Securities Act, such instruction or opinion may be
appropriately modified until the Registration Statement is once again effective;
PROVIDED FURTHER, HOWEVER, that if an event contemplated by Section 3(f) of this
Agreement shall occur, the Company or such counsel may modify such instruction
or opinion, as the case may be, for the period from the date the Company
notifies the Investors of such event to the date the Company is required to
supplement or amend the Registration Statement in accordance with Section 3(f)
of this Agreement; and
(o) take all other reasonable actions necessary to expedite
and facilitate disposition by the Investor of the Registrable Securities
pursuant to the Registration Statement.
4. OBLIGATIONS OF THE 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. At least ten (10)
days prior to the first anticipated filing date of the Registration Statement,
the Company shall notify each Investor of the information the Company requires
from each such Investor (the "Requested Information") if such Investor elects to
have any of such Investor's Registrable
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Securities included in the Registration Statement. If within five (5) business
days prior to the filing date the Company has not received the Requested
Information from an Investor (a "Non-Responsive Investor"), then the Company may
file the Registration Statement without including Registrable Securities of such
Non-Responsive Investor;
(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
in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement;
(c) In the event Investors holding a majority in interest of
the Registrable Securities being registered determine to engage the services of
an underwriter, each Investor agrees to enter into and perform such Investor's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement;
(d) Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(f)
or 3(g), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice; and
(e) No Investor may participate in any underwritten
registration hereunder unless such Investor (i) agrees to sell such Investor's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Investors entitled hereunder to approve such arrangements, (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
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of such underwriting arrangements and (iii) agrees to pay its pro rata share of
all underwriting discounts and commissions and other fees and expenses of
investment bankers and any manager or managers of such underwriting and legal
expenses of the underwriters applicable with respect to its Registrable
Securities, in each case to the extent not payable by the Company pursuant to
the terms of this Agreement.
5. EXPENSES OF REGISTRATION. All expenses, other than
underwriting discounts and commissions and other fees and expenses of investment
bankers and other than brokerage commissions, incurred in connection with
registrations, filings or qualifications pursuant to Section 3, including,
without limitation, all registration, listing and qualifications fees, printers
and accounting fees and the fees and disbursements of counsel for the Company
and one counsel for all of the Investors, shall be borne by the Company;
PROVIDED, HOWEVER, that the Investors shall bear the fees and out-of-pocket
expenses of the one legal counsel selected by the Investors pursuant to Section
2(c) hereof.
6. INDEMNIFICATION. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Investor who holds such Registrable Securities, 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
Securities Act or the Exchange Act (each, an "Indemnified Person"), against any
losses, claims, damages, expenses or liabilities (joint or several)
(collectively, "Claims"), including, without limitation, any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim, to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings in respect thereof) arise out of or are based upon any of
the following statements, omissions or violations in the Registration Statement,
or any post-effective amendment thereof, or any prospectus included therein: (i)
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, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as amended or
supplemented, if
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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 or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation under the Securities Act, the Exchange
Act or any state securities law (the matters in the foregoing clauses (i)
through (iii) being, collectively, "Violations"). Notwithstanding anything to
the contrary contained herein, the indemnification agreement contained in this
Section 6(a)(I) shall not apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by any 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
3(c) hereof; (II) with respect to any preliminary prospectus shall not inure to
the benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3(c) hereof; and (III)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, 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 the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9.
(b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in Section 6(a),
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 Securities Act or the Exchange Act, any other stockholder selling
securities pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder within the meaning of the
Securities Act or the Exchange Act (collectively and together with an
Indemnified Person, an "Indemnified Party"), against any Claim to which any of
them may become subject, under the Securities Act, the Exchange 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)
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that such Violation occurs 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; 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 6(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;
PROVIDED, FURTHER, HOWEVER, that the Investor shall be liable under this Section
6(b) for only that amount of a Claim as does not exceed the amount of the net
proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. 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 pursuant to Section 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(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) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing by such
persons expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 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 made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written 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 selected by the indemnifying party
and reasonably satisfactory to the Indemnified Parties or Indemnified Persons,
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
(1) the representation by the counsel so selected by the indemnifying party of
the
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Indemnified Person or Indemnified Party and the indemnifying party would create
a conflict of interest for such counsel or (2) there may be reasonable defenses
available to an Indemnified Person or an Indemnified Party which are not
available to the indemnifying party. The Company shall pay for only one separate
legal counsel for the Investors; such legal counsel shall be selected by the
Investors holding a majority in interest of the Registrable Securities included
in the Registration Statement to which the Claim relates. The failure to deliver
written 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 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.
7. CONTRIBUTION. To the extent any indemnification by an
indemnifying party 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 6 to the fullest extent permitted by
law; PROVIDED, HOWEVER, that (a) 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 6, (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation and (c) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available
to the Investors the benefits of Rule 144 promulgated under the Securities Act
or any other similar rule or regulation of the SEC that may at any time permit
the Investors to sell securities of the Company to the public without
registration ("Rule 144"), the Company agrees that, until the later of (i) the
date which is three years after the date of the closing under the Subscription
Agreement and (ii) the date on which the Investors beneficially own an aggregate
of less than 100,000 Registrable Securities, the Company shall:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
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(c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, such information as may be
reasonably requested to permit such Investor to sell such securities pursuant to
Rule 144 without registration.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have
the Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to transferees or assignees of all or
any portion of such securities which portion constitutes 20 percent or more of
such securities only if: (a) the Investor agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (b) the transferee
or assignee is an "accredited investor" as that term is defined in Regulation D
under the Securities Act, (c) the Company is, within a reasonable time after
such transfer or assignment, furnished with written notice of (i) the name and
address of such transferee or assignee and (ii) the securities with respect to
which such registration rights are being transferred or assigned, (d)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act and applicable state securities laws, and (e) at or before the time the
Company received the written notice contemplated by clause (c) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein.
10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
hold a majority in interest of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
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(b) Notices required or permitted to be given hereunder shall
be in writing and shall be deemed to be sufficiently given when personally
delivered (by hand, by courier, by telephone line facsimile transmission or
other means) or sent by certified mail, return receipt requested, properly
addressed and with proper postage pre-paid (i) if to the Company, at Interneuron
Pharmaceuticals, Inc., One Ledgemont Center, 99 Hayden Avenue, Lexington,
Massachusetts 02173, Attention: President, (ii) if to the Initial Investor, at
the address set forth under its name in the Subscription Agreement and (iii) if
to any other Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 11(b), and shall be effective, when
personally delivered, upon receipt and, when so sent by certified mail, four
days after deposit with the United States Postal Service.
(c) 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, shall not operate as a waiver thereof.
(d) This Agreement shall be enforced, governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State. In the event
that any provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof.
(e) This Agreement constitutes 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. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
(f) Subject to the requirements of Section 9 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
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(g) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
(h) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
day and year first above written.
INTERNEURON PHARMACEUTICALS, INC.
By: /S/ THOMAS F. FARB
---------------------------------
Name: Thomas F. Farb
Title: Senior Vice President, Finance
INITIAL INVESTOR:
GFL Advantage Fund Limited
By: /S/ A.P. DE GROOT
----------------------------------
Name: A.P. de Groot
Title: President
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<PAGE>
EXHIBIT 1
TO
REGISTRATION
RIGHTS
AGREEMENT
[Company Letterhead]
[Date]
[Name and address of Transfer Agent]
Ladies and Gentlemen:
This letter shall serve as our irrevocable authorization and
direction to you to transfer or re-register the certificate for the shares of
Common Stock, $.01 par value (the "Common Stock"), of Interneuron
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), represented by
certificate number _______ for _______ shares of Common Stock (the "Shares")
presently registered in the name of [Name of Investor] upon surrender of such
certificate to you, notwithstanding the legend appearing on such certificate.
The transfer or re-registration of the certificate by you should be made at such
time as you are requested to do so by the record holder of the Shares. The
certificate issued upon such transfer or re-registration should be registered in
such name as requested by the registered holder of the certificate surrendered
to you and should not bear any legend which would restrict the transfer of the
shares represented thereby; PROVIDED, HOWEVER, no transfer of such certificate
may be made during any period that the Company notifies you and the holder of
record of such certificate in writing that the use of the prospectus forming
part of the Registration Statement covering the Shares (the "Prospectus") has
been suspended. In addition, you are hereby directed to remove any stop-transfer
instruction relating to the Shares.
Nothing in this letter shall modify, as between the Company
and the holder of record of such certificate, the terms of the Registration
Rights Agreement, dated as of September __, 1995, between the Company and GFL
Advantage Fund Limited regarding the circumstances under which the Prospectus
shall be available for the offer and sale of the Shares.
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Contemporaneous with the delivery of this letter, the Company
is delivering to you an opinion of ____________________ as to registration of
the Shares under the Securities Act of 1933, as amended.
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Should you have any questions concerning this matter, please
contact me.
Very truly yours,
INTERNEURON PHARMACEUTICALS, INC.
By:
----------------------------------------
Name:
Title:
cc: [Name Of Investor]
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<PAGE>
EXHIBIT 2
TO
REGISTRATION
RIGHTS
AGREEMENT
[Date]
[Name and address
of transfer agent]
INTERNEURON PHARMACEUTICALS, INC.
SHARES OF COMMON STOCK
---------------------------
Ladies and Gentlemen:
We are counsel to Interneuron Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), and we understand that [Name of Investor]
(the "Holder") has purchased from the Company an aggregate of __________ shares
(the "Shares") of the Company's Common Stock, $.01 par value, represented by
Certificate No. __________. The Shares were purchased by the Holder pursuant to
a Subscription Agreement, dated as of __________, 1995, between the Holder and
the Company (the "Subscription Agreement"). Pursuant to a Registration Rights
Agreement, dated as of __________, 1995, between the Company and the Holder (the
"Registration Rights Agreement") entered into in connection with the purchase by
the Holder of the Shares pursuant to the Subscription Agreement, the Company
agreed with the Holder, among other things, to register the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), upon the terms
provided in the Registration Rights Agreement. In connection with the exercise
by the Holder of its registration rights under the Registration Rights
Agreement, on __________, ____ the Company filed a Registration Statement on
Form S-__ (File No. 33-__________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the Shares, which
names the Holder as a selling stockholder thereunder.
[Other introductory and scope of examination language to
be inserted]
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Based on the foregoing, we are of the opinion that the Shares
have been registered under the Securities Act.
[Other appropriate language to be included.]
Very truly yours,
cc: [Name of Investor]
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<PAGE>
ANNEX III
TO
SUBSCRIPTION
AGREEMENT
[LETTERHEAD OF COMPANY COUNSEL]
[Date of Closing]
[Name of Buyer]
INTERNEURON PHARMACEUTICALS, INC.
--------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Interneuron Pharmaceuticals, Inc.,
a Delaware corporation (the "Company"), in connection with the Subscription
Agreement, dated ________________, between you and the Company (the
"Agreement"). Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings assigned to such terms in the Agreement.
As such counsel, we have reviewed the actions heretofore taken
by the Company in connection with the Agreement and the transactions
contemplated thereby and we have examined originals, or copies certified or
otherwise authenticated to our satisfaction, of all such corporate documents,
records, agreements, certificates and other instruments of the Company and of
such certificates of public officials, and have made such investigations of law
and have discussed with officers and representatives of the Company such
questions of fact as we have deemed necessary or appropriate as the basis for
the opinions hereinafter expressed. We have assumed the accuracy and
completeness of all corporate records and information made available to us by
the Company upon which we have relied.
Based upon the foregoing, we are of the opinion that:
(1) The Shares have been duly authorized and, when issued and
paid for in accordance with the Agreement, will be validly issued,
fully paid and non-assessable;
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(2) The Agreement and the Registration Rights Agreement has
been duly and validly authorized, executed and delivered by the Company
and, assuming the due authorization, execution and delivery thereof by
you, constitute the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective
terms subject, as to enforcement of remedies, to applicable bankruptcy,
insolvency, moratorium, reorganization, or similar laws affecting
creditors' rights generally and general principles of equity and except
that rights to indemnification and contribution may be limited by
public policy; and
(3) Assuming the accuracy of your representations and
warranties in the Agreement, the issuance and sale of the Shares to the
Buyer pursuant to the Agreement is exempt from registration under the
1933 Act by reason of Section 4(2) thereof.
These opinions are limited to the matters expressly stated
herein and are rendered solely for your benefit and may not be quoted or relied
upon for any other purpose or by any other person.
Very truly yours,
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