<PAGE>
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 OF 1934
Date of Report (Date of earliest event reported): December 23, 1996
VIMRx Pharmaceuticals Inc.
(Exact name of registrant as specified in charter)
Delaware 0-19153 06-1192468
(State or other juris- (Commission (IRS Employer
diction of incorp- File Number) Identification No.)
oration)
2751 Centerville Road, Wilmington, Delaware 19808
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (302) 998-1734
1200 High Ridge Road, Stamford, Connecticut 06905
(Former name or former address, if changed since last report)
2
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On December 23, 1996, VIMRx Pharmaceuticals Inc. (the "Registrant")
acquired an approximate 68% ownership interest in Innovir Laboratories, Inc.
(Nasdaq SmallCap: INVR) ("Innovir"), pursuant to an agreement dated November 21,
1996, as amended, among the Registrant and The Aries Fund, a Cayman Island trust
(the "Aries Trust"), and The Aries Domestic Fund, L.P., a Delaware limited
partnership ("The Aries Limited Partnership" and, together with the Aries Trust,
the "Aries Funds"), and an agreement dated November 21, 1996 between the
Registrant and Innovir.
Pursuant to the agreements, as amended (i) the Aries Funds, which owned 4
million shares of Innovir's common stock prior to the transaction, exercised
warrants and unit purchase options to purchase an additional 6 million shares,
thereby providing $3 million in cash to Innovir and resulting in the Aries Funds
owning 10 million shares of Innovir's common stock; (ii) the Registrant acquired
9.5 million shares of Innovir's common stock from the Aries Funds for $3,000,000
in cash and 3,000,000 newly issued shares (the "Registrant Shares") of the
Common Stock, $.001 par value, of the Registrant, and (iii) the Registrant
exchanged all of the capital stock of its wholly-owned subsidiary, VIMRx
Holdings Ltd., a Delaware corporation ("VHL") (to which, prior to closing, the
Registrant had made a capital contribution of $4,000,000), for 8.7 million
shares of Innovir's convertible preferred stock (convertible into 8.7 million
shares of Innovir's common stock), plus five-year warrants to purchase an
additional 2 million shares of Innovir's common stock (1 million shares at an
exercise price of $1.00 per share and 1 million shares at an exercise price of
$2.00 per share).
The Registrant has agreed to file a registration statement (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") by February 6, 1997 for the public resale of the Registrant
Shares, to use its best efforts to cause the Registration Statement to be
declared effective by the Commission under the Securities Act as soon as
practicable and to use its best efforts to keep the Registration Statement
effective until the earlier of the date the Registrant Shares shall have been
disposed of or the date on which all Registrant Shares are eligible for sale
pursuant to Rule 144 under the Securities Act (December 23, 1999 under Rule 144
as in effect on the date of this Report). The Company has agreed to indemnify
the holders of the Registrant Shares against certain civil liabilities,
including liabilities under the Securities Act.
<PAGE>
Lindsay A. Rosenwald, M.D., a director of the Registrant, serves as
President and is sole shareholder of the investment manager of the Aries Trust,
and serves as President and is the sole shareholder of the general partner of
the Aries Limited Partnership. Jerome Groopman, M.D., a director of the
Registrant, is an interested party in the Aries Funds. The acquisition of the
9.5 million shares of Innovir stock from the Aries Funds was negotiated at arms'
length with the Aries Funds and an opinion was issued by an independent
investment banking firm that the transaction was fair from a financial point of
view to the Registrant and its public shareholders.
Innovir has agreed to convene a meeting of its stockholders to elect seven
directors, four of whom shall be designees of the Registrant (Richard L.
Dunning, the Registrant's President and Chief Executive Officer, Francis M.
O'Connell, the Registrant's Chief Financial Officer, David A. Jackson, the
Registrant's Executive Vice President and Chief Scientific Officer, and Laurence
D. Fink, a director of the Registrant), and to approve an amendment to its
certificate of incorporation to increase the authorized number of shares of
Innovir's common stock to 70,000,000 shares.
Under the agreements, (i) the Registrant has agreed to exercise its
warrants to purchase 1 million shares of Innovir's common stock at $1.00 per
share (for an aggregate exercise price of $1 million) after receipt of a written
request from Innovir's Board of Directors subsequent to May 31, 1997 specifying
that Innovir has insufficient funds to continue its operations, (ii) the Aries
Funds have agreed to exercise warrants to purchase 2 million shares of Innovir's
common stock at $.50 per share (for an aggregate exercise price of $1 million)
in the event the Registrant exercises its warrants pursuant to clause (i) above
and to grant VIMRx an irrevocable voting proxy through November 31, 1999 with
respect to the shares of common stock so purchased (which will not restrict the
Aries Funds from selling such shares and will lapse with respect to any such
shares sold), and (iii) the Aries Funds granted VIMRx an irrevocable voting
proxy with respect to the 500,000 shares of Innovir's common stock owned by the
Aries Funds (which will not restrict the Aries Funds from selling such shares
and will lapse with respect to any such shares sold).
VHL and Innovir are each engaged in developing therapeutic technologies
that seek to control disease-triggering flaws in individuals' genetic chemistry.
VHL's and Innovir's technologies are each based on a different class of
catalytically active oligomers (referred to by Innovir and the Registrant as
"OligozymesTM") that have shown an ability to inactivate certain RNA "messenger"
molecules that direct cells to produce illness-causing proteins. VHL's
technology focuses on RILONTM OligozymesTM, and Innovir's technology focuses on
External Guidance Sequence ("EGS") OligozymesTM.
3
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired.
It is impracticable to provide the required financial statements for the
acquired business at the date of filing of this Form 8-K. Such financial
statements will be filed as soon as practicable, but no later than 60 days
following the date this Form 8-K is required to be filed.
(c) Exhibits.
2.2a Agreement dated November 21, 1996 (the "Aries Agreement") by and among
the Registrant and The Aries Fund and The Aries Domestic Fund, L.P.
2.2b Amendment to the Aries Agreement dated December 23, 1996 by and among
the Registrant and the Aries Fund and The Aries Domestic Fund, L.P.
2.3 Agreement dated November 21, 1996 by and between the Registrant and
Innovir Laboratories, Inc.
10.17Registration Rights Agreement dated December 23, 1996 by and among
the Registrant and The Aries Fund and The Aries Domestic Fund, L.P.
4
<PAGE>
SIGNATURE
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.
VIMRx PHARMACEUTICALS INC.
(Registrant)
By: /s/ Francis M. O'Connell
Francis M. O'Connell
Chief Financial Officer
Dated: December 30, 1996
5
<PAGE>
EXHIBIT INDEX
Page
2.2a Agreement dated November 21, 1996 (the "Aries Agreement"), by and among the
Registrant and The Aries Fund and The Aries Domestic Fund,
L.P........................................................... 7
2.2b Amendment to the Aries Agreement dated December 23, 1996 by and among the
Registrant and the Aries Fund and The Aries Domestic Fund,
L.P........................................................... 23
2.3 Agreement dated November 21, 1996 by and between the Registrant and Innovir
Laboratories, Inc. ............................................25
10.17Registration Rights Agreement dated December 23, 1996 by and among the
Registrant and The Aries Fund and The Aries Domestic Fund,
L.P........................................................... 54
6
<PAGE>
Exhibit 2.2a
AGREEMENT
by and among
VIMRx PHARMACEUTICALS INC.
and
THE ARIES FUND
and
THE ARIES DOMESTIC FUND, L.P.
Dated: November 21, 1996
7
<PAGE>
TABLE OF CONTENTS
Page
AGREEMENT............................................................. 1
RECITALS.............................................................. 1
ARTICLE 1 EXCHANGE OF SHARES.................................. 1
1.1 Exchange of Shares.................................. 1
1.2 Adjustment of Initial VIMRx Shares.................. 1
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF VIMRx............. 2
2.1 Organization........................................ 2
2.2 Authority and Consent............................... 2
2.3 The VIMRx Shares.................................... 3
2.4 Investment Purposes................................. 3
2.5 Documents Delivered................................. 3
2.6 No Breach........................................... 3
2.7 Litigation.......................................... 3
2.8 Disclosure.......................................... 4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF ARIES............. 4
3.1 Organization........................................ 4
3.2 Authority and Consent............................... 4
3.3 The Innovir Shares.................................. 4
3.4 Examination of Documents, Investment Purposes and
Legending of the VIMRx Shares....................... 4
3.5 Ownership of VIMRx Common Stock .................... 5
ARTICLE 4 COVENANTS OF VIMRx AND THE ARIES FUNDS..................... 5
4.1 Further Assurances.................................. 5
4.2 Filings and Consents................................ 5
4.3 Access to Information and Confidentiality........... 5
ARTICLE 5 ADDITIONAL COVENANT OF THE ARIES FUNDS.............. 6
5.1 Additional Covenant of The Aries Funds.............. 6
8
<PAGE>
ARTICLE 6 CONDITIONS TO CLOSING............................... 6
6.1 Conditions to Obligations of The Aries Funds........ 6
6.2 Conditions to Obligations of VIMRx.................. 7
ARTICLE 7 CLOSING............................................. 8
7.1 Closing Date........................................ 8
7.2 Deliveries by VIMRx................................. 8
7.3 Deliveries by The Aries Funds....................... 8
ARTICLE 8 SURVIVAL............................................ 9
8.1 Survival............................................ 9
ARTICLE 9 INDEMNIFICATION..................................... 9
9.1 Indemnification..................................... 9
ARTICLE 10 MISCELLANEOUS PROVISIONS ................................. 10
10.1 Amendment and Modification.......................... 10
10.2 Waiver of Compliance................................ 10
10.3 Expenses............................................ 10
10.4 Notices............................................. 10
10.5 Assignment.......................................... 11
10.6 Freedom of Action................................... 11
10.7 Third Parties....................................... 12
10.8 Governing Law....................................... 12
10.9 Counterparts........................................ 12
10.10 Headings............................................. 12
10.11 Entire Agreement..................................... 12
9
<PAGE>
AGREEMENT
AGREEMENT (the "Agreement") made this 21st day of November, 1996 by and
among VIMRx Pharmaceuticals Inc., a Delaware corporation ("VIMRx" or the
"Company"), The Aries Fund, A Cayman Island Trust ("Aries I") and The Aries
Domestic Fund, L.P. , a Delaware limited partnership ("Aries II" and, together
with Aries I, "The Aries Funds").
R E C I T A L S
WHEREAS, The Aries Funds own 4,000,000 shares of the Common Stock of
Innovir Laboratories, Inc., a Delaware corporation ("Innovir") and hold warrants
to purchase an additional 8,000,000 shares of Innovir's Common Stock at an
aggregate exercise price of $4,000,000; and
WHEREAS, The Aries Funds have indicated, subject to the terms and
conditions of this Agreement, that they will exercise certain of such warrants,
thereby purchasing 6,000,000 shares of Innovir's Common Stock; and
WHEREAS, VIMRx is desirous of exchanging shares of its Common Stock for
9,500,000 of the 10,000,000 shares of Innovir's Common Stock to be owned by The
Aries Funds following the exercise by The Aries Funds of their warrants, as
aforesaid, and The Aries Funds are desirous of effecting such exchange (the
9,500,000 shares of Innovir's Common Stock to be so exchanged, the "Innovir
Shares").
NOW, THEREFORE, VIMRx and The Aries Funds hereby agree as follows:
ARTICLE 1
EXCHANGE OF SHARES
1.1 Exchange of shares. Subject to the terms and conditions of this
Agreement and in reliance upon the representations, warranties and covenants
herein contained, on the date of closing specified in Section 7.1 (the "Closing
Date"), The Aries Funds hereby agree to assign, transfer and deliver the Innovir
Shares to VIMRx or its designee and, in exchange therefor, VIMRx hereby agrees
to issue and deliver to The Aries Funds, pro rata to their ownership of the
Innovir Shares to be delivered, 2,750,000 shares of VIMRx's Common Stock (the
"Initial VIMRx Shares"), subject to adjustment as set forth in Section 1.2
hereof (the number of shares of VIMRx's Common Stock issued following all
adjustments, the "VIMRx Shares").
1.2 Adjustment of Initial VIMRx Shares. The Initial VIMRx Shares shall be
subject to adjustment on or about January 22, 1997 and on or about January 7,
1998, as follows:
(a) On or about January 22, 1997, but no later than January 30, 1997, VIMRx
shall issue to The Aries Funds such additional number of shares of VIMRx's
Common Stock, if any, as shall be determined by (i) dividing $12,350,000 by the
average of the Daily Prices (as defined below) for each trading day of VIMRx's
Common Stock during the period from November 15, 1996 to January 15, 1997, as
reported by The Nasdaq Stock Market, and (ii) deducting from the number of
shares so determined the Initial VIMRx Shares (the Initial VIMRx Shares and the
additional shares of VIMRx's Common Stock, if any, so issued, the "Base VIMRx
Shares" and the per share value determined by dividing $12,350,000 by the Base
VIMRx Shares, the "Base VIMRx Per Share Value"). Notwithstanding the foregoing,
in no event shall the Base VIMRx Shares be less than the Initial VIMRX shares.
10
<PAGE>
(b) In the event the average of the Daily Prices for each trading day of
VIMRx's Common Stock during the period from November 1, 1997 to December 31,
1997, as reported by The Nasdaq Stock Market (the "December 31, 1997 Per Share
Average Value") is lower than the Base VIMRx Per Share Value then, on or about
January 7, 1998, but no later than January 15, 1998, VIMRx shall issue to The
Aries Funds such additional number of shares of VIMRx's Common Stock, as shall
be determined by (i) multiplying the number of shares of VIMRx's Common Stock
owned by The Aries Funds on December 31, 1997 (such number of shares, "The Aries
Funds December 31, 1997 VIMRx Holdings") by the Base VIMRx Per Share Value, (ii)
subtracting from the amount so obtained an amount equal to The Aries Funds
December 31, 1997 VIMRx Holdings multiplied by the December 31, 1997 Per Share
Average Value, and (iii) dividing the difference so obtained by the December 31,
1997 Per Share Average Value; provided, however, that no such adjustment shall
be made in the event the total proceeds received by The Aries Funds from their
sales of VIMRx's Common Stock prior to December 31, 1997, plus The Aries Funds
December 31, 1997 VIMRx Holdings multiplied by the December 31, 1997 Per Share
Average Value equals or exceeds $12,350,000. For purposes of this Agreement, the
"Daily Price" shall be, for each trading day in the applicable period, the
average of the bid and asked price of VIMRX's Common Stock for such day.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF VIMRx
VIMRx represents and warrants to The Aries Funds that:
2.1 Organization. VIMRx is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has all requisite
corporate power and authority to own, lease and operate its properties and carry
on its business as now conducted, and is duly qualified as a foreign corporation
in each jurisdiction in which it is required to be so qualified, except where
the failure to qualify would not have a material adverse effect on its
operations.
2.2 Authority and Consent. This Agreement has been duly executed and
delivered by VIMRx and is a valid and binding agreement of VIMRx enforceable
against VIMRx in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies and no consent or approval
is required of any governmental authority, person, corporation, partnership,
trust or other entity of any kind ("Person") in connection with the performance
by VIMRx of this Agreement or the transactions contemplated hereby.
11
<PAGE>
2.3 The VIMRx Shares. The VIMRx Shares to be delivered hereby, when issued
in accordance with the terms of this Agreement, will be validly issued, fully
paid and non-assessable, free and clear of all liens imposed by or through the
Company, and will not be subject to any preemptive right of stockholders of the
Company or to any right of first refusal or other right in favor of any person.
2.4 Investment Purposes. VIMRx is acquiring the Innovir Shares for its own
account for investment within the contemplation of the Securities Act of 1933,
as amended (the "Securities Act") and not with a view to the transfer or resale
thereof.
2.5 Documents Delivered. VIMRx has delivered to The Aries Funds VIMRx's (i)
Annual Report on Form 10-K for its fiscal year ended December 31, 1995 (ii)
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, June 30,
1996 and September 30, 1996 and (iii) Proxy Statement for its 1996 Annual
Meeting of Stockholders (collectively, the "SEC Documents"). The SEC Documents,
including the financial statements included therein, complied as to form with
the requirements of the Securities Exchange Act of 1934, as amended and the
rules and regulations thereunder, were true and complete in all material
respects as at their respective dates, and did not contain any untrue statement
of a material fact nor omit to state any material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading and no event has
occurred since September 30, 1996 which would have a material adverse effect on
the operations, financial condition or results of operations of VIMRx.
2.6 No Breach. The execution and delivery by the Company of this Agreement,
the issuance of the VIMRx Shares hereunder and the performance and fulfillment
by the Company of its obligations hereunder do not and will not (i) conflict
with or result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under, or event which, with notice or lapse of time or
both, would constitute a breach of or default under, (iii) result in the
creation of any lien, security interest, adverse claim, charge or encumbrance
upon the capital stock or assets of the Company pursuant to, (iv) give any third
party the right to accelerate any obligation under or terminate, (v) result in a
violation of, (vi) result in the loss of any license, certificate, legal
privilege or legal right enjoyed or possessed by the Company or any of its
subsidiaries under, or (vii) require any authorization, consent, approval,
exemption or other action by or notice to any court or administrative or
governmental body pursuant to or require the consent of any other person under
the Certificate of Incorporation or Bylaws of the Company or any of its
subsidiaries or any law, statute, rule or regulation to which the Company or any
of its subsidiaries is subject or by which any of its properties are bound, or
any agreement, instrument, order, judgment or decree to which the Company or any
of its subsidiaries is subject or by which its properties are bound.
2.7 Litigation. There are no actions, suits, proceedings, orders,
investigations or claims pending or threatened against or affecting the Company
or any of its subsidiaries, at law or in equity or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, other than a claim asserting a breach of employment
against a subsidiary of the Company.
12
<PAGE>
2.8 Disclosure. Neither this Agreement nor any of the schedules, exhibits,
written statements, documents or certificates prepared or supplied by the
Company with respect to the transactions contemplated hereby contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained herein or therein not misleading and, to the knowledge of
the Company no fact or circumstance exists which would materially adversely
affect the existing or expected financial condition, operating results, assets,
customer relations, employee relations or business prospects of the Company or
any of its subsidiaries.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE ARIES FUNDS
The Aries Funds severally represent and warrant to VIMRx that:
3.1 Organization. Each is duly organized, validly existing and in good
standing under its respective jurisdiction of organization, with requisite power
and authority to perform the terms of this Agreement.
3.2 Authority and Consent. This Agreement has been duly authorized,
executed and delivered by each of them and is a valid and binding agreement of
each of them enforceable against each of them in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable remedies
and no consent or approval is required of any Person in connection with the
performance by each of them of this Agreement or the consummation by each of
them of the transactions contemplated hereby.
3.3 The Innovir Shares. At the Closing Date, based solely upon the
representations made to the Aries Funds by Innovir in the Common Stock and
Warrant Purchase Agreement dated August 30, 1996, by and among the Aries Funds
and Innovir, to our knowledge, the Aries Funds will own, of record and
beneficially, the Innovir Shares, free and clear and, upon delivery to VIMRx of
the certificates therefor duly endorsed for transfer to VIMRx, VIMRx will
acquire good, valid, indefeasible and marketable title thereto, free and clear
of any security interest, lien, restriction or other encumbrance, other than
restrictions under applicable federal and state securities laws.
3.4 Examination of Documents, Investment Purposes and Legending of the
VIMRx Shares. Aries I and Aries II have conducted such examination of materials
relating to VIMRx as they have deemed necessary in connection with the
transactions contemplated hereby; Aries I and Aries II are each "Accredited
Investors" within the meaning of Rule 501 under the Securities Act of 1933, as
amended, and each has had the opportunity to discuss VIMRx's operations with
VIMRx's officers and employees. Aries I and Aries II are each acquiring their
respective pro rata portion of the VIMRx Shares for its own account for
investment within the contemplation of the Securities Act and not with a view to
the transfer or resale thereof, and each hereby consents to the legending of the
certificates for the VIMRx Shares to be received with a legend in substantially
the following form:
13
<PAGE>
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
FOR THESE SHARES OR AN OPINION OF VIMRx'S COUNSEL THAT
REGISTRATION IS NOT REQUIRED."
3.5 Ownership of VIMRx Common Stock. Neither Aries I nor Aries II has
acquired any shares of VIMRx Common Stock in the public market or otherwise,
including by exercise of options or warrants to purchase common stock, other
than pursuant to the Subscription and Registration Rights Agreement dated as of
March 21, 1996 by and among VIMRx and several parties including the Aries Funds.
ARTICLE 4
COVENANTS OF VIMRx AND THE ARIES FUNDS
VIMRx, Aries I and Aries II hereby severally covenant and agree:
4.1 Further Assurances. To take, or cause to be taken, all actions and to
do, or cause to be done, all things reasonably necessary or desirable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement expeditiously, including executing and delivering such further
documents, certificates, applications and agreements as reasonably may be
necessary or desirable.
4.2 Filing and Consents. To cooperate with respect to (i) any filing with
any governmental body, agency, official or authority required in connection with
this Agreement or the consummation of the transactions contemplated hereby and
(ii) any actions, consents, approvals or waivers required to be obtained from
any Person in connection with this Agreement or the consummation of the
transactions contemplated hereby.
4.3 Access to Information and Confidentiality. To afford The Aries Funds,
their counsel, financial advisors, auditors and other authorized representatives
full access, upon reasonable prior notice and during normal business hours, to
VIMRx's offices, properties, books and records and to its employees, agents and
independent accountants, and to furnish The Aries Funds, their counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information as may reasonably be requested, and to
cooperate with The Aries Funds in their due diligence.
14
<PAGE>
ARTICLE 5
ADDITIONAL COVENANT OF THE ARIES FUNDS
5.1 Additional Covenant of The Aries Funds. The Aries Funds hereby covenant
and agree, upon twenty days prior notice from VIMRx, to exercise their warrants
to purchase 2,000,000 shares of Innovir's Common Stock at $.50 per share for an
aggregate exercise price of $1,000,000, concurrent with the exercise by VIMRx of
its warrants to purchase 1,000,000 shares of Innovir's Common Stock at $1.00 per
share for an aggregate exercise price of $1,000,000, conditional upon VIMRx's
receipt from Innovir's Board of Directors of a notice that additional funding is
required and to grant VIMRx an irrevocable proxy through November 31, 1999, with
respect to the 2,000,000 shares of Innovir's Common Stock so purchased, which
proxy shall not restrict The Aries Fund from selling such shares, in which event
the proxy shall lapse with respect to any shares sold.
ARTICLE 6
CONDITIONS TO CLOSING
6.1 Conditions to Obligations of The Aries Funds. The obligations of The
Aries Funds hereunder are conditioned upon the following:
(a) All warranties and representations of VIMRx contained in this
Agreement or in any instrument delivered hereunder or otherwise made
in connection with the transactions contemplated hereby shall be true
and correct on and as of the Closing Date, with the same force and
effect as if made on and as of the Closing Date.
(b) VIMRx shall have performed and complied with all of the
covenants and agreements required by or pursuant to this Agreement and
any instrument delivered hereunder to be performed or complied with on
or prior to the Closing Date.
(c) No suit, action, investigation or proceeding before or by any
federal or state court or governmental or regulatory authority shall
have been commenced, and no suit, action or proceeding by any
governmental or regulatory authority shall have been threatened,
against VIMRx, The Aries Funds, or Innovir seeking to restrain,
prevent or modify the transactions contemplated hereby or seeking
material damages in connection with any of such transactions and no
order of any court or administrative agency to restrain, prohibit or
nullify the consummation of the transactions contemplated herein shall
be outstanding as of the Closing Date.
(d) All governmental authorities having jurisdiction, to the
extent required by law, shall have consented to or approved the
consummation of the transactions contemplated by this Agreement.
15
<PAGE>
(e) As at the Closing Date, The Aries Funds shall have exercised
warrants to purchase 6,000,000 shares of Innovir's Common Stock upon
payment of an aggregate exercise price of $3,000,000 therefor.
(f) All documents delivered and action taken pursuant hereto
shall be satisfactory in form and substance to The Aries Funds and
their counsel.
6.2 Conditions to Obligations of VIMRx. The obligations of VIMRx hereunder
are conditioned upon the following:
(a) All warranties and representations of The Aries Funds
contained in this Agreement shall be true and correct on and as of the
Closing Date with the same force and effect as if made on and as of
the Closing Date.
(b) The Aries Funds shall have performed and complied with all of
the covenants and agreements required by or pursuant to this Agreement
and any instrument delivered hereunder to be performed or complied
with on or prior to the Closing Date.
(c) No suit, action, investigation or proceeding before or by any
federal or state court or governmental or regulatory authority shall
have been commenced, and no suit, action or proceeding by any
governmental or regulatory authority shall have been threatened,
against VIMRx, The Aries Funds or Innovir seeking to restrain, prevent
or modify the transactions contemplated hereby or seeking material
damages in connection with any of such transactions and no order of
any court or administrative agency to restrain, prohibit, or nullify
the consummation of the transactions contemplated herein shall be
outstanding as of the Closing Date.
(d) All governmental authorities having jurisdiction, to the
extent required by law, shall have consented to or approved the
consummation of the transactions contemplated by this Agreement.
(e) As at the Closing Date, The Aries Funds shall have exercised
warrants to purchase 6,000,000 shares of Innovir's Common Stock upon
payment of an aggregate exercise price of $3,000,000 therefor.
(f) Receipt of an opinion from an investment banking or other
firm experienced in rendering "fairness opinions" that the
transactions herein provided are fair from a financial prospective to
VIMRx.
(g) All documents delivered and action taken pursuant hereto
shall be satisfactory in form and substance to VIMRx and its counsel.
16
<PAGE>
ARTICLE 7
CLOSING
7.1 Closing Date. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be conditional upon and shall take place
concurrently with the closing of (i) the exercise by Aries of warrants to
purchase 6,000,000 shares of Innovir's Common Stock for $3,000,000 and (ii) the
acquisition by Innovir of a subsidiary of VIMRx in exchange for Common Stock and
Warrants of Innovir, on December 4, 1996, or such other date as the parties may
fix, (the "Closing Date") at the offices of Epstein Becker & Green, P.C., 250
Park Avenue, New York, New York 10177-0077.
7.2 Deliveries by Vimrx. At the Closing, VIMRx shall deliver to The Aries
Funds the following:
(a) Stock certificates for the Initial VIMRx Shares registered in
the names of The Aries Funds.
(b) A registration rights agreement providing for (i) VIMRx's
preparation, filing and processing to effectiveness of a Registration
Statement on Form S-3 for the public sale of the Base VIMRx Shares by
The Aries Funds, which registration statement shall be filed within 45
days of the Closing Date, and (ii) cross-indemnification rights with
respect thereto.
(c) An officers' certificate by the President and the Chief
Financial Officer of VIMRx confirming as at the Closing Date the
correctness of the warranties and representations of VIMRx in the
agreement and compliance by VIMRx with the covenants and agreements to
be performed by it under the agreement.
(d) The opinion of Epstein Becker & Green, P.C., counsel to
VIMRx, addressed to The Aries Funds, as to Sections 2.1, 2.2, 2.3, and
7.2(b).
7.3 Deliveries by The Aries Funds. At the Closing, The Aries Funds shall
deliver to VIMRx the following:
(a) Stock certificates for the Innovir Shares, duly endorsed for
transfer to VIMRx or its designee.
(b) The Registration Rights Agreement duly executed by The Aries
Funds.
(c) An irrevocable three-year proxy granting VIMRx all voting
rights with respect to the 500,000 shares of Innovir's Common Stock
being retained by The Aries funds following the Closing Date, duly
executed, which proxy shall not restrict The Aries Funds from selling
such shares, in which event the proxy shall lapse with respect to any
shares sold.
(d) A written waiver and release (the "Release") by The Aries
Funds of certain rights under (i) the Common Stock And Warrant
Purchase Agreement dated as of August 30, 1996 by and among The Aries
Funds and Innovir and (ii) certain other agreements with Innovir which
such Release shall be in form and substance satisfactory to the
parties.
17
<PAGE>
(e) An officers' certificate by an authorized representative of
the Aries Funds, in form and substance reasonably satisfactory to the
parties.
(f) The opinion of counsel to The Aries Funds, addressed to
VIMRx, in form and substance reasonably satisfactory to the parties.
ARTICLE 8
SURVIVAL
8.1 Survival. All representations and warranties made in this Agreement
shall survive the delivery of this Agreement and remain in full force and effect
until December 31, 1998.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification
(a) Indemnification by VIMRx. VIMRx hereby agrees to indemnify
and hold harmless The Aries Funds from and against any and all losses,
liabilities, damages, obligations, costs and expenses, including,
without limitation, amounts paid in settlement and reasonable costs
and expenses of investigating, preparing to defend and defending any
claim, action, suit, proceeding, inquiry or investigation in respect
thereof (such losses, liabilities, damages, obligations, costs and
expenses as hereinabove set forth, collectively "Damages") incurred by
The Aries Funds, resulting from, relating to, or arising out of the
inaccuracy of any representation or warranty herein by VIMRx or the
breach of any covenant herein by VIMRx.
(b) Indemnification by The Aries Funds. Each of The Aries Funds,
severally, and not jointly, hereby agrees to indemnify and hold
harmless VIMRx from and against any and all Damages incurred by VIMRx
resulting from, relating to, or arising out of the inaccuracy of any
representation or warranty herein by either of The Aries Funds,
respectively, or the breach of any covenant contained herein by either
of The Aries Funds, respectively.
(c) Procedure. If any action, suit, proceeding or claim shall be
brought against the party to be indemnified by any third party, which
action, suit, proceeding or claim, if determined adversely to the
interest of the party to be indemnified and which would entitle the
party to be indemnified to indemnity pursuant to this Section 10.1,
the party to be indemnified shall promptly notify the indemnifying
party of the same in writing and, if the indemnifying party so elects,
the indemnifying party shall assume the defense thereof, including the
employment of counsel satisfactory to the party to be indemnified and
18
<PAGE>
the payment of all reasonable costs and expenses in respect thereof.
The party to be indemnified shall have the right to employ counsel
separate from any counsel employed by the indemnifying party in any
action, suit, proceeding or claim and to control (or, if the party to
be indemnified has elected to allow the indemnifying party to assume
the defense thereof, participate in) the defense thereof and the fees
and expenses of such counsel employed by the party to be indemnified
shall be at the expense of the party to be indemnified. The
indemnifying party shall not be liable for any settlement of any such
action, suit, proceeding or claim effected without his or its written
consent (which shall not be unreasonably withheld), but if settled
with the written consent of the indemnifying party, or if there shall
be a final judgment for plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless the party to be
indemnified from and against any loss, liability, obligation, damage,
cost or expense by reason of such settlement or judgment.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Amendment and Modification. This Agreement may be amended, modified
and supplemented only by a writing signed by The Aries Funds and VIMRx.
10.2 Waiver of Compliance. Any failure of The Aries Funds or VIMRx to
comply with any obligation, covenant, agreement or condition herein contained
may be expressly waived, in writing only, by (i) The Aries Funds in the case of
any failure of VIMRx or (ii) VIMRx in the case of any failure of The Aries
Funds. Such waiver shall be effective only in the specific instance and for the
specific purpose for which made or given.
10.3 Expenses. VIMRx and The Aries Funds shall each pay their own
respective expenses incurred in connection with this Agreement or any
transaction contemplated by this Agreement, except that VIMRx shall pay the
reasonable fees and expenses of counsel incurred in connection with rendering
the opinion of counsel referred to in Section 7.3(f) hereof. The foregoing shall
not be construed as limiting any other rights which any party may have as a
result of misrepresentation of or breach by any other party.
10.4 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, or when mailed by certified or
registered mail (return receipt requested), postage prepaid or when delivered by
fax (evidenced by confirmation of successful transmission), as follows:
A. If to The Aries Funds:
Paramount Capital Asset Management, Inc.
787 Seventh Avenue
New York, New York 10019
Fax # (212) 554-4490
Attn: President
19
<PAGE>
With a copy to:
Roberts, Sheridan & Kotel,
A Professional Corporation
640 Fifth Avenue, 15th Floor
New York, New York 10019
Fax # (212)
Attn: Ira L. Kotel, Esq.
or to such other person or place as The Aries Funds shall designate by
notice in the manner provided in this Section 10.4;
B. If to VIMRx:
VIMRX Pharmaceuticals Inc.
2751 Centerville Road
Wilmington, Delaware 19808
Fax # (302) 998-3794
Attn: Mr. Richard L. Dunning
With a copy to:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Fax # (212) 661-0989
Attn: Lowell Lifschultz, Esq.
or to such other person as VIMRx shall designate by notice in the manner
provided in this Section 10.4.
10.5 Assignment. This Agreement shall be binding upon and inure to the
benefit of The Aries Funds and their respective successors and assigns, and to
VIMRx and its successors and assigns, but neither this Agreement nor any of the
rights, interests and obligations hereunder shall be assigned by either The
Aries Funds or VIMRx without the prior written consent of the others.
10.6 Freedom of Action. (a) The Aries Funds and their affiliates shall not
have any obligation to the Company not to (i) engage in the same or similar
activities or lines of business as the Company or develop or market any
products, services or technologies that does or may in the future compete,
directly or indirectly, with those of the Company, (ii) invest or own any;
interest publicly or privately in, or develop a business relationship with, any
corporation, partnership or other person or entity engaged in the same or
similar activities or lines or business as or otherwise in competition with, the
Company or (iii) do business with any client, collaborator, licensor,
consultant, vendor or customer of the Company. The Aries Funds and their
officers, directors, employees or former employees and affiliates shall not have
any obligation or be liable, to the Company solely on account of the conduct
20
<PAGE>
described in the preceding sentence. In the event that either of The Aries Funds
and any officer, director, employee or former employee or affiliate thereof
acquires knowledge of a potential transaction, agreement, arrangement or other
matter which may be a corporate opportunity for both The Aries Funds or any
affiliates and the Company, neither of The Aries Funds nor their officers,
directors, employees or former employees or affiliates shall have any duty to
communicate or offer such corporate opportunity to the Company; and neither of
The Aries Funds nor their officers, directors, employees or former employees or
affiliates shall be liable to the Company for breach of any fiduciary duty, as a
stockholder or otherwise, solely by reason of the fact that The Aries Funds or
any of their officers, directors, employees or former employees or affiliates
pursue or acquire such corporate opportunity for either of The Aries Funds,
direct such corporate opportunity to another person or entity or communicate or
fail to communicate such corporate opportunity or entity to the Company. As used
in this Section, The Aries Funds shall include their affiliates (excluding the
Company; as an affiliate of The Aries Funds).
(b) The provisions of this Section 10.6 shall be enforceable to
the fullest extent permitted by law.
10.7 Third Parties. This Agreement is not intended to and shall not be
construed to give any Person other than the parties hereto any interest or
rights (including, without limitation, any third party beneficiary rights) with
respect to or in connection with any agreement or provision contained herein or
contemplated hereby.
10.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws.
10.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
10.8 Headings. The headings of the sections, schedules and articles of this
Agreement are inserted for the sake of convenience only and shall not constitute
a part hereof.
10.9 Entire Agreement. This Agreement, including the schedules and
exhibits, contains the entire understanding of the parties in respect of the
subject matter contained herein and therein and there are no other terms or
conditions, representations or warranties, written or oral, express or implied,
except as set forth herein.
21
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
THE ARIES FUND, A CAYMAN ISLAND TRUST
By: its Investment Manager,
PARAMOUNT CAPITAL ASSET
MANAGEMENT, INC.
By: /s/ Lindsay A. Rosenwald, M.D.
Lindsay A. Rosenwald, M.D., President
THE ARIES DOMESTIC FUND, L.P.
By: its General Partner,
PARAMOUNT CAPITAL ASSET
MANAGEMENT, INC.
By: /s/ Lindsay A. Rosenwald, M.D.
Lindsay A. Rosenwald, M.D., President
VIMRx PHARMACEUTICALS INC.
By: /s/ Richard L. Dunning
Richard L. Dunning, President
22
<PAGE>
Exhibit 2.2b
AMENDMENT
AMENDMENT dated December 23, 1996 ("Amendment") to the Agreement (the
"November Agreement") dated November 21, 1996 by and among VIMRx Pharmaceuticals
Inc., a Delaware corporation ("VIMRx" or the "Company"), The Aries Fund, A
Cayman Island Trust ("Aries I") and The Aries Domestic Fund, L.P. , a Delaware
limited partnership ("Aries II" and, together with Aries I, "The Aries Funds").
R E C I T A L S
WHEREAS, the parties have entered into the November Agreement and are
desirous of effecting an amendment thereto.
NOW, THEREFORE, VIMRx and The Aries Funds hereby agree as follows:
1. Section 1.1 of the November Agreement is hereby amended to
read in full as follows:
1.1 Exchange of Shares. Subject to the terms and conditions of
this Agreement and in reliance upon the representations, warranties
and covenants herein contained, on the date of closing specified in
Section 7.1 (the "Closing Date"), The Aries Funds hereby agree to
assign, transfer and deliver the Innovir Shares to VIMRx or its
designee and, in exchange therefor, VIMRx hereby agrees to issue and
deliver to The Aries Funds, pro rata to their ownership of the Innovir
Shares to be delivered, 3,000,000 shares of VIMRx's Common Stock (the
"VIMRx Shares"), and $3,000,000 by wire transfer to the account(s)
designated by the Aries Funds."
2. Section 1.2 of the November Agreement is hereby deleted in its
entirety.
3. Subsections (a) and (b) of Section 7.2 are hereby amended to
read as follows:
"(a) Stock certificates for the VIMRx Shares registered in the
names of The Aries Funds.
(b) A registration rights agreement providing for (i) VIMRx's
preparation, filing and processing to effectiveness of a Registration
Statement on Form S-3 for the public sale of the VIMRx Shares, which
registration statement shall be filed within 45 days of the Closing
Date, and (ii) cross-indemnification rights with respect thereto."
4. Except as and to the extent amended hereby the November
Agreement shall remain in full force and effect.
5. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York, without regard to
principles of conflicts of laws.
23
<PAGE>
6. This Amendment may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
duly executed as of the day and year first above written.
THE ARIES FUND, A CAYMAN ISLAND TRUST
By: its Investment Manager,
PARAMOUNT CAPITAL ASSET MANAGEMENT, INC.
By: /s/ Lindsay A. Rosenwald, M.D.
Lindsay A. Rosenwald, M.D., President
THE ARIES DOMESTIC FUND, L.P.
By: its General Partner,
PARAMOUNT CAPITAL ASSET
MANAGEMENT, INC.
By: /s/ Lindsay A. Rosenwald, M.D.
Lindsay A. Rosenwald, M.D., President
VIMRx PHARMACEUTICALS INC.
By: /s/ Francis M. O'Connell
Francis M. O'Connell
Chief Financial Officer
24
<PAGE>
Exhibit 2.3
AGREEMENT
by and among
VIMRx PHARMACEUTICALS INC.
and
INNOVIR LABORATORIES, INC.
Dated: November 21, 1996
25
<PAGE>
TABLE OF CONTENTS
Page
AGREEMENT ............................................................1
ARTICLE 1 EXCHANGE ................................................1
1.1 Exchange.............................................1
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF VIMRx ................2
2.1 Organization and Authority...........................2
2.2 Capitalization.......................................2
2.3 Subsidiaries....................................... 2
2.4 Articles of Incorporation, By-Laws and
Corporate Records................................. 2
2.5 Governmental Authorizations and Other Consents..... 3
2.6 Non-Contravention.................................. 3
2.7 Financial Statements............................... 3
2.8 Tangible Property.................................. 4
2.9 Real Property and Leases........................... 4
2.10 Intellectual Property.............................. 4
2.11 Tax Matters........................................ 4
2.12 Compliance with Laws............................... 5
2.13 Permits and Licenses............................... 5
2.14 Contracts and Agreements........................... 5
2.15 Employee Benefits.................................. 5
2.16 Accounts Payable................................... 6
2.17 Liabilities........................................ 6
2.18 Actions and Proceedings............................ 6
2.19 Bank Accounts, Guarantees and Powers............... 6
2.20 Absence of Changes................................. 6
2.21 Employee Relations................................. 7
2.22 Affiliated Transactions............................ 7
2.23 Brokers' Fees...................................... 8
2.24 Full Disclosure.................................... 8
2.25 Employee Compensation.............................. 8
2.26 Authority.......................................... 8
2.27 Title to the VHL Shares............................ 8
2.28 Examination of Documents, Investment Purposes and
Legending of Innovir Shares and Innovir Warrants.. 8
2.29 Insurance.......................................... 9
2.30 Environmental...................................... 9
26
<PAGE>
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF INNOVIR.......... 9
3.1 Organization....................................... 9
3.2 Authority and Consent.............................. 10
3.3 Non-Contravention.................................. 10
3.4 Capitalization..................................... 10
3.5 Intellectual Property.............................. 10
3.6 Actions and Proceedings............................ 11
3.7 Absence of Changes................................. 11
3.8 The Innovir Shares................................. 11
3.9 The Innovir Warrants............................... 12
3.11 Documents Delivered................................ 12
ARTICLE 4 CONDUCT PENDING CLOSING BY VHL AND
THE SUBSIDIARIES ................................. 12
4.1 Conduct of Business................................ 12
4.2 Certain Prohibited Activities...................... 13
4.3 Reports; Taxes; Etc................................ 13
4.4 Access to Information.............................. 13
4.5 Further Assurances................................. 14
4.6 Tax Adjustments.................................... 14
4.7 Governmental Notification and Approvals............ 14
ARTICLE 5 CONDUCT PENDING CLOSING BY INNOVIR ................ 14
5.1 Conduct of Business................................ 14
5.2 Certain Prohibited Activities...................... 14
5.3 Reports; Taxes; Etc................................ 15
5.4 Access to Information.............................. 15
5.5 Further Assurances................................. 15
5.6 Tax Adjustments.................................... 16
5.7 Governmental Notification and Approvals............ 16
ARTICLE 6 COVENANTS OF VIMRx AND INNOVIR..................... 16
6.1 Necessary Assurances............................... 16
6.2 Filings and Consents............................... 16
6.3 Government Filings................................. 16
6.4 Public Announcements............................... 17
6.5 Confidentiality.................................... 17
6.6 Expenses........................................... 17
27
<PAGE>
ARTICLE 7 ADDITIONAL COVENANTS............................... 17
7.1 VIMRx Covenants.................................... 17
7.2 Innovir Covenant................................... 17
ARTICLE 8 CONDITIONS TO CLOSING.............................. 18
8.1 Conditions to Obligations of Innovir............... 18
8.2 Conditions to Obligations of VIMRx................. 19
ARTICLE 9 CLOSING............................................ 19
9.1 Closing Date....................................... 19
9.2 Deliveries by VIMRx................................ 20
9.3 Deliveries by Innovir.............................. 20
ARTICLE 10 SURVIVAL................................................ 21
10.1 Survival........................................... 21
ARTICLE 11 INDEMNIFICATION......................................... 21
11.1 Indemnification.................................... 21
11.2 Access............................................. 22
ARTICLE 12 MISCELLANEOUS PROVISIONS................................ 22
12.1 Amendment and Modification......................... 22
12.2 Waiver of Compliance............................... 22
12.3 Notices............................................ 22
12.4 Assignment......................................... 23
12.5 Third Parties...................................... 24
12.6 Governing Law...................................... 24
12.7 Counterparts....................................... 24
12.8 Headings........................................... 24
12.9 Entire Agreement................................... 24
28
<PAGE>
AGREEMENT
AGREEMENT (the "Agreement") made this 21st day of November, 1996 by and
among VIMRx Pharmaceuticals Inc., a Delaware corporation with offices at 2751
Centerville Road, Wilmington, Delaware 19808 ("VIMRx"), and Innovir
Laboratories, Inc., a Delaware corporation with offices at 510 East 73rd Street,
New York, New York 10021 ("Innovir").
R E C I T A L S
WHEREAS, Innovir is desirous of acquiring all of the issued and outstanding
shares of the capital stock of VIMRx Holdings, Ltd., a Delaware corporation
("VHL") consisting of 12,000 shares of common stock, $.01 par value (the "VHL
Shares"), solely in exchange for 8,666,6661 shares of Innovir's Class D
Convertible Preferred Stock, par value $.06 per share (the "Innovir Shares") and
five-year warrants to purchase 1,000,000 shares of Innovir's Common Stock at
$1.00 per share and 1,000,000 shares at $2.00 per share (the "Innovir
Warrants"); and
WHEREAS, VIMRx is the owner of the VHL Shares and is desirous of exchanging
the VHL Shares for the Innovir Shares and has agreed to cause VHL to advance
$1,000,000 to Innovir concurrent with the signing of this Agreement;
NOW, THEREFORE, Innovir and VIMRx hereby agree as follows:
ARTICLE 1
EXCHANGE
1.1 Exchange. Subject to the terms and conditions of this Agreement and in
reliance upon the representations, warranties and covenants herein contained, on
the date of closing specified in Section 9.1 (the "Closing Date"), VIMRx hereby
agrees to assign, transfer and deliver the VHL Shares to Innovir or its designee
and, in exchange therefor, Innovir hereby agrees to issue and deliver the
Innovir Shares and the Innovir Warrants to VIMRx.
- ----------
1 The number of Innovir Shares were calculated valuing VHL at
$13,000,000 following an additional $3,000,000 cash infusion to be made prior to
closing, divided by $1.50, the per share value attributed to the Innovir Shares.
29
<PAGE>
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF VIMRx
VIMRx represents and warrants to Innovir that:
2.1 Organization and Authority. VHL is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
has all requisite corporate power and authority to own, lease and operate its
properties and carry on its business as now conducted, and is not required to be
qualified as a foreign corporation in any other jurisdiction.
2.2 Capitalization. The authorized capital stock of VHL consists of 120,000
shares of common stock, $.01 par value. The VHL Shares have been duly authorized
and are validly issued, fully paid and nonassessable, constitute the only shares
of VHL outstanding and there are no outstanding rights, subscriptions, warrants,
calls, preemptive rights, options or other agreements or commitments of any kind
or character to purchase or otherwise to acquire from VHL any shares of its
capital stock or any other security, and no security or obligation of any kind
convertible into the capital stock or other security of VHL exists in favor of
any person, corporation, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or any agency or
political subdivision thereof) or other entity of any kind ("Person").
2.3 Subsidiaries. VPI (UK) Ltd., incorporated in England, VPI Gesellschaft
fur die Entwicklung und Synthese von Oligomeren mbH, organized in Germany, and
Ribonetics GmbH Gesellschaft fur molekulare Therapie, organized in Germany, are
wholly-owned subsidiaries of VHL (collectively, the "Subsidiaries" and
individually, a "Subsidiary") and the only subsidiaries of VHL. Each Subsidiary
has been duly organized and is validly existing and in good standing under the
laws of its respective jurisdiction of organization, with full corporate power
and authority to own, lease and operate its respective properties, no Subsidiary
is required to qualify to do business in the United States, and there are no
outstanding rights, subscriptions, warrants, calls, preemptive rights, options
or other agreements or commitments of any kind or character to purchase or
otherwise to acquire from any Subsidiary any shares of its capital stock or any
other security, and no security or obligation of any kind convertible into the
capital stock or other security of any Subsidiary exists in favor of any Person.
2.4 Articles of Incorporation, By-Laws and Corporate Records. The copies of
the Certificate of Incorporation, By-Laws, stock transfer, minute books and
corporate records of VHL and the copies of the Memorandum of Association and/or
organizational documents of each Subsidiary, which have been made available to
Innovir, are true and correct copies.
30
<PAGE>
2.5 Governmental Authorizations and Other Consents. Except as set forth on
Schedule 2.5, no consent, order, license, approval or authorization of, or
exemption by, or registration or declaration or filing with, any governmental
authority, bureau or agency, and no consent or approval of any other Person, is
required to be obtained or made in connection with the performance by VIMRx
and/or VHL or any Subsidiary of this Agreement or the consummation of the
transactions contemplated to be performed by each of them hereunder.
2.6 Non-Contravention. Except as set forth on Schedule 2.6, the performance
of this Agreement will not (i) violate any provision of the Certificate of
Incorporation or By-Laws of VIMRx or VHL or the equivalent organizational
documents of any Subsidiary; (ii) violate, conflict with or result in the breach
or termination of, or constitute an amendment to, or otherwise give any Person
the right to terminate, or constitute (or with notice or lapse of time or both
would constitute) a default (by way of substitution, novation or otherwise)
under the terms of, any contract, mortgage, lease, bond, indenture, agreement,
franchise or other instrument or obligation to which VHL or any Subsidiary is a
party or by which VHL or any Subsidiary or any of their respective assets or
properties are bound or affected; (iii) result in the creation of any lien,
mortgage, claim, charge, security interest, encumbrance, restriction or
limitation (collectively, "Liens") upon the properties or assets of VHL or any
Subsidiary pursuant to the terms of any contract, mortgage, lease, bond,
indenture, agreement, franchise or other instrument or obligation; (iv) violate
any judgment, order, injunction, decree or award of any court, arbitrator,
administrative agency or governmental or regulatory body against, or binding
upon, VHL or any Subsidiary or any of their respective securities, properties,
assets or business; (v) constitute a violation by VHL or any Subsidiary of any
statute, law, rule or regulation of any jurisdiction as such statute, law, rule
or regulation relates to VHL or any Subsidiary or to any of their respective
securities, properties, assets or business; or (vi) violate any Permit (as
defined in Section 2.14).
2.7 Financial Statements. The unaudited balance sheet of VHL and its
Subsidiaries as at September 30, 1996 (the "September 30, 1996 Balance Sheet")
and the related unaudited statement of income for the nine months then ended
(together with the September 30, 1996 Balance Sheet, the "September 30, 1996
Financial Statements"), together with the balance sheet of VHL and its
Subsidiaries as at December 31, 1995 (the "December 31, 1995 Balance Sheet") and
the related statements of income, capital and cash flows for each of the years
from inception through December 31, 1995 audited by independent certified public
accountants (the "Audited Financial Statements") to be delivered to Innovir
prior to the Closing Date will be prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied, be true and correct and
present fairly the financial condition and the results of operations and cash
flows of VHL and its Subsidiaries as at the respective dates and for the
respective periods covered thereby.
31
<PAGE>
2.8 Tangible Property. VHL and the Subsidiaries have good and marketable
title to all of the assets reflected on the September 30, 1996 Balance Sheet,
free and clear of all Liens, except for those assets leased under leases listed
on Schedule 2.8.
Real Property and Leases. (a) VHL and the Subsidiaries own no real property.
(b) Schedule 2.9(b) sets forth a true and correct list of all
leases, subleases or other agreements under which VHL or any
Subsidiary is lessee or lessor of any real property or has any
interest in real property and, except as set forth in Schedule 2.9(b),
there are no rights or options held by VHL or any Subsidiary or any
contractual obligations to purchase or otherwise acquire (including by
way of lease or sublease) any interest in or use of any real property,
nor any rights or options granted by VHL or any Subsidiary, or any
contractual obligations to sell or otherwise dispose of (including by
way of lease or sublease) any interest in or use of any real property.
All such leases, subleases and other agreements are in full force and
effect and constitute legal, valid and binding obligations of the
respective parties thereto, with no existing or claimed default or
event of default, or event which with notice or lapse of time or both
would constitute a default or event of default, by VHL, any Subsidiary
or, to the knowledge of VIMRx, by any other party thereto, which would
materially and adversely affect VHL or any Subsidiary, and grant the
leasehold estates or other interests they purport to grant with the
right to quiet possession. VHL and the Subsidiaries are not in
violation of any building, zoning, health, safety, environmental or
other law, rule or regulation and no notice from any Person has been
served upon VHL or any Subsidiary claiming any such violation.
2.10 Intellectual Property. Schedule 2.10 sets forth (i) all trademarks,
trade names, trade secrets, patents, inventions, processes, copyrights,
copyright rights or other intellectual property rights (or applications
therefor) used by VHL and the Subsidiaries in connection with their respective
business, (ii) whether such property is owned, licensed or leased, and (iii) a
summary of the terms of the license or lease. VHL has not made any commercial
sale of synthetic catalytic oligonucleotides in the United States through the
date hereof.
2.11 Tax Matters. VHL and the Subsidiaries have timely filed all applicable
tax returns, estimates and reports (collectively, "Returns") required to be
filed by them through the date hereof, copies of which have been delivered to
Innovir, which Returns accurately reflect the taxes, if any, due for the periods
indicated, and have paid in full all income, gross receipts, value added,
excise, property, franchise, sales, use, employment, payroll and other taxes of
any kind whatsoever (collectively, "Taxes") shown to be due by such Returns, and
have established adequate reserves with respect to any liabilities for Taxes
accrued through December 31, 1995 which are reflected on the December 31, 1995
Balance Sheet and VIMRx has no knowledge of any unassessed deficiency for Taxes
proposed or threatened against VHL and the Subsidiaries, and no taxing authority
has raised any issue which, if adversely determined, would result in a liability
for any Tax which has not been reserved against on the December 31, 1995 Balance
Sheet. No extensions with respect to the dates on which any Return was or is due
to be filed by VHL or any Subsidiary nor any waivers or agreements by VHL and
32
<PAGE>
the Subsidiaries for the extension of time for the assessment or payment of any
Taxes are in force. Neither VHL nor any Subsidiary has been, nor currently is
being, audited by any tax authority.
2.12 Compliance with Laws. VHL and the Subsidiaries are not in violation of
any applicable law, rule or regulation, the violation of which could materially
and adversely affect their assets, properties, liabilities, business, results of
operations, condition (financial or otherwise) or prospects, nor does VIMRx know
of the enactment, promulgation or adoption of any such law, rule or regulation
which is not yet effective.
2.13 Permits and Licenses. Except as set forth on Schedule 2.13, VHL and
the Subsidiaries have duly obtained and hold in full force and effect all
consents, authorizations, permits, licenses, orders or approvals of, and has
made all declarations and filings with, all federal, state or local governmental
or regulatory bodies that are material or necessary in the conduct of their
respective business (collectively, the "Permits"); all the Permits were duly
obtained and are in full force and effect; no violations are or have been
recorded in respect of any such Permit and no proceeding is pending or
threatened to revoke, deny or limit any such Permit.
2.14 Contracts and Agreements. Schedule 2.14 lists and briefly describes
all written or oral contracts, agreements, leases, mortgages and commitments to
which VHL or any Subsidiary is a party/or by which any of them may be bound
involving in excess of $25,000, including, without limitation, all collaboration
agreements, management agreements, joint venture agreements, leases, guarantees
and indemnifications, employment and consulting agreements and instruments of
indebtedness (individually, a "Contract" and, collectively, "Contracts"), true
and correct copies of which have been made available to Innovir. All Contracts
constitute legal, valid and binding obligations of VHL or the Subsidiaries and,
to the best knowledge of VIMRx, of the other parties thereto, and are in full
force and effect on the date hereof, and VHL or the Subsidiaries have paid in
full all amounts due thereunder which are due and payable and are not in default
under any such Contract nor, to the best knowledge of VIMRx, is any other party
to any such Contract in default thereunder, nor does any condition exist that
with notice or lapse of time or both would constitute a default or event of
default thereunder by VHL or the Subsidiaries or, to the best knowledge of
VIMRx, by any other Person. Except as set forth in Schedule 2.5, no Contract
requires the consent or approval of a third party in connection with the
performance by VHL or any Subsidiary of this Agreement or the transactions
contemplated to be performed by it hereunder.
2.15 Employee Benefits. Except as set forth on Schedule 2.15, there are no
pension, retirement, savings, disability, medical, dental or other health plans,
life insurance (including any individual life insurance policy as to which VHL
or any Subsidiary makes premium payments whether or not VHL or the Subsidiary is
the owner, beneficiary, or both, of such policy) or other death benefit plans,
profit sharing, deferred compensation, stock option, bonus or other incentive
plans, vacation benefit plans, severance plans, or other employee benefit plans
or arrangements (whether written or arising from custom).
33
<PAGE>
2.16 Accounts Payable. Except as set forth on Schedule 2.16, no accounts
payable of VHL or any Subsidiary have arisen subsequent to September 30, 1996
that exceed $10,000 for any one payee or $25,000 in the aggregate.
2.17 Liabilities. There are no material liabilities or obligations of VHL
and the Subsidiaries either accrued, absolute, contingent or otherwise
("Liabilities"), whether or not of a kind required by GAAP to be set forth on a
financial statement, except (i) those accrued, reflected or otherwise provided
for on the September 30, 1996 Balance Sheet furnished to Innovir, (ii) those
incurred in the ordinary course of business since September 30, 1996, consistent
with past practices, and which in the aggregate do not exceed $25,000 and (iii)
those listed on Schedule 2.17.
2.18 Actions and Proceedings. Except as set forth on Schedule 2.18, there
are no claims, actions, suits, arbitrations, proceedings, investigations or
inquiries, whether at law or in equity and whether or not before any court,
private body or group, governmental department, commission, board, agency or
instrumentality (collectively, "Actions"), pending, or to the knowledge of
VIMRx, threatened against, involving or affecting VHL, any Subsidiary or any of
their respective assets, whether or not fully or partially covered by insurance,
or which would give rise to any right of indemnification by any Person from VHL
or any Subsidiary, and there are no outstanding orders, writs, injunctions,
awards, sentences or decrees of any court, private body or group, governmental
department, commission, board, agency or instrumentality against, involving or
affecting VHL or any Subsidiary or their respective assets or business.
2.19 Bank Accounts, Guarantees and Powers. Schedule 2.19 sets forth (i) a
list of all accounts, borrowing resolutions and deposit boxes maintained by VHL
and each Subsidiary at any bank or other financial institution and the names of
the persons authorized to effect transactions in such accounts, to borrow
pursuant to such resolutions and with access to such boxes; (ii) all agreements
or commitments of VHL and each Subsidiary guaranteeing the payment of money or
the performance of other contracts by any third persons; and (iii) the names of
all Persons holding general or special powers of attorney from VHL or a
Subsidiary, together with a summary of the terms thereof.
2.20 Absence of Changes. Except as set forth in Schedule 2.20, since
September 30, 1996, VHL and the Subsidiaries have carried on their respective
business in the ordinary course, and there has not been:
(i) any material adverse change in their respective business condition
(financial or otherwise), results of operations or liabilities;
(ii) any pending or threatened amendment, modification, or termination
of any agreement or Permit which is material to their respective
business;
34
<PAGE>
(iii) any disposition or acquisition of any of their respective assets
or properties, other than in the ordinary course, which exceed $2,500
in the aggregate;
(iv) any damage, destruction or other casualty loss (whether or not
covered by insurance) adversely affecting or that could reasonably be
expected to adversely affect their respective business or assets;
(v) any increase in the compensation of any of their respective
employees or consultants; or
(vi) except in the ordinary course, the incurrence of any obligation
or liability (whether matured, unmatured, absolute, accrued,
contingent or otherwise) which exceed $2,500 in the aggregate.
2.21 Employee Relations. VHL and the Subsidiaries have not at any time
during the last five years had, or to the knowledge of VIMRx is there now
threatened, a strike, picket, work stoppage, work slowdown, or other labor
trouble or dispute, and VIMRx has no knowledge of the proposed resignation of
any employee of VHL or any Subsidiary whose annual salary exceeds $25,000.
2.22 Affiliated Transactions. For purposes of this Section, an "Affiliate"
means VIMRx or any employee, officer or director of VHL or any Subsidiary or any
spouse or family member (including in-laws) of, or any corporation or other
entity "controlled by" (as such term is defined in Rule 405 of the General Rules
and Regulations under the Securities Act of 1993, as amended), any such persons
or in which any such person has an equity or ownership interest exceeding five
percent.
(a) Except as specifically set forth (including dollar amounts)
on Schedule 2.22, as of the date hereof, no Affiliate is indebted to,
or is a creditor of, VHL or any Subsidiary.
(b) During the past three (3) years, except as set forth on
Schedule 2.22 neither VHL nor any Subsidiary has, directly or
indirectly, purchased, leased from or otherwise acquired any property
or obtained any services from, or sold, leased to or otherwise
disposed of any property or furnished any services to, or otherwise
dealt with, any Affiliate nor is VHL or any Subsidiary a party to any
contract, agreement, license, commitment or other arrangement, written
or oral, express or implied, with an Affiliate except as disclosed on
such schedule.
35
<PAGE>
2.23 Brokers' Fees. There is no broker, finder or other intermediary
retained by VIMRx, VHL or any Subsidiary who might be entitled to a fee or
commission in connection with the transactions contemplated hereby.
2.24 Full Disclosure. All documents, schedules, financial statements and
other materials delivered or made available by or on behalf of VIMRx or VHL or
any Subsidiary to Innovir in connection with this Agreement and the transactions
contemplated hereby are true and correct in all material respects. The
information furnished to Innovir by or on behalf of VIMRx, VHL or any Subsidiary
in connection with this Agreement and the transactions contemplated hereby does
not, in light of the circumstances under which the statements contained in the
information so furnished were made, contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
contained therein not false or misleading.
2.25 Employee Compensation. Schedule 2.25 lists all employees of VHL and
each Subsidiary, setting forth their respective annual salaries, whether they
are employed under contract or at will, and the expiration date of each
contract.
2.26 Authority. This Agreement has been duly executed and delivered by
VIMRx and is a valid and binding agreement of VIMRx enforceable against VIMRx in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies.
2.27 Title to the VHL Shares. VIMRx owns the VHL Shares, free and clear of
all Liens and, upon delivery to Innovir of the certificates therefor duly
endorsed for transfer to Innovir, Innovir will acquire good, valid, indefeasible
and marketable title thereto, free and clear of any and all Liens.
2.28 Examination of Documents, Investment Purposes and Legending of Innovir
Shares and Examination of Documents, Investment Purposes and Legending of
Innovir Shares and Innovir Warrants. VIMRx has examined the Annual Report on
Form 10-K of Innovir for the fiscal year ended September 30, 1995 (the "1995
Form 10-K"), Innovir's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1995, March 31, 1996 and June 30, 1996, Innovir's Proxy Statement
for its 1994 Annual Meeting of Stockholders and Innovir's 1994 Annual Report to
Stockholders, has had the opportunity to discuss Innovir's operations with
Innovir's officers and employees, and is acquiring the Innovir Shares and the
Innovir Warrants for its own account for investment within the contemplation of
the Securities Act of 1933, as amended (the "Securities Act") and not with a
view to the transfer or resale thereof, and consents to the legending of the
certificates for the Innovir Shares to be received with a legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT FOR THESE SHARES OR AN OPINION
OF INNOVIR'S COUNSEL THAT REGISTRATION IS NOT
REQUIRED",
36
<PAGE>
and to the affixation of a similar legend on the Innovir Warrants.
2.29 Insurance. Schedule 2.29 contains a list of all insurance policies
covering the respective assets, businesses, operations, employees, officers and
directors of VHL and each Subsidiary, and the dates through which each such
policy is effective. Each such policy is in full force and effect and evidence
of the effectiveness of each such policy has been delivered to Innovir. Except
as set forth in Schedule 2.29, there is no claim by VHL or any Subsidiary
pending under any of such policies as to which coverage has been questioned,
denied or disputed by the underwriters of such policies. All premiums payable
under such policies have been paid, and VHL and each Subsidiary is otherwise in
full compliance with the terms and conditions of such policies. Such policies
are of the types and in the amounts customarily carried by Persons conducting
businesses similar to those of VHL and the Subsidiaries. Neither VIMRx, VHL nor
any Subsidiary has any knowledge of any threatened termination of any of such
policies.
2.30 Environmental. VHL and each Subsidiary currently operates, and at all
times in the past has operated, in compliance with all applicable laws,
statutes, codes, ordinances, rules, regulations, or other requirements relating
to the protection of human health and safety, the environment, or hazardous or
toxic substances or waste, pollutants or contaminants ("Environmental Laws").
None of VIMRx, VHL or any Subsidiary has received any notification of any
present or past failure on the part of VHL or any Subsidiary to comply with any
applicable Environmental Laws. No Lien has attached to, and no basis exists for
the attachment of any Lien to, any revenues of VHL or any Subsidiary or their
respective assets pursuant to any Environmental Laws. There has not been any
Phase I, Phase II or other environmental report conducted by or on behalf of VHL
or any Subsidiary with respect to their respective properties or assets.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF INNOVIR
Innovir represents and warrants to VIMRx that:
3.1 Organization. Innovir is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified and licensed
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which it is required to be so qualified or authorized.
37
<PAGE>
3.2 Authority and Consent. This Agreement has been duly authorized,
executed and delivered by Innovir and is a valid and binding agreement of
Innovir enforceable against Innovir in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies and no
consent or approval is required of any Person in connection with the performance
by Innovir of this Agreement or the consummation by Innovir of the transactions
contemplated hereby.
3.3 Non-Contravention. Except as set forth on Schedule 3.3, the performance
of this Agreement by Innovir will not (i) violate any provision of its
Certificate of Incorporation or By-Laws; (ii) violate, conflict with or result
in the breach or termination of, or constitute an amendment to, or otherwise
give any Person the right to terminate, or constitute (or with notice or lapse
of time or both would constitute) a default (by way of substitution, novation or
otherwise) under the terms of, any contract, mortgage, lease, bond, indenture,
agreement, franchise or other instrument or obligation to which Innovir is a
party or by which it or any of its assets or properties are bound or affected;
(iii) result in the creation of any Liens upon the properties or assets of
Innovir pursuant to the terms of any contract, mortgage, lease, bond, indenture,
agreement, franchise or other instrument or obligation; (iv) violate any
judgment, order, injunction, decree or award of any court, arbitrator,
administrative agency or governmental or regulatory body against, or binding
upon, Innovir or any of its securities, properties, assets or business; (v)
constitute a violation by Innovir of any statute, law, rule or regulation of any
jurisdiction as such statute, law, rule or regulation relates to Innovir or to
any of its securities, properties, assets or business; (vi) violate any Permit
(as defined in Section 2.13); or (vi) result in an adjustment to the conversion
or exercise price of any of Innovir's outstanding securities.
3.4 Capitalization. Innovir's authorized capital stock consists of (i)
15,000,000 shares of preferred stock, of which 297,000 shares of Class B
Convertible Preferred Stock and 20,000 shares of Class C Convertible Preferred
Stock are issued and outstanding, and (ii) 35,000,000 shares of Common Stock, of
which 11,780,646 shares are issued and outstanding, 14,616,500 shares are
reserved for issuance upon exercise of warrants (8,000,000 shares at a price of
$.50 per share and 6,616,500 shares at prices ranging from $0.05 per share to
$10.67 per share and averaging $5.07 per share), 1,646,625 shares are reserved
for issuance upon exercise of outstanding employee stock options at prices
ranging from $0.97 per share to $12.00 per share and averaging $4.21 per share,
629,289 shares are reserved for issuance upon conversion of convertible
preferred stock and 519,736 shares are reserved for future option grants under
Innovir's stock option plan.
3.5 Intellectual Property. Schedule 3.5 sets forth (i) all trademarks,
trade names, trade secrets, patents, inventions, processes, copyrights,
copyright rights or other intellectual property rights (or applications
therefor) used by Innovir in connection with its business, (ii) whether such
property is owned, licensed or leased, and (iii) a summary of the terms of the
license or lease.
38
<PAGE>
3.6 Actions and Proceedings. Except as set forth on Schedule 3.6, there are
no Actions pending, or to the knowledge of Innovir threatened against, involving
or affecting Innovir or any of its assets, whether or not fully or partially
covered by insurance or which would give rise to any right of indemnification by
any Person from Innovir, and there are no outstanding orders, writs,
injunctions, awards, sentences or decrees of any court, private body or group,
governmental department, commission, board, agency or instrumentality against,
involving or affecting Innovir, its assets or business.
3.7 Absence of Changes. Except as set forth in Schedule 3.7, since
September 30, 1996, Innovir has carried on its business in the ordinary course,
and there has not been:
(i) any material adverse change in its business condition
(financial or otherwise), results of operations or liabilities;
(ii) any pending or threatened amendment, modification, or
termination of any agreement or Permit which is material to its
business;
(iii) any disposition or acquisition of any of its assets or
properties, other than in the ordinary course, which exceed
$2,500 in the aggregate;
(iv) any damage, destruction or other casualty loss (whether or
not covered by insurance) adversely affecting or that could
reasonably be expected to adversely affect its business or
assets;
(v) any modification to any existing, or the adoption or entrance
into any new, employee benefit plan, employment agreement or
consulting agreement, or the increase in the compensation of any
of its employees or consultants; or
(vi) except in the ordinary course, the incurrence of any
obligation or liability (whether matured, unmatured, absolute,
accrued, contingent or otherwise) which exceed $2,500 in the
aggregate.
3.8 The Innovir Shares. The Innovir Shares to be delivered hereby, when
issued and delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable and will conform to the terms
thereof set forth on Schedule 3.8 and, following the increase of Innovir's
authorized Common Stock to 70,000,000 shares, the shares of Innovir's Common
Stock issuable upon conversion thereof will be duly reserved for issuance and,
when issued upon such conversion, will be validly issued, fully paid and
non-assessable.
39
<PAGE>
3.9 The Innovir Warrants. The Innovir Warrants to be delivered hereby, when
issued and delivered in accordance with the terms of this Agreement, will be
duly authorized and executed, will conform to the terms thereof set forth on
Schedule 3.9 and will constitute valid and legally binding obligations of
Innovir, enforceable in accordance with their terms and, following the increase
of Innovir's authorized Common Stock to 70,000,000 shares, the shares of
Innovir's Common Stock issuable upon exercise thereof will be duly reserved for
issuance and, when issued upon such exercise, will be validly issued, fully paid
and non-assessable.
3.10 Investment Purposes. Innovir is acquiring the VHL Shares for its own
account for investment within the contemplation of the Securities Act and not
with a view to the transfer or resale thereof.
3.11 Documents Delivered. Innovir has delivered to VIMRx, Innovir's (i)
Annual Report on Form 10-K for its fiscal year ended September 30, 1995 (ii)
Quarterly Reports on Form 10-Q for the quarters ended December 31, 1995, March
31, 1996 and June 30, 1996 (iii) Proxy Statement for its 1994 Annual Meeting of
Stockholders and (iv) its Prospectus dated October 8, 1996 and the related
Registration Statement on Form S-3 (collectively, the "SEC Documents"). The SEC
Documents, including the financial statements included therein, complied as to
form with the requirements of the Securities Exchange Act of 1934, as amended
and the rules and regulations thereunder (and, with respect to the Registration
Statement on Form S-3, the Securities Act), were true and complete in all
material respects as at their respective dates, and did not contain any untrue
statement of a material fact nor omit to state any material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading. The unaudited
financial statements of Innovir as at September 30, 1996 and for the three years
then ended delivered to VIMRx have been prepared in accordance with GAAP
consistently applied, are true and correct and present fairly the financial
condition and the results of operations and cash flows of Innovir as at the
respective dates and for the respective periods covered thereby, except as
disclosed in Schedule 3.11.
ARTICLE 4
CONDUCT PENDING CLOSING BY VHL AND THE SUBSIDIARIES
From the date hereof and until the Closing Date, except as otherwise
provided by this Agreement or as agreed by Innovir in writing, VIMRx hereby
covenants and agrees that it shall cause VHL and each Subsidiary to comply with
each of the following covenants:
4.1 Conduct of Business. To conduct its business in the ordinary course
consistent with past practice, maintain adequate insurance, preserve intact its
business organization and employees, maintain satisfactory relationships with
its independent agents, and others having business relationships with it,
40
<PAGE>
maintain its books and records in its usual manner and not make any change in
its financial reporting, or accounting practices or policies, or in its
reserving practices or policies.
4.2 Certain Prohibited Activities. Not to (i) issue, sell or deliver, or
agree to issue, sell or deliver, any shares of its capital stock or any other
security (whether authorized and unissued or held as treasury shares), or grant
or issue, or agree to grant or issue, any subscription, option, warrant or other
right calling for the issue, sale or delivery thereof; (ii) declare or pay any
dividend or distribution on any shares of its capital stock; (iii) purchase,
redeem or otherwise acquire any shares of its capital stock; (iv) make any
change in any pension or employee benefit plan or arrangement, or any collective
bargaining agreement, or enter into, amend, modify or terminate any arrangement
or agreement with any officer, director, employee, independent contractor,
representative; (v) create, incur, assume or guarantee any indebtedness for
borrowed money; (vi) make any capital expenditure, or purchase, lease or license
any real or personal property which exceed $2,500 in the aggregate; (vii) sell
or otherwise dispose of or pledge any of its assets (tangible or intangible) or
cancel any debts or claims (including, without limitation, accounts receivable)
owing to it, except in the ordinary course of business which does not otherwise
violate this Agreement; (viii) merge or consolidate with any other Person or
acquire control of all or any substantial portion of the assets of any other
Person or take any steps incident to, or in furtherance of, merging or
consolidating with or acquiring control of all or any substantial portion of the
assets of any other Person, whether by entering into an agreement providing
therefor or otherwise; (ix) make or cause to be made any alteration in the
manner of keeping its books, accounts or records or in the accounting practices
and principles therein and theretofore reflected, except as required by law; (x)
effect or agree to any change in its articles or similar instruments of
organization (except that VHL is discontinuing in the Islands of Bermuda and
domesticating in the State of Delaware) or By-Laws; (xi) settle or agree to
settle any claim, action, suit or proceeding involving the payment or receipt of
more than $5,000, individually, or $10,000, in the aggregate; (xii) enter into
any other transaction or agreement which is not in the ordinary and usual course
of business; or (xiii) agree or commit to do any of the foregoing.
4.3 Reports; Taxes; Etc. To duly and timely file, or cause to be duly and
timely filed, all filings, declarations, reports or returns required to be filed
with governmental authorities and to promptly pay all taxes, assessments and
governmental charges lawfully levied or assessed.
4.4 Access to Information. To afford Innovir, its counsel, financial
advisors, auditors and other authorized representatives full access, upon
reasonable prior notice and during normal business hours, to its offices,
properties, books and records and to its employees, agents and independent
accountants, and to furnish to Innovir, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
and other information as may reasonably be requested, and to instruct its
employees, counsel and financial advisors to cooperate with Innovir in Innovir's
due diligence.
41
<PAGE>
4.5 Further Assurances. To do or cause to be done such further acts and
things and deliver or cause to be delivered to Innovir such additional
assignments, agreements, powers and instruments as Innovir may reasonably
require or deem reasonably advisable to carry into effect the purposes of this
Agreement or the other agreements to be entered into in connection with the
transactions contemplated hereby or to better assure and confirm the rights,
powers and remedies of Innovir hereunder and thereunder.
4.6 Tax Adjustments. To promptly notify Innovir of all proposed adjustments
contained in examination reports received from any tax authority to any Return
relating to adjustment for tax years prior to and including the Closing Date
which could materially adversely affect VHL, any Subsidiary or Innovir and to
provide Innovir and its representatives such information and records as they may
reasonably request with respect to such adjustments. Innovir shall have the
right to participate in and pay its own expenses relating to the contest of all
such proposed adjustments which might adversely affect Innovir by the creation
of adverse precedent or otherwise.
4.7 Governmental Notification and Approvals. To prepare promptly, file and
diligently pursue with the appropriate governmental agencies all documentation
and information required by law or requested by each such agency to be filed to
permit the consummation of the transactions contemplated hereby.
ARTICLE 5
CONDUCT PENDING CLOSING BY INNOVIR
From the date hereof and until the Closing Date, except as otherwise
provided by this Agreement or as agreed by VIMRx in writing, Innovir hereby
covenants and agrees, as follows:
5.1 Conduct of Business. To conduct its business in the ordinary course
consistent with past practice, maintain adequate insurance, preserve intact its
business organization and employees, maintain satisfactory relationships with
its independent agents, and others having business relationships with it,
maintain its books and records in its usual manner and not make any change in
its financial reporting, or accounting practices or policies, or in its
reserving practices or policies.
5.2 Certain Prohibited Activities. Not to (i) issue, sell or deliver, or
agree to issue, sell or deliver, any shares of its capital stock or any other
security (whether authorized and unissued or held as treasury shares), other
than upon the exercise of outstanding options or warrants or upon conversion of
outstanding preferred stock, or grant or issue, or agree to grant or issue, any
subscription, option, warrant or other right calling for the issue, sale or
delivery thereof, except that Innovir may grant (x) new employee stock options
to purchase Innovir's Common Stock at $1.30 per share in replacement of existing
employee stock options and to employees who have not theretofore been granted
42
<PAGE>
options, all such grants of stock options being substantially in accordance with
Schedule 5.2, with new vesting provisions approved by VIMRx and provided that
such vesting provisions do not accelerate upon the consummation of the
transactions herein provided and (y) warrants to purchase 20,000 shares of
Innovir's Common Stock at $1.50 per share to New York State Science and
Technology Foundation, (ii) declare or pay any dividend or distribution on any
shares of its capital stock; (iii) purchase, redeem or otherwise acquire any
shares of its capital stock; (iv) make any change in any pension or employee
benefit plan or arrangement, or any collective bargaining agreement, or enter
into, amend, modify or terminate any arrangement or agreement with any officer,
director, employee, independent contractor, representative; (v) create, incur,
assume or guarantee any indebtedness for borrowed money; (vi) make any capital
expenditure, or purchase, lease or license any real or personal property which
exceed $2,500 in the aggregate; (vii) sell or otherwise dispose of or pledge any
of its assets (tangible or intangible) or cancel any debts or claims (including,
without limitation, accounts receivable) owing to it, except in the ordinary
course of business which does not otherwise violate this Agreement; (viii) merge
or consolidate with any other Person or acquire control of all or any
substantial portion of the assets of any other Person or take any steps incident
to, or in furtherance of, merging or consolidating with or acquiring control of
all or any substantial portion of the assets of any other Person, whether by
entering into an agreement providing therefor or otherwise; (ix) make or cause
to be made any alteration in the manner of keeping its books, accounts or
records or in the accounting practices and principles therein and theretofore
reflected, except as required by law; (x) effect or agree to any change in its
Certificate of Incorporation or By-laws; (xi) settle or agree to settle any
claim, action, suit or proceeding involving the payment or receipt of more than
$5,000, individually, or $10,000, in the aggregate; (xii) enter into any other
transaction or agreement which is not in the ordinary and usual course of
business; or (xiii) agree or commit to do any of the foregoing.
5.3 Reports; Taxes; Etc. To duly and timely file, or cause to be duly and
timely filed, all filings, declarations, reports or returns required to be filed
with governmental authorities and to promptly pay all taxes, assessments and
governmental charges lawfully levied or assessed.
5.4 Access to Information. To afford VIMRx, its counsel, financial
advisors, auditors and other authorized representatives full access, upon
reasonable prior notice and during normal business hours, to its offices,
properties, books and records and to its employees, agents and independent
accountants, and to furnish VIMRx, its counsel, financial advisors, auditors and
other authorized representatives such financial and operating data and other
information as may reasonably be requested, and to instruct its employees,
counsel and financial advisors to cooperate with VIMRx in VIMRx's due diligence.
5.5 Further Assurances. To do or cause to be done such further acts and
things and deliver or cause to be delivered to VIMRx such additional
assignments, agreements, powers and instruments as VIMRx may reasonably require
or deem reasonably advisable to carry into effect the purposes of this Agreement
43
<PAGE>
or the other agreements to be entered into in connection with the transactions
contemplated hereby or to better assure and confirm the rights, powers and
remedies of VIMRx hereunder and thereunder.
5.6 Tax Adjustments. To promptly notify VIMRx of all proposed adjustments
contained in examination reports received from any tax authority to any Return
relating to adjustment for tax years prior to and including the Closing Date
which could materially adversely affect Innovir and to provide VIMRx and its
representatives such information and records as they may reasonably request with
respect to such adjustments.
5.7 Governmental Notification and Approvals. To prepare promptly, file and
diligently pursue with the appropriate governmental agencies all documentation
and information required by law or requested by each such agency to be filed to
permit the consummation of the transactions contemplated hereby.
ARTICLE 6
COVENANTS OF VIMRx AND INNOVIR
VIMRx and Innovir hereby severally covenant and agree:
6.1 Necessary Assurances. To take, or cause to be taken, all actions and to
do, or cause to be done, all things reasonably necessary or desirable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement expeditiously, including executing and delivering such further
documents, certificates, applications and agreements as reasonably may be
necessary or desirable.
6.2 Filings and Consents. To cooperate (i) with respect to any filing with
any governmental body, agency, official or authority required in connection with
this Agreement or the consummation of the transactions contemplated hereby and
(ii) with respect to any actions, consents, approvals or waivers required to be
obtained from parties to any material contracts in connection with this
Agreement or the consummation of the transactions contemplated hereby.
6.3 Government Filings. To make any and all filings required to be made
with any and all governmental authorities in connection with the consummation of
the transactions contemplated herein, including, if required, the notification
required by the Hart-Scott-Rodino Act (the "HSR" Act) and any requested or
supplementary filings thereto in such manner and at such places as are specified
in the HSR Act and the applicable rules and regulations thereunder, and any
other notifications to, or filings with, regulatory authorities. Innovir shall
pay the fee due in connection with the filing, if required, of the notification
required under the HSR Act; provided, however, that Innovir shall not be
required to pay such fee in the event that such notification relates only to the
transaction between Aries and VIMRx referred to in clause (ii) of Section 9.1
hereof.
44
<PAGE>
6.4 Public Announcements. To consult with each other before issuing any
press release or otherwise making any public statement with respect to the
transactions contemplated by this Agreement and not to issue any such press
release or make any such public statement without the prior approval of the
other party, except as may be required by any applicable law, rule, regulation
or regulatory agency requirement.
6.5 Confidentiality. To treat as confidential all information concerning
Innovir (in the case of VIMRx, VHL and the Subsidiaries) and VIMRx, VHL and the
Subsidiaries (in the case of Innovir) provided in connection with the
transactions contemplated hereby, except to the extent that such information was
in the public domain, prior to the provision thereof to the other party or
thereafter is in the public domain other than through the release, directly or
indirectly, by the party to whom the information was furnished.
6.6 Expenses. To bear their respective expenses incurred in connection with
the preparation, execution and performance of this Agreement and the transaction
contemplated hereby, including without limitation, all fees and expenses of
their respective legal counsel, financial advisors, auditors and other
representatives.
ARTICLE 7
ADDITIONAL COVENANTS
7.1 VIMRx Covenants. VIMRx hereby covenants and agrees (i) to exercise its
warrants to purchase 1,000,000 shares of Innovir's Common Stock at $1.00 per
share within 30 days after receipt of a written request by the Board of
Directors of Innovir subsequent to May 31, 1997 specifying that Innovir has
insufficient funds to continue its operations past 30 days from the date of the
request, (ii) to pay the costs of the capital equipment ordered and listed on
Schedule 2.20 to the extent any payments are due thereon, and (iii) to vote the
Innovir Shares and its shares of Innovir's Common Stock in favor of the items
specified in sections 7.2 (i) and 7.2 (ii) below.
7.2 Innovir Covenant. Innovir hereby covenants and agrees, conditional upon
the closing, to convene a meeting of its stockholders to vote upon (i) the
election of five directors, three of whom shall be designees of VIMRx, one of
whom shall not be a VIMRx director, officer or employee, (ii) an amendment to
Innovir's Certificate of Incorporation to increase its authorized Common Stock
to 70,000,000 shares and (iii) such further specified action as Innovir and
VIMRx shall agree.
45
<PAGE>
ARTICLE 8
CONDITIONS TO CLOSING
8.1 Conditions to Obligations of Innovir. The obligations of Innovir
hereunder are conditioned upon the following:
(a) All warranties and representations of VIMRx contained in this
Agreement or in any Schedule or instrument delivered hereunder or
otherwise made in connection with the transactions contemplated hereby
shall be true and correct on and as of the Closing Date, with the same
force and effect as if made on and as of the Closing Date.
(b) VHL and VIMRx shall have performed and complied with all of
the covenants and agreements required by or pursuant to this Agreement
and any Schedule or instrument delivered hereunder to be performed or
complied with on or prior to the Closing Date.
(c) No suit, action, investigation or proceeding before or by any
federal or state court or governmental or regulatory authority shall
have been commenced, and no suit, action or proceeding by any
governmental or regulatory authority shall have been threatened,
against VIMRx, VHL, any Subsidiary or Innovir seeking to restrain,
prevent or modify the transactions contemplated hereby or seeking
material damages in connection with any of such transactions and no
order of any court or administrative agency to restrain, prohibit or
nullify the consummation of the transactions contemplated herein shall
be outstanding as of the Closing Date.
(d) All governmental authorities having jurisdiction, to the
extent required by law, shall have consented to or approved the
consummation of the transactions contemplated by this Agreement.
(e) As at the Closing Date, VHL shall have cash and cash
equivalents of $3,000,000 in excess of its stated liabilities.
(f) As at the Closing Date, The Aries Fund, A Cayman Island Trust
and The Aries Domestic Fund, L.P., a Delaware limited partnership (
collectively, "Aries") shall have exercised warrants to acquire
6,000,000 shares of Innovir's Common Stock at an aggregate exercise
price of $3,000,000.
(g) Receipt of the Audited Financial Statements and the September
30, 1996 Financial Statements.
(h) All documents delivered and action taken pursuant hereto
shall be satisfactory in form and substance to Innovir and its
counsel.
46
<PAGE>
8.2 Conditions to Obligations of VIMRx. The obligations of VIMRx hereunder
are conditioned upon the following:
(a) All warranties and representations of Innovir contained in
this Agreement shall be true and correct on and as of the Closing Date
with the same force and effect as if made on and as of the Closing
Date.
(b) Innovir shall have performed and complied with all of the
covenants and agreements required by or pursuant to this Agreement and
any Schedule or instrument delivered hereunder to be performed or
complied with on or prior to the Closing Date.
(c) No suit, action, investigation or proceeding before or by any
federal or state court or governmental or regulatory authority shall
have been commenced, and no suit, action or proceeding by any
governmental or regulatory authority shall have been threatened,
against VIMRx, VHL, any Subsidiary or Innovir seeking to restrain,
prevent or modify the transactions contemplated hereby or seeking
material damages in connection with any of such transactions and no
order of any court or administrative agency to restrain, prohibit, or
nullify the consummation of the transactions contemplated herein shall
be outstanding as of the Closing Date.
(d) All governmental authorities having jurisdiction, to the
extent required by law, shall have consented to or approved the
consummation of the transactions contemplated by this Agreement.
(e) As at the Closing Date, Aries shall have exercised warrants
to acquire 6,000,000 shares of Innovir's Common Stock at an aggregate
exercise price of $3,000,000.
(f) All documents delivered and action taken pursuant hereto
shall be satisfactory in form and substance to VIMRx and its counsel.
ARTICLE 9
CLOSING
9.1 Closing Date. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be conditional upon and shall take place
concurrently with the closing of (i) the exercise by Aries of warrants to
purchase 6,000,000 shares of Innovir's Common Stock and (ii) the exchange by
Aries with VIMRx of 9,500,000 shares of Innovir's Common Stock owned by Aries
for VIMRx Common Stock, on December 4, 1996, or such other date as the parties
may fix, (the "Closing Date") at the offices of Epstein Becker & Green, P.C.,
250 Park Avenue, New York, New York 10177-0077.
47
<PAGE>
9.2 Deliveries by VIMRx. At the Closing, VIMRx shall deliver to Innovir the
following:
(a) Stock certificates for the VHL Shares, duly endorsed for
transfer to Innovir or its designee and the stock certificates for the
outstanding shares of the capital stock of the Subsidiaries.
(b) The minute book, stock book and stock ledger of VHL and the
Subsidiaries.
(c) A copy of the Certificate of Incorporation of VHL, certified
by the appropriate governmental official having authority therefor.
(d) An agreement providing for the provision of administrative
and related services by VIMRx to Innovir and for submission by VIMRx
to Innovir of potential licenses and other arrangements relating to,
but limited to, catalytic oligonucleotides, duly executed by VIMRx.
(e) The written resignations of the directors and officers of VHL
and the Subsidiaries as requested by Innovir.
(f) An officers' certificate by the President and the Chief
Financial Officer of VIMRx confirming as at the Closing Date the
correctness of the warranties and representations of VIMRx in the
agreement and compliance by VIMRx and VHL of the covenants and
agreements to be performed by them under the agreement.
(g) The opinion of Epstein Becker & Green, P.C., counsel to
VIMRx, addressed to Innovir, as to Sections 2.1, 2.2, 2.3 (as to due
organization and subsistence of the Subsidiaries), 2.18, 2.26 and
2.27.
9.3 Deliveries by Innovir. At the Closing, Innovir shall deliver to VIMRx,
the following:
(a) Stock certificates for the Innovir Shares and the Innovir
Warrants registered in the name of VIMRx.
(b) An officers' certificate by the Chief Executive Officer and
the Chief Financial Officer of Innovir confirming as at the Closing
Date the correctness of the warranties and representations of Innovir
in the agreement and compliance by Innovir of the covenants and
agreements to be performed by Innovir under the agreement.
(c) A Secretary's certificate as to (i) the passage of
resolutions reducing the size of Innovir's Board of Directors to five
directors, (ii) the receipt and acceptance of written resignations
from all directors of Innovir, other than Dr. Allan Goldberg and one
48
<PAGE>
other director, and (iii) the passage of resolutions electing as
directors of Innovir Richard L. Dunning, David A. Jackson and a third
designee of VIMRx who shall not be a director, officer or employee of
VIMRx or Innovir.
(d) An agreement providing for the provision of administrative
and related services by VIMRx to Innovir and for submission by VIMRx
to Innovir of potential licenses and other arrangements relating to,
but limited to, catalytic oligonucleotides, duly executed by Innovir.
(e) The opinion of Fullbright & Jaworski L.L.P., counsel to
Innovir, addressed to VIMRx, as to Sections 3.1, 3.2, 3.4, 3.6, 3.8,
and 3.9.
ARTICLE 10
SURVIVAL
10.1 Survival. All representations and warranties made in this Agreement
shall survive the delivery of this Agreement and remain in full force and effect
until December 31, 1997.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification.
(a) Indemnification by VIMRx. VIMRx hereby agrees to indemnify
and hold harmless Innovir from and against any and all losses,
liabilities, damages, obligations, costs and expenses, including,
without limitation, amounts paid in settlement and reasonable costs
and expenses of investigating, preparing to defend and defending any
claim, action, suit, proceeding, inquiry or investigation in respect
thereof (such losses, liabilities, damages, obligations, costs and
expenses as hereinabove set forth, collectively "Damages") incurred by
Innovir, resulting from, relating to, or arising out of the inaccuracy
of any representation or warranty herein by VIMRx or the breach of any
covenant herein by VIMRx.
(b) Indemnification by Innovir. Innovir hereby agrees to
indemnify and hold harmless VIMRx from and against any and all Damages
incurred by VIMRx resulting from, relating to, or arising out of the
inaccuracy of any representation or warranty herein by Innovir or the
breach of any covenant contained herein by Innovir.
(c) Procedure. If any action, suit, proceeding or claim shall be
brought against the party to be indemnified by any third party, which
action, suit, proceeding or claim, if determined adversely to the
interest of the party to be indemnified and which would entitle the
party to be indemnified to indemnity pursuant to this Section 11.1,
the party to be indemnified shall promptly notify the indemnifying
49
<PAGE>
party of the same in writing and, if the indemnifying party so elects,
the indemnifying party shall assume the defense thereof, including the
employment of counsel satisfactory to the party to be indemnified and
the payment of all reasonable costs and expenses in respect thereof.
The party to be indemnified shall have the right to employ counsel
separate from any counsel employed by the indemnifying party in any
action, suit, proceeding or claim and to control (or, if the party to
be indemnified has elected to allow the indemnifying party to assume
the defense thereof, participate in) the defense thereof and the fees
and expenses of such counsel employed by the party to be indemnified
shall be at the expense of the party to be indemnified. The
indemnifying party shall not be liable for any settlement of any such
action, suit, proceeding or claim effected without his or its written
consent (which shall not be unreasonably withheld), but if settled
with the written consent of the indemnifying party, or if there shall
be a final judgment for plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless the party to be
indemnified from and against any loss, liability, obligation, damage,
cost or expense by reason of such settlement or judgment.
11.2 Access. In the event that Innovir delivers to VIMRx notice of a claim
for indemnification, Innovir shall provide VIMRx reasonable access to the books
and records of VHL and any Subsidiary (and of Innovir in the event Innovir has
possession of the requisite books and records) with respect to any matters
giving rise to such claim.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 Amendment and Modification. This Agreement may be amended, modified
and supplemented only by a writing signed by Innovir and VIMRx.
12.2 Waiver of Compliance. Any failure of Innovir or VIMRx to comply with
any obligation, covenant, agreement or condition herein contained may be
expressly waived, in writing only, by (i) Innovir in the case of any failure of
VIMRx or (ii) VIMRx in the case of any failure of Innovir. Such waiver shall be
effective only in the specific instance and for the specific purpose for which
made or given.
12.3 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, or when mailed by certified or
registered mail (return receipt requested), postage prepaid or when delivered by
fax (evidenced by confirmation of successful transmission), as follows:
50
<PAGE>
A. If to Innovir:
Innovir Laboratories, Inc.
510 East 73rd Street
New York, New York 10021
Fax # (212) 249-4513
Attn: Dr. Allan R. Goldberg
With a copy to:
Fullbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Fax # (212) 752-5958
Attn: Merrill M. Kraines, Esq.
or to such other person or place as Innovir shall designate by notice in
the manner provided in this Section 12.3;
B. If to VIMRx:
VIMRX Pharmaceuticals Inc.
2751 Centerville Road
Wilmington, Delaware 19808
Fax # (302) 998-3794
Attn: Mr. Richard L. Dunning
With a copy to:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Fax # (212) 661-0989
Attn: Lowell Lifschultz, Esq.
or to such other person as VIMRx shall designate by notice in the manner
provided in this Section 12.3.
12.4 Assignment. This Agreement shall be binding upon and inure to the
benefit of Innovir and its successors and assigns, and to VIMRx and its
successors and assigns, but neither this Agreement nor any of the rights,
interests and obligations hereunder shall be assigned by either of Innovir or
VIMRx without the prior written consent of the other.
51
<PAGE>
12.5 Third Parties. This Agreement is not intended to and shall not be
construed to give any Person other than the parties hereto any interest or
rights (including, without limitation, any third party beneficiary rights) with
respect to or in connection with any agreement or provision contained herein or
contemplated hereby.
12.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws.
12.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
12.8 Headings. The headings of the sections, schedules and articles of this
Agreement are inserted for the sake of convenience only and shall not constitute
a part hereof.
12.9 Entire Agreement. This Agreement, including the schedules and
exhibits, contains the entire understanding of the parties in respect of the
subject matter contained herein and therein and there are no other terms or
conditions, representations or warranties, written or oral, express or implied,
except as set forth herein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
INNOVIR LABORATORIES, INC.
By: /s/ Alan R. Goldberg
Dr. Allan R. Goldberg,
Chief Executive Officer
VIMRx PHARMACEUTICALS INC.
By: /s/ Richard L. Dunning
Richard L. Dunning, President
52
<PAGE>
Schedules
The following is a list of schedules not filed herewith. The Registrant
hereby agrees to supplementally furnish to the Securities and Exchange
Commission a copy of such schedules upon request.
Schedule Description
2.5...................... Governmental Authorizations and Other Consents
2.6...................... Non-Contravention
2.8...................... Tangible Property
2.9(b)................... Leased Real Property
2.10..................... Intellectual Property
2.13..................... Permits and Licenses
2.14..................... Contracts and Agreements
2.15..................... Employee Benefits
2.16..................... Accounts Payable
2.17..................... Liabilities
2.18..................... Actions and Proceedings
2.19..................... Bank Accounts, Guarantees and Powers
2.20..................... Absence of Changes
2.22..................... Affiliated Transactions
2.25..................... Employee Compensation
2.29..................... Insurance
3.3...................... Non-Contravention
3.5...................... Intellectual Property
3.6...................... Actions and Proceedings
3.7...................... Absence of Changes
3.8...................... The Innovir Shares
3.9...................... The Innovir Warrants
3.11..................... Documents Delivered
5.2...................... Certain Prohibited Activities
53
<PAGE>
Exhibit 10.17
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT made on this 23rd day of December 1996 (the
"Agreement") by and among VIMRx PHARMACEUTICALS INC., a Delaware corporation
(the "Company"), the ARIES FUND, a Cayman Island Trust and THE ARIES DOMESTIC
FUND, L.P., a Delaware limited partnership (The Aries Fund and The Aries
Domestic Fund, L.P., together "The Aries Funds").
WHEREAS, pursuant to an Exchange Agreement dated November 21, 1996 by and
among the Company and the Aries Funds, as amended (the "Exchange Agreement"),
the Aries Funds have acquired from the Company shares of the Company's common
stock (the "Shares") which have not been registered under the Securities Act of
1933 (the "Act"); and
WHEREAS, the Company has agreed to register the Shares under the Act;
NOW, THEREFORE, The Aries Funds and the Company hereby agree as follows:
Section 1. Registration and Indemnification
1.1. Registration. The Company shall file, as promptly as possible, but no
later than 45 days from the date hereof, a registration statement on Form S-3,
or if such form is not available, such other applicable form, with the
Securities and Exchange Commission ("SEC") providing for the sale of the Shares
by The Aries Funds and any successors and assigns as provided herein
("Holders"); and shall use its best efforts to cause the registration statement
to be declared effective as soon as practicable, and to keep the registration
statement effective until the earlier of the time the distribution contemplated
thereby is complete or the time the Shares are eligible for sale to the public,
pursuant to Rule 144 under the Act. In addition, the Company shall use its
reasonable best efforts to effect such registrations, qualifications or
compliances (including, without limitation, the execution of any required
undertaking to file post-effective amendments, appropriate qualifications or
exemptions under applicable blue sky or other state securities laws and
appropriate compliance with applicable securities laws, requirements or
regulations) as may be reasonably requested, and as would permit or facilitate
the sale and distribution of all the Shares.
1.2. Expenses. The Company shall pay all expenses in connection with the
registration rights granted in Section 1.1 including, without limitation, the
fees and expenses of the Company's counsel and accountants, the costs and
expenses incident to the preparation, printing, filing and processing to
effectiveness of the registration statement, the costs of furnishing The Aries
Funds with a reasonable number of copies of the Final Prospectus, and the fees
and disbursements incurred in qualifying the Shares under applicable blue sky or
securities laws, but shall not include any underwriting discounts or
54
<PAGE>
commissions, stock transfer taxes and fees and expenses of counsel for any
Holders.
1.3. Agreements of the Holders. (a) Each Holder shall furnish in writing to
the Company all appropriate information reasonably requested by the Company
concerning it, in connection with preparation and processing of the requisite
registration statement (or post-effective amendments thereto), including a
shareholder's questionnaire as to securities held and other matters, and shall
otherwise reasonably cooperate with the Company in connection therewith.
(b) Each Holder agrees to deliver a final prospectus to the purchaser(s) of
any Shares sold pursuant to the registration statement to be filed pursuant to
Section 1.1 hereof.
1.4. Indemnification. (a) With respect to any registration statement which
includes Shares, the Company shall indemnify and hold harmless each Holder and
its officers, directors, employees, legal counsel, agents, investment managers
and general partners and each person, if any, who controls such Holder within
the meaning of the Securities Act of 1933, from and against any and all losses,
claims, damages and liabilities, joint or several, to which any such person may
become subject under the Securities Act of 1933, or otherwise, caused by,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in such registration statement or post-effective
amendment or any prospectus included therein, or caused by, arising out of or
based upon 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, and to reimburse any such persons for any legal or other expenses
reasonably incurred in connection with investigating or defending any such loss,
claim, damage, liability or action, except insofar as such losses, claims,
damages, or liabilities arise out of or are based upon any such untrue statement
or alleged untrue statement or omission or alleged omission, based upon
information furnished in writing to the Company by the Aries Funds or any such
Holder, expressly for use in such registration statement or post-effective
amendment.
(b) Each Holder shall indemnify the Company, its directors, officers,
employees, legal counsel, agents, and each person, if any, who controls the
Company within the meaning of the Securities Act of 1933 from and against any
and all losses, claims, damages and liabilities, joint and several, to which the
Company or any such person may become subject under the Securities Act of 1933,
or otherwise, caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in such registration
statement or post-effective amendment or any prospectus included therein, or
caused by, arising out of or based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
55
<PAGE>
the statements therein not misleading, and to reimburse the Company and each
such person for any legal or other expenses reasonably incurred in connection
with investigating or defending any such loss, claim, damage, liability or
action, but only to the extent that such untrue statement or alleged untrue
statement, omission or alleged omission is caused by, arises out of or is based
upon information furnished in writing to the Company by such Holder expressly
for use in such registration statement or post-effective amendment. The
foregoing notwithstanding, no Holder shall be liable hereunder in an amount in
excess of the gross proceeds received by it as a result of sale of the Shares
pursuant to the Registration Statement.
(c) If the indemnification provided for in this Section 1.4 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
1.5. Information and Cooperation. In the case of the registration,
qualification, exemption or compliance effected by the Company pursuant to this
Agreement, the Company will, upon reasonable request, inform each Holder as to
the status of such registration, qualification, exemption and compliance. At its
expense the Company:
(a) will advise the Holders:
(i) when the Registration Statement or any amendment thereto has been filed
with the Commission and when the Registration Statement or any post-effective
amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements to the
Registration Statement or the prospectus included therein or for additional
information;
56
<PAGE>
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for such purpose;
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities included therein
for sale in any jurisdiction, or the initiation or threatening of any proceeding
for such purpose; and
(v) of the happening of any event that requires the making of any changes
in the Registration Statement or the prospectus so that, as of such date, the
statements therein are not misleading, and do not omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the prospectus, in the light of the circumstances under which they
were made) not misleading;
(b) will make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of any Registration Statement at the earliest
possible time;
(c) will furnish to each Holder, without charge, at least one copy of such
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits (including those incorporated by reference) in the form filed with
the Commission;
(d) during the Registration Period, will deliver to each Holder, without
charge, as many copies of the prospectus included in such Registration Statement
and any amendment or supplement thereto as such Holder may reasonably request;
and the Company consents to the use, consistent with the provisions hereof, of
the prospectus or any amendment or supplement thereto by each of the selling
Holders of Registrable Securities in connection with the offering and sale of
the Registrable Securities covered by the prospectus or any amendment or
supplement thereto. In addition, upon the reasonable request of the Holder and
subject in all cases to confidentiality protections reasonably acceptable to the
Company, the Company will meet with a Holder or a representative thereof at the
Company's headquarters to discuss all information relevant for disclosure in the
Registration Statement covering the Registrable Securities, and will otherwise
cooperate with any Holder conducting an investigation for the purpose of
reducing or eliminating such Holder's exposure to liability under the Act,
including the reasonable production of information at the Company's
headquarters;
(e) during the registration period, will deliver to each Holder, without
charge, (i) as soon as practicable (but in the case of the annual report of the
Company to its stockholders, within 120 days after the end of each fiscal year
of the Company) one copy of: (A) its annual report to its stockholders, if any
57
<PAGE>
(which annual report shall contain financial statements audited in accordance
with generally accepted accounting principles in the United States of America by
a firm of certified public accountants of recognized standing); (B) if not
included in substance in its annual report to stockholders, its annual report on
Form 10-K (or similar form); (C) each of its quarterly reports to its
stockholders, and, if not included in substance in its quarterly reports to
stockholders, its quarterly report on Form 10-Q (or similar form); and (D) a
copy of the full Registration Statement (the foregoing, in each case, excluding
exhibits); and (ii) upon reasonable request, all exhibits excluded by the
parenthetical to the immediately preceding clause (D), and all other information
that is generally available to the public;
(f) prior to any public offering of Shares pursuant to any Registration
Statement, will register or qualify or obtain an exemption for offer and sale
under the securities or blue sky laws of such jurisdictions as any such Holders
reasonably request in writing, provided that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified, or to consent to
general service of process in any such jurisdiction, and will do any and all
other acts or things reasonably necessary or advisable to enable the offer and
sale in such jurisdictions of the Shares covered by such Registration Statement;
(g) will cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Shares sold pursuant to any
Registration Statement, free of any restrictive legends to the extent not
required at such time and in such denominations and registered in such names as
Holders may request.
(h) upon the occurrence of any event contemplated by Section 1.5(b)(v)
above, shall promptly prepare a post-effective amendment to the Registration
Statement or a supplement to the related prospectus, or file any other required
document so that, as thereafter delivered to purchasers of the Shares included
therein, the prospectus will not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
(i) will use its best efforts to comply with all applicable rules and
regulations of the Commission, and will make generally available to the Holders
not later than 45 days (or 90 days if the fiscal quarter is the fourth fiscal
quarter) after the end of its fiscal quarter in which the first anniversary date
of the effective date of the Registration Statement occurs, an earnings
statement satisfying the provisions of Section 11(a) of the Act.
58
<PAGE>
1.6. Rule 144. With a view to making available to the Holders the benefits
of certain rules and regulations of the Commission which at any time permit the
sale of the Shares to the public without registration, the Company agrees to use
it reasonable best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Act, at all times;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
(c) so long as a Holder owns any unregistered Shares, furnish to such
Holder upon any reasonable request a written statement by the Company as to its
compliance with Rule 144 under the Act, and of the Exchange Act, a copy of the
most recent annual or quarterly report of the Company, and such other reports
and documents of the Company as such Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Holder to sell any
such securities without registration.
Section 2. Notices. Any notice pursuant to this Agreement by the Company or
by The Aries Funds shall be in writing and shall be deemed to have been duly
given if delivered or mailed by certified mail five days after mailing, return
receipt requested:
If to The Aries Funds:
The Aries Trust or the Aries Domestic Fund, L.P.
c/o Paramount Capital Asset Management, Inc.
787 Seventh Avenue
New York, New York 10019
Fax No.: (212) 554-4490
Attn: David Walner
If to the Company:
VIMRx Pharmaceuticals Inc.
2751 Centerville Road
Wilmington, Delaware 19808
Fax No.: (302) 998-3794
Attn: Mr. Richard L. Dunning
with a copy to:
Lowell S. Lifschultz, Esq.
Epstein Becker & Green, P.C.
250 Park Avenue - 12th Floor
New York, New York 10177
59
<PAGE>
Each party hereto may from time to time change the address to which notices
to it are to be delivered or mailed hereunder by notice in accordance herewith
to the other party.
Section 3. Successors. All of the covenants and provisions of this
Agreement by or for the benefit of the Company or The Aries Funds shall bind and
inure to the benefit of their respective successors and assigns hereunder. No
such assignee may claim rights under Section 1 hereof without at the time of
such claim agreeing to be bound by the provisions thereof.
Section 4. Applicable Law. This Agreement shall be deemed to be a contract
made under the laws of the State of New York and for all purposes shall be
construed in accordance with the internal laws of said state.
Section 5. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and The
Aries Funds and their respective successors and assigns any legal or equitable
right, remedy or claim under this Agreement, and this Agreement shall be for the
sole and exclusive benefit of the Company and The Aries Funds and their
respective successors and assigns.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the day and year set forth below.
VIMRx PHARMACEUTICALS, INC.
By: /s/ Francis M. O'Connell
Francis M. O'Connell
Chief Financial Officer
THE ARIES FUND, A CAYMAN ISLAND TRUST
By: its Investment Manager,
PARAMOUNT CAPITAL ASSET
MANAGEMENT, INC.
By: /s/ Lindsay A. Rosenwald, M.D.
Lindsay A. Rosenwald, M.D.,
President
60
<PAGE>
THE ARIES DOMESTIC FUND, L.P.
By: its General Partner,
PARAMOUNT CAPITAL ASSET
MANAGEMENT, INC.
By: /s/ Lindsay A. Rosenwald, M.D.
Lindsay A. Rosenwald, M.D.,
President
61
<PAGE>
