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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): November 24, 1999
NEXELL THERAPEUTICS INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-19153 06-1192468
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
9 Parker, Irvine, CA 92618
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (949) 470-9011
Not applicable
(Former name or former address, if changed since last report)
Item 5. Other Events.
-------------------------------------
On November 24, 1999, Nexell Therapeutics Inc. (the "Registrant") entered
into a Securities Agreement (the "Securities Agreement") with John Hancock
Mutual Life Insurance Company, Metropolitan Life Insurance Company,
Massachusetts Mutual Life Insurance Company, The Lincoln National Life Insurance
Company, and certain of their affiliates (collectively, the "Purchasers").
Pursuant to the terms of the Securities Agreement, the Company issued and sold
to the Purchasers, for an aggregate price of $63,000,000, 63,000 shares of
newly-designated Series B Cumulative Convertible Preferred Stock of the
Registrant (the "Series B Preferred Stock"), Put Rights (the "Put Rights")
issued by Baxter International Inc. ("Baxter"), Class A Warrants of the
Registrant (the "Class A Warrants"), and Class B Warrants of the Registrant (the
"Class B Warrants"). The Registrant has used approximately $34,000,000 of the
proceeds to retire convertible
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subordinated debentures held by Baxter and will use the remainder for general
corporate purposes.
Under the terms of the Registrant's Certificate of Designation filed with
the Delaware Secretary of State on November 24, 1999 (the "Certificate of
Designation") each share of the Series B Preferred Stock is convertible at the
option of the holder at any time until November 24, 2006 (at which time
conversion is automatic), into common stock of the Registrant ("Common Stock")
at a price of $2.75 per share, subject to anti-dilution adjustment in certain
circumstances. The Series B Preferred Stock is convertible, in the aggregate,
into 22,909,091 shares of Common Stock (representing approximately 17.7% of pro
forma fully-diluted shares outstanding, using the treasury method). Holders of
Series B Preferred Stock do not have voting rights except as required by
Delaware law and for certain matters specified in the Certificate of
Designation. Cash dividends are payable on the Series B Preferred Stock at the
rate of 3% of the liquidation preference, payable semi-annually. The other
rights and preferences of the Series B Preferred Stock are set forth in the
Certificate of Designation.
The Put Rights provide the Purchasers with the ability to cause Baxter to
purchase the Series B Preferred Stock from November 24, 2002 until November 24,
2004, unless terminated earlier under the circumstances described in the Put
Right Certificate. The purchase price to be paid by Baxter would reflect a per
annum compounded return to the Purchasers equal to 5.91%.
The Class A Warrants are exercisable for 15 business days commencing
November 24, 2004 (provided the Put Right has not been exercised), at an
exercise price of $.01 per share, subject to anti-dilution adjustment in certain
circumstances, into a number of shares of Common Stock, up to a maximum of
6,000,000 shares, that is dependent on the average of the last reported sale
prices of the Common Stock for the 10 trading days preceding November 24, 2004.
The maximum number of shares is issuable if the price of the Common Stock is
$3.00 or less, and no shares are issuable if the price of the Common Stock is
greater than $5.00. If the stock price is between $3.01 and $5.00, the number
of shares that is issuable decreases by 1,000,000 for each $.50 increment that
the stock price exceeds $3.00. The Class A Warrants may only be transferable
together with the Series B Preferred Stock.
The Class B Warrants are currently exercisable until December 16, 2004, for
an aggregate of 3,000,000 shares of
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Common Stock, at an exercise price of $3.00, subject to anti-dilution adjustment
in certain circumstances.
Under the terms of a Registration Rights Agreement dated November 24, 1999
between the Registrant and the Purchasers (the "Registration Rights Agreement"),
the Registrant granted the Purchasers certain demand registration rights
commencing November 24, 2002, as well as certain piggyback registration rights
commencing currently.
On November 24, 1999, the Registrant and Baxter entered into an agreement
(the "Side Letter Agreement") to provide that the conversion price for the
Series B Preferred Stock purchased by Baxter in the event the Put Rights are
exercised (the "Put Series B Preferred Stock") would be adjusted on November 24,
2004 (or earlier, if 100% of the Series B Preferred Stock is put to Baxter) but
only in the event that an amount in excess of $15,000,000 is purchased by
Baxter, as follows: (i) for the Put Series B Preferred Stock in an amount up to
$53,000,000 (computed on the basis of the liquidation preference for such stock)
(the "Threshold"), the conversion price would be adjusted to equal the closing
price of the Common Stock on the respective date or dates such Series B
Preferred Stock was purchased by Baxter (including purchases below the
$15,000,000 amount), less a 5% discount (subject to a floor price equal to the
closing price of the Common Stock on November 24, 1999, unless shareholder
approval is obtained if required by the rules of the Nasdaq Stock Market); (ii)
for the Put Series B Preferred Stock in an amount in excess of the Threshold,
then the conversion price would be adjusted to equal the closing price of the
Common Stock on November 24, 1999. The dollar amount of the Put Series B
Preferred Stock would be deemed to accrue interest (payable in kind in shares of
Series B Preferred Stock) from the respective date or dates the Series B
Preferred Stock is put to Baxter to the date the adjusted conversion price is
determined, at a rate equal to the applicable three-year U.S. Treasury Note rate
at the date of each such purchase, plus 100 basis points.
In the event that the foregoing conversion adjustments would not be
permissible under Delaware law, the Registrant has agreed to take such action as
is appropriate to exchange the Put Series B Preferred Stock for an equal number
of shares of a new series of preferred stock of the Registrant, having the
identical terms, conditions, preferences and rights of the Series B Preferred
Stock, except that it would bear the conversion price adjustment described
above.
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The Registrant and Baxter also entered into a Put Agreement dated November
24, 1999 (the "Put Agreement") pursuant to which the parties made certain
representations to each other, and agreed to take certain actions in connection
with, and to provide for certain rights and remedies regarding the transactions
contemplated by, the Securities Agreement.
As a result of the issuance of the Class A Warrants and certain other
recent transactions effected by the Registrant, the exercise price of the
Registrant's outstanding warrants (the "1996 Warrants") to purchase Common Stock
issued pursuant to a warrant agreement dated June 17, 1996 between the
Registrant and American Stock Transfer & Trust Company as warrant agent that are
listed on the Nasdaq Stock Market (NEXL W) has been adjusted from $1.50 per
share to $1.354 per share; this has resulted in up to an additional 237,222
shares of Common Stock being issuable upon exercise of the original 2,199,993
1996 Warrants currently outstanding.
For a complete description of the terms of the transactions described
above, reference is made to the Securities Agreement, the Certificate of
Designation creating the Series B Preferred Stock, the form of Put Right
Certificate, the form of Class A Warrant, the form of Class B Warrant, the
Registration Rights Agreement, the Side Letter Agreement and the Put Agreement
attached as exhibits to this Current Report on Form 8-K.
On November 29, 1999, the Registrant issued a press release related to the
Securities Agreement, which is attached as Exhibit 99.1 to this Current Report
on Form 8-K.
Attached as Exhibit 99.2 to this Current Report on Form 8-K is a pro forma
balance sheet of the Registrant as of October 31, 1999, giving effect to the
issuance and sale of the Series B Preferred Stock and retirement of the
convertible subordinated debentures that had been held by Baxter.
Item 7. Financial Statements and Exhibits.
---------------------------------
c. Exhibits.
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2.6 Securities Agreement dated as of November 24, 1999 among the
Registrant and the Purchasers named in Schedule I thereto (certain
schedules are omitted and the Registrant agrees to furnish
supplementally a copy of any schedule to the Commission upon
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request).
3.1 Registrant's Amended and Restated Certificate of Incorporation dated
July 10, 1990, as amended to date, including the Certificate of
Designation filed with the Delaware Secretary of State on November
24, 1999.
3.2 Registrant's Amended and Restated Bylaws.
4.9 Registrant's Certificate of Designation filed with the Delaware
Secretary of State on November 24, 1999 creating the Series B
Preferred Stock (included in Exhibit 3.1 above).
10.46 Form of Put Right Certificate.
10.47 Form of Class A Warrant.
10.48 Form of Class B Warrant.
10.49 Registration Rights Agreement dated as of November 24, 1999 among the
Registrant and the Investors identified therein.
10.50 Side Letter Agreement dated as of November 24, 1999 among the
Registrant, Baxter International Inc. and the other parties signatory
thereto.
10.51 Put Agreement dated as of November 24, 1999 between the Registrant
and Baxter International Inc.
99.1 Press Release of the Registrant dated November 29, 1999.
99.2 Pro forma Balance Sheet of the Registrant as of October 3, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEXELL THERAPEUTICS INC.
(Registrant)
By: /s/ William A. Albright, Jr.
-------------------------------
William A. Albright, Jr.
Senior Vice President, Chief
Financial Officer, Treasurer and
Secretary
Dated: December 6, 1999
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INDEX TO EXHIBITS
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Exhibit Method of
No. Description Filing
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2.6 Securities Agreement dated as of November 24, 1999 among the Filed herewith
Registrant and the Purchasers named in Schedule I thereto electronically
(certain schedules are omitted and the Registrant agrees to
furnish supplementally a copy of any schedule to the
Commission upon request).
3.1 Registrant's Amended and Restated Certificate of Filed herewith
Incorporation dated July 10, 1990, as amended to date, electronically
including the Certificate of Designation filed with the
Delaware Secretary of State on November 24, 1999.
3.2 Registrant's Amended and Restated Bylaws. Filed herewith
electronically
4.9 Registrant's Certificate of Designation filed with the
Delaware Secretary of State on November 24, 1999 creating the
Series B Preferred Stock (included in Exhibit 3.1 above).
10.46 Form of Put Right Certificate. Filed herewith
electronically
10.47 Form of Class A Warrant. Filed herewith
electronically
10.48 Form of Class B Warrant. Filed herewith
electronically
10.49 Registration Rights Agreement dated as of November 24, 1999 Filed herewith
among the Registrant and the Investors identified therein. electronically
10.50 Side Letter Agreement dated as of November 24, 1999 among the Filed herewith
Registrant, Baxter International Inc., and the other parties electronically
signatory thereto.
10.51 Put Agreement dated as of November 24, 1999 between the Filed herewith
Registrant and Baxter International Inc. electronically
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99.1 Press Release of the Registrant dated November 29, 1999. Filed herewith
electronically
99.2 Pro forma Balance Sheet of the Registrant as of October 31, Filed herewith
1999. electronically
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EXHIBIT 2.6
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Nexell Therapeutics Inc.
Securities Agreement
Dated as of November 24, 1999
63,000 Shares Series B Cumulative Convertible Preferred Stock
Class A Warrants to Purchase Common Stock
Class B Warrants to Purchase Common Stock
and
Put Right Certificates by
Baxter International Inc.
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Table of Contents
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Section Heading Page
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Section 1. Issue and Sale of Series B Preferred Stock; Put
Rights; Warrants; Commitment; Closing Date.......................................... 1
Section 1.01. Creation and Description of Series B Preferred Stock................................ 1
Section 1.02. Put Rights.......................................................................... 2
Section 1.03. Warrants to Purchase Common Stock................................................... 2
Section 1.04. Sale of Subject Securities; Closing Date............................................ 3
Section 1.05. Forms of Subject Securities......................................................... 3
Section 1.06. Failure to Deliver.................................................................. 3
Section 1.07. Several Obligations................................................................. 3
Section 1.08. Certain Tax Treatment of Series B Preferred Stock................................... 4
Section 2. Representations..................................................................... 4
Section 2.01. Representations of the Purchasers................................................... 4
Section 2.02. Representations of the Company...................................................... 5
Section 3. Closing Conditions.................................................................. 6
Section 3.01. Execution of Documents.............................................................. 6
Section 3.02. Company Closing Certificate......................................................... 6
Section 3.03. Certificate of Designation.......................................................... 6
Section 3.04. Legal Opinions...................................................................... 6
Section 3.05. Concurrent Sale of Subject Securities............................................... 7
Section 3.06. Corporate Existence and Authority................................................... 7
Section 3.07. Charter and By-laws................................................................. 7
Section 3.08. Consent of Holders of Other Securities.............................................. 7
Section 3.09. Use of Proceeds..................................................................... 7
Section 3.10. Private Placement Number............................................................ 7
Section 3.11. Funding Instructions................................................................ 7
Section 3.12. Special Counsel Fees................................................................ 8
Section 3.13. Legality of Investment.............................................................. 8
Section 3.14. Proceedings and Documents........................................................... 8
Section 3.15. Waiver of Conditions................................................................ 8
Section 4. Covenants of the Company............................................................ 8
Section 4.01. Reports and Rights of Inspection.................................................... 8
Section 4.02. Use of Proceeds..................................................................... 11
Section 4.03. Corporate Existence; SEC Reporting Status........................................... 11
Section 4.04. Properties, Business, Insurance..................................................... 12
Section 4.05. Taxes, Claims for Labor and Materials............................................... 12
Section 4.06. Maintenance, Etc.................................................................... 12
Section 4.07. Compliance with Laws................................................................ 12
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Section 4.08. Restrictive Agreements Prohibited................................................... 13
Section 4.09. Reservation of Common Stock......................................................... 13
Section 4.10. Transactions With Affiliates........................................................ 14
Section 4.11. Nature of Business.................................................................. 14
Section 4.12. Purchase of Securities.............................................................. 14
Section 4.13. Mergers, Consolidations and Sales of Assets......................................... 14
Section 4.14. Amendments to Certain Agreements.................................................... 15
Section 4.15. Remedies and Default................................................................ 15
Section 5. Purchasers' Special Rights.......................................................... 16
Section 5.01. Direct Payment...................................................................... 16
Section 5.02. Delivery Expense.................................................................... 17
Section 5.03. Taxes............................................................................... 17
Section 5.04. Replacement of Series B Preferred Stock Certificates................................ 17
Section 5.05. Exchange of Series B Preferred Stock Certificates................................... 17
Section 5.06. Register............................................................................ 18
Section 6. Amendments, Modifications and Waivers............................................... 19
Section 6.01. Consent Required.................................................................... 19
Section 6.02. Solicitation of Holders............................................................. 19
Section 6.03. Effect of Amendment or Waiver....................................................... 20
Section 7. Interpretation of Agreement......................................................... 20
Section 7.01. Certain Definitions................................................................. 20
Section 7.02. Accounting Principles............................................................... 25
Section 8. Miscellaneous....................................................................... 26
Section 8.01. Expenses............................................................................ 26
Section 8.02. Legends on Series B Preferred Stock Certificates.................................... 26
Section 8.03. Notices............................................................................. 27
Section 8.04. Successors and Assigns.............................................................. 27
Section 8.05. Survival of Covenants and Representations........................................... 28
Section 8.06. Severability........................................................................ 28
Section 8.07. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial..................... 28
Section 8.08. Captions............................................................................ 29
Section 8.09. Counterparts........................................................................ 29
Signature Page................................................................................................. 30
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Exhibits to Securities Agreement:
Exhibit A -- Form of Certificate of Designation
Exhibit B -- Form of Put Right Certificate
Exhibit C-1 -- Form of Class A Warrant
Exhibit C-2 -- Form of Class B Warrant
Exhibit D -- Form of Closing Certificate
Exhibit E -- Form of Closing Opinion of Counsel to the Company
Exhibit F -- Form of Closing Opinion of Counsel to Baxter
Exhibit G -- Form of Closing Opinion of Special Counsel to the
Purchasers
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Nexell Therapeutics Inc.
9 Parker
Irvine, California 92618
Securities Agreement
63,000 Shares Series B Cumulative Convertible Preferred Stock
Class A Warrants to Purchase Common Stock
and
Class B Warrants to Purchase Common Stock
Dated as of
November 24, 1999
To the Purchasers Named in Schedule I
to this Agreement
Ladies and Gentlemen:
Nexell Therapeutics Inc., a Delaware corporation (together with any Person
who succeeds to all, or substantially all, of the assets and business of Nexell
Therapeutics Inc., the "Company"), hereby confirms its agreement with the
purchasers named in Schedule I to this Agreement (the "Purchasers") as follows:
Section 1. Issue and Sale of Series B Preferred Stock; Put Rights; Warrants;
Commitment; Closing Date.
Section 1.01. Creation and Description of Series B Preferred Stock. The
Company proposes to create, issue and sell a new series of its preferred stock,
$0.001 par value, to be designated "Series B Cumulative Convertible Preferred
Stock" and to consist of 80,000 shares (together with any shares issued in
exchange therefor or replacement thereof, the "Series B Preferred Stock"). The
Series B Preferred Stock will have the designations, preferences, limitations
and relative rights set forth in the form of the Certificate of Designation (the
"Certificate of Designation") attached hereto as Exhibit A setting forth the
Resolution (the "Resolution") to be adopted by the Board of Directors of the
Company designating the Series B Preferred Stock, which Resolution will be duly
adopted by the Board of Directors of the Company prior to the Closing Date in
accordance with the provisions of Article Fourth of the Company's Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), and will be
filed by the Company with the Secretary of State of the State of Delaware prior
to the Closing Date pursuant to the Delaware General Corporation Law. A true and
correct copy of the Certificate of Incorporation of the Company as currently in
effect and prior to the adoption and filing of the Certificate of Designation
has heretofore been furnished to each of the Purchasers by the Company. The
shares of Series B Preferred Stock are convertible into shares of Common Stock
of the Company on the terms and conditions set forth in the Certificate of
Designation.
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The Series B Preferred Stock will rank, as to preferences on payment of
dividends, redemption and distribution of assets upon liquidation, dissolution
or winding-up, equally with the Company's Series A Cumulative Convertible
Preferred Stock (the "Series A Preferred Stock") and prior to any and all shares
of Common Stock or other equity Securities of whatever class or series now or
hereafter issued by the Company.
The terms which are capitalized herein shall have the meanings set forth in
Section 7 unless the context shall otherwise require.
Section 1.02. Put Rights. Each of the shares of Series B Preferred Stock
shall be issued and sold on the Closing Date (as defined below) together with
one put right (individually referred to herein as a "Put Right" and,
collectively, as the "Put Rights") granted by Baxter International Inc., a
Delaware corporation (together with any Person who succeeds to all, or
substantially all, of the assets and business of Baxter International Inc.,
"Baxter"), evidenced by a certificate substantially in the form of Exhibit B
attached hereto (individually referred to herein as a "Put Right Certificate"
and, collectively, as the "Put Right Certificates"). The Put Right Certificates
shall be transferable only upon the concurrent transfer to the same transferee
of the number of shares of Series B Preferred Stock underlying the Put Rights so
transferred and shall have such other terms and provisions as set forth in the
form of Put Right Certificate.
Section 1.03. Warrants to Purchase Common Stock. (a) In consideration of,
and as an inducement to, the purchase by the Purchasers of the Series B
Preferred Stock, the Company agrees to deliver to the Purchasers on the Closing
Date (as defined below):
(i) Class A Warrants of the Company in the form of Exhibit C-1
attached hereto (the "Class A Warrants") to purchase in the aggregate
the Adjusted Number of Shares (as such term is defined in the Class A
Warrants) of the Common Stock of the Company for an exercise price of
$0.01 per share; and
(ii) Class B Warrants of the Company in the form of Exhibit C-2
attached hereto (the "Class B Warrants") to purchase in the aggregate
3,000,000 shares of the Common Stock of the Company for an exercise
price of $3.00 per share.
The number of shares which may be acquired upon the exercise of the Warrants and
the price per share are subject to adjustment in the manner and on the terms and
conditions set forth in the Warrants. The Class A Warrants and the Class B
Warrants are collectively referred to herein as the "Warrants." The shares of
Series B Preferred Stock, the Put Right Certificates and the Warrants, in each
case, to be issued and sold on the Closing Date, are collectively referred to
herein as the "Subject Securities."
(b) The Class A Warrants shall be transferable only upon the concurrent
transfer to the same transferee of that number of shares of Series B Preferred
Stock which represents the same proportion of the transferring holder's
investment in the Series B Preferred Stock as the Class A Warrants so
transferred represent in such holder's investment in the Class A Warrants
immediately prior to the transfer.
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Section 1.04. Sale of Subject Securities; Closing Date. Subject to the
terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, the Company hereby agrees to issue and sell to
each Purchaser, and each such Purchaser agrees to purchase from the Company on
the Closing Date hereinafter mentioned, the Subject Securities set forth
opposite such Purchaser's name on Schedule I attached hereto and at the price
indicated on Schedule I.
Delivery of the Subject Securities will be made at the offices of Chapman
and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, at 10:00 A.M.,
Chicago, Illinois time, on November 24, 1999 (or on such other date, not later
than November 30, 1999, as the Purchasers shall agree) against payment of the
purchase price therefor by transfer (of federal or other immediately available
funds) to the Company's Account No. 937-0142525 at Fleet Bank, ABA No.
011900571, and as further specified in the funding instructions delivered
pursuant to Section 3.11 (said date of delivery and payment being herein called
the "Closing Date").
Section 1.05. Forms of Subject Securities. The shares of the Series B
Preferred Stock delivered to each Purchaser on the Closing Date will be printed
and will be delivered in the form of a single certificate for the full amount of
such Purchaser's purchase, registered in the name of such Purchaser or the name
of its nominee and in such denomination or denominations as are specified in
Schedule I hereto. The Put Rights granted to each Purchaser on the Closing Date
will be evidenced by Put Right Certificates in the form attached hereto as
Exhibit B, registered in the name of such Purchaser or the name of its nominee
and in such denomination or denominations as are specified in Schedule I hereto.
The Warrants delivered to each Purchaser on the Closing Date will be delivered
in the forms attached hereto as Exhibit C-1 and Exhibit C-2, as appropriate,
registered in the name of such Purchaser or in the name of its nominee and in
such denomination or denominations as are specified in Schedule I hereto.
Section 1.06. Failure to Deliver. If on the Closing Date, the Company
fails to tender to each Purchaser against payment therefor the Subject
Securities to be purchased by such Purchaser on the Closing Date, or if the
conditions to such Purchaser's obligations specified in Section 3 have not been
fulfilled or waived by such Purchaser, such Purchaser may thereupon elect to be
relieved of all further obligations under this Agreement. Nothing in this
Section shall operate to relieve the Company from its obligations hereunder or
to waive any Purchaser's rights against the Company.
Section 1.07. Several Obligations. The obligations of the Purchasers shall
be several and not joint and no Purchaser shall be liable or responsible for the
acts of any other Purchaser.
Section 1.08. Certain Tax Treatment of Series B Preferred Stock. The
issuance of the Series B Preferred Stock as contemplated hereunder and under the
Certificate of Designation is not an issuance of the type described in Treasury
Regulation Section 1.305-5(b)(1), and the Company and each of the Purchasers
agree that for Federal income tax reporting purposes there will be no redemption
premium with respect to the Series B Preferred Stock under Treasury Regulation
Section 1.305-5(b).
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Section 2. Representations.
Section 2.01. Representations of the Purchasers. (a) Each Purchaser
severally represents, and in entering into this Agreement the Company
understands, that (i) such Purchaser is acquiring the Subject Securities for the
purpose of investment and not with a view to the distribution thereof, and that
such Purchaser has no present intention of selling, negotiating or otherwise
disposing of the Subject Securities; it being understood, however, that the
disposition of such Purchaser's property shall at all times be and remain within
its control, and (ii) such Purchaser is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended.
(b) Each Purchaser further represents that at least one of the following
statements concerning each source of funds to be used by such Purchaser to
purchase the Subject Securities is accurate as of the Closing Date:
(i) if the Purchaser is an insurance company, the source of
funds from which its investment is to be made is a general account of an
insurance company, and the amount of the reserves and liabilities for the
general account contract(s) held by or on behalf of any Benefit Plan (as
defined by the annual statement for life insurance companies approved by
the National Association of Insurance Commissioners (the "NAIC Annual
Statement")) together with the amount of the reserves and liabilities for
the general account contract(s) held by or on behalf of any other Benefit
Plans maintained by the same employer (or affiliate thereof as defined in
Department of Labor Prohibited Transaction Exemption ("PTE") 95-60) or by
the same employee organization (as defined by the NAIC Annual Statement) in
the general account do not exceed 10% of the total reserves and liabilities
of the general account (exclusive of separate account liabilities) plus
surplus as set forth in the NAIC Annual Statement filed with the state of
domicile of the insurance company (for purposes of the percentage
limitation in this clause (i), the amount of reserves and liabilities for
the general account contract(s) held by or on behalf of a plan shall be
determined before reduction for credits on account of any reinsurance ceded
on a coinsurance basis);
(ii) all or a part of such funds constitute assets of one or
more separate accounts, trusts or a commingled pension trust maintained by
such Purchaser, and such Purchaser has disclosed to the Company the names
of such employee benefit plans whose assets in such separate account or
accounts or pension trusts exceed 10% of the total assets or are expected
to exceed 10% of the total assets of such account or accounts or trusts as
of the date of such purchase (for the purpose of this clause (ii), all
employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan);
(iii) all or part of such funds constitute assets of a bank
collective investment fund maintained by such Purchaser, and such Purchaser
has disclosed to the Company the names of such employee benefit plans whose
assets in such collective investment fund exceed 10% of the total assets or
are expected to exceed 10% of the total assets of such fund as of the date
of such purchase (for the purpose of this clause (iii), all employee
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benefit plans maintained by the same employer or employee organization are
deemed to be a single plan);
(iv) all or part of such funds constitute assets of one or more
employee benefit plans, each of which has been identified to the Company in
writing;
(v) such Purchaser is acquiring the Subject Securities for the
account of one or more pension funds, trust funds or agency accounts, each
of which is a "governmental plan" as defined in Section 3(32) of ERISA;
(vi) the source of funds is an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (A) the identity
of such QPAM and (B) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this clause (vi); or
(vii) if such Purchaser is other than an insurance company, all
of such funds consists of funds which do not constitute "plan assets."
As used in this Section 2.01(b), the terms "separate account" and "employee
benefit plan" shall have the respective meanings assigned to them in ERISA and
the term "plan assets" shall have the meaning assigned to it in Department of
Labor Regulation 29 C.F.R. ss.2510.3-101.
Section 2.02. Representations of the Company. The Company represents and
warrants to each Purchaser that all representations and warranties set forth in
the Closing Certificate attached hereto as Exhibit D are true and correct as of
the date of the execution and delivery of this Agreement by the Company.
Section 3. Closing Conditions.
The obligation of each Purchaser to make the purchases herein provided for
shall be subject to the performance by the Company of its agreements hereunder
which by the terms hereof are to be performed at or prior to the time of
delivery of the Subject Securities and to the following further conditions
precedent:
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Section 3.01. Execution of Documents. The following documents shall be
satisfactory in scope and form to such Purchaser, shall have been duly executed
and delivered by the parties thereto, and shall be in full force and effect:
(a) this Agreement;
(b) the Certificate of Designation and the share certificates
representing the Series B Preferred Stock;
(c) the Put Right Certificates;
(d) the Class A Warrants;
(e) the Class B Warrants; and
(f) the Registration Rights Agreement.
Section 3.02. Company Closing Certificate. Such Purchaser shall receive
from the Company a Closing Certificate dated the Closing Date and executed by
the Chief Executive Officer, the President or a Vice President of the Company,
in substantially the form attached hereto as Exhibit D, the truth and accuracy
of which shall be a condition to such Purchaser's obligation to accept and pay
for the Subject Securities to be purchased by it hereunder.
Section 3.03. Certificate of Designation. The Board of Directors of the
Company shall have duly adopted the Resolution set forth in the Certificate of
Designation and the Certificate of Designation shall have been duly filed with
the Secretary of State of the State of Delaware all in compliance with the
applicable provisions of the Delaware General Corporation Law, and the
Certificate of Designation shall constitute a legal and valid amendment of the
Certificate of Incorporation of the Company.
Section 3.04. Legal Opinions. Such Purchaser shall receive from (a)
Chapman and Cutler, who are acting as special counsel to the Purchasers in this
transaction, (b) Bryan Cave LLP, counsel for the Company, and (c) Thomas J.
Sabatino, Jr., Esq., General Counsel for Baxter, their respective opinions,
dated the Closing Date, in form and substance satisfactory to such Purchaser and
covering substantially the respective matters set forth in Exhibits E, F and G,
respectively, hereto.
Section 3.05. Concurrent Sale of Subject Securities. The Company shall
have consummated the sale of all of the Subject Securities scheduled to be sold
on the Closing Date.
Section 3.06. Corporate Existence and Authority. (a) On or prior to the
Closing Date, such Purchaser shall have received, in form and substance
reasonably satisfactory to such Purchaser and the Purchasers' special counsel,
such documents and evidence with respect to the Company as they may reasonably
request in order to establish the existence and good standing of the Company and
the authorization of the transactions contemplated by this Agreement and the
other Operative Documents to which it is a party.
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(b) On or prior to the Closing Date, such Purchaser shall have received,
in form and substance reasonably satisfactory to such Purchaser and the
Purchasers' special counsel, such documents and evidence with respect to Baxter
as they may reasonably request in order to establish the existence and good
standing of Baxter and the authorization of the transactions contemplated by
this Agreement and the Put Right Certificates.
Section 3.07. Charter and By-laws. The Certificate of Incorporation and
By-laws of the Company shall in all respects be satisfactory in form and
substance to such Purchaser and the Purchasers' special counsel.
Section 3.08. Consent of Holders of Other Securities. Any consents or
approvals required to be obtained from any holder or holders of any outstanding
Security of the Company (including, without limitation, the holders of the
Series A Preferred Stock) and any amendments of agreements pursuant to which any
Security may have been issued which shall be necessary to permit the
consummation of the transactions contemplated hereby shall have been obtained
and all such consents or amendments shall be satisfactory in form and substance
to such Purchaser and the Purchasers' special counsel.
Section 3.09. Use of Proceeds. The Company shall have delivered to such
Purchaser and the Purchasers' special counsel a detailed statement setting forth
the uses of funds from the issuance of the Subject Securities on the Closing
Date in form and substance satisfactory to such Purchaser and the Purchasers'
special counsel.
Section 3.10. Private Placement Numbers. On or prior to the Closing Date,
special counsel to the Purchasers shall have duly made the appropriate filings
with Standard & Poor's CUSIP Service Bureau, as agent for the National
Association of Insurance Commissioners, and shall have obtained private
placement numbers for the Subject Securities.
Section 3.11. Funding Instructions. At least three business days prior to
the Closing Date, such Purchaser shall have received written instructions
executed by a Responsible Officer of the Company directing the manner of the
payment of funds and setting forth (a) the name and address of the transferee
bank, (b) such transferee bank's ABA number, (c) the account name and number
into which the purchase price for the Subject Securities is to be deposited, and
(d) the name and telephone number of the account representative responsible for
verifying receipt of such funds.
Section 3.12. Special Counsel Fees. On or prior to the Closing Date, the
charges and disbursements of Chapman and Cutler, the Purchasers' special
counsel, shall have been paid by the Company.
Section 3.13. Legality of Investment. The Subject Securities shall on the
Closing Date (a) be permitted by the laws and regulations of each jurisdiction
to which such Purchaser is subject, without recourse to provisions (such as
Section 1405(a)(8) of the New York Insurance Law) permitting limited investments
by insurance companies without restriction as to the character of the particular
investment, (b) not violate any applicable law or regulation (including, without
limitation, Regulation T, U or X of the Board of Governors of the Federal
Reserve
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System) and (c) qualify as a legal investment for such Purchaser and such
purchase shall not subject such Purchaser to any penalty or other onerous
condition under or pursuant to any applicable law or governmental regulation,
and such Purchaser shall have received such evidence as it may reasonably
request to establish compliance with this condition.
Section 3.14. Proceedings and Documents. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary to the consummation thereof, shall be satisfactory in form
and substance to such Purchaser and the Purchasers' special counsel, and such
Purchaser and the Purchasers' special counsel shall have received copies
(executed or certified as may be appropriate) of all legal documents or
proceedings which they may request in connection with the consummation of said
transactions.
Section 3.15. Waiver of Conditions. If on the Closing Date, the Company
fails to tender to any Purchaser the Subject Securities to be issued to such
Purchaser on such date or if the conditions specified in this Section 3 have not
been fulfilled, such Purchaser may thereupon elect to be relieved of all further
obligations under this Agreement. Without limiting the foregoing, if the
conditions specified in this Section 3 have not been fulfilled, such Purchaser
may waive compliance by the Company with any such condition to such extent as
such Purchaser may in its sole discretion determine.
Section 4. Covenants Of The Company.
The Company covenants that so long as any of the Subject Securities are
outstanding:
Section 4.01. Reports and Rights of Inspection. (a) The Company will keep,
and will cause each Subsidiary to keep, proper books of record and account in
which full and correct entries will be made of all dealings or transactions of,
or in relation to, the business and affairs of the Company or such Subsidiary,
in accordance with GAAP consistently applied and will furnish to each original
holder of any of the Series B Preferred Stock (so long as such holder continues
to hold any Series B Preferred Stock) and to each other Institutional Holder of
the Series B Preferred Stock:
(i) Quarterly Statements. As soon as available and in any event
within 45 days after the end of each quarterly fiscal period (except
the last) of each fiscal year, copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such quarterly fiscal period,
setting forth in comparative form the consolidated figures for
the fiscal year then most recently ended,
(2) a consolidated statement of operations of the Company
and its Subsidiaries for such quarterly fiscal period and for the
portion of the fiscal year ending with such quarterly fiscal
period, in each case setting forth in comparative form the
consolidated figures for the corresponding periods of the
preceding fiscal year, and
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(3) a consolidated statement of cash flows of the Company
and its Subsidiaries for the portion of the fiscal year ending
with such quarterly fiscal period, setting forth in comparative
form the consolidated figures for the corresponding period of the
preceding fiscal year,
all in reasonable detail and certified as complete and correct by an
authorized financial officer of the Company, which certificate shall state
that such consolidated financial statements present fairly, in all material
respects, the consolidated financial statements of the Company and its
Subsidiaries as of the end of the fiscal quarter set forth therein and the
consolidated results of operations and cash flows for such fiscal quarter,
subject to normal year-end audited adjustments, provided that the delivery
within the time period specified above of the Company's Quarterly Report on
Form 10-Q prepared in compliance with the requirements therefore and filed
with the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 4.01(a)(i);
(ii) Annual Statements. As soon as available and in any event within
90 days after the close of each fiscal year of the Company, copies of:
(1) a consolidated balance sheet of the Company and its
Subsidiaries as of the close of such fiscal year, and
(2) consolidated statements of operations, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries for such fiscal year,
in each case setting forth in comparative form the consolidated figures for
the preceding fiscal year, all in reasonable detail and accompanied by a
report thereon of a firm of independent public accountants of recognized
national standing selected by the Company to the effect that the
consolidated financial statements present fairly, in all material respects,
the consolidated financial position of the Company and its Subsidiaries as
of the end of the fiscal year being reported on and the consolidated
results of the operations and cash flows for said year in conformity with
GAAP and that the examination of such accountants in connection with such
financial statements has been conducted in accordance with generally
accepted auditing standards and included such tests of the accounting
records and such other auditing procedures as said accountants deemed
necessary in the circumstances, provided that the delivery within the time
period specified above of copies of the Company's Annual Report on Form 10-
K for such fiscal year (together with the Company's Annual Report to
Shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange
Act) prepared in accordance with the requirements therefor and filed with
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 4.01(a)(ii);
(iii) Audit Reports; Management Letters. Promptly upon receipt
thereof, one copy of each interim or special audit made by independent
accountants or management consultants of the books of the Company or any
Subsidiary and any management letter received from such accountants or
consultants;
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(iv) SEC and Other Reports. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement
sent by the Company to its stockholders generally and of each regular or
periodic report, and any registration statement or prospectus filed by the
Company or any Subsidiary with any securities exchange or the Securities
and Exchange Commission or any successor agency, and copies of any orders
in any proceedings to which the Company or any of its Subsidiaries is a
party, issued by any governmental agency, Federal or state, having
jurisdiction over the Company or any of its Subsidiaries, which proceedings
could reasonably be expected to have a Material Adverse Effect;
(v) Material Adverse Effect. Promptly upon the occurrence thereof,
written notice of any condition or event which has had, or which could
reasonably be expected to have, a Material Adverse Effect, including,
without limitation, the commencement of litigation or governmental
investigation or the assertion of any material claim against or default by
the Company or any of its Subsidiaries;
(vi) Notice of Defaults. Immediately upon becoming aware that the
holder of any evidence of Indebtedness or other Security of the Company or
any Subsidiary has given notice or taken any other action with respect to a
claimed default or event of default with respect to any such evidence of
Indebtedness or other Security, a written notice specifying the notice
given or action taken by such holder and the nature of the claimed default
or event of default and what action the Company is taking or proposes to
take with respect thereto; and
(vii) Requested Information. With reasonable promptness, such other
data and information as any such Institutional Holder may reasonably
request.
(b) Inspections. The Company will permit each original holder of any of
the Series B Preferred Stock (so long as such holder continues to hold any
Series B Preferred Stock), and each other Institutional Holder of the Series B
Preferred Stock (or such Persons as such holder may designate), to visit and
inspect, under the Company's guidance, any of the properties of the Company or
any Subsidiary, to examine all of their books of account, records, reports and
other papers, to make copies and extracts therefrom and to discuss their
respective affairs, finances and accounts with their respective officers,
employees, and independent public accountants (and by this provision the Company
authorizes said accountants to discuss with such holder the finances and affairs
of the Company and its Subsidiaries), all at such reasonable times and as often
as may be reasonably requested. Any visitation or inspection shall be subject to
the confidentiality terms of Section 4.01(c) and shall be at the sole expense of
such holder, unless a default shall have occurred and be continuing under this
Agreement, the Registration Rights Agreement, or the provisions of the
Certificate of Designation or the holder of any of the Series B Preferred Stock
or of any evidence of Indebtedness of the Company or any Subsidiary gives any
written notice or takes any other action with respect to a claimed default, in
which case, any such visitation or inspection shall be at the sole expense of
the Company.
(c) Confidentiality. Each holder of any of the Subject Securities, by its
acceptance thereof, agrees that it will keep confidential in accordance with its
internal policies and
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procedures in effect from time to time any written information with respect to
the Company or its Subsidiaries which is furnished pursuant to this Agreement
that is proprietary in nature and which is designated by the Company or its
Subsidiaries in writing when received by such holder as confidential, provided
that such holder may disclose any such information (i) as has become generally
available to the public or to such holder on a non-confidential basis from a
source other than the Company or its Subsidiaries or as was known to such holder
on a non-confidential basis prior to its disclosure by the Company or its
Subsidiaries, (ii) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state or Federal regulatory body having or
claiming to have jurisdiction over such holder or to the National Association of
Insurance Commissioners or similar organizations or their successors, (iii) as
may be required or appropriate in response to any summons or subpoena or in
connection with any litigation, (iv) to the extent that such holder reasonably
believes it appropriate in order to protect its investment in the Subject
Securities or in order to comply with any law, order, regulation or ruling
applicable to such holder, (v) to such holder's officers, trustees, employees,
auditors or counsel who have been advised of the confidential nature of such
information and directed to treat it accordingly or to rating agencies or
another holder of the Subject Securities, (vi) to Persons who are parties to
similar confidentiality agreements with the Company, or (vii) to the prospective
permitted transferee in connection with any contemplated transfer of any of the
Subject Securities by such holder.
Section 4.02. Use of Proceeds. The proceeds from the sale of the Subject
Securities shall be used to redeem in full the Company's 6-1/2% convertible
subordinated debentures held by Baxter, to pay certain fees and expenses
incurred in connection with the issue and sale of the Subject Securities and for
general corporate purposes.
Section 4.03. Corporate Existence; SEC Reporting Status. The Company will
preserve and keep in full force and effect, and will cause each Material
Subsidiary to preserve and keep in full force and effect, its corporate
existence and all licenses and permits necessary to the proper conduct of the
business of the Company and its Subsidiaries taken as a whole, provided that the
foregoing shall not prevent any transaction permitted by Section 4.13. In
addition to the foregoing, the Company shall maintain its status as a reporting
Company under Sections 13(a) and 15(d) of the Exchange Act.
Section 4.04. Insurance. The Company shall maintain and cause each of its
Subsidiaries to maintain as to their respective properties and businesses, with
financially sound and reputable insurers, insurance against such casualties and
contingencies and of such types and in such amounts as is customary for
companies similarly situated.
Section 4.05. Taxes, Claims for Labor and Materials. The Company will pay
and discharge, and will cause each Subsidiary to pay and discharge, all lawful
Material taxes, assessments and governmental charges or levies imposed upon the
Company or such Subsidiary, respectively, or upon or in respect of all or any
part of the Material property or business of the Company or such Subsidiary, in
all cases before the same shall become delinquent, all Material trade accounts
payable in accordance with usual and customary business terms, and all Material
claims for work, labor or materials, which if unpaid might become a lien or
encumbrance upon any property of the Company or such Subsidiary; provided the
Company or such Subsidiary shall
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not be required to pay any such tax, assessment, charge, levy, account payable
or claim if (a) the validity, applicability or amount thereof is being contested
in good faith by appropriate actions or proceedings which will prevent the
forfeiture or sale of any property of the Company or such Subsidiary or any
material interference with the use thereof by the Company or such Subsidiary,
and (b) the Company or such Subsidiary shall set aside on its books, reserves
deemed by it to be adequate with respect thereto.
Section 4.06. Maintenance, Etc. The Company will maintain, preserve and
keep, and will cause each Subsidiary to maintain, preserve and keep, its
properties which are used or useful in the conduct of its business (whether
owned in fee or a leasehold interest) in good repair and working order and from
time to time will make all necessary repairs, replacements, renewals and
additions so that at all times the efficiency thereof shall be maintained;
provided that the Company may discontinue the operation or maintenance of any of
its properties if in the good faith judgment of management such discontinuance
is desirable in the conduct of its business and such discontinuance could not
reasonably be expected to have a Material Adverse Effect.
Section 4.07. Compliance with Laws. The Company shall comply and shall
cause each Subsidiary to comply with all applicable laws, rules, regulations and
orders, including, without limitation, the Occupational Safety and Health Act of
1970, as amended, ERISA, the Americans with Disabilities Act of 1990, as
amended, and all Environmental Laws, noncompliance with which could reasonably
be expected to have a Material Adverse Effect.
Section 4.08. Restrictive Agreements Prohibited. (a) The Company will not
enter into, become a party to, allow to exist or adopt any contract, indenture,
agreement or instrument, or any note, debenture, bond or other security or enter
into any amendment of any provision of its Certificate of Incorporation or By-
laws, containing provisions which would by its terms restrict or limit the
ability of the Company to pay the full amount of the dividends on the Series B
Preferred Stock at the rates and on the dates fixed in the Certificate of
Designation or which otherwise restrict the Company's performance of this
Agreement, the terms of the Series B Preferred Stock, the Warrants or the
Registration Rights Agreement; provided that covenants or other provisions
requiring the maintenance of reasonable minimum levels of shareholders' equity
or net worth, cash flow, current assets and similar items shall not be deemed to
limit, impair or otherwise modify the obligations of the Company to declare and
pay dividends on the Series B Preferred Stock as and when the same are due and
payable.
(b) The Company will not permit any Subsidiary to be a party to or bound
by any contract, indenture, agreement, instrument or any note, debenture, bond
or other security under the terms of which such Subsidiary's right to declare
and pay dividends or make other distributions on or in respect of its capital
stock is restricted; provided that covenants or other provisions requiring the
maintenance of reasonable minimum levels of shareholders' equity or net worth,
cash flow, current assets and similar items shall not be deemed to limit, impair
or otherwise modify the obligations of the Subsidiaries to declare and pay
dividends on capital stock as and when the same are due and payable or to redeem
shares of capital stock.
Section 4.09. Reservation of Common Stock. The Company shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, for the purpose of
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effecting the conversion of the Series B Preferred Stock and exercise of the
Warrants and otherwise complying with the terms of this Agreement, such number
of its duly authorized shares of Common Stock as shall be sufficient to effect
the conversion of the Series B Preferred Stock and exercise of the Warrants all
as from time to time outstanding or otherwise to comply with the terms of this
Agreement. Notwithstanding the foregoing, because there is no "floor" or minimum
conversion or exercise price applicable to the Subject Securities, it is
mathematically possible that the Subject Securities could convert into or become
exercisable for a number of shares of Common Stock that it is in excess of the
Company's authorized capital thereof. If at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of the Series B Preferred Stock or the exercise of the Warrants or
otherwise to comply with the terms of this Agreement, the Company will forthwith
take such corporate action (including the obtaining of stockholder approval) as
may be necessary to increase its authorized but unissued shares of Common Stock
to such number of shares as shall be sufficient for such purposes. The Company
will obtain any authorization, consent, approval or other action by or make any
filing with any court or administrative body that may be required under
applicable Federal or state Securities laws in connection with the issuance or
delivery of shares of Common Stock upon conversion of the Series B Preferred
Stock and exercise of the Warrants. The Company will not, by amendment to its
Certificate of Incorporation or through any reorganization, reclassification,
consolidation, merger, sale of assets, dissolution, issue or sale of Securities
or other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of the Series B Preferred Stock or the Conversion Shares or
the Warrants, if any, and will at all times carry out all such terms and take
all such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series B Preferred Stock and exercise
rights of the holders of the Warrants.
Section 4.10. Transactions With Affiliates. The Company will not, and will
not permit any Subsidiary to, enter into or be a party to any transaction or
arrangement with any Affiliate (including, without limitation, the purchase
from, sale to or exchange of property with, or the rendering of any service by
or for, any Affiliate), except (a) arrangements between the Company and Baxter
either existing or, in the case of the transfer by Baxter to the Company of its
cell therapies business pursuant to the Asset Transfer Agreement dated June 30,
1999, in the process of implementation on the Closing Date and generally
described in the Private Placement Memorandum and in the Company's public
reports filed with the Commission and (b) transactions or arrangements entered
into in the ordinary course of and pursuant to the reasonable requirements of
the Company's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to the Company or such Subsidiary than would be obtainable in
a comparable arm's-length transaction with a Person other than an Affiliate.
Section 4.11. Nature of Business. Neither the Company nor any Subsidiary
will engage in any business if, as a result, the general nature of the business,
taken on a consolidated basis, which would then be engaged in by the Company and
its Subsidiaries would be substantially changed from the general nature of the
business engaged in by the Company and its Subsidiaries as of the date of this
Agreement, which is the business of cellular therapy and the development of
healthcare products involving cellular therapy.
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Section 4.12. Purchase of Securities. The Company will not, directly or
indirectly, through any Subsidiary or Affiliate or otherwise, purchase, redeem
or retire, or make any offer to purchase, redeem or retire, any of the shares of
Series B Preferred Stock, the Put Right Certificates, the Class A Warrants or
the Class B Warrants (other than, in the case of the Series B Preferred Stock,
pursuant to and in accordance with the applicable provisions of the Certificate
of Incorporation and the Certificate of Designation), unless the offer has been
made to repurchase the shares of Series B Preferred Stock, the Put Right
Certificates, the Class A Warrants or the Class B Warrants, as applicable, pro
rata from all holders thereof at the same time and at the same price and upon
the same terms.
Section 4.13. Mergers, Consolidations and Sales of Assets. Without the
prior written consent of the holders of 66-2/3% or more of the shares of Series
B Preferred Stock, the Company will not, and will not permit any of its Material
Subsidiaries to, consolidate with or merge into any other Person, or sell, lease
or otherwise dispose of all or substantially all of its property (pursuant to a
single transaction or a series of transactions) to any Person or Person (each
and every such action is hereinafter referred to as a "Significant
Transaction"). Notwithstanding the foregoing, the Company may consummate a
Significant Transaction without such prior written consent if:
(a) in connection with such Significant Transaction, the holders
of the Series B Preferred Stock receive cash or cash equivalents in
respect of the Series B Preferred Stock in an amount greater than (i)
in the case of a Significant Transaction occurring on or prior to
November 24, 2002, $4.26 per share of Common Stock issuable upon
conversion of the Series B Preferred Stock (as adjusted for any stock
dividends, stock splits, stock combinations, recapitalizations and
similar events) and (ii) in the case of a Significant Transaction
occurring after November 24, 2002 and on or prior to November 24,
2004, $4.95 per share of Common Stock issuable upon conversion of the
Series B Preferred Stock (as so adjusted); or
(b) in connection with such Significant Transaction, the holders
of the Series B Preferred Stock receive common stock (or equivalent
equity interests) of an Acceptable Acquiring Company, in respect of
the Series B Preferred Stock, valued (as provided below) at greater
than (i) in the case of a Significant Transaction occurring on or
prior to November 24, 2002, $4.26 per share of Common Stock issuable
upon conversion of the Series B Preferred Stock (as adjusted for any
stock dividends, stock splits, stock combinations, recapitalizations
and similar events) and (ii) in the case of a Significant Transaction
occurring after November 24, 2002 and on or prior to November 24,
2004, $4.95 per share of Common Stock issuable upon conversion of the
Series B Preferred Stock (as so adjusted); such valuation shall be (A)
determined, at the expense of the Company, by an independent
investment banking firm selected by the Company and reasonably
satisfactory to the Required Holders and (B) delivered in writing to
all holders of the Series B Preferred Stock prior to the effective
date of such Significant Transaction; or
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(c) prior to any such Significant Transaction, the Company shall
have obtained the approval of the holders of 75% or more of the shares
of Series B Preferred Stock then outstanding (an "Approved Significant
Transaction"); or
(d) prior to any such Significant Transaction, the Put Right
Certificates shall have been fully exercised by all holders thereof
and Baxter shall have paid the purchase price in full and otherwise
performed its obligations in connection with such exercise.
Section 4.14. Amendments to Certain Agreements. Without the written
consent of the holders of 66-2/3% of the Series B Preferred Stock then
outstanding, the Company will not enter into any amendment to either (a) the
Side Letter Agreement dated as of November 24, 1999 between the Company and
Baxter or (b) Section 10.1 of the Put Agreement between dated as of November 24,
1999 between the Company and Baxter, each as entered into on the Closing Date in
connection with the issuance of the Put Right Certificates by Baxter.
Section 4.15. Remedies and Default.
(a) Notice of Default. If the Company shall default in performing
and complying with its covenants contained in this Agreement or in any other
Operative Document, it shall, promptly after any Responsible Officer of the
Company obtains knowledge of such default, give notice thereof to all holders of
the outstanding Subject Securities, such notice to be in writing and sent in the
manner provided in Section 8.03.
(b) Remedies. (i) If the Company shall default in the performance
and observance of any of its covenants contained in this Agreement or in any
other Operative Document, the holder of any of the Subject Securities
outstanding at the time may proceed to protect and enforce any or all of its
rights and remedies resulting from such failure, by suit in equity or action at
law or by other appropriate proceedings.
(ii) The Company further agrees, to the extent not prohibited by law,
to pay to the holder or holders of the the Subject Securities all reasonable
costs and expenses incurred by them in enforcing the observance by the Company
of its covenants contained in this Agreement and the other Operative Documents,
including reasonable compensation to such holder's or holders' attorneys for all
services rendered and related disbursements in connection therewith.
(iii) The Company stipulates that the remedies at law of the holder or
holders of the Subject Securities in the event of any breach or threatened
breach by it in the performance of or compliance with any covenant or agreement
in this Agreement or any of the other Operative Documents are not and will not
be adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance thereof, whether
by an adjunction against a violation thereof or otherwise.
(iv) No remedy conferred in this Agreement or in any of the other
Operative Documents upon the holder of any Subject Security is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy
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given hereunder or thereunder or now or hereafter existing at law or in equity
or by statute or otherwise.
(v) No delay or failure on the part of the holder of any Subject
Security in the exercise of any power or right shall operate as a waiver
thereof; nor shall any single or partial exercise of the same preclude any other
or further exercise thereof, or the exercise of any other power or right.
Section 5. Purchasers' Special Rights.
Section 5.01. Direct Payment. The Company will pay punctually all amounts
with respect to each of the Subject Securities (whether as dividends, upon
redemption of shares, if any, or otherwise) payable to any Purchaser or its
nominee or any other Institutional Holder of the Subject Securities, without any
presentment or surrender of any certificate for any such shares on partial
redemption of any of the shares evidenced by such certificate: (a) by wire
transfer in immediately available funds to such bank account at a commercial
bank in the United States of America as may be designated under such Purchaser's
name in Schedule I or as may hereafter be designated or redesignated by written
notice to the Company from such Purchaser or such Institutional Holder of the
Subject Securities, and (b) if payment in the manner provided by the foregoing
clause (a) has not been specified, by check duly mailed and addressed to such
address as may be specified in a written notice to the Company by such Purchaser
or such Institutional Holder of the Subject Securities.
Section 5.02. Delivery Expense. If any Purchaser surrenders any
certificate for shares of Series B Preferred Stock or any Warrant to the Company
or a transfer agent of the Company for exchange for certificates or Warrants of
other denominations or for registration in another name or names, the Company
will pay the cost of insurance and delivery to such place as such Purchaser may
designate from the Company or its transfer agent of the certificates issued in
substitution or replacement for the surrendered certificate.
Section 5.03. Taxes. The Company will pay all stamp and other taxes (other
than (a) income taxes and (b) taxes which are the result of the ownership of the
Subject Securities which may be payable in connection with the execution and
delivery of this Agreement or the authorization, issuance and delivery upon the
sale of the Subject Securities hereunder or in connection with any modification
of this Agreement or the other Operative Documents, and will indemnify and save
the Purchasers harmless, without limitation as to time, from and against any and
all liabilities with respect to all such taxes and the Company agrees to pay to
the Purchasers such additional amounts as may be necessary in respect of such
taxes in order that the Purchasers shall incur no greater cost or expenses than
the Purchasers would have incurred had there been no such taxes payable in
connection with such execution and delivery, such authorization and issuance or
such modification. The obligations of the Company under this Section 5.03 shall
survive the termination of this Agreement, any redemption, repurchase or
conversion of the Series B Preferred Stock by the Company and any exercise of
the Warrants.
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Section 5.04. Replacement of Series B Preferred Stock Certificates. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of any certificate evidencing any shares of
Series B Preferred Stock and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided, if the owner of such shares is a
Purchaser or an Institutional Holder, its own agreement to indemnify shall
be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company, at its expense, will execute and deliver, in lieu thereof, a new
certificate for an equal number of shares of Series B Preferred Stock.
Section 5.05. Exchange of Series B Preferred Stock Certificates. Upon
surrender at the office of the Company of any certificate for shares of Series B
Preferred Stock and at the request of the holder of such shares, the Company
will execute and deliver, at the Company's expense (except as provided below),
new certificates for shares of Series B Preferred Stock in exchange for such
surrendered certificates, which new certificates shall be in denominations of
100 shares or any multiple thereof (except as may be necessary to reflect any
number of shares not evenly divisible by 100 as requested by such holder), in an
aggregate number of shares equal to the number of shares represented by such
surrendered certificates. In the event a certificate being surrendered is for
less than 100 shares, a new certificate will be issued for not less than the
number of shares represented by the certificate being surrendered. Such new
certificates shall be registered in the name of such Person as such holder may
request. The Company may require payment of a sum sufficient to cover any stamp
tax or governmental charge imposed in respect of any such exchange.
Section 5.06. Register. The Company shall keep at its principal executive
office a register for the initial registration and registration of transfers of
the Subject Securities. The name and address of each holder of one or more of
the Subject Securities, each transfer thereof and the name and address of each
transferee of one or more of the Subject Securities shall be registered in such
register. Prior to due presentment for registration of transfer, the Person in
whose name any Subject Security shall be registered shall be deemed and treated
as the owner and holder thereof for all purposes hereof, and the Company shall
not be affected by any notice or knowledge to the contrary. The Company shall
give to any Institutional Holder promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered holders of all Subject
Securities.
Section 5.07. Transfer. (a) Subject to the further provisions of this
Section 5.07, the Subject Securities may be transferred or assigned by the
holders thereof in whole or in part and from time to time.
(b) Each Purchaser agrees that the shares of Series B Preferred Stock
may be transferred or assigned only upon the concurrent transfer or
assignment to the same transferee or assignee of (i) that portion of the
Put Right Certificate representing the Put Rights corresponding to such
shares of Series B Preferred Stock and (ii) that portion of
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the Class A Warrants representing the same proportion of the transferring
holder's investment in the Class A Warrants as the Series B Preferred Stock
so transferred represents in such holder's investment in the Series B
Preferred Stock immediately prior to the transfer.
(c) Each Purchaser agrees that it will not transfer the Subject
Securities or any part or portion of any thereof to a Competitor.
(d) Each Purchaser agrees that, in addition to the restrictions in
clauses (a) through (c) above, it will not transfer any of the Subject
Securities in denominations which constitute less than (i) in the case of
the Series B Preferred Stock, 5% of the aggregate number of shares then
outstanding, (ii) in the case of each of the Class A Warrants and the Class
B Warrants, 5% of the aggregate number of shares of Common Stock into which
such Warrants, respectively, are exercisable and (iii) in the case of the
Put Right Certificates, 5% of the aggregate number of all shares of Put
Stock (as defined therein) at the time outstanding, or in all cases, such
lesser amount as shall constitute the Purchaser's entire investment in such
class of Subject Securities being transferred.
Any purported transfer of Subject Securities in a manner contrary to the
foregoing provisions of this Section 5.07 shall be deemed invalid and of no
force or effect.
Section 6. Amendments, Modifications and Waivers.
Section 6.01. Consent Required. Any covenant, agreement, provision or
condition of this Agreement or any other Operative Document may, with the
consent of the Company, be amended or modified, or compliance therewith may be
waived (either generally or in any particular instance and either retroactively
or prospectively), by and only by one or more written instruments signed by the
Required Holders; provided that:
(a) no such amendment, modification or waiver of the provisions
of Sections 1 and 3 shall be effective as to any particular Purchaser
unless consented to by such Purchaser in writing;
(b) no amendment, modification or waiver shall, without the
consent in writing of the holders of all of the Subject Securities then
outstanding, amend any provision of this Section 6;
(c) no amendment, modification or waiver shall, without the
consent in writing of the holders of all of the shares of Series B
Preferred Stock, amend any provision of the Certificate of Designation
which would have the effect of changing the amount or time of any dividend
payment or the initial Conversion Price (as defined therein); and
(d) no amendment, modification or waiver shall, without the
consent in writing of the holder of a Put Right Certificate, amend any
provision of or terminate (other than pursuant to its express terms) the
Put Right Certificate held by such holder.
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Except to the extent not effective as to any particular Purchaser because not
consented to by such Purchaser pursuant to the terms hereof, any amendment,
modification or waiver pursuant to this Section 6 shall apply equally to all
holders of Subject Securities and shall be binding on them, on each future
holder of any such securities (or successor or assignee of such holder) and on
the Company.
Section 6.02. Solicitation of Holders. So long as any Subject Securities
are outstanding, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or any other Operative Document, unless each holder of Subject
Securities (irrespective of the amount then owned by it) shall be informed
thereof by the Company and shall be afforded the opportunity of considering the
same and shall be supplied by the Company with sufficient information to enable
it to make an informed decision with respect thereto. The Company will not,
directly or indirectly, pay or cause to be paid any remuneration, whether by way
of fee or otherwise, to any holder of Subject Securities as consideration for or
as an inducement to the entering into by such holder of any waiver or amendment
of any of the terms and provisions of this Agreement or any other Operative
Document, unless such remuneration is concurrently paid, on the same terms,
ratably to the holders of all of the Subject Securities then outstanding.
Section 6.03. Effect of Amendment or Waiver. The Company will give prompt
notice to all holders of the Subject Securities of the effectiveness of any
amendment, modification or waiver entered into in accordance with the provisions
of this Section 6. Such notice shall state the terms of any such amendment,
modification or waiver and shall be accompanied by at least two conformed copies
(which may be composite conformed copies) of each written instrument which
embodies such amendment, modification or waiver.
Section 6.04. Subject Securities held by Company, etc. Solely for the
purpose of determining whether the holders of the requisite percentage of the
Subject Securities then outstanding, or any class thereof, approved or consented
to any amendment, waiver or consent to be given under this Agreement or any
other Operative Document, Subject Securities directly or indirectly owned by the
Company or any of its Subsidiaries shall be deemed not to be outstanding.
Section 7. Interpretation Of Agreement.
Section 7.01. Certain Definitions. The terms hereinafter set forth when
used herein shall have the following meanings:
"Acceptable Acquiring Company" shall mean a corporation (a) engaged in
the health care business, (b) whose common stock is at the time listed on a
national securities exchange or traded on the NASDAQ National Market and is
current in its periodic reporting with the Commission and (c) which has annual
revenues of at least $500,000,000 and a market capitalization of at least $2
billion.
"Affiliate" shall mean any Person (other than a Subsidiary) (a) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common
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control with, the Company, (b) which beneficially owns or holds 10% or more of
any class of the Voting Stock of the Company or (c) 10% or more of the Voting
Stock (or in the case of a Person which is not a corporation, 10% or more of the
equity interest) of which is beneficially owned or held by the Company or a
Subsidiary. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Voting Stock, by contract or otherwise.
"Approved Significant Transaction" is defined in Section 4.13.
"Baxter" is defined in Section 1.02.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Certificate of Designation" is defined in Section 1.01.
"Certificate of Incorporation" is defined Section 1.01.
"Class A Warrants" is defined in Section 1.03.
"Class B Warrants" is defined in Section 1.03.
"Closing Date" is defined in Section 1.04.
"Commission" means the Securities and Exchange Commission, and any
successor thereto.
"Common Stock" means (a) the Company's Common Stock, $0.001 par value,
authorized on the Closing Date, and (b) any other class or series of capital
stock of the Company now or hereafter authorized the right of which to share in
distributions either of earnings or assets of the Company is without limit as to
any amount or percentage as and to the extent no amounts payable on or in
respect of such Common Stock and no rights arising in connection therewith have
preference over any other Common Stock upon dissolution, liquidation or winding
up of the Company.
"Company" is defined in the introductory paragraph to this Agreement.
"Competitive Business Line" shall mean either (a) the business of
cellular therapy or the development of health care products involving cellular
therapy or (b) the sale, marketing or manufacture of medical devices for use in
the health care industry.
"Competitor" shall mean (a) any Person which is engaged in a
Competitive Business Line or (b) any Person which at the time owns more than
forty percent (40%) of the Voting Stock
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of such Competitor and in connection therewith exercises control over management
of a Person that is engaged in a Competitive Business Line, provided in any
event that:
(i) the provision of investment advisory services by a Person
to a Plan which is owned or controlled by a Person which would
otherwise be a Competitor shall not in any event cause the Person
providing such services to be deemed to be a Competitor;
(ii) in no event shall an Institutional Holder be deemed a
Competitor unless such Institutional Holder owns or holds more than
50% of the Voting Stock of, and in connection therewith exercises
control over management of, a Person that is engaged in a Competitive
Business Line;
(iii) in no event shall an Institutional Holder be deemed a
Competitor if such Institutional Holder is a pension plan sponsored by
a Person which would otherwise be a Competitor but which is a regular
investor in privately placed Securities and such pension plan has
established procedures which will prevent confidential information
supplied to such pension plan by the Company from being transmitted or
otherwise made available to such plan sponsor; and
(iv) an Institutional Holder that would otherwise be deemed a
Competitor pursuant to the foregoing provisions of this definition by
virtue of its ownership or control as a portfolio investment of the
equity Securities of any Person primarily engaged in a Competitive
Business Line, shall not be deemed a Competitor if such Institutional
Holder has established procedures which will prevent confidential
information supplied to such Institutional Holder by the Company from
being transmitted or otherwise made available to such Person.
"Conversion Shares" shall mean the shares of Common Stock of the
Company (or any other Securities of the Company or any other Person) issued or
issuable from time to time upon conversion of the Series B Preferred Sock.
"Environmental Laws" shall mean any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that
is, along with the Company, a member of a controlled group of corporations or a
controlled group of trades or
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businesses, as described in section 414(b) and 414(c), respectively, of the Code
or Section 4001 of ERISA.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States of America.
"Hazardous Material" shall mean any and all pollutants, toxic or
hazardous wastes or any other substances, including all substances listed in or
regulated in any Environmental Law that might pose a hazard to health or safety,
the removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, regulated, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"Indebtedness" with respect to any Person shall mean, at any time,
without duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable preferred stock;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or
arising under any conditional sale or other title retention agreement
with respect to any such property);
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of capitalized leases;
(d) all liabilities secured by any lien or other encumbrance
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities) other
than non-consensual liens arising in the ordinary course of business
and not in connection with borrowed money;
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money); and
(f) any guaranty or similar support or keep well agreement or
arrangement of such Person with respect to liabilities of a type
described in any of clauses (a) through (e) hereof.
"Institutional Holder" shall mean (a) any original purchaser of the
shares of Series B Preferred Stock (so long as such holder continues to hold any
such shares), (b) any holder of 10% or more of the shares of the Series B
Preferred Stock, and (c) any bank, trust company, savings and loan association
or other financial institution, any pension plan, any investment company,
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any insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form, provided that for purposes of
the definition of "Competitor," a holder of the type described in clause (b)
(and no other clause) shall not be included in the term "Institutional Holder".
"Intellectual Property Rights" shall mean and include patents,
registered and common law trademarks, service marks, trade names, brand names,
copyrights, licenses and other similar rights (including, without limitation,
know-how, trade secrets and other confidential information) and applications for
each of the foregoing, if any.
"Investments" shall mean all investments, in cash or by delivery of
property, made directly or indirectly in any property or assets or in any
Person, whether by acquisition of shares of capital stock, Indebtedness or other
obligations or Securities or by loan, advance, capital contribution or
otherwise; provided that "Investments" shall not mean or include routine
investments in property to be used or consumed in the ordinary course of
business.
"Licenses" shall mean certificates of public convenience and
necessity, franchises, licenses and other permits and authorizations from
governmental authorities.
"Material" shall mean material in relation to the properties,
business, prospects, profits or financial condition of the Company and its
Subsidiaries taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the properties, business, prospects, profits or financial condition of the
Company and its Subsidiaries, (b) the legality, validity or enforceability of
this Agreement, the Subject Securities or any of the other Operative Documents,
(c) the rights and remedies of any holders of the Subject Securities with
respect to any such Subject Securities or (d) the ability of the Company to
perform its obligations under any of the Operative Documents.
"Material Subsidiary" shall have the same meaning as the term
"significant subsidiary" is given in Rule 1.02(w) of Regulation S-X under the
Securities Act.
"Multiemployer Plan" shall have the same meaning as in ERISA.
"Operative Documents" shall mean and include this Agreement, the
Certificate of Designation, the Certificate of Incorporation, the shares of
Series B Preferred Stock, the Put Rights Certificates, the Class A Warrants, the
Class B Warrants and the Registration Rights Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity, limited liability company or government (whether national,
Federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
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"Plan" shall mean a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Private Placement Memorandum" is defined in paragraph 4 of Exhibit D.
"Purchasers" is defined in the introductory paragraph hereof.
"Put Right Certificate" and "Put Right Certificates" are defined in
Section 1.02.
"Put Right" and "Put Rights" are defined in Section 1.02.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement of the Company dated as of November 24, 1999 by the Company in favor
of the Purchasers.
"Required Holders" shall mean, at the time of any determination, the
holders of (a) 66-2/3% of the Series B Preferred Stock (determined by the number
of shares of Common Stock represented by each such share, as if converted), (b)
66-2/3% of the Class A Warrants (determined by the number of shares of Common
Stock represented by each such Warrant, as if exercised) and (c) 66-2/3% of the
Class B Warrants (determined by the number of shares of Common Stock represented
by each such Class B Warrant, as if exercised).
"Resolution" is defined in Section 1.01.
"Responsible Officer" shall mean the Chief Executive Officer, the
President, the Chief Financial Officer or the Treasurer of the Company.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act.
"Series A Preferred Stock" is defined in Section 1.01.
"Series B Preferred Stock" is defined in Section 1.01.
"Subject Securities" is defined in Section 1.03.
"Subsidiary" shall mean, as to any Person, any corporation,
association or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient
equity or voting interests to enable it or them (as a group) ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership or joint
venture if more than a 50% interest in the profits or capital thereof is owned
by such Person or one or more of its Subsidiaries or such Person and one or more
of its Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or
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more of its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the Company.
"Voting Stock" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"Warrants" is defined in Section 1.03.
Section 7.02. Accounting Principles. Where the character or the amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, the same shall be done in accordance
with GAAP, to the extent applicable, except where such principles are
inconsistent with the requirements of this Agreement.
Section 8. Miscellaneous.
Section 8.01. Expenses. Whether or not the transactions herein
contemplated shall be consummated, the Company agrees to pay directly all of the
Purchasers' out-of-pocket expenses in connection with the preparation, execution
and delivery of this Agreement and the other Operative Documents and the
transactions contemplated thereby and hereby, including but not limited to the
charges and disbursements of Chapman and Cutler, the Purchasers' special
counsel, duplicating and printing costs and charges for shipping the Series B
Preferred Stock, the Put Right Certificates and the Warrants, adequately insured
to the Purchasers at their respective home offices or at such other place as the
Purchasers may designate, and all expenses relating to any amendments, waivers
or consents pursuant to the provisions of this Agreement or any of the other
Operative Documents (whether or not the same are actually executed and
delivered), including, without limitation: (a) any such amendments, waivers, or
consents resulting from any work-out, renegotiation or restructuring relating to
the performance by the Company of its obligations under this Agreement or the
other Operative Documents, (b) the cost and expenses incurred in enforcing or
defending (or determining whether or how to enforce or defend) any rights under
or in respect of this Agreement or the other Operative Documents or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or the other Operative Documents
or by reason of being a holder of any share of the Series B Preferred Stock, the
Put Right Certificates or the Warrants, and (c) the cost and expenses, including
financial advisors' fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any work-out
or restructuring of the transactions contemplated by this Agreement or the other
Operative Documents. The Company also agrees to pay, within 30 days of receipt
thereof, supplemental statements of Chapman and Cutler for disbursements
unposted or not incurred as of the Closing Date. The Company agrees to protect
and indemnify each Purchaser against any liability for any and all brokerage
fees and commissions payable or claimed to be payable to any Person (other than
Persons retained by a Purchaser) in connection with the transactions
contemplated by this Agreement or the other Operative Documents. Without
limiting the foregoing, the Company agrees to pay the cost of obtaining the
private placement numbers for the Series B Preferred
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Stocks and the Warrants and authorizes the submission of such information as may
be required by Standard & Poor's CUSIP Service Bureau for the purpose of
obtaining such numbers.
Section 8.02. Legends on Series B Preferred Stock Certificates. Each
certificate representing shares of the Series B Preferred Stock shall be stamped
or otherwise imprinted with legends in substantially the following forms:
(a) "The shares evidenced by this certificate have not been
registered or qualified under the Securities Act of 1933, as amended,
or any state securities laws and may not be sold or transferred unless
registered or qualified pursuant to such Act and applicable state
securities laws or an exemption from registration under such Act or
such applicable state securities laws is available."
(b) "The shares evidenced by this certificate are subject to
certain restrictions on transfers and certain rights specified in the
Securities Agreement dated as of November 24, 1999, as amended from
time to time, between the Company and the original holders of the
shares of Series B Preferred Stock, a copy of which will be mailed to
any requesting holder by the Company within five business (5) days of
written request therefor."
In the event that a registration statement covering the Series B
Preferred Stock shall become effective under the Securities Act and under any
applicable state securities laws or in the event that the Company shall receive
an opinion of counsel to the holder thereof (which may be internal counsel to
such holder) that, in the opinion of such counsel, the legend in clause (a) is
not, or is no longer, necessary or required (including, without limitation,
because of the availability of the exemptions afforded by Rule 144 or Rule 144A
of the General Rules and Regulations of the Commission), the Company shall, or
shall instruct its transfer agents and registrars to, remove such legend from
the certificates evidencing the Series B Preferred Stock or issue new
certificates without such legend in lieu thereof. The Company agrees to bear all
expenses in connection with the matters covered by this Section 8.02.
Section 8.03. Notices. All communications provided for hereunder shall be
in writing and, if to a Purchaser, delivered or mailed prepaid by registered or
certified mail or prepaid overnight air courier, or by facsimile communication,
in each case addressed to such Purchaser at its address appearing on Schedule I
to this Agreement or such other address as such Purchaser or the subsequent
holder of any Subject Security may designate to the Company in writing, and if
to the Company, delivered or mailed by registered or certified mail or prepaid
overnight air courier, or by facsimile communication, to the Company at:
Nexell Therapeutics Inc.
9 Parker
Irvine, California 92618
Attention: President
Telecopy No.: (949) 470-6645
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or to such other address as the Company may in writing designate to each
Purchaser or to the subsequent holders of any Subject Security; provided that a
notice by overnight air courier shall only be effective if delivered at a street
address designated for such purpose above or in Schedule I, and a notice by
facsimile communication shall only be effective if confirmed by transmission of
a copy thereof by prepaid overnight air courier.
Section 8.04. Successors and Assigns. This Agreement shall be binding
upon the Company and its successors and permitted assigns and shall inure to the
benefit of each Purchaser and its successors and permitted assigns, including
each successive holder or holders of shares of Series B Preferred Stock, the Put
Right Certificates, the Warrants or any share of Common Stock issuable upon
conversion of the Series B Preferred Stock or exercise of any of the Warrants.
The Company may not assign any of its rights or obligations under this Agreement
or any other Operative Document without the written consent of the Required
Holders.
Section 8.05. Survival of Covenants and Representations. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of the Operative
Documents.
Section 8.06. Severability. Should any part of this Agreement for any
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any remaining portion, which remaining portion
shall remain in force and effect as if this Agreement had been executed with the
invalid or unenforceable portion thereof eliminated and it is hereby declared
the intention of the parties hereto that they would have executed the remaining
portion of this Agreement without including therein any such part, parts or
portion which may, for any reason, be hereafter declared invalid or
unenforceable.
Section 8.07. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial. This Agreement, including the construction, validity and performance
hereof and the obligations arising hereunder, and all amendments and supplements
hereof and all waivers and consents hereunder, shall be construed in accordance
with and governed by the laws of the State of New York without giving effect to
any choice of law or conflicts of law provision or rule that would cause the
application of the laws of any other jurisdiction. Any legal action or
proceeding with respect to this Agreement or any document related hereto shall
be brought in the courts of the State of New York sitting in the County of New
York or of the United States of America for the State of New York sitting in the
County of New York or the courts of the State of Illinois sitting in the County
of Cook or of the United States of America for the State of Illinois sitting in
the Northern District of Illinois, and, by execution and delivery and/or
acceptance of this Agreement, the Company and the Purchasers each hereby accepts
the non-exclusive jurisdiction of the aforesaid courts. In addition, the Company
hereby irrevocably and unconditionally waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions, suits or
proceedings arising out of or in connection with this Agreement or any document
related hereto brought in any of the aforesaid courts, and hereby further
irrevocably and unconditionally waives and agrees not
-27-
<PAGE>
to plead or claim that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
The Company and each Purchaser hereby irrevocably waives all right to a
trial by jury in any suit, action or other proceeding instituted by or against
it in respect of its obligations hereunder or the transactions contemplated
hereby.
Section 8.08. Captions. The descriptive headings of the various Sections
or parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
Section 8.09. Counterparts. This Agreement may be executed in any number
of counterparts and each counterpart shall be deemed to be an original; and all
such counterparts shall constitute one and the same instrument.
-28-
<PAGE>
The execution hereof by the Purchasers shall constitute a contract among
the Company and the Purchasers for the uses and purposes hereinabove set forth.
Nexell Therapeutics Inc.
By /s/
-------------------------------
Name:
Title:
Accepted and agreed to as of the first date written above.
[Purchaser]
By /s/
-------------------------------
Name:
Title:
[Purchaser]
By /s/
-------------------------------
Name:
Title:
[Purchaser]
By /s/
-------------------------------
Name:
Title:
[Purchaser]
By /s/
-------------------------------
Name:
Title:
-29-
<PAGE>
Schedule I
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
<TABLE>
<S> <C>
John Hancock Mutual Life Insurance $25,500,000
Company Series B Preferred Stock -- 25,500 shares
John Hancock Place Class A Warrant -- 40.48%
200 Clarendon Street Class B Warrant -- 1,214,286 shares
Boston, Massachusetts 02117 Put Right Certificates -- 25,500 Put Rights
$4,500,000
Series B Preferred Stock -- 4,500 shares
Class A Warrant -- 7.14%
Class B Warrant -- 214,285 shares
Put Right Certificates -- 4,500 Put Rights
</TABLE>
Payments
All payments on account of the Series B Preferred Stock or other obligations in
accordance with the provisions thereof shall be made by bank wire transfer of
immediately available funds for credit, not later than 12 noon, Boston time, to:
BankBoston
ABA #011000390
Boston, Massachusetts 02110
Account of: John Hancock Mutual Life Insurance Company
Private Placement Collection Account
Account Number 541-55417
On Order of: Nexell Therapeutics Inc., Series B Cumulative Convertible
Preferred Stock, PPN 65332H 2# 0
Notices
Contemporaneous with the above wire transfer, advice setting forth (1) the full
name and description of the securities or other obligations and (2) name and
address of Bank (or Trustee) from which wire transfer was sent, shall be
delivered or faxed and mailed to:
Schedule I
(to Securities Agreement)
<PAGE>
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Manager, Investment Accounting Division, B-3
Fax: (617) 572-0628
All notices with respect to prepayments, both scheduled and unscheduled, whether
partial or in full, and notice of maturity shall be delivered or faxed and
mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Manager, Investment Accounting Division, B-3
Fax: (617) 572-0628
All other communications which shall include, but not be limited to, financial
statements and certificates of compliance with financial covenants, shall be
delivered or faxed and mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Bond and Corporate Finance Group, T-57
Fax: (617) 572-1605
A copy of any notices relating to change in issuer's name, address or principal
place of business or location of collateral and a copy of any legal opinions
shall be delivered or faxed and mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Investment Law Division, T-50
Fax: (617) 572-9268
Name in which Subject Securities are to be issued: John Hancock Mutual Life
Insurance Company
Taxpayer I.D. Number: 04-1414660
-2-
<PAGE>
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
<TABLE>
<S> <C>
John Hancock Variable Life Insurance $2,000,000
Company Series B Preferred Stock -- 2,000 shares
John Hancock Place Class A Warrant -- 3.17%
200 Clarendon Street Class B Warrant -- 95,238 shares
Boston, Massachusetts 02117 Put Right Certificates -- 2,000 Put Rights
</TABLE>
Payments
All payments on account of the Series B Preferred Stock or other obligations in
accordance with the provisions thereof shall be made by bank wire transfer of
immediately available funds for credit, not later than 12 noon, Boston time, to:
BankBoston
ABA #011000390
Boston, Massachusetts 02110
Account of: John Hancock Mutual Life Insurance Company
Private Placement Collection Account
Account Number 541-55417
On Order of: Nexell Therapeutics Inc., Series B Cumulative Convertible
Preferred Stock, PPN 65332H 2# 0
Notices
Contemporaneous with the above wire transfer, advice setting forth (1) the full
name and description of the securities or other obligations; and (2) name and
address of Bank (or Trustee) from which wire transfer was sent, shall be
delivered or faxed and mailed to:
John Hancock Variable Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Manager, Investment Accounting Division, B-3
Fax: (617) 572-0628
All notices with respect to prepayments, both scheduled and unscheduled, whether
partial or in full, and notice of maturity shall be delivered or faxed and
mailed to:
-3-
<PAGE>
John Hancock Variable Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Manager, Investment Accounting Division, B-3
Fax: (617) 572-0628
All other communications which shall include, but not be limited to, financial
statements and certificates of compliance with financial covenants, shall be
delivered or faxed and mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Bond and Corporate Finance Group, T-57
Fax: (617) 572-1605
A copy of any notices relating to change in issuer's name, address or principal
place of business or location of collateral and a copy of any legal opinions
shall be delivered or faxed and mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Investment Law Division, T-50
Fax: (617) 572-9268
Name in which Subject Securities are to be issued: John Hancock Variable Life
Insurance Company
Taxpayer I.D. Number: 04-2664016
-4-
<PAGE>
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
<TABLE>
<S> <C>
Investors Partner Life Insurance $1,000,000
Company Series B Preferred Stock -- 1,000 Shares
John Hancock Place Class A Warrant -- 1.59%
200 Clarendon Street Class B Warrant -- 47,619 shares
Boston, Massachusetts 02117 Put Right Certificates -- 1,000 Put Rights
</TABLE>
Payments
All payments on account of the Series B Preferred Stock or other obligations in
accordance with the provisions thereof shall be made by bank wire transfer of
immediately available funds for credit, not later than 12 noon, Boston time, to:
BankBoston
ABA #011000390
Boston, Massachusetts 02110
Account of: John Hancock Mutual Life Insurance Company
Private Placement Collection Account
Account Number 541-55417
On Order of: Nexell Therapeutics Inc., Series B Cumulative Convertible
Preferred Stock, PPN 65332H 2# 0
Notices
Contemporaneous with the above wire transfer, advice setting forth (1) the full
name and description of the securities or other obligations and (2) name and
address of Bank (or Trustee) from which wire transfer was sent, shall be
delivered or faxed and mailed to:
Investors Partner Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Manager, Investment Accounting Division, B-3
Fax: (617) 572-0628
All notices with respect to prepayments, both scheduled and unscheduled, whether
partial or in full, and notice of maturity shall be delivered or faxed and
mailed to:
-5-
<PAGE>
Investors Partner Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Manager, Investment Accounting Division, B-3
Fax: (617) 572-0628
All other communications which shall include, but not be limited to, financial
statements and certificates of compliance with financial covenants, shall be
delivered or faxed and mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Bond and Corporate Finance Group, T-57
Fax: (617) 572-1605
A copy of any notices relating to change in issuer's name, address or principal
place of business or location of collateral and a copy of any legal opinions
shall be delivered or faxed and mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Investment Law Division, T-50
Fax: (617) 572-9268
Name in which Subject Securities are to be issued: Investors Partner Life
Insurance Company
Taxpayer I.D. Number: 13-3072894
-6-
<PAGE>
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
<TABLE>
<S> <C>
The Lincoln National Life Insurance $5,000,000
Company Series B Preferred Stock -- 5,000 Shares
c/o Lincoln Investment Management, Inc. Class A Warrant -- 7.94%
200 East Berry Street Class B Warrant -- 238,095 shares
Renaissance Square Put Right Certificates -- 5,000 Put Rights
Fort Wayne, Indiana 46802
Attention: Investments/Private Placements
Telefacsimile: (219) 455-5499 Private Placements
</TABLE>
Payments
All payments on or in respect of the Series B Preferred Stock to be by bank wire
transfer of Federal or other immediately available funds (identifying each
payment as "Nexell Therapeutics Inc., Series B Cumulative Convertible Preferred
Stock, PPN 65332H 2# 0, principal, premium or interest") to:
Bankers Trust Company
New York, New York
ABA #021-00-1033
A/C #99-911-145
Private Placement Processing
For Further Credit: The Lincoln National Life Insurance Company (Surplus)
Custodial Account Number 98449.
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above with duplicate notices with respect to payments to:
Bankers Trust Company
P. O. Box 998
Bowling Green Station
New York, New York 10274
Attention: Private Placement Unit
Telefacsimile: (615) 835-2493 Attn: Crystal Jones, Private Placements
Name of Nominee in which the Subject Securities are to be issued: None
Taxpayer I.D. Number: 35-0472300
-7-
<PAGE>
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
<TABLE>
<S> <C>
Massachusetts Mutual Life Insurance $3,875,000
Company Series B Preferred Stock -- 3,875 Shares
1295 State Street Class A Warrant -- 6.15%
Springfield, Massachusetts 01111 Class B Warrant -- 184,524 shares
Attention: Securities Investment Division Put Right Certificates -- 3,875 Put Rights
</TABLE>
Payments
All payments on or in respect of the Series B Preferred Stock to be by bank wire
transfer of Federal or other immediately available funds (identifying each
payment as "Nexell Therapeutics Inc., Series B Cumulative Convertible Preferred
Stock, PPN 65332H 2# 0, principal, premium or interest") to:
Citibank, N.A. (ABA #021000089)
111 Wall Street
New York, New York 10043
for credit to: MassMutual Long-Term Pool Account Number 4067-3488
Re: Description of security, principal and interest split
With telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (413) 744-3561.
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments, to be addressed Attention: Securities Custody
and Collection Department, F 381.
Name of Nominee in which the Subject Securities are to be issued: None
Taxpayer I.D. Number: 04-1590850
-8-
<PAGE>
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
<TABLE>
<S> <C>
Massmutual Corporate Investors $3,875,000
c/o Massachusetts Mutual Life Insurance Series B Preferred Stock -- 3,875 shares
Company Class A Warrant -- 6.15%
1295 State Street Class B Warrant -- 184,524 shares
Springfield, Massachusetts 01111 Put Right Certificates -- 3,875 Put Rights
Attention: Securities Investment Division
</TABLE>
Payments
All payments on or in respect of the Series B Preferred Stock to be by bank wire
transfer of Federal or other immediately available funds (identifying each
payment as "Nexell Therapeutics Inc., Series B Cumulative Convertible Preferred
Stock, PPN 65332H 2# 0, principal, premium or interest") to:
Chase/NYC/Cust
ABA #021000021
A/C No. 900-9-000200 for F/C/T
MassMutual Corporate Investors
A/C No. G06109
Attention: Bond Interest
Re: Description of Security (principal and interest split, if applicable)
With telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (413) 744-3561.
If payment made by check: MassMutual Corporate Investors
(include A/C No. G06109 (or Cudd & Co., if securities are registered in the
nominee name)
on the check) c/o Chase Manhattan Bank, N.A.
Attention: Income Processing, Level 4B
P.O. Box 1508, Church Street Station
New York, New York 10008
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments, to be addressed Attention: Securities Custody
and Collection Department, F381.
Name of Nominee in which the Subject Securities are to be issued: None
Taxpayer I.D. Number: 04-2483041
-9-
<PAGE>
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
<TABLE>
<S> <C>
Massmutual Participation Investors $2,250,000
c/o Massachusetts Mutual Life Insurance Series B Preferred Stock -- 2,250 shares
Company Class A Warrant -- 3.57%
1295 State Street Class B Warrant -- 107,143 shares
Springfield, Massachusetts 01111 Put Right Certificates -- 2,250 Put Rights
Attention: Securities Investment Division
</TABLE>
Payments
All payments on or in respect of the Series B Preferred Stock to be by bank wire
transfer of Federal or other immediately available funds (identifying each
payment as "Nexell Therapeutics Inc., Series B Cumulative Convertible Preferred
Stock, PPN 65332H 2# 0, principal, premium or interest") to:
Chase/NYC/Cust
ABA #021000021
A/C No. 900-9-000200 for F/C/T
MassMutual Participation Investors
A/C No. G06110
Attention: Bond Interest
Re: Description of Security (principal and interest split, if applicable)
With telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (413) 744-3561.
If payment made by check: MassMutual Participation Investors
(include A/C No. G06110 (or Cudd & Co., if securities are registered in the
nominee name)
on the check) c/o Chase Manhattan Bank, N.A.
Attention: Income Processing, Level 4B
P.O. Box 1508, Church Street Station
New York, New York 10008
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments, to be addressed Attention: Securities Custody
and Collection Department, F381.
Name of Nominee in which the Subject Securities are to be issued: None
Taxpayer I.D. Number: 04-3025730
-10-
<PAGE>
Name and Address Subject Securities to
of Purchaser Be Purchased
and Price Thereof
<TABLE>
<S> <C>
Metropolitan Life Insurance Company $15,000,000
Corporate Equities Series B Preferred Stock -- 15,000 shares
334 Madison Avenue Class A Warrant -- 23.81%
Convent Station, New Jersey 07961-0633 Class B Warrant -- 714,286 shares
Fax Number: (973) 254-3055 Put Right Certificates -- 15,000 Put Rights
</TABLE>
Payments
All payments on or in respect of the Series B Preferred Stock to be by bank wire
transfer of Federal or other immediately available funds (identifying each
payment as "Nexell Therapeutics Inc., Series B Cumulative Convertible Preferred
Stock, PPN 65332H 2# 0, principal, premium or interest") to:
The Chase Manhattan Bank
New York, New York
ABA #021-000-021
Account Number 002-2-410591
for credit to: Metropolitan Life Insurance Company
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above with a copy to:
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010-3690
Attention: George M. Bryant (Area 6-H)
Fax Number: (212) 251-1531
and
Metropolitan Life Insurance Company
4100 Boy Scout Blvd.
Tampa, Florida 33607
Attention: Ascension Lopez
Fax Number: (813) 801-2515
Name of Nominee in which the Subject Securities are to be issued: None
Taxpayer I.D. Number: 13-5581829
-11-
<PAGE>
NEXELL THERAPEUTICS INC.
CLOSING CERTIFICATE
To Each of the Purchasers Named in Schedule I to
the Securities Agreement described below
Ladies and Gentlemen:
Nexell Therapeutics Inc., a Delaware corporation (the "Company"), as an
inducement to and as part of the consideration for your purchase on this date of
an aggregate of 63,000 shares of the Series B Cumulative Convertible Preferred
Stock (the "Series B Preferred Stock"), the Class A Warrants and the Class B
Warrants (collectively, the "Warrants") of the Company pursuant to the
Securities Agreement dated as of November 24, 1999 (the "Securities Agreement",
words and phrases not otherwise defined herein having the meanings assigned
thereto in the Securities Agreement) among each of you and the Company, and in
compliance with the Securities Agreement, hereby represents and warrants to you
as follows:
1. Corporate Organization and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite power and authority to own, lease and
operate its properties and to conduct the business now being conducted by it, to
enter into and perform each of the Operative Documents to which it is a party
and to create, issue and sell the Series B Preferred Stock and the Warrants as
contemplated in the Securities Agreement. Except as set forth in Annex I (Part
1), no approval of the stockholders of the Company or any of its Subsidiaries is
required in connection with the consummation of the transactions contemplated by
the Operative Documents. Each such approval has heretofore been obtained.
2. Qualification to Do Business. The Company is duly qualified and in
good standing as a foreign corporation authorized to do business in each
jurisdiction wherein the nature of properties owned or leased or activities
conducted by it makes such licensing or qualification necessary, except where
the failure to so qualify could not be reasonably be expected to have a Material
Adverse Effect.
3. Subsidiaries. Annex I (Part 2) attached hereto states the name of
each Subsidiary of the Company, its jurisdiction of incorporation and the
percentage of its capital stock owned by the Company and/or each Subsidiary.
Nexell of California, Inc. is the Company's only Material Subsidiary. Each such
Subsidiary has been duly organized and is validly existing and in good standing
under the laws of its jurisdiction of incorporation, and is duly qualified and
in good standing as a foreign corporation under the laws of each jurisdiction
wherein the nature of the properties owned or leased or activities conducted by
it make such qualification necessary, except where the failure to so qualify
could not be reasonably be expected to have a Material Adverse Effect, and has
all requisite power and authority to own and operate its properties and to
EXHIBIT D
(to Securities Agreement)
<PAGE>
conduct the business now being conducted by it. All of the outstanding shares of
stock of each Subsidiary have been validly issued, are fully paid and
nonassessable.
4. Private Placement Memorandum. The information with respect to the
Company and its Subsidiaries contained in the Private Placement Memorandum dated
July, 1999, prepared by Lehman Brothers Inc. for use in connection with the
placement of the Subject Securities, a copy of which has been furnished to you,
is true and correct in all material respects, except that: (a) the term sheet
set forth therein has been replaced by the final term sheet distributed on or
about October 29, 1999; (b) the financial and other information contained
therein has been updated by the Company's Quarterly Reports on Form 10-Q for the
quarterly periods ended June 30, 1999 and September 30, 1999; (c) the references
therein to the Company's arrangements with Baxter in the event the Put Rights
are exercised are replaced by the Side Letter Agreement dated the Closing Date
between the Company and Baxter; (d) the references to the Company's hiring of
Baxter personnel in Europe has been updated to reflect the current status of
such activities which has been discussed with you; and (e) the Company's Board
of Directors has expanded to seven members. The Private Placement Memorandum,
taken together with the matters set forth in the foregoing clauses (a) through
(e), is hereafter referred to as the "Private Placement Memorandum."
5. Financial Statements. (a) The consolidated balance sheet of the
Company and Subsidiaries as of December 31, 1998, and the related consolidated
statements of operations and changes in shareholder' equity and cash flows for
the fiscal year ended on said date, certified by KPMG LLP, independent public
accountants, a copy of which has heretofore been delivered to you, were prepared
in accordance with generally accepted accounting principles consistently applied
throughout the period involved and present fairly the financial position and
results of operations and changes in their cash flows of the Company and
consolidated Subsidiaries for and as at the end of each of such fiscal year.
(b) The unaudited consolidated balance sheet and the unaudited
consolidated statements of operations and cash flows of the Company and its
consolidated Subsidiaries for the six-month period ended September 30, 1999, a
true and correct copy of which has been furnished to you by the Company, were
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved and present fairly the
financial position and results of operations of the Company and its consolidated
Subsidiaries for and as at the end of the respective periods set forth therein,
subject to normal year-end audit adjustments.
(c) Since December 31, 1998 there has been no change in the
condition, financial or otherwise, of the Company and its consolidated
Subsidiaries as shown on the consolidated balance sheet as of such date, except
changes in the ordinary course of business, none of which individually or in the
aggregate has been adverse and no condition or event has occurred which has had,
or which could reasonably be expected to have, a Material Adverse Effect, it
being understood that the Company's losses have continued since December 31,
1998.
6. Indebtedness, Liens, Investments, etc. Annex I (Part 3) attached
hereto correctly describes all Indebtedness, including all capitalized leases,
operating leases and liens and
D-2
<PAGE>
encumbrances securing Indebtedness of the Company and its Subsidiaries
outstanding on the Closing Date.
7. Solvency and Consideration. (a) On the Closing Date, the Company is
solvent, has capital not unreasonably small in relation to its business or any
contemplated or undertaken transaction and has assets having a value both at
fair valuation and a present fair salable value greater than the amount required
to pay its debts as they become due and greater than the amount that will be
required to pay its probable liability on its existing debts as they become due
and matured. The Company does not intend to incur, nor does it believe, that it
will incur, debts beyond its ability to pay such debts as they become due.
Neither the Company nor any of its Subsidiaries will be rendered insolvent by
the execution, delivery and performance of its respective obligations under or
in respect of the Securities Agreement, the Series B Preferred Stock, the
Warrants and the Registration Rights Agreement. Neither the Company nor any of
its Subsidiaries intends to hinder, delay or defraud its creditors by or through
the execution, delivery or performance of its respective obligations under or in
respect of the Securities Agreement, the Series B Preferred Stock, the Warrants
and the Registration Rights Agreement.
(b) There will be provided to the Company and each of its Subsidiaries a
substantial economic benefit and adequate consideration for the execution and
delivery of the Securities Agreement, the Series B Preferred Stock, the Warrants
and the Registration Rights Agreement by the Company and its Subsidiaries
because, among other reasons, the proceeds of the Series B Preferred Stock will
be used in the manner set forth in paragraph 19 of this Closing Certificate and
therefore will enhance the financial position of the Company and its
Subsidiaries taken as a whole.
8. Capital Stock; Stockholder Matters. The authorized, issued and
outstanding Capital Stock of the Company and each Subsidiary is set forth in
Annex I (Part 4) attached hereto. All of the outstanding Capital Stock of the
Company and each Subsidiary has been validly issued and is fully paid and
non-assessable and is subject to no liens and encumbrances. No Stockholders of
the Company are entitled to any preemptive rights with respect to the Common
Stock of the Company. Neither the Company nor any of its Subsidiaries has
outstanding any warrants, options, convertible Securities or preemptive or other
rights for the purchase, or is a party or is bound by any agreement or other
instrument restricting or affecting the issuance, of capital stock of the
Company or any of its Subsidiaries, other than the Certificate of Designation,
the Warrants and as set forth in Annex I (Part 4(a)). The shares of Series B
Preferred Stock which are to be issued and sold to you on the Closing Date will,
upon the issuance to you, have the designations, preferences, qualifications,
limitations, restrictions and such special and relevant rights as are set forth
in the Certificate of Incorporation, the Certificate of Designation and the laws
of the State of Delaware. The shares of Series B Preferred Stock upon issuance
on the Closing Date, and the shares of Common Stock issuable upon conversion of
the Series B Preferred Stock and upon exercise of the Warrants, if and when
converted or exercised in compliance with the terms and provisions of the
Certificate of Designation or the Warrants, as applicable, will be validly
issued, fully paid and nonassessable shares. Neither the Company nor any of its
Subsidiaries or to the Company's knowledge any of their respective stockholders
is a party to any agreement, document or instrument relating to voting or
similar requirements with respect to actions taken or
D-3
<PAGE>
to be taken by the board of directors or stockholders of the Company or any
Subsidiary, except as set forth in Annex I (Part 4(b)).
9. Full Disclosure. Neither the financial statements referred to in
paragraph 5 hereof nor the Securities Agreement, the Private Placement
Memorandum or any other written statement furnished by the Company to you in
connection with the negotiation of the sale of the Series B Preferred Stock, the
Put Right Certificates and the Warrants, contains any untrue statement of a
material fact or omits a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact peculiar to the
Company or its Subsidiaries which the Company has not disclosed to you in
writing which affects adversely the Company and its Subsidiaries nor, so far as
the Company can now foresee could reasonably be expected to have a Material
Adverse Effect, except as set forth in Annex I (Part 4(c)).
10. Pending Litigation or Proceedings. There are no actions, suits or
proceedings pending or, to the knowledge of the Company, threatened against or
affecting the Company or 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, domestic or foreign, which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
11. Title to Properties; Leases. The Company and each of its Subsidiaries
has good and marketable title to all Material property, real and personal, which
each of them purports to own and good and valid leasehold interests in all
property, real and personal, which it purports to lease as lessee, except
certain defects affecting the Company's title to certain properties which do not
individually or in the aggregate adversely affect the marketability of title or
the use by the Company of such property for its intended purpose and such
property is free of any Material lien or encumbrance. The Company and each of
its Subsidiaries enjoy peaceful and undisturbed possession under all material
leases of property leased as lessee, and all of such leases are valid,
subsisting and in full force and effect.
12. Patents, Trademarks and Licenses. Annex I (Part 5) attached hereto
correctly describes all material Intellectual Property Rights and material
Licenses owned or otherwise possessed by the Company and its Subsidiaries. The
Company and each Subsidiary own or possess all the material Intellectual
Property Rights and material Licenses, and have obtained all material Food and
Drug Administration approvals, necessary for the present and planned future
conduct of its business, without any known conflict with the rights of others.
13. Sale is Legal and Authorized. The authorization, creation, issuance
and sale of the Series B Preferred Stock and the Warrants and compliance by the
Company with all of the provisions of the Operative Documents to which it is a
party (a) are within the corporate powers of the Company, (b) have been duly
authorized by all necessary corporate action on the part of the Company, and (c)
are legal and will not conflict with nor result in any breach of any of the
provisions of, or constitute a default under, or result in the creation of any
lien or encumbrance upon any property of the Company under the provisions of,
any loan agreement, charter instrument, by-law or other agreement or instrument
to which the Company is a party or by which it may be bound or to which any of
its properties may be subject. The shares of the
D-4
<PAGE>
Series B Preferred Stock, the Warrants, the Securities Agreement and the
Registration Right Agreement have been duly executed and delivered by the
Company and constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms and the shares of Series B Preferred
Stock and the Warrants issued on this date are validly issued, fully paid and
nonassessable.
14. No Defaults. Neither the Company nor any Subsidiary is in default in
the payment of principal or interest on any Indebtedness for borrowed money, nor
is the Company or any Subsidiary in default under any Material instrument or
instruments or agreements under and subject to which it has incurred any
Indebtedness for borrowed money and no event has occurred and is continuing
under the provisions of any such instrument or agreement which with the lapse of
time or the giving of notice, or both, would constitute an event of default
thereunder. No waiver of any default in respect of any Indebtedness of the
Company is currently in effect.
15. Governmental Consent. Neither the nature of the Company, its
business or property, nor any relationship between the Company and any other
Person, nor any circumstances in connection with the offer, creation, issue,
sale or delivery of the Series B Preferred Stock and the Warrants is such as to
require a consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority or any stock exchange on the part
of the Company in connection with the execution, delivery and performance of the
Securities Agreement or the offer, creation, issue, sale or delivery of the
Series B Preferred Stock or the Warrants, except for the filing of the
Certificate of Designation described in Section 1 of the Securities Agreement,
the filing with The NASDAQ Stock Market, Inc. of a NASDAQ National Market
Notification Form for Listing of Additional Shares, and the filing of a Form D
with the Commission.
16. Employee Controversies. There are no material controversies pending
or, to the knowledge of the Company, threatened or anticipated between the
Company or any of its Subsidiaries, on the one hand, and any of their respective
employees, on the other hand, and there are no labor disputes, grievances,
arbitration proceedings or any strikes, work stoppages or slowdowns pending, or
threatened, between the Company or any of its Subsidiaries, on the one hand and
their respective employees and representatives on the other hand, which could
reasonably be expected to have a Material Adverse Effect.
17. Taxes. The Company has and each of its Subsidiaries has filed all
Federal, State and other income tax returns which, to the best knowledge of the
officers of the Company, are required to be filed, and each has paid all taxes
as shown on such returns and on all assessments received by it to the extent
that such taxes have become due, except such taxes as are being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established in accordance with generally accepted accounting principles.
18. Private Offering. Neither the Company nor Lehman Brothers Inc. (the
only Person authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering of the Subject Securities or any
similar Security) has offered any of the shares of Series B Preferred Stock, the
Put Right Certificates or the Warrants or any similar Security for sale to, or
solicited offers to buy any thereof from, or otherwise approached or negotiated
with
D-5
<PAGE>
respect thereto with, any prospective purchaser, other than the Purchasers and
75 other institutional investors, each of whom is an "accredited investor"
within the meaning of that term as defined in Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), and was offered a
portion of the shares of Series B Preferred Stock, the Put Right Certificates
and the Warrants at private sale for investment. The Company agrees that neither
the Company nor anyone acting on its behalf will offer the Series B Preferred
Stock, the Put Right Certificates or the Warrants or any part of either thereof
or any similar Securities for issue or sale to, or solicit any offer to acquire
any of the same from, anyone so as to bring the issuance and sale of the Series
B Preferred Stock, the Put Right Certificates and the Warrants within the
provisions of Section 5 of the Securities Act.
19. Use of Proceeds. The Company will apply all of the proceeds from
the sale of the Subject Securities on the Closing Date to redeem in full the
Company's 6-1/2% convertible subordinated debentures held by Baxter, to pay
certain fees and expenses incurred in connection with the issue and sale of the
Subject Securities and for other corporate purposes, and such proceeds will not
be used for the purchase of securities in violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulation issued pursuant
thereto, including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System, 12 CFR, Chapter 11.
20. Restrictions on Distributions. Other than (a) the Credit Agreement
dated June 30, 1999 between the Company and Baxter Healthcare Corporation (the
"Baxter Credit Agreement") and (b) the Series A Preferred Stock, the Company is
not a party to or bound by any contract, indenture, agreement, instrument, order
of any court, or governmental agency (except the Delaware General Corporation
Law) rule or regulation, or any note, debenture, bond, or other security, which
contains provisions expressly limiting or restricting payments by the Company on
or in respect of shares of its capital stock of any class, including, without
limitation, the Company's right and obligation to declare and pay the regular
dividends on the Series B Preferred Stock pursuant to the provisions of the
Certificate of Incorporation and the Certificate of Designation. The Company has
obtained the written consent of Baxter Healthcare Corporation under the Baxter
Credit Agreement and the Series A Preferred Stock to the payment of the regular
dividends on the Series B Preferred Stock.
21. ERISA. The consummation of the transactions contemplated in the
Securities Agreement and compliance by the Company with the provisions thereof
and of the other Operative Documents will not involve any prohibited transaction
within the meaning of ERISA or Section 4975 of the Code. Each Plan complies in
all material respects with all applicable statutes and governmental rules and
regulations, and (a) no Reportable Event has occurred and is continuing with
respect to any Plan, (b) neither the Company nor any ERISA Affiliate has
withdrawn from any Plan or Multiemployer Plan or instituted steps to do so, and
(c) no steps have been instituted to terminate any Plan. No condition exists or
event or transaction has occurred in connection with any Plan which could
reasonably be expected to result in the incurrence by the Company or any ERISA
Affiliate of any material liability, fine or penalty. No Plan maintained by the
Company or any ERISA Affiliate, nor any trust created thereunder, has incurred
any "accumulated funding deficiency" as defined in Section 302 of ERISA nor does
the present value of all benefits vested under all Plans exceed, as of the last
annual valuation date,
D-6
<PAGE>
the value of the assets of the Plans allocable to such vested benefits. Neither
the Company nor any ERISA Affiliate has any contingent liability with respect to
any post-retirement "welfare benefit plan" (as such term is defined in ERISA)
except as has been disclosed to the Purchaser.
22. Compliance with Law. (a) Neither the Company nor any Subsidiary (i)
is in violation of any law, ordinance, franchise, governmental rule or
regulation to which it is subject; or (ii) has failed to obtain any License
necessary to the ownership of its property or to the conduct of its business,
which violation or failure to obtain could reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any Subsidiary is in default
with respect to any order of any court or governmental authority or arbitration
board or tribunal which default could reasonably be expected to have a Material
Adverse Effect.
(b) Without limiting the provisions of clause (a) of this paragraph 22,
the Company is in compliance with all applicable Environmental Laws, the failure
to comply with which could reasonably be expected to have a Material Adverse
Effect.
23. Investment Company Act. Neither the Company nor any of its
Subsidiaries is, and neither of them is directly or indirectly controlled by, or
acting on behalf of any Person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
24. Absence of Foreign or Enemy Status. Neither the Company nor any of its
Subsidiaries, is, by reason of being a "national" of a "designated foreign
country" or a "specially designated national" within the meaning of the
Regulations of the Office of Foreign Assets Control, United States Treasury
Department (31 C.F.R., Subtitle B, Chapter V), or subject to any restriction or
prohibition under, or is in violation of, any federal statute or Presidential
Executive Order, or any rules or regulations of any department, agency or
administrative body promulgated under any such statute or Order, concerning
trade or other relations with any foreign country or any citizen or national
thereof or the ownership or operation of any property. Neither the sale of the
Subject Securities by the Company hereunder nor its intended use of the proceeds
thereof violates the Trading with the Enemy Act, as amended, or any of the
foregoing foreign asset control regulations enabling legislation or executive
orders relating thereto.
25. Put Agreement with Baxter. The Put Agreement dated as of November
24, 1999 between the Company and Baxter is in full force and effect, all
conditions precedent required by Baxter to the issuance of the Put Right
Certificates as provided in the Put Agreement have been satisfied without waiver
and no default under the Put Agreement has occurred.
D-7
<PAGE>
In Witness Whereof, this Certificate is executed and delivered this
______ day of _______________, ____.
Nexell Therapeutics Inc.
By /s/
------------------------------
Its ______________________________
D-8
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
VIMRx PHARMACEUTICALS INC.
The undersigned, the President of VIMRx PHARMACEUTICALS INC., a
Delaware corporation (the "Corporation"), does hereby execute the following
Amended and Restated Certificate of Incorporation pursuant to Sections 242(b)
and 245 of the Delaware General Corporation Law:
1. The name of the Corporation is:
VIMRx PHARMACEUTICALS INC.
2. The Corporation was originally incorporated under the name
of "Cellular Immunology Corporation" and the original Certificate of
Incorporation of the Corporation was filed in the Office of the Secretary of
State of Delaware on December 30, 1986.
3. The Certificate of Incorporation of the Corporation is
hereby amended and restated to read in its entirely as follows:
"FIRST: The name of the Corporation is:
VIMRx PHARMACEUTICALS INC.
SECOND: The address of its registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
19801. The name of its registered agent at such address is The Corporation Trust
Company.
THIRD: The nature of the business or purposes to be conducted
or promoted is to engage in any lawful act or activity for which corporations
may, now or hereafter, be organized under the Delaware General Corporation Law
("Delaware Law").
FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is Forty Million (40,000,000), all of
which shall be common stock with a par value of $.001.
FIFTH: Except to the extent otherwise specifically provided in
the Bylaws of the Corporation, the Board of Directors may adopt, amend or repeal
the Bylaws of the Corporation.
SIXTH: No election of directors of the Corporation need be by
written ballot unless the Bylaws of the Corporation so provide.
SEVENTH: The Corporation shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as the same may be
<PAGE>
amended and supplemented, or by any successor thereto, indemnify any and all
persons whom it shall have power to indemnify under said Section from and
against any and all of the expenses, liabilities or other matters referred to in
or covered by said Section. The Corporation shall advance expenses to the
fullest extent permitted by said Section. Such right to indemnification and
advancement of expenses shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person. The indemnification and
advancement of expenses provided for herein shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
EIGHTH: To the fullest extent that the General Corporation Law
of the State of Delaware, as it exists on the date hereof or as it may hereafter
be amended, permits the limitation or elimination of the liability of directors,
no director shall be personally liable to the Corporation or its stockholders
for any monetary damages for breach of fiduciary duty as a director.
Notwithstanding the foregoing, a director shall be liable to the extent provided
by applicable law (i) for any breach of such director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which such director derived an improper personal benefit.
NINTH: Neither the amendment or repeal of Articles SEVENTH or
EIGHTH, nor the adoption of any provision of this Certificate of Incorporation
inconsistent with such Articles shall adversely affect any right or protection
existing under such Articles at the time of such amendment, repeal or adoption."
4. The seven million nine hundred forty seven thousand seven
hundred twenty-four (7,947,724) shares of common stock, $.01 par value, of the
Corporation presently issued and outstanding are hereby converted and changed
into an aggregate of four million seven hundred sixty thousand four hundred
twenty-one (4,760,421) issued and outstanding shares of the new class of common
stock, $.001 par value, of the Corporation at the rate of .59896544 new shares
of $.001 par value for each outstanding share of $.01 par value, rounded up to
the next whole share with respect to the aggregate number of newly converted
shares to be issued to each holder of record of $.01 par value shares, all such
newly converted shares to be restricted from sale, assignment or transfer prior
to August 31, 1991, the certificates for such shares to be legended accordingly,
and any purported sale, assignment or transfer prior to such date to be void and
of no force or effect.
5. The foregoing amendment to the Certificate of Incorporation
of the Corporation was adopted by vote of the Board of Directors and the written
consent of the holders of a majority of the outstanding capital stock of the
Corporation in accordance with Sections 228, 242 and 245 of the Delaware Law.
Prompt notice thereof has been given to those stockholders who have not so
consented in writing, in accordance with
-2-
<PAGE>
Section 228 of the Delaware Law.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day
of July, 1990.
/s/ Richard F. Maradie
-----------------------------------
Richard F. Maradie
President
Attest: /s/ Barbara Freides
-------------------------------
Barbara Freides
Assistant Secretary
-3-
<PAGE>
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
VIMRx PHARMACEUTICALS INC.
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
VIMRx Pharmaceuticals Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies as follows:
1. The name of the Corporation is VIMRx Pharmaceuticals Inc.
and the name under which the Corporation originally was incorporated is Cellular
Immunology Corporation.
2. The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of Delaware on December 30, 1986.
3. The Amended and Restated Certificate of Incorporation of the
Corporation as heretofore amended or supplemented, is hereby further amended by
striking out "Article FOURTH" and substituting in lieu thereof a new "Article
FOURTH" changing the authorized capital stock of the Corporation to read as
follows:
"FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is Sixty Million
(60,000,000), all of which shall be common stock with a par
value of $.001."
4. The amendment to the Amended and Restated Certificate of
Incorporation, herein certified has been duly adopted in the manner and by the
vote prescribed by Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be affixed hereto and this certificate to be signed by its President and
attested by its Secretary this 12/th/ day of June, 1993.
VIMRx PHARMACEUTICALS INC.
By /s/ Richard I Podell
------------------------------
Richard I. Podell
President
Attest:
By: /s/ Lowell S. Lifschultz
-------------------------------
Lowell S. Lifschultz
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
VIMRx PHARMACEUTICALS INC.
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
VIMRx Pharmaceuticals Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies as follows:
1. The name of the Corporation is VIMRx Pharmaceuticals Inc.
and the name under which the Corporation originally was incorporated is
"Cellular Immunology Corporation."
2. The original Certificate of Incorporation of the Corporation
was filed with the Secretary of State of Delaware on December 30, 1986.
3. The Amended and Restated Certificate of Incorporation of the
Corporation as heretofore amended or supplemented (the "Certificate of
Incorporation"), is hereby further amended by striking out "Article IV" and
substituting in lieu thereof a new "Article IV" changing the authorized capital
stock of the Corporation to read as follows:
"FOURTH:
The authorized capitol stock of the Corporation shall consist of
one hundred twenty million (120,000,000) shares, consisting of one hundred
twenty million (120,000,000) shares of Common Stock, each having a par value of
$.001 (the "Common Stock")."
4. The amendment to the Certificate of Incorporation herein
certified has been duly adopted in the manner and by the vote prescribed by
Section 242 of the General Corporation Law of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be affixed hereto and this certificate to be signed by a duly authorized
officer of the Corporation and attested by its Secretary this 20th day of June,
1996.
VIMRx PHARMACEUTICALS INC.
By: /s/ Richard L. Dunning
----------------------------------
Richard L. Dunning, President
and Chief Executive Officer
Attest:
By: /s/ Lowell S. Lifschultz
--------------------------------
Lowell S. Lifschultz
Secretary
-2-
<PAGE>
CERTIFICATE OF CHANGE OF REGISTERED AGENT
and
REGISTERED OFFICE
VIMRx PHARMACEUTICALS INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
The present registered agent of the corporation is The
Corporation Trust Company and the present registered office of the corporation
is in the county of New Castle.
The Board of Directors of VIMRx PHARMACEUTICALS INC. adopted the
following resolution on the 6th of February, 1997.
RESOLVED, that the registered office of the Corporation in the
State of Delaware be and it hereby is changed to 2751 Centerville
Road in the City of Wilmington, County of New Castle and the
authorization of the present registered agent of this corporation
be and the same is hereby withdrawn, and VIMRx PHARMACEUTICAL
INC. shall be and is hereby constituted and appointed the
registered agent of this corporation at the above address of its
registered office.
IN WITNESS WHEREOF, VIMRx PHARMACEUTICALS INC. has caused this statement to be
signed by Richard L. Dunning, its President this 10th day of March, 1997.
By: /s/ Richard L. Dunning
----------------------------------
Richard L. Dunning
President
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
VIMRx PHARMACEUTICALS INC.
______________________
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
______________________
VIMRx Pharmaceuticals Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies as follows:
1. The name of the Corporation is VIMRx Pharmaceuticals Inc.
and the name under which the Corporation originally was incorporated was
"Cellular Immunology Corporation."
2. The original Certificate of Incorporation of the Corporation
was filed with the Secretary of State of Delaware on December 13, 1986.
3. The Amended and Restated Certificate of Incorporation of the
Corporation, as heretofore amended or supplemented (the "Certificate of
Incorporation"), is hereby further amended by striking out "Article IV" and
substituting in lieu thereof a new "Article IV" changing the authorized capital
stock of the Corporation to read as follows:
"FOURTH:
A. The authorized capital stock of the Corporation shall consist of
one hundred twenty million one hundred fifty thousand (120,150,000) shares,
consisting of one hundred twenty million (120,000,000) shares of Common Stock,
each having a par value of $.001 (the "Common Stock"), and one hundred fifty
thousand (150,000) shares of Preferred Stock, each having a par value of $.001
(the "Preferred Stock").
B. The Board of Directors hereby creates and establishes and
authorizes the issuance of a first series of preferred stock, such series to
consist of 150,000 shares of this Corporation's authorized and unissued
Preferred Stock, each share having a par value of $.001, and the Board of
Directors hereby fixes the designation of such series as "Series A Cumulative
Convertible Preferred Stock" (hereinafter referred to as the "Preferred Stock")
and fixes the number of shares constituting such series at 150,000, and hereby
determines the powers, preferences, rights, qualifications, limitations and
restrictions of such series as follows:
Section 1.
Dividends
(a) The holders of the Preferred Stock shall be entitled to receive
dividends thereon at the rate of 6% of the Liquidation Preference (as defined in
Section 2) per share per annum, (as
<PAGE>
adjusted for any combinations, consolidations, stock distributions or stock
dividends with respect to such shares) as and when declared by the Board of
Directors, before any dividend or distribution shall be declared, set apart for,
or paid upon the Common Stock of the Corporation, which dividend shall be
payable in additional shares of Preferred Stock, each valued at their
Liquidation Preference. The dividends on the Preferred Stock shall be
cumulative, so that if the Corporation fails in any fiscal year to pay such
dividends on all of the issued and outstanding Preferred Stock, such deficiency
in the dividends shall be fully paid before any dividends or distributions shall
be paid on or set apart for the Common Stock. All dividends and distributions on
the Preferred Stock shall be made pro rata per share to all holders of Preferred
Stock; provided, however, that, notwithstanding the foregoing, until all
cumulative dividends on the Preferred Stock shall have been fully paid, all
dividends and distributions on the Preferred Stock shall be made ratably to the
holders thereof in proportion to the respective amounts that would be payable on
such shares if such dividend arrearages were paid in full. Such dividends shall
accrue annually on the anniversary of the Original Issuance Date (as defined in
Section 3(d)).
(b) For purposes of this Section 1, unless the context requires
otherwise, "distribution" shall mean the transfer of cash or property without
consideration, whether by way of dividend or otherwise, or the purchase or
redemption of shares of the Corporation (other than repurchases of Common Stock
held by employees or directors of, or consultants to, the Corporation upon
termination of their employment or services pursuant to agreements providing for
such repurchase and other than redemptions in liquidation or dissolution of the
Corporation) for cash or property, including any such transfer, purchase or
redemption by a subsidiary of the Corporation.
Section 2.
Liquidation Rights
(a) Treatment at Liquidation, Dissolution or Winding Up.
(i) Except as otherwise provided in Section 2(b) below, in the
event of any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, the holders of Preferred Stock
shall be entitled to be paid first out of the assets of the Corporation
available for distribution to holders of the Corporation's capital stock of all
classes, before payment or distribution of any of such assets to the holders of
any other class of the corporation's capital stock, an amount equal to $1,000
per share of Preferred Stock (the "Liquidation Preference,") which amount shall
be subject to equitable adjustment whenever there shall occur a stock dividend,
stock split, combination of shares, reclassification or other similar event
affecting such shares), and shall include any accrued but unpaid dividends.
(ii) After payment shall have been made in full to the holders
of Preferred Stock pursuant to Section 2(a)(i) hereof or funds necessary for
such payment shall have been set aside by the Corporation in trust for the
account of the holders of Preferred Stock to be available for such payment, the
remaining assets of the Corporation shall be distributed ratably to the holders
of Common Stock to the exclusion of the Preferred Stock.
(iii) If the assets of the Corporation shall be insufficient
to permit the payment in full to the holders of Preferred Stock of all amounts
distributable to them under Section 2(a)(i) hereof, then the entire assets of
the Corporation available for such distribution
2
<PAGE>
shall be distributed ratably among the holders of Preferred Stock in proportion
to the full preferential amount each such holder is otherwise entitled to
receive.
(b) Treatment of Reorganizations, Consolidations, Mergers and Sales
of Assets. A consolidation or merger of the Corporation with or into another
unaffiliated corporation or a sale of all or substantially all of the assets of
the Corporation, shall not be regarded as a liquidation, dissolution or winding
up of the affairs of the Corporation for purposes of this Section 2, but shall
result in conversion of the Preferred Stock into Common Stock as set forth in
Section 3(c).
(c) Distributions Other Than Cash. The value of any distribution
provided for in this Section 2, or portion thereof, payable in property other
than cash shall be the fair value (as determined by the Board of Directors in
good faith) of such property at the time of such distribution.
Section 3.
Conversion
The holders of Preferred Stock shall have conversion rights (the
"Conversion Rights") and the Preferred Stock shall be subject to conversion, as
follows:
(a) Right to Convert; Conversion Price. Each share of Preferred Stock
shall be convertible, without the payment of any additional consideration by the
holder thereof and at the option of the holder thereof, at any time after
eighteen (18) months after the Original Issuance Date (as defined in Section
3(d) below), at the office of the Corporation or any transfer agent for the
Preferred Stock, into such whole number of fully paid and nonassessable shares
of Common Stock as is determined by dividing $1,000 by the Conversion Price,
determined as hereinafter provided, in effect at the time of conversion. The
Conversion Price at which shares of Common Stock shall be deliverable upon
conversion without the payment of any additional consideration by the holder of
Preferred Stock (the "Conversion Price") shall initially be the highest average
of closing bid prices per share of Common Stock on the principal market on which
such Common Stock trades for any sixty (60) consecutive trading day period
commencing with the Original Issuance Date and ending on the date which is
eighteen (18) months from such date, but in no event shall such Conversion Price
be less than $5.50 or greater than $7.50. Such initial Conversion Price shall be
subject to adjustment, in order to adjust the number of shares of Common Stock
into which Preferred Stock is convertible, as hereinafter provided. The right of
conversion with respect to any shares of Preferred Stock which the Corporation
redeems pursuant to Section 5(a) hereof shall terminate at the close of business
on the Redemption Date (as defined in Section 5 of this Certificate of
Designations), unless the Corporation shall default in the payment of the
redemption price for such shares of Preferred Stock, in which case such
termination shall occur upon payment of the redemption price of such shares.
(b) Mechanics of Conversion; Dividends; Fractional Shares. Before any
holder of Preferred Stock shall be entitled to convert the same into shares of
Common Stock, such holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the Preferred Stock, and shall give written notice to the Corporation
at such office that such holder elects to convert the same. At the time of each
conversion of shares of Preferred Stock, the Corporation shall also issue shares
of Common Stock in an amount equal to all dividends declared and unpaid on the
shares of Preferred Stock surrendered for conversion to the date upon which such
conversion is deemed to occur, valued at
3
<PAGE>
the Conversion Price. In lieu of any fractional shares of Common Stock to which
the holder would otherwise be entitled, the Corporation shall pay cash equal to
such fraction multiplied by the then effective Conversion Price. The Corporation
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which such holder shall be entitled as aforesaid,
together with cash in lieu of any fraction of a share. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
(c) Automatic Conversion.
(i) Each share of Preferred Stock shall automatically be
converted into shares of Common Stock at the then effective Conversion Price:
(1) on the date which is seven (7) years after the Original
Issuance Date; or
(2) immediately prior to the effective time of any merger,
sale of assets, reorganization or like event in which the Corporation is not the
surviving entity (if such event occurs prior to eighteen months from the
Original Issuance Date, then the Conversion Price shall be equal to the fair
value of the consideration to be received by the holder of a share of Common
Stock, as determined in good faith by the Corporation's Board of Directors, but
in no event greater than $7.50), or
(3) upon the written election of the holders of not less
than a majority in voting power of the then outstanding shares of Preferred
Stock to require such mandatory conversion.
(ii) Upon the occurrence of an event specified in Section
3(c)(i) hereof, all shares of Preferred Stock shall be converted automatically
without any further action by any holder of such shares and whether or not the
certificate(s) representing such shares are surrendered to the Corporation or
the transfer agent for the Preferred Stock; provided, however, that the
Corporation shall not be obligated to issue a certificate or certificates
evidencing the shares of Common Stock issuable upon such conversion unless the
certificate(s) evidencing such shares of Preferred Stock being converted are
either delivered to the Corporation or the transfer agent for the Preferred
Stock, or the holder notifies the Corporation or such transfer agent that such
certificate or certificates have been lost, stolen, or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection therewith ("Indemnity Agreement"), except that
such holder shall not be required to provide any indemnity bond. Upon the
automatic conversion of Preferred Stock, each holder of Preferred Stock shall
surrender the certificate(s) representing such holder's shares of Preferred
Stock or the aforesaid Indemnity Agreement at the office of the Corporation or
of the transfer agent for the Preferred Stock. Thereupon, there shall be issued
and delivered to such holder, promptly at such office and in such holder's name
as shown on such surrendered certificate(s), a certificate or certificates for
the number of shares of Common Stock into which the shares of Preferred Stock
surrendered were convertible on the date on which such automatic conversion
occurred. No fractional shares of Common Stock shall be issued upon the
automatic conversion of Preferred Stock. In lieu of any fractional shares of
Common Stock to which the holder would
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otherwise be entitled, the Corporation shall pay cash equal to such fraction
multiplied by the then effective Conversion Price.
(d) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time or from time to time after the date on which shares of the
Preferred Stock are first issued (the "Original Issuance Date") effect a
subdivision of the outstanding Common Stock, the Conversion Price in effect
immediately before that subdivision shall be proportionately decreased. If the
Corporation shall at any time or from time to time after the Original Issuance
Date combine the outstanding shares of Common Stock, the Conversion Price in
effect immediately before the combination shall be proportionately increased.
Any adjustment under this paragraph shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(e) Adjustment for Certain Dividends and Distributions.
(1) In the event the Corporation at any time or from time to
time after the Original Issuance Date shall make or issue, or fix a record date
for the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock, then and in
each such event the Conversion Price then in effect shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the close of business on such record date, by multiplying the Conversion
Price then in effect by a fraction:
(A) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(B) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or such distribution is not fully made on the date fixed
therefor, the Conversion Price shall be recomputed accordingly as of the close
of business on such record date and thereafter the Conversion Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions.
(2) For the purposes of Section 3(e)(1) hereof, the total
number of shares of Common Stock deemed to be issued and outstanding shall
include (i) all shares of Common Stock issuable on conversion of all shares of
Preferred Stock outstanding and (ii) all shares of Common Stock issued and
outstanding and entitled to receive such dividend.
(f) Adjustments for Other Dividends and Distributions. In the event
the Corporation at any time or from time to time after the Original Issuance
Date shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, including a
cash dividend, then and in each such event provision shall be made so that the
holders of Preferred Stock shall receive upon conversion thereof in addition to
the number of shares of Common Stock receivable thereupon, the amount of
securities of the Corporation
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<PAGE>
and/or cash that they would have received had their Preferred Stock been
converted into Common Stock on the date of such event and had they thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by them as aforesaid during such
period, giving application to all adjustments called for herein during such
period.
(g) Adjustment for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon the conversion of the Preferred Stock shall be
changed into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification, or otherwise (other
than a subdivision or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation, or sale of assets provided
for in Section 3(c), then and in each such event the holder of each such share
of Preferred Stock shall have the right thereafter to convert such share into
the kind and amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification, or other change, by
holders of the number of shares of Common Stock into which such shares of
Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
(h) [INTENTIONALLY OMITTED]
(i) Adjustment of Conversion Price Upon Issuance of Additional Shares
of Common Stock.
(1) Subject always to Section 3(i)(5), in the event that at any
time or from time to time after the Original Issuance Date, through and
including the date which ends eighteen (18) months after the Original Issuance
Date, but not thereafter, the corporation shall issue any shares of Common Stock
or securities convertible into or exercisable to purchase shares of Common Stock
("Additional Shares of Common Stock") excluding shares issued upon a stock split
or combination as provided in Section 3(d) or as a dividend or distribution as
provided in Sections 3(e) or (f)), without consideration or for a consideration
per share less than the Conversion Price in effect on the date of, and
immediately prior to, the issuance or deemed issuance of such Additional Shares
of Common Stock, (which shall include the assumed conversion of all convertible
securities and the assumed exercise of all convertible securities or rights to
purchase shares of Common Stock in accordance with the terms of such convertible
securities or rights to purchase Common Stock), then and in such event, the
applicable Conversion Price then in effect shall be reduced, concurrently with
such issue, to a price (calculated to the nearest cent) determined by
multiplying such Conversion Price by a fraction:
(A) the numerator of which shall be (x) the number of
shares of Common Stock outstanding immediately prior to such issue plus (y) the
number of shares of Common Stock which the aggregate consideration received or
deemed to have been received by the corporation for the total number of
Additional Shares of Common Stock so issued would purchase at the Conversion
Price in effect on the date of, and immediately prior to, the issuance or deemed
issuance of such Additional Shares of Common Stock, and
(B) the denominator of which shall be the number of shares
of Common Stock outstanding immediately prior to such issue plus the number of
such Additional Shares of Common Stock so issued or deemed to be issued.
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<PAGE>
(2) For the purposes of Section 3(i) (1) hereof, all shares of
Common Stock issuable upon conversion of shares of Preferred Stock outstanding
immediately prior to any issue of Additional Shares of Common Stock, or any
event with respect to which Additional Shares of Common Stock shall be deemed to
be issued, shall be deemed to be outstanding; and immediately after any
Additional Shares of Common Stock are deemed issued pursuant to Section 3(i)(l)
such Additional Shares of Common Stock shall be deemed to be outstanding.
(3) Notwithstanding anything to the contrary contained herein,
the applicable Conversion Price in effect at the time Additional Shares of
Common Stock are issued or deemed to be issued shall not be reduced pursuant to
Section 3(i)(1) hereof at such time if the amount of such reduction would be an
amount less than $. 01, but any such amount shall be carried forward and
reduction with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other amount or
amounts so carried forward, shall aggregate $.01 or more.
(4) Determination of Consideration. For purposes of this
Section 3(i) , the consideration received by the Corporation for the issue of
any Additional Shares of Common Stock shall be computed as follows:
(i) Cash and Property: Such consideration shall:
(A) insofar as it consists of cash, be computed at the
aggregate amounts of cash received by the Corporation, excluding
amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue,
as determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of
such consideration so received, computed as provided in clauses (A) and
(B) above, as determined in good faith by the Board of Directors.
(ii) Options and Convertible Securities. The consideration
per share received by the Corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to Section 3(i)(1) , relating to options,
warrants or rights to purchase Common Stock, and convertible securities, shall
be determined by dividing (W) the total amount, if any, received or receivable
by the Corporation as consideration for the issue of such options or convertible
securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Corporation upon the exercise of such options or the conversion or exchange
of such convertible securities, or in the case of options for convertible
securities, the exercise of such options for convertible securities and the
conversion or exchange of such convertible securities, by (X) the maximum number
of shares of Common Stock (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such number) issuable upon the exercise of such options or the conversion or
exchange of such convertible securities. (5)Notwithstanding any other provision
of this Section 3(i), there shall be no deemed issuance of Additional Shares
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<PAGE>
of Common Stock upon (A) issuance of any shares of Preferred Stock as a dividend
on the Preferred Stock, (B) conversion of any Preferred Stock, (C) exercise of
any options or warrants issued and outstanding on the Original Issuance Date,
(D) grant or exercise of any options to purchase Common Stock pursuant to the
Corporation's Stock Option Plan as in effect on the Original Issuance Date or
any subsequent amendment thereof which is approved by the Corporation's
stockholders pursuant to Securities and Exchange Commission regulations, or (E)
the sale for cash of no more than 3,333,334 shares of Common Stock for aggregate
gross proceeds of no more than $10,000,000, at a gross per-share price of no
less than $3.00. In the event that the gross per-share sale price of a share of
Common Stock under Section 3(i)(5)(E) shall be less than $3.00, then the
difference between $3.00 and the actual gross per- share sale price shall be
subtracted from the Conversion Price utilized in the calculation set forth in
Section 3(i)(1)(A)(y).
(j) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 3,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each affected
holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any affected holder of Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of each share of Preferred
Stock.
(k) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall mail to each
holder of Preferred Stock at least ten (10) days prior to such record date a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend or distribution.
(l) Common Stock Reserved. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all Preferred Stock.
(m) Certain Taxes. The Corporation shall pay any issue or transfer
taxes payable in connection with the conversion of any shares of Preferred
Stock; provided, however, that the Corporation shall not be required to pay any
tax that may be payable in respect of any transfer to a name other than that of
the holder of such Preferred Stock.
Section 4.
Voting Rights
Except as otherwise required by law or by Section 7, the holders of
Preferred Stock shall not have the right to vote on any matter submitted to a
vote of the stockholders of the Corporation. With respect to all questions as to
which, under law, stockholders are entitled to vote by classes, the holders of
Preferred Stock shall vote together as a single class separately from the
holders of Common Stock.
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<PAGE>
Section 5.
No Reissuance Preferred Stock
No share or shares of Preferred Stock acquired by the Corporation by
reason of redemption, purchase, conversion or otherwise shall be reissued, and
all such shares shall be canceled, retired and eliminated from the shares which
the Corporation shall be authorized to issue.
Section 6.
Protective Covenant
The Corporation shall not, without the affirmative vote or written
consent of the holders of a majority of the then issued and outstanding shares
of Preferred Stock, amend its Certificate of Incorporation to provide for the
creation or issuance of any class or series of capital stock which shall rank
pari passu or senior to the Preferred Stock in priority to receive the
liquidation preference on the Preferred Stock."
4. The amendment to the Certificate of Incorporation herein
certified has been duly adopted in the manner and by the vote prescribed by
Section 242 of the General Corporation Law of the State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Richard L. Dunning, its President, and attested by Lowell S.
Lifschultz, its Secretary, as of this 16th day of December, 1997.
VIMRx PHARMACEUTICALS INC.
By: /s/ Richard L. Dunning
----------------------------------------
Richard L. Dunning
President and Chief Executive Officer
Attest:
By: /s/ Lowell S. Lifschultz
-------------------------------
Lowell S. Lifschultz
Secretary
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<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
VIMRX PHARMACEUTICALS INC.
============================================
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
============================================
VIMRX Pharmaceuticals Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies as follows:
1. The name of the Corporation is VIMRX Pharmaceuticals Inc. and the
name under which the Corporation originally was incorporated was "Cellular
Immunology Corporation."
2. The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of Delaware on December 13, 1986.
3. The Amended and Restated Certificate of Incorporation of the
Corporation, as heretofore amended or supplemented (the "Certificate of
Incorporation"), is hereby further amended by striking out "Article I" and
substituting in lieu thereof a new "Article I" changing the name of the
Corporation to read as follows:
"FIRST: The name of the Corporation is:
Nexell Therapeutics Inc."
4. The Amended and Restated Certificate of Incorporation of the
Corporation, as heretofore amended or supplemented (the "Certificate of
Incorporation"), is hereby further amended by striking out "Article IV" and
substituting in lieu thereof a new "Article IV" changing the authorized capital
stock of the Corporation to read as follows:
"FOURTH
A. The authorized capital stock of the Corporation shall consist of one
hundred sixty-one million, one hundred fifty thousand (161,150,000) shares,
consisting of one hundred sixty million (160,000,000) shares of Common Stock,
each having a par value of $.001 (the "Common Stock"), and one million, one
hundred fifty thousand (1,150,000) shares of Preferred Stock, each having a par
value of $.001 (the "Preferred Stock").
B. The Preferred Stock may be issued from time to time in one or more
series of any number of shares, provided that the aggregate number of shares
issued and not canceled of any and all such series shall not exceed the total
number of shares of Preferred Stock hereinabove authorized. Each series of
Preferred Stock shall be distinctively designated by letter
<PAGE>
or descriptive words. All series of Preferred Stock shall rank equally and be
identical in all respects except as provided by this Article FOURTH or in a
resolution of the Board of Directors providing for the issuance of any series of
Preferred Stock.
C. Authority is hereby expressly vested in the Board of Directors
from time to time to issue the Preferred Stock as Preferred Stock of any series
and in connection with the creation of each such series to fix by the resolution
or resolutions providing for the issue of shares thereof the designations,
preferences, limitations and relative participating, optional or other special
rights, and the qualifications, limitations or restrictions thereof, to the full
extent now or hereafter permitted by this Certificate of Incorporation and the
laws of the State of Delaware, including, without limitation:
(1) the distinctive designation of such series and the number of
shares which shall constitute such series, which number may be increased (but
not above the total number of authorized shares of the Preferred Stock) or
decreased (but not below the number of shares thereof then outstanding) from
time to time by a resolution or resolutions of the Board of Directors, all
subject to the conditions or restrictions set forth in the resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock;
(2) the dividend rate payable on shares of such series, the
conditions and dates upon which such dividends shall be payable, the preferences
or relation which such dividend shall bear to the dividends payable on any other
class or classes or any other series of capital stock (except as otherwise
expressly provided in this Certificate of Incorporation), and whether such
dividends shall be cumulative or non-cumulative and, if cumulative, the date or
dates from which dividends shall accumulate;
(3) whether the shares of such series shall be subject to
redemption by the Corporation and, if made subject to redemption, the price or
prices at which, and the terms and conditions on which, the shares of such
series may be redeemed by the Corporation;
(4) the amount or amounts payable upon the shares of such series
in the event of any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation and the preferences or relation which such payments shall
bear to such payments made on any other class or classes or any other series of
capital stock (except as otherwise expressly provided in this Certificate of
Incorporation);
(5) whether or not the shares of such series shall be made
convertible into, or exchangeable for, shares of any other class or classes of
capital stock of the Corporation, or any series thereof, or for any other series
of the same class of capital stock of the Corporation or for debt of the
Corporation evidenced by an instrument of indebtedness, and, if so convertible
or exchangeable, the conversion price or prices, or the rate or rates of
exchange, and the adjustments thereof, if any, at which such conversion or
exchange may be made, and any other terms and conditions of such conversion or
exchange;
(6) whether the holders of shares of such series shall have any
right or power to vote or to receive notice of any meeting of stockholders,
either generally or as a condition to specified corporate action; and
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(7) any other preferences and relative, participating, optional or
other special rights and qualifications, limitations or restrictions thereof as
may be permitted by the laws of the State of Delaware and as shall not be
inconsistent with this Article FOURTH.
D. Shares of Preferred Stock which have been issued and reacquired in any
manner by the Corporation (excluding, until the Corporation elects to retire
them, shares which are held as treasury shares, but including shares redeemed,
shares purchased and retired and shares which have been converted into shares of
Common Stock) shall have the status of authorized but unissued shares of
Preferred Stock and may be reissued as a part of the series of which they were
originally a part or may be reissued as a part of another series of Preferred
Stock, all subject to the conditions or restrictions on issuance set forth in
the resolution or resolutions adopted by the Board of Directors providing for
the issuance of any series of Preferred Stock.
E. Except as otherwise provided by the resolution or resolutions
providing for the issuance of any series of Preferred Stock, or in subsection H
of this Article FOURTH, after payment shall have been made to the holders of
Preferred Stock of the full amount of dividends to which they shall be entitled
pursuant to the resolution or resolutions providing for the issuance of any
series of Preferred Stock, the holders of Common Stock shall be entitled, to the
exclusion of the holders of Preferred Stock of any and all series, to receive
such dividends as from time to time may be declared by the Board of Directors.
F. Except as otherwise provided by the resolution or resolutions
providing for the issuance of any series of Preferred Stock, in the event of any
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, after payment shall have been made to the holders of Preferred
Stock of the full amounts to which they shall be entitled pursuant to the
resolution or resolutions providing for the issuance of any series of Preferred
Stock, the holders of Common Stock shall be entitled, to the exclusion of the
holders of Preferred Stock of any and all series, to share, ratably according to
the number of shares of Common Stock held by them, in all remaining assets of
the Corporation available for distribution to its stockholders.
G. The holders of Preferred Stock shall not have any preemptive rights
except to the extent such rights shall be specifically provided for in the
resolution or resolutions providing for the issuance thereof adopted by the
Board of Directors.
H. The Board of Directors hereby creates and establishes and authorizes
the issuance of a first series of preferred stock, such series to consist of
150,000 shares of this Corporation's authorized and unissued Preferred Stock,
each share having a par value of $.001, and the Board of Directors hereby fixes
the designation of such series as "Series A Cumulative Convertible Preferred
Stock" (hereinafter referred to as the "Series A Preferred Stock") and fixes the
number of shares constituting such series at 150,000, and hereby determines the
powers, preferences, rights, qualifications, limitations and restrictions of
such series as follows:
SECTION 1.
DIVIDENDS
(a) The holders of the Series A Preferred Stock shall be entitled to
receive dividends thereon at the rate of 6% of the Liquidation Preference (as
defined in Section 2) per share per annum, (as adjusted for any combinations,
consolidations, stock distributions or stock dividends with respect to such
shares) as and when declared by the Board of Directors, before any dividend
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<PAGE>
or distribution shall be declared, set apart for, or paid upon the Common Stock
of the Corporation, which dividend shall be payable in additional shares of
Series A Preferred Stock, each valued at their Liquidation Preference. The
dividends on the Series A Preferred Stock shall be cumulative, so that if the
Corporation fails in any fiscal year to pay such dividends on all of the issued
and outstanding Series A Preferred Stock, such deficiency in the dividends shall
be fully paid before any dividends or distributions shall be paid on or set
apart for the Common Stock. All dividends and distributions on the Series A
Preferred Stock shall be made pro rata per share to all holders of Series A
Preferred Stock; provided, however, that, notwithstanding the foregoing, until
all cumulative dividends on the Series A Preferred Stock shall have been fully
paid, all dividends and distributions on the Series A Preferred Stock shall be
made ratably to the holders thereof in proportion to the respective amounts that
would be payable on such shares if such dividend arrearages were paid in full.
Such dividends shall accrue annually on the anniversary of the Original Issuance
Date (as defined in Section 3(d)).
(b) For purposes of this Section 1, unless the context requires otherwise,
"distribution" shall mean the transfer of cash or property without
consideration, whether by way of dividend or otherwise, or the purchase or
redemption of shares of the Corporation (other than repurchases of Common Stock
held by employees or directors of, or consultants to, the Corporation upon
termination of their employment or services pursuant to agreements providing for
such repurchase and other than redemptions in liquidation or dissolution of the
Corporation) for cash or property, including any such transfer, purchase or
redemption by a subsidiary of the Corporation.
SECTION 2.
LIQUIDATION RIGHTS
(a) Treatment at Liquidation, Dissolution or Winding Up.
(i) Except as otherwise provided in Section 2(b) below, in the event
of any liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or involuntary, the holders of Series A Preferred Stock shall
be entitled to be paid first out of the assets of the Corporation available for
distribution to holders of the Corporation's capital stock of all classes,
before payment or distribution of any of such assets to the holders of any other
class of the corporation's capital stock, an amount equal to $1,000 per share of
Series A Preferred Stock (the "Liquidation Preference"), which amount shall be
subject to equitable adjustment whenever there shall occur a stock dividend,
stock split, combination of shares, reclassification or other similar event
affecting such shares), and shall include any accrued but unpaid dividends.
(ii) After payment shall have been made in full to the holders of
Series A Preferred Stock pursuant to Section 2(a)(i) hereof or funds necessary
for such payment shall have been set aside by the Corporation in trust for the
account of the holders of Series A Preferred Stock to be available for such
payment, the remaining assets of the Corporation shall be distributed ratably to
the holders of Common Stock to the exclusion of the Series A Preferred Stock.
(iii) If the assets of the Corporation shall be insufficient to permit
the payment in full to the holders of Series A Preferred Stock of all amounts
distributable to them under Section 2(a)(i) hereof, then the entire assets of
the Corporation available for such
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<PAGE>
distribution shall be distributed ratably among the holders of Series A
Preferred Stock in proportion to the full preferential amount each such holder
is otherwise entitled to receive.
(b) Treatment of Reorganizations, Consolidations, Mergers and Sales of
Assets. A consolidation or merger of the Corporation with or into another
unaffiliated corporation or a sale of all or substantially all of the assets of
the Corporation, shall not be regarded as a liquidation, dissolution or winding
up of the affairs of the Corporation for purposes of this Section 2, but shall
result in conversion of the Series A Preferred Stock into Common Stock as set
forth in Section 3(c).
(c) Distributions Other Than Cash. The value of any distribution provided
for in this Section 2, or portion thereof, payable in property other than cash
shall be the fair value (as determined by the Board of Directors in good faith)
of such property at the time of such distribution.
SECTION 3.
CONVERSION
The holders of Series A Preferred Stock shall have conversion rights (the
"Conversion Rights") and the Series A Preferred Stock shall be subject to
conversion, as follows:
(a) Right to Convert; Conversion Price. Each share of Series A Preferred
Stock shall be convertible, without the payment of any additional consideration
by the holder thereof and at the option of the holder thereof, at any time after
June 17, 1999, at the office of the Corporation or any transfer agent for the
Series A Preferred Stock, into such whole number of fully paid and nonassessable
shares of Common Stock as is determined by dividing $1,000 by the Conversion
Price, determined as hereinafter provided, in effect at the time of conversion.
The Conversion Price at which shares of Common Stock shall be deliverable upon
conversion without the payment of any additional consideration by the holder of
Series A Preferred Stock (the "Conversion Price") shall initially be $2.75. Such
initial Conversion Price shall be subject to adjustment, in order to adjust the
number of shares of Common Stock into which Series A Preferred Stock is
convertible, as hereinafter provided. The right of conversion with respect to
any shares of Series A Preferred Stock which the Corporation redeems pursuant to
Section 5(a) hereof shall terminate at the close of business on the Redemption
Date (as defined in Section 5 of this Certificate of Designations), unless the
Corporation shall default in the payment of the redemption price for such shares
of Series A Preferred Stock, in which case such termination shall occur upon
payment of the redemption price of such shares.
(b) Mechanics of Conversion; Dividends; Fractional Shares. Before any
holder of Series A Preferred Stock shall be entitled to convert the same into
shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Series A Preferred Stock, and shall give written notice
to the Corporation at such office that such holder elects to convert the same.
At the time of each conversion of shares of Series A Preferred Stock, the
Corporation shall also issue shares of Common Stock in an amount equal to all
dividends declared and unpaid on the shares of Series A Preferred Stock
surrendered for conversion to the date upon which such conversion is deemed to
occur, valued at the Conversion Price. In lieu of any fractional shares of
Common Stock to which the holder would otherwise be entitled, the Corporation
shall pay cash equal to such fraction multiplied by the then effective
Conversion Price. The Corporation shall, as soon as practicable
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<PAGE>
thereafter, issue and deliver at such office to such holder of Series A
Preferred Stock, a certificate or certificates for the number of shares of
Common Stock to which such holder shall be entitled as aforesaid, together with
cash in lieu of any fraction of a share. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of the shares of Series A Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
(c) Automatic Conversion.
(i) Each share of Series A Preferred Stock shall automatically be
converted into shares of Common Stock at the then effective Conversion Price on
the earliest of:
(1) December 17, 2004; or
(2) immediately prior to the effective time of any merger, sale
of assets, reorganization or like event in which the Corporation is not the
surviving entity (if such event occurs prior to June 17, 1999, then the
Conversion Price shall be equal to the fair value of the consideration to be
received by the holder of a share of Common Stock, as determined in good faith
by the Corporation's Board of Directors, but in no event greater than $2.75), or
(3) upon the written election of the holders of not less than a
majority in voting power of the then outstanding shares of Series A Preferred
Stock to require such mandatory conversion.
(ii) Upon the occurrence of an event specified in Section 3(c)(i)
hereof, all shares of Series A Preferred Stock shall be converted automatically
without any further action by any holder of such shares and whether or not the
certificate(s) representing such shares are surrendered to the Corporation or
the transfer agent for the Series A Preferred Stock; provided, however, that the
Corporation shall not be obligated to issue a certificate or certificates
evidencing the shares of Common Stock issuable upon such conversion unless the
certificate(s) evidencing such shares of Series A Preferred Stock being
converted are either delivered to the Corporation or the transfer agent for the
Series A Preferred Stock, or the holder notifies the Corporation or such
transfer agent that such certificate or certificates have been lost, stolen, or
destroyed and executes an agreement satisfactory to the Corporation to indemnify
the Corporation from any loss incurred by it in connection therewith ("Indemnity
Agreement"), except that such holder shall not be required to provide any
indemnity bond. Upon the automatic conversion of Series A Preferred Stock, each
holder of Series A Preferred Stock shall surrender the certificate(s)
representing such holder's shares of Series A Preferred Stock or the aforesaid
Indemnity Agreement at the office of the Corporation or of the transfer agent
for the Series A Preferred Stock. Thereupon, there shall be issued and delivered
to such holder, promptly at such office and in such holder's name as shown on
such surrendered certificate(s), a certificate or certificates for the number of
shares of Common Stock into which the shares of Series A Preferred Stock
surrendered were convertible on the date on which such automatic conversion
occurred. No fractional shares of Common Stock shall be issued upon the
automatic conversion of Series A Preferred Stock. In lieu of any fractional
shares of Common Stock to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.
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(d) Adjustment for Stock Splits and Combinations. If the Corporation shall
at any time or from time to time after December 17, 1997 (the "Original Issuance
Date") effect a subdivision of the outstanding Common Stock, the Conversion
Price in effect immediately before that subdivision shall be proportionately
decreased. If the Corporation shall at any time or from time to time after the
Original Issuance Date combine the outstanding shares of Common Stock, the
Conversion Price in effect immediately before the combination shall be
proportionately increased. Any adjustment under this paragraph shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(e) Adjustment for Certain Dividends and Distributions.
(1) In the event the Corporation at any time or from time to
time after the Original Issuance Date shall make or issue, or fix a record date
for the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock, then and in
each such event the Conversion Price then in effect shall be decreased as of the
time of such issuance or, in the event such a record date shall have been fixed,
as of the close of business on such record date, by multiplying the Conversion
Price then in effect by a fraction:
(A) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date, and
(B) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such
dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or such distribution is not fully made on the date fixed
therefor, the Conversion Price shall be recomputed accordingly as of the close
of business on such record date and thereafter the Conversion Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions.
(2) For the purposes of Section 3(e)(1) hereof, the total number
of shares of Common Stock deemed to be issued and outstanding shall include (i)
all shares of Common Stock issuable on conversion of all shares of Series A
Preferred Stock outstanding and (ii) all shares of Common Stock issued and
outstanding and entitled to receive such dividend.
(f) Adjustments for Other Dividends and Distributions. In the event the
Corporation at any time or from time to time after the Original Issuance Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, including a
cash dividend, then and in each such event provision shall be made so that the
holders of Series A Preferred Stock shall receive upon conversion thereof in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Corporation and/or cash that they would have
received had their Series A Preferred Stock been converted into Common Stock on
the date of such event and had they thereafter, during the period from the date
of such event to and including the conversion date, retained such securities
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receivable by them as aforesaid during such period, giving application to all
adjustments called for herein during such period.
(g) Adjustment for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon the conversion of the Series A Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for above, or a reorganization, merger, consolidation, or sale of assets
provided for in Section 3(c), then and in each such event the holder of each
such share of Series A Preferred Stock shall have the right thereafter to
convert such share into the kind and amount of shares of stock and other
securities and property receivable upon such reorganization, reclassification,
or other change, by holders of the number of shares of Common Stock into which
such shares of Series A Preferred Stock might have been converted immediately
prior to such reorganization, reclassification, or change, all subject to
further adjustment as provided herein.
(h) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the Conversion Price pursuant to this Section 3, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each affected
holder of Series A Preferred Stock a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any affected holder of Series A Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Price at the time in effect, and (iii)
the number of shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of each share of Series
A Preferred Stock.
(i) Notices of Record Date. In the event of any taking by the Corporation
of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend which is the same as cash dividends paid in previous
quarters) or other distribution, the Corporation shall mail to each holder of
Series A Preferred Stock at least ten (10) days prior to such record date a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend or distribution.
(j) Common Stock Reserved. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all Series A Preferred Stock.
(k) Certain Taxes. The Corporation shall pay any issue or transfer taxes
payable in connection with the conversion of any shares of Series A Preferred
Stock; provided, however, that the Corporation shall not be required to pay any
tax that may be payable in respect of any transfer to a name other than that of
the holder of such Series A Preferred Stock.
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SECTION 4.
VOTING RIGHTS
Except as otherwise required by law or by Section 7, the holders of
Series A Preferred Stock shall not have the right to vote on any matter
submitted to a vote of the stockholders of the Corporation. With respect to all
questions as to which, under law, stockholders are entitled to vote by classes,
the holders of Series A Preferred Stock shall vote together as a single class
separately from the holders of Common Stock.
SECTION 5.
NO REISSUANCE OF SERIES A PREFERRED STOCK
No share or shares of Series A Preferred Stock acquired by the Corporation
by reason of redemption, purchase, conversion or otherwise shall be reissued,
and all such shares shall be canceled, retired and eliminated from the shares
which the Corporation shall be authorized to issue.
SECTION 6.
PROTECTIVE COVENANT
The Corporation shall not, without the affirmative vote or written consent
of the holders of a majority of the then issued and outstanding shares of
Series A Preferred Stock, amend its Certificate of Incorporation or adopt a
resolution of the Board of Directors to provide for the creation or issuance of
any class or series of capital stock which shall rank pari passu or senior to
the Series A Preferred Stock in priority to receive the liquidation preference
on the Series A Preferred Stock."
5. The amendment to the Certificate of Incorporation herein
certified has been duly adopted in the manner and by the vote prescribed by
Section 242 of the General Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this certificate signed by its President and Chief Executive
Officer and attested by its Secretary this 25th day of May, 1999.
VIMRX PHARMACEUTICALS INC.
By: /s/ Richard L. Dunning
-------------------------------
Richard L. Dunning
President and Chief Executive
Officer
Attest:
By: /s/ Lowell S. Lifschultz
--------------------------------------
Lowell S. Lifschultz
Secretary
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Certificate of Designation
---------------------
Setting Forth "Resolution Designating
Series B Cumulative Convertible Preferred Stock
and Fixing Preferences and Rights Thereof"
Adopted By The Board Of Directors of
Nexell Therapeutics Inc.
Pursuant to the Provisions of Section 151 of the
General Corporation Law of the State of Delaware, as amended
We, the undersigned, L. William McIntosh and William A. Albright, Jr.,
respectively the President and Secretary of Nexell Therapeutics Inc., a Delaware
corporation (hereinafter sometimes referred to as the "Corporation"), hereby
certify as follows:
First: That under the provisions of Article Fourth of the Certificate
of Incorporation of the Corporation the total number of shares which the
Corporation may issue is 160,000,000 shares of Common Stock, par value
$0.001 per share and 1,150,000 shares of Preferred Stock, par value $0.001
per share, of which 150,000 shares have been previously designated Series A
Cumulative Convertible Preferred Stock and under said Certificate of
Incorporation, as amended (the "Certificate of Incorporation"), authority
is expressly vested in the Board of Directors from time to time to issue
the Preferred Stock by series and in connection with the creation of each
such series to fix by the resolution or resolutions providing for the issue
of shares thereof the designations, preferences, limitations and relative
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, to the full extent permitted by the
Certificate of Incorporation and the laws of the State of Delaware.
Second: That the Board of Directors of the Corporation pursuant to the
authority so vested in it by Article Fourth of the Certificate of
Incorporation, and in accordance with the provisions of Section 151 of the
Delaware General Corporation Law, as amended, adopted on November 9, 1999
the following resolution creating a series of Preferred Stock of 80,000
shares designated as "Series B Cumulative Convertible Preferred Stock,"
which resolution has not been amended, modified, rescinded or revoked and
is in full force and effect on the date hereof.
<PAGE>
"Resolution of The Board of Directors Of
Nexell Therapeutics Inc. Designating
`Series B Cumulative Convertible Preferred Stock'
and Fixing Preferences and Rights Thereof"
Be It Resolved, that, pursuant to authority expressly granted to and vested
in the Board of Directors of Nexell Therapeutics Inc., hereinafter called the
"Corporation", by the provisions of the Certificate of Incorporation the Board
of Directors of the Corporation hereby fixes the number of shares, the
designation, voting powers, rights on liquidation or dissolution, and other
preferences and rights, and the qualifications, limitations or restrictions
thereof, of the shares of such series (in addition to the designations,
preferences and relative rights, and the qualifications, limitations or
restrictions thereof, set forth in the Certificate of Incorporation which are
applicable to the Series B Preferred Stock) as follows:
Section 1. Designation and Number; Classification. The series of Preferred
Stock established hereby shall be designated as the Series B Cumulative
Convertible Preferred Stock (herein called the "Series B Preferred Stock") which
shall have a par value of $0.001 per share and the authorized number of the
shares of such series shall be 80,000, which authorized number shall not be
subject to increase. The Series B Preferred Stock is the second series of
preferred stock of the Corporation and shall rank equally with the Series A
Preferred Stock as to preference in payment of dividends and in distributions of
assets in liquidation, dissolution and winding-up. The Series A Preferred Stock
and the Series B Preferred Stock shall be of the same class.
Section 2. Dividends. Except in the case of distributions in liquidation,
dissolution or winding up of the affairs of the Corporation provided for in
Section 3 below, the holders of the Series B Preferred Stock shall be entitled
to receive cumulative cash dividends at the rate of 3% of the Liquidation
Preference provided in Section 3 hereof per annum (computed on the basis of a
360-day year of twelve 30-day months) per share, such dividends to be payable
semi-annually on each November 24 and May 24 in each year commencing May 24,
2000 (each such semi-annual dividend period being hereinafter referred to as a
"Dividend Period" and each such dividend payment date being hereinafter referred
to as a "Dividend Payment Date") and shall accrue on a daily basis whether or
not they have been declared and whether or not there are profits, surplus or
other funds of the Corporation legally available for the payment of dividends.
If the Corporation shall fail to pay in cash the accrued dividends payable on or
within 10 business days after any Dividend Payment Date, to the extent permitted
by applicable law, an additional amount shall thereafter accrue on such accrued
but unpaid dividends which shall be computed at the rate of 6% per annum on the
amount of such accrued but unpaid dividends from the Dividend Payment Date on
which the Corporation shall have failed to pay such accrued but unpaid dividends
to the date on which such accrued but unpaid dividends shall be paid in full in
cash. In addition, the holders of the Series B Preferred Stock shall be entitled
to receive cash dividends in the amount per share determined by multiplying the
amount per share at any time distributed in cash on shares of Common Stock by
the number of shares of Common Stock at the time issuable upon
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conversion of a share of Series B Preferred Stock (such distribution being
hereinafter referred to as the "Common Equivalent Dividend"), payable on the
date that distributions shall be paid or set apart for any shares of Common
Stock. In no event shall any dividend be paid or declared, nor shall any
distribution be made on the Corporation's Common Stock, Series A Preferred Stock
or preferred stock of any other class or series unless (i) all dividends on the
Series B Preferred Stock for all past periods shall have been paid or declared
and a sum sufficient for the payment thereof set apart for payment, and (ii)
Common Equivalent Dividends as set forth above are declared and paid on the
Series B Preferred Stock at or prior to such time. In addition, upon any
conversion of shares of Series B Preferred Stock in accordance with the
provisions of Section 6, all accrued dividends and other amounts, if any,
payable on the Series B Preferred Stock shall be paid in cash, including
dividends for the portion of any Dividend Period in which such conversion shall
have occurred. The Corporation covenants and agrees that dividends on the Series
B Preferred Stock shall be declared at the annual rate of 3% of the Liquidation
Preference per share and shall be paid in cash on each Dividend Payment Date
unless the Corporation is prevented by operation of law from the declaration or
payment of such dividend.
Section 3. Preference in Liquidation, Dissolution or Winding-Up. In
the event of any liquidation, dissolution or winding up of the Corporation,
either voluntary or involuntary, the holders of Series B Preferred Stock shall
be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders ratably with the holders of the Series A
Preferred Stock, before any payment or declaration and setting apart for payment
of any amount shall be made in respect of the Common Stock or stock of any other
class an amount equal to $1,000.00 per share of Series B Preferred Stock (as
adjusted to reflect stock splits, dividends, combinations, reclassifications,
reorganizations and similar events) (the "Liquidation Preference") plus an
amount equal to any accrued but unpaid dividends on such share of Series B
Preferred Stock and other amounts, if any, payable thereon. If, upon such
liquidation, dissolution or winding-up, the assets of the Corporation
distributable as aforesaid among the holders of the Series A Preferred Stock and
the Series B Preferred Stock shall be insufficient to permit the payment to such
holders of said amount, the entire assets shall be distributed ratably among the
holders of Series A Preferred Stock and Series B Preferred Stock in proportion
to their respective interests. Thereafter, the assets shall be distributed
ratably among the holders of Common Stock, Series A Preferred Stock and Series B
Preferred Stock, all in proportion to the number of shares of Common Stock owned
by each such holder and, in the case of the Series A Preferred Stock and the
Series B Preferred Stock, to which such holder would then be entitled upon
conversion of such stock owned by such holder.
Section 4. Voting Rights. Except as otherwise required by law and as
set forth in Section 5 below, the holders of the Series B Preferred Stock shall
not have the right to vote on any matter submitted to a vote of the stockholders
of the Corporation. With respect to all matters as to which, under law, the
holders of the Series B Preferred Stock are entitled to vote, the affirmative
vote of the holders of at least 66-2/3% of the shares of Series B Preferred
Stock voting as a separate series shall be required to approve any such matter.
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Section 5. Restrictions on Corporate Action. (a) In addition to any
rights provided by law, so long as any shares of Series B Preferred Stock remain
outstanding, the consent of the holders of at least 66-2/3% of the shares of the
Series B Preferred Stock outstanding at the time shall be necessary to permit,
effect or validate any one or more of the following:
(i) the creation, authorization or issuance of any shares of
any class of Prior Stock or Parity Stock (excluding the Baxter Exchange
Securities), including the issuance of any indebtedness, stock or other
Security convertible into any class or series of Prior Stock or Parity
Stock, or increase in the number of authorized shares of Series A
Preferred Stock or Series B Preferred Stock; or
(ii) the increase of the authorized number of shares of any
class or series of shares of Prior Stock or Parity Stock of the
Corporation, including the increase in aggregate principal amount or
authorized number of shares of any indebtedness, stock or other
Security convertible into any class or series of Prior Stock or Parity
Stock; or
(iii) the declaration or payment of any dividend or the making
of any other distribution on any shares of Prior Stock, Parity Stock or
Junior Stock (other than (A) dividends payable solely in the same class
or series of Prior Stock, Parity Stock or Junior Stock, as the case may
be, to the holders thereof and (B) subject to compliance with Section 2
hereof, the payment of regular dividends on the Series A Preferred
Stock); or
(iv) the purchase, redemption or other acquisition for
consideration of any shares of Prior Stock, Parity Stock or Junior
Stock other than the repurchase of shares of Common Stock from
employees, officers, directors, consultants or other persons performing
services for the Corporation or pursuant to agreements existing on
November 24, 1999 under which the Corporation has the option to
repurchase such shares upon the occurrence of certain events, such as
the termination of employment, so long as the total amount applied to
all permitted repurchases of shares of Common Stock pursuant to this
clause (iv) shall not exceed $2,000,000 during any twelve-month period;
or
(v) the execution and delivery of any contract, indenture,
agreement, instrument, note, debenture, bond or other Security which by
its terms expressly would restrict or limit the ability of the
Corporation to make the dividend payments to the holders of the Series
B Preferred Stock in the amount set forth in Section 2; or
(vi) the amendment, alteration or repeal, of any of the
provisions of this Certificate of Designation, if such amendment,
alteration or repeal would adversely affect any privilege, preference,
right or power of the Series B Preferred Stock or the holders thereof;
or
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<PAGE>
(vii) the amendment or change of its certificate of
incorporation or by-laws (each as currently amended and/or restated) if
such amendment or change would adversely affect any privilege,
preference, right or power of the Series B Preferred Stock or the
holders thereof; or
(viii) the merger, consolidation or amalgamation of the
Corporation with or into any other Person or the sale of all or
substantially all of the assets of the Corporation, if (A) such
transaction constitutes a Significant Transaction requiring the consent
of such holders of Series B Preferred Stock pursuant to Section 4.13 of
the Securities Agreement or (B) such transaction would by its terms
adversely affect any privilege, preference, right or power of the
Series B Preferred Stock.
(b) In addition to any rights provided by law, so long as any shares
of Series B Preferred Stock remain outstanding, the consent of the holders of at
least 75% of the shares of the Series B Preferred Stock outstanding at the time
shall be necessary to permit, effect or consummate any Approved Significant
Transaction pursuant to Section 4.13 of the Securities Agreement.
(c) The Corporation shall not issue any shares of Series B Preferred
Stock other than pursuant to the Securities Agreement and the Side Letter
Agreement.
Section 6. Conversion. (a) (i) Optional Conversion. Each share of the
Series B Preferred Stock shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such share, at the office of
the Corporation or any transfer agent for the Series B Preferred Stock, into
such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Liquidation Preference of such share by the
Conversion Price then in effect. The Conversion Price at which shares of Common
Stock shall be delivered upon conversion of each share of Series B Preferred
Stock without the payment of any additional consideration by the holder thereof
shall initially be $2.75 per share (the "Conversion Price"). Such initial
Conversion Price shall be subject to adjustment as set forth in subparagraph (c)
of this Section 6.
(ii) Automatic Conversion. (A) On November 24, 2006 (the
"Automatic Conversion Date") all (but not less than all) of the shares
of Series B Preferred Stock shall be converted into shares of Common
Stock of the Corporation. Each holder of Series B Preferred Stock so
converted will be entitled to receive such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the
Liquidation Preference of such share by the Conversion Price then in
effect.
(B) On the Automatic Conversion Date, the outstanding
shares of the Series B Preferred Stock to be converted shall be
converted without any further action by the holders of such
shares and whether or not the certificates representing such
shares are surrendered to the Corporation or its transfer agent;
provided, however, (1) that such conversion will not
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<PAGE>
violate any legal requirements (such as compliance with the Hart-
Scott-Rodino Antitrust Improvement Act of 1976) and (2) that the
Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such
conversion unless certificates evidencing such shares of the
Series B Preferred Stock being converted are delivered to either
the Corporation or any transfer agent, as hereinafter provided,
or the holder notifies the Corporation or any transfer agent, as
hereinafter provided, that such certificates have been lost,
stolen, or destroyed and executes an agreement satisfactory to
the Corporation to indemnify the Corporation from any loss
incurred by it in connection therewith. Upon the automatic
conversion of the Series B Preferred Stock, the holders of such
Series B Preferred Stock shall surrender the certificates
representing such shares at the office of the Corporation or of
any transfer agent for the Common Stock. Thereupon, there shall
be issued and delivered to such holder, promptly at such office
and in such holder's name as shown on such surrendered
certificate or certificates, a certificate or certificates for
the number of shares of Common Stock into which the shares of the
Series B Preferred Stock surrendered were convertible on the
Automatic Conversion Date.
(b) Mechanics of Conversion; Fractional Shares. (i) The shares of
Common Stock issued to the holders of Series B Preferred Stock pursuant to this
Section 6 will be shares of the Corporation's voting Common Stock. Before any
holder of Series B Preferred Stock shall be entitled to convert the same into
shares of Common Stock pursuant to subparagraph (a)(i) of this Section 6, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Corporation or of any transfer agent for the Series B
Preferred Stock, and shall give written notice by mail, postage prepaid, to the
Corporation at its principal corporate office of the election to convert the
same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The Corporation shall
as soon as practicable thereafter, issue and deliver at such office to such
holder of Series B Preferred Stock, or to the nominee or nominees of such
holder, a certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Series B Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date. If the conversion is in
connection with an underwritten offering of securities registered pursuant to
the Securities Act of 1933, the conversion may, at the option of any holder
tendering the Series B Preferred Stock for conversion, be conditioned upon the
closing with the underwriter of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive the Common Stock
issuable upon such conversion of the Series B Preferred Stock shall not be
deemed to have converted such Series B Preferred Stock until immediately prior
to the closing of such sale of securities.
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(ii) No fractional shares of Common Stock shall be issued
upon conversion of Series B Preferred Stock. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one
share of Series B Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the conversion would
result in the issuance of any fractional share. If, after such
aggregation, the conversion would result in the issuance of a fraction
of a share of Common Stock, the Corporation shall, in lieu of issuing
any fractional share, pay the holder otherwise entitled to such
fraction a sum in cash equal to the fair market value of such fraction
on the date of conversion (as determined in good faith by the Board of
Directors). In lieu of any fractional share to which the holder would
otherwise be entitled, the Corporation shall pay cash equal to such
fraction multiplied by the then effective Conversion Price.
(iii) All shares of Series B Preferred Stock which have been
converted, either optionally or automatically, shall be deemed
extinguished and no shares of Series B Preferred Stock shall be issued
or issuable in replacement thereof.
(c) Conversion Price Adjustments of Series B Preferred Stock. The
Conversion Price shall be subject to adjustment from time to time as follows:
(i) Stock Dividends, Subdivisions and Combinations. In case
after the original date on which the Series B Preferred Stock is issued
the Corporation shall:
(A) take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend
payable in, or other distribution of, Common Stock, or
(B) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock, or
(C) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock,
then the Conversion Price shall be adjusted to that rate
determined by multiplying the Conversion Price in effect
immediately prior to such event by a fraction (1) the
numerator of which shall be the total number of outstanding
shares of Common Stock of the Corporation immediately prior to
such event, and (2) the denominator of which shall be the
total number of outstanding shares of Common Stock of the
Corporation immediately after such event. In the event that
the dividend or distribution referenced in subparagraph
(c)(i)(A) above is lawfully abandoned, the Conversion Price
shall be appropriately readjusted.
(ii) Issuance of Additional Shares of Common Stock at Less
Than Conversion Price. In case after the original date on which the
Series B Preferred
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Stock is issued the Corporation shall (except as hereinafter provided)
issue any Additional Shares of Common Stock for a consideration per share
which is less than the Conversion Price per share, then the per share
Conversion Price upon each such issuance shall be adjusted to that price
determined by multiplying the per share Conversion Price in effect
immediately prior to such event by a fraction:
(x) the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of
such Additional Shares of Common Stock plus the number of full
shares of Common Stock which the aggregate consideration for the
total number of such Additional Shares of Common Stock so issued
would purchase at the per share Conversion Price, and
(y) the denominator of which shall be the number of shares
of Common Stock outstanding immediately prior to the issuance of
such Additional Shares of Common Stock plus the number of such
Additional Shares of Common Stock so issued.
The provisions of this subparagraph (c)(ii) shall not apply to any
Additional Shares of Common Stock which are distributed to holders of
Common Stock as a stock dividend or subdivision, for which an adjustment is
provided for under subparagraph (c)(i) above. No adjustment of the per
share Conversion Price shall be made under this subparagraph (c)(ii) upon
the issuance of any Additional Shares of Common Stock that are issued
pursuant to the exercise of any warrants or other subscription or purchase
rights or pursuant to the exercise of any conversion or exchange rights in
any Convertible Securities, if any such adjustment shall previously have
been made upon the issuance of such warrants or other rights or upon the
issuance of such Convertible Securities (or upon the issuance of any
warrants or other rights therefor) pursuant to subparagraph (c)(iii) below.
(iii) Issuance of Warrants, Other Rights or Convertible Securities.
In case the Corporation shall issue any options, warrants or other rights
to subscribe for or purchase any Additional Shares of Common Stock or issue
Convertible Securities (other than Series A Preferred Stock issued as a
dividend on the Series A Preferred Stock in accordance with Section 2) and
the consideration per share for which Additional Shares of Common Stock may
at any time thereafter be issuable pursuant to such options, warrants or
other rights or pursuant to the terms of such Convertible Securities shall
be less than the Conversion Price, then the per share Conversion Price
shall be adjusted as provided in subparagraph (c)(ii) above.
For purposes of adjustments in the Conversion Price pursuant to this
subparagraph (c)(iii), the number of shares of Common Stock outstanding
shall be deemed to include the maximum number of Additional Shares of
Common Stock
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issuable pursuant to all outstanding options, warrants or other rights or
necessary to effect the conversion or exchange of all such outstanding
Convertible Securities of the Corporation. All such options, warrants,
other rights or Convertible Securities shall be deemed to have been issued
as of, and the date as of which the Conversion Price per share of Common
Stock shall be computed shall be, the earlier of (A) the date on which the
Corporation shall enter a firm contract or commitment for the issuance of
such options, warrants, other rights or Convertible Securities or (B) the
date of actual issuance of such options, warrants, other rights or
Convertible Securities.
No adjustment of the per share Conversion Price shall be made under
this subparagraph (c)(iii) upon the issuance of any Convertible Securities
which are issued pursuant to the exercise of any options, warrants or other
subscription or purchase rights therefor if any such adjustment shall
previously have been made upon the issuance of such options, warrants or
other rights pursuant to said paragraph.
(iv) Other Provisions Applicable to Adjustments Under This
Subparagraph. The following provisions shall be applicable to the making of
adjustments to the Conversion Price hereinbefore provided in this
subparagraph (c):
(A) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
options, warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities shall
be issued for a cash consideration, the consideration received by the
Corporation therefor shall be deemed to be the amount of the cash
received by the Corporation therefor, or, if such Additional Shares of
Common Stock or Convertible Securities or options, warrants or other
rights are offered by the Corporation for subscription, the
subscription price, or, if such Additional Shares of Common Stock or
Convertible Securities or options, warrants or other rights are sold
to underwriters or dealers for public offering without a subscription
offering, the initial public offering price, in any such case
excluding any amounts paid or receivable for accrued interest or
accrued dividends and without deduction of any compensation, discounts
or expenses paid or incurred by the Corporation for and in the
underwriting thereof, or otherwise in connection with the issue
thereof. To the extent that such issuance shall be for a consideration
other than cash, then, except as herein otherwise expressly provided,
the amount of such consideration shall be deemed to be the fair value
of such consideration at the time of such issuance as determined in
good faith by the Board of Directors of the Corporation. The
consideration for any Additional Shares of Common Stock issuable
pursuant to any options, warrants or other rights to subscribe for or
purchase the same shall be the consideration received by the
Corporation
9
<PAGE>
for issuing such options, warrants or other rights, plus the
additional consideration payable to the Corporation upon the
exercise of such options, warrants or other rights. The
consideration for any Additional Shares of Common Stock
issuable pursuant to the terms of any Convertible Securities
shall be the consideration received by the Corporation for
issuing any options, warrants or other rights to subscribe for
or purchase such Convertible Securities plus the consideration
paid or payable to the Corporation in respect of the
subscription for or purchase of such Convertible Securities,
plus the additional consideration, if any, payable to the
Corporation upon the exercise of the right of conversion or
exchange in such Convertible Securities. In case of the
issuance at any time of any Additional Shares of Common Stock
or Convertible Securities in payment or satisfaction of any
dividend upon any class of equity securities other than Common
stock, the Corporation shall be deemed to have received for
such Additional Shares of Common Stock or Convertible
Securities a consideration equal to the amount of such
dividend so paid or satisfied.
(B) Readjustment of Conversion Price. Upon expiration
of the right of exercise, conversion or exchange of any
Convertible Securities, or upon the expiration of any rights,
options or warrants, or upon the termination of any firm
contract or commitment for the issuance of such rights,
options, warrants or Convertible Securities, or upon any
increase in the minimum consideration receivable by the
Corporation for the issuance of Additional Shares of Common
Stock pursuant to such Convertible Securities, rights, options
or warrants, if any such Convertible Securities shall not have
been converted or exchanged, or if any such rights, options or
warrants shall not have been exercised, the number of shares
of Common Stock deemed to be issued and outstanding by reason
of the fact that they were issuable upon conversion or
exchange of any such Convertible Securities or upon exercise
of any such rights, options or warrants shall no longer be
computed as set forth above, and the Conversion Price shall
forthwith be readjusted and thereafter be the rate which it
would have been (but reflecting any other adjustments in the
Conversion Price made pursuant to the provisions of this
Section 6 after the issuance of such Convertible Securities,
rights, options or warrants) had the adjustment of the
Conversion Price made upon the issuance or sale of such
Convertible Securities or the issuance of such rights, options
or warrants been made on the basis of the issuance only of the
number of Additional Shares of Common Stock actually issued
upon conversion or exchange of such Convertible Securities or
upon the exercise of such rights, options or warrants, or upon
the basis of such increased minimum consideration, as the case
may be, and thereupon only the number of Additional Shares of
Common Stock actually so issued plus the number thereof then
issuable upon the basis of such increased minimum
consideration shall be deemed to have been issued and only the
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<PAGE>
consideration actually received plus such increased minimum
consideration receivable by the Corporation (computed as in
subparagraph (c)(iv)(A) of this Section 6) shall be deemed to
have been received by the Corporation.
(C) No Rounding of Conversion Price. Any determination
of the Conversion Price hereunder shall be expressed in United
States Dollars, cents and portions of cents and shall not be
subject to rounding.
(v) Common Equivalent Dividends. In case the Corporation
shall declare, to the extent otherwise permitted herein, a dividend
upon its Common Stock (except a dividend payable in shares of Common
Stock referred to in subparagraph (c)(i) of this Section 6) or a
dividend payable in warrants, rights or Convertible Securities referred
to in subparagraph (c)(iii) of this Section 6 payable otherwise than
out of earnings or surplus (other than revaluation surplus or paid-in
surplus), the Corporation shall simultaneously declare a dividend, in
cash, upon the Series B Preferred Stock equal to, in the case of a cash
dividend, the amount of the per share dividend declared upon the Common
Stock times the number of shares of Common Stock to be received by the
holders of the Series B Preferred Stock upon conversion at the
Conversion Price then in effect and, in the case of a dividend payable
other than in cash, the fair value of such dividend declared upon the
Common Stock as determined by the Board of Directors of the
Corporation. For the purposes of the foregoing, a dividend payable
other than in cash shall be considered payable out of earnings or
surplus (other than revaluation surplus or paid-in surplus) only to the
extent that such earnings or surplus are charged an amount equal to the
fair value of such dividend as determined by the Board of Directors of
the Corporation.
(vi) Additional Adjustments, etc. If any other transaction
or event shall occur (excluding any transaction or event explicitly
referred to in this Section 6, but including, without limitation, any
issuance repurchase, redemption, or other distribution in respect of
any shares or capital stock or other securities of the Corporation or
of any other person) as to which the other provisions of this Section 6
are not strictly applicable but the failure to make any adjustment to
the Conversion Price of the Series B Preferred Stock would not fairly
protect the conversion rights and other rights of any share of the
Series B Preferred Stock, then, and as a condition to the consummation
of any such transaction or event, and in each such case, the Board of
Directors shall promptly determine the adjustment, if any, on a basis
consistent with the essential intent and principles established in this
Section 6, which is necessary to preserve, without dilution, the
conversion rights of each share of the Series B Preferred Stock and,
promptly following such determination, the Corporation shall furnish to
each holder of the Series B Preferred Stock a certificate setting forth
such adjustment and showing in detail the facts upon which such
adjustment is based. The adjustment set forth in such certificate shall
be binding upon the Corporation and the holders of the Series B
Preferred Stock unless, within 30 days following receipt of such
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<PAGE>
certificate, the holders of 20% or more of the outstanding shares of
Series B Preferred Stock shall notify the Corporation of their
disagreement with such adjustment, in which event such adjustment shall
be determined at the expense of the Corporation by its independent
auditors (so long as such auditors' accounting firm ranks among the
five largest national accounting firms) or by an independent investment
banking firm or other professional of recognized national standing
selected by the Corporation and, in all such cases (including the
Corporation's selection of its auditors), reasonably satisfactory to
the holders of 66-2/3% or more of the outstanding shares of Series B
Preferred Stock, which shall give its opinion as to the adjustment, if
any, on a basis consistent with the essential intent and principles
established in this Section 6, which is necessary to preserve, without
dilution, the conversion rights of each share of Series B Preferred
Stock. The opinion of any such auditor, banking firm or other
professional shall be conclusive evidence of the correctness of any
computation made under this Section 6. The Corporation shall pay all
fees and expenses in connection with any such opinion. Upon receipt of
such opinion, the Corporation will promptly deliver a copy thereof to
each holder of any share of Series B Preferred Stock and the
Corporation shall (subject to obtaining necessary director and
stockholder actions), take all actions necessary or appropriate under
the laws of the State of Delaware and the Certificate of Incorporation
consistent with such opinion to effect the intent and principles
hereof.
(vii) Minimum Adjustment. Except as hereinafter provided, no
adjustment of the Conversion Price hereunder shall be made if such
adjustment results in a change of the Conversion Price then in effect
of less than two cents ($0.02). Any adjustment of less than two cents
($0.02) of any Conversion Price shall be carried forward and shall be
made at the time of and together with any subsequent adjustment that,
together with adjustment or adjustments so carried forward, amounts to
two cents ($0.02) of the Conversion Price then in effect or more.
However, upon the conversion of any share of the Series B Preferred
Stock, the Corporation shall make all necessary adjustments not
theretofore made to the Conversion Price up to and including the date
upon which the conversion is exercised.
(viii) Notice of Adjustments. Whenever the Conversion Price
shall be adjusted pursuant to this subparagraph (c), the Corporation at
its expense shall promptly prepare a certificate signed by the Chief
Financial Officer or the Chief Operating Officer and by the Treasurer
or an Assistant Treasurer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the
adjusted Conversion Price, the method by which such adjustment was
calculated (including a description of the basis on which the Board of
Directors of the Corporation made any determination hereunder), and
shall promptly cause copies of such certificate to be mailed (by first
class mail postage prepaid) to each of the holders of the Series B
Preferred Stock. The adjustments set forth in such certificate shall be
binding upon the Corporation and the holders of the Series B Preferred
Stock unless, within 30 days following receipt of such
12
<PAGE>
Certificate, the holders of 20% or more of the outstanding shares of
Series B Preferred Stock shall notify the Corporation of their
disagreement with such adjustments, in which event, such adjustments
shall be determined at the expense of the Corporation by its
independent auditors (so long as such auditors' accounting firm ranks
among the five largest national accounting firms) or by an independent
investment banking firm or other professional of recognized national
standing selected by the Corporation and, in all such cases (including
the Corporation's selection of its auditors), reasonably satisfactory
to the holders of 66-2/3% or more of the outstanding shares of Series B
Preferred Stock, such determination to be set forth in a separate
report from such auditor, banking firm or other professional delivered
promptly to the Corporation and the holders of the Series B Preferred
Stock following the such determination. The Corporation shall, upon the
written request made at any time by any holder of Series B Preferred
Stock, furnish to such holder a certificate setting forth (A) all
adjustments that shall have been made with respect to the Series B
Preferred Stock pursuant to this Section 6, (B) the Conversion Price at
the time in effect and (C) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received
upon the conversion of the then outstanding shares of Series B
Preferred Stock.
(ix) Special Limitation on Adjustments to Conversion Price. No
adjustment to the Conversion Price required by this Section 6 shall be
made to a Conversion Price below the greater of the book value or the
market value of the Common Stock on the date the Series B Preferred
Stock was originally issued (the "Issue Date Price") unless stockholder
approval is obtained in accordance with The Nasdaq Marketplace Rules,
provided that such stockholder approval shall only be so required if
The Nasdaq Market Marketplace Rules require such stockholder approval
at the time such adjustment is required hereunder. If such stockholder
approval is required by The Nasdaq Market Marketplace Rules, the
Corporation shall take all actions which are necessary or appropriate
to seek to obtain such stockholder approval. If such approval is not
obtained, an adjustment to the Conversion Price shall be made to a
Conversion Price which equals the Issue Date Price.
(d) Mergers, Consolidations, Sales, Reorganization or
Reclassification. In the case of any consolidation or merger of the Corporation
with another entity (regardless of whether the Corporation is the surviving
entity), or the sale of all or substantially all of its assets to another
entity, or any reorganization, recapitalization or reclassification of the
Common Stock or other equity securities of the Corporation (except a split-up or
combination, provision for which is made in subparagraph (c)(i) of this Section
6), then, as a condition of such consolidation, merger, sale, reorganization,
recapitalization or reclassification, lawful and adequate provision shall be
made whereby the holders of the Series B Preferred Stock shall thereafter have
the right to receive upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore
receivable hereunder, such shares of stock, securities or assets as may (by
virtue of such consolidation, merger, sale, reorganization, recapitalization or
13
<PAGE>
reclassification) be issued or payable with respect to or in exchange for a
number of outstanding shares of Common Stock equal to the number of shares of
Common Stock immediately theretofore so receivable hereunder had such
consolidation, merger, sale, reorganization, recapitalization or
reclassification not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of the holders of the
Series B Preferred Stock to the end that the provisions hereof (including,
without limitation, provisions for adjustment of the Conversion Price) shall
thereafter be applicable as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon conversion of such
Series B Preferred Stock.
(e) Dissolution or Liquidation. In the event of any proposed distribution
of the assets of the Corporation in dissolution or liquidation (except under
circumstances when the foregoing subparagraph (d) of this Section 6 shall be
applicable) the Corporation shall mail notice thereof to the holders of the
Series B Preferred Stock and shall make no distribution to stockholders until
the expiration of 30 days from the date of mailing of the aforesaid notice, and
in any such case, the holders of the Series B Preferred Stock may exercise the
conversion rights with respect to the Series B Preferred Stock within 30 days
from the date of mailing such notice and all rights herein granted not so
exercised within such 30-day period shall thereafter become null and void.
(f) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all of the provisions of this Section 6 and in the taking of all such action as
may be necessary or appropriate in order to protect the conversion rights of the
holders of the Series B Preferred Stock against impairment.
(g) Fully Paid Stock; Taxes. The shares of stock represented by each and
every certificate for its Common Stock to be delivered on the exercise of the
conversion rights herein provided for shall, at the time of such delivery, be
validly issued and outstanding and be fully paid and nonassessable. The
Corporation shall pay when due and payable any and all federal and state taxes
(other than taxes in respect of income) which may be payable in respect of the
Series B Preferred Stock or any Common Stock or certificates therefor upon the
exercise of the conversion rights herein provided for pursuant to the provisions
hereof. The Corporation shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the transfer and delivery of
stock certificates in the name other than that of the holder of the Series B
Preferred Stock converted, and any such tax shall be paid by such holder at the
time of presentation.
(h) Closing of Transfer Books. The right to convert any of the Series B
Preferred Stock shall not be suspended during any period while the stock
transfer books of the Corporation for its Common Stock may be closed. The
Corporation shall not be required, however, to deliver certificates of its
Common Stock upon such exercise while such books are duly closed for any
purpose, but the Corporation may postpone the
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<PAGE>
delivery of the certificate for such Common Stock until the opening of such
books, and they shall, in such case, be delivered forthwith upon the opening
thereof, or as soon as practicable thereafter.
(i) Reservation of Common Stock. The Corporation will at all times reserve
and keep available such number of authorized shares of its Common Stock solely
for the purpose of issue upon the conversion of the Series B Preferred Stock as
herein provided for, as shall then be issuable upon the conversion of all
outstanding shares of Series B Preferred Stock and such shares of Common Stock
shall at no time have a par value which is in excess of the Conversion Price
then in effect.
Section 7. Definitions. In addition to the terms defined elsewhere in this
Designation of Series B Cumulative Convertible Preferred Stock, the following
terms have the following respective meanings:
The term "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Corporation on and after the original date on
which the Series B Preferred Stock was issued, except:
(A) Common Stock issued upon conversion of the Series B
Preferred Stock at the Conversion Price and Common Stock issued upon
exercise of the Corporation's Class A Warrants or Class B Warrants;
(B) Common Stock issued to officers, directors, employees and
members of the Scientific Advisory Board of the Corporation and
Common Stock issued pursuant to employee stock option or stock
purchase plans approved by the Board of Directors, provided that the
aggregate number of shares of Common Stock issued and/or issuable to
such persons and pursuant to all such plans and agreements shall not
in the aggregate at any time exceed 9,000,000 shares (as such number
of shares shall be appropriately adjusted by the Board of Directors
for stock splits, dividends, combinations and other similar events),
it being understood that the shares of Common Stock excluded pursuant
to this clause (B) are in addition to shares excluded pursuant to
clause (D);
(C) Common Stock issued in connection with a corporate
collaboration, development agreement, or commercial relationship
which is not primarily for the purpose of obtaining financing,
approved by the Board of Directors and for consideration equal to or
greater than the fair market value of such shares of Common Stock at
the time of issue;
(D) Up to 16,560,176 shares of Common Stock issued upon
conversion or exercise of convertible securities, options and
warrants outstanding on November 24, 1999 (as such number of shares
shall be appropriately adjusted by the Board of Directors for stock
splits, dividends, combinations and other similar events);
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<PAGE>
(E) Common Stock issued upon conversion of the Series A
Preferred Stock;
(F) Common Stock valued at up to $10,000,000 issued as
consideration in connection with a single acquisition transaction to
be made by the Corporation on or before December 31, 2000 involving a
medical therapeutics company consistent with the Corporation's
business plan;
(G) Up to 250,000 shares of Common Stock issued substantially
concurrently with the initial issuance of the Series B Preferred
Stock to holders of the Corporation's warrants existing at such time
and resulting from the operation of dilution protection provisions in
such warrants arising principally from the issuance of the Class A
Warrants; and
(H) Common Stock issued with the affirmative vote or written
consent of the holders of at least 66-2/3% of the outstanding shares
of Series B Preferred Stock.
The term "Baxter Exchange Securities" shall mean securities of any
class or classes which are convertible into shares of Common Stock and for
which the Corporation exchanges any shares of Series B Preferred Stock
pursuant to the Side Letter Agreement.
The term "Class A Warrants" shall mean the Class A Warrants to
purchase Common Stock of the Company issued concurrently with the initial
issuance of the Series B Preferred Stock.
The term "Class B Warrants" shall mean the Class B Warrants to
purchase Common Stock of the Company issued concurrently with the initial
issuance of the Series B Preferred Stock.
The term "Common Stock" shall mean (i) the Corporation's Common Stock,
$0.001 par value, authorized on the date of issuance of the Series B
Preferred Stock and (ii) any other class of capital stock of the
Corporation hereafter authorized the right of which to share in
distributions either of earnings or assets of the Corporation is without
limit as to any amount or percentage as and to the extent no amounts
payable on or in respect of such Common Stock and no rights arising in
connection therewith have preference over any other Common Stock upon
dissolution, liquidation or winding up of the Corporation; provided that
the shares to be received by the holders of the Series B Preferred Stock
upon conversion shall be the Common Stock authorized on the date of
issuance of the Series B Preferred Stock.
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<PAGE>
The term "Conversion Price" shall have the meaning set forth in
Section 6(a)(i) hereof.
The term "Convertible Securities" shall mean evidences of
indebtedness, shares of stock or other securities which are convertible
into or exchangeable for Additional Shares of Common Stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event, including, without limitation, the Baxter Exchange
Securities.
The term "Junior Stock" shall mean all Common Stock and all other
shares of stock of any other class of the Corporation, whether or not
presently authorized, ranking as to both payment of dividends and
distribution of assets upon liquidation, dissolution or winding-up junior
to the Series B Preferred Stock, and junior to the Series B Preferred
Stock.
The term "Parity Stock" shall mean all Series A Preferred Stock and
all other capital stock of the Corporation, whether or not presently
authorized, ranking, as to distribution of assets upon liquidation,
dissolution or winding-up, on a parity with the Series B Preferred Stock;
provided that in no event shall any such Parity Stock be issued under and
pursuant to the Certificate of Incorporation, except in compliance with the
provisions of Section 5.
The term "Preferred Stock" shall have the meaning set forth in Article
FOURTH of the Certificate of Incorporation of the Corporation.
The term "Prior Stock" shall mean all stock ranking, either as to
payment of dividends, liquidation, redemption, sinking fund or distribution
of assets upon liquidation, dissolution or winding-up, prior to the Series
B Preferred Stock; provided that in no event shall any such Prior Stock be
issued under and pursuant to the Certificate of Incorporation, except in
compliance with the provisions of Section 5.
The term "Securities Agreement" shall mean the Securities Agreement
dated as of November 24, 1999 between the Corporation and the original
institutional investors named therein and pursuant to which the Series B
Preferred Stock was originally issued and sold.
The term "Side Letter Agreement" shall mean the Side Letter Agreement
dated as of November 24, 1999 between the Corporation and Baxter
International Inc. relating to the Series B Preferred Stock.
This resolution shall be known and may be referred to as "A Resolution of
the Board of Directors of Nexell Therapeutics Inc. Designating Series B
Cumulative Convertible Preferred Stock and Fixing Preferences and Rights
Thereof."
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<PAGE>
Resolved, Further, that following the consent of the holder of the
Corporation's Series A Preferred Stock to the creation and issuance of the
Series B Preferred Stock the appropriate officers of the Corporation are hereby
authorized and directed to execute and acknowledge a certificate setting forth
these resolutions and to cause such certificate to be filed and recorded, all in
accordance with the requirements of Section 242 of the General Corporation Law
of the State of Delaware, as amended."
Third: The number of shares of Series B Preferred Stock that may be
issued by the Corporation pursuant to said resolution is 80,000.
In Witness Whereof, this Certificate has been made under the seal of said
Nexell Therapeutics Inc., and has been signed by the undersigned said L. William
McIntosh, President and said William A. Albright, CFO & Treasurer, this 24th day
of November, 1999.
NexelL Therapeutics Inc.
/s/
- ----------------------------------
(Corporate Seal)
_______________________________
________________
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<PAGE>
EXHIBIT 3.2
BYLAWS
OF
NEXELL THERAPEUTICS INC.
AMENDED AND RESTATED EFFECTIVE NOVEMBER 9, 1999
- --------------------------------------------------------------------------------
ARTICLE I.
OFFICES
1.1 Registered Office. The registered office of Nexell Therapeutics Inc.
-----------------
(hereinafter called the "Corporation") in the State of Delaware shall be at 2751
Centerville Road in the City of Wilmington, County of New Castle, and the name
of the registered agent in charge thereof shall be the Corporation.
1.2 Other Offices. The Corporation may also have an office or offices at such
-------------
other place or places, either within or without the State of Delaware, as the
Board of Directors (hereinafter called the "Board") may from time to time
determine or as the business of the Corporation may require.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
2.1 Annual Meetings. Annual meetings of the stockholders of the Corporation for
---------------
the purpose of electing directors and for the transaction of such other proper
business as may come before such meetings may be held at such time, date and
place as the Board shall determine by resolution.
2.2 Special Meetings. A special meeting of the stockholders for the transaction
----------------
of any proper business may be called at any time by the Board or by the Chief
Executive Officer.
2.3 Place of Meetings. All meetings of the stockholders shall be held at such
-----------------
places, within or without the State of Delaware, as may from time to time be
designated by the person or persons calling the respective meeting and specified
in the respective notices or waivers of notice thereof.
2.4 Notice of Meetings. Except as otherwise required by law, notice of each
------------------
meeting of the stockholders, whether annual or special, shall be given not less
than 10 nor more
<PAGE>
than 60 days before the date of the meeting to each stockholder of record
entitled to vote at such meeting by delivering a typewritten or printed notice
thereof to him personally, or by depositing such notice in the United States
mail or in the care of an express courier, in a postage prepaid envelope,
directed to him at his post office address or other delivery address furnished
by him to the Secretary of the Corporation for such purpose or, if he shall not
have furnished to the Secretary his address for such purpose, then at his post
office address last known to the Secretary, or by transmitting a notice thereof
to him at such address by facsimile, telegraph, cable, or wireless. Except as
otherwise expressly required by law, no publication of any notice of a meeting
of the stockholders shall be required. Every notice of a meeting of the
stockholders shall state the place, date and hour of the meeting, and, in the
case of a special meeting, shall also state the purpose or purposes for which
the meeting is called. Notice of any meeting of stockholders shall not be
required to be given to any stockholder who shall have waived such notice, and
such notice shall be deemed waived by any stockholder who shall attend such
meeting in person or by proxy, except for a stockholder who shall attend such
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened. Except as otherwise expressly required by law, notice of any adjourned
meeting of the stockholders need not be given if the time and place thereof are
announced at the meeting at which the adjournment is taken.
2.5 Quorum. Except in the case of any meeting for the election of directors
------
summarily ordered as provided by law, the holders of record of a majority in
voting interest of the shares of stock of the Corporation entitled to be voted
thereat, present in person or by proxy, shall constitute a quorum for the
transaction of business at any meeting of the stockholders of the Corporation or
any adjournment thereof. In the absence of a quorum at any meeting or any
adjournment thereof, a majority in voting interest of the stockholders present
in person or by proxy and entitled to vote thereat or, in the absence therefrom
of all the stockholders, any officer entitled to preside at or to act as
secretary of such meeting may adjourn such meeting from time to time. At any
such adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally called.
2.6 Voting.
------
(a) Each stockholder shall, at each meeting of the stockholders, be entitled to
vote, in person or by proxy, each share or fractional share of the stock of the
Corporation which shall have voting rights on the matter in question and which
shall have been held by him and registered in his name on the books of the
Corporation:
(i) on the date fixed, pursuant to Section 6.5 of these Bylaws, as the
record date for the determination of stockholders entitled to notice
of and to vote at such meeting; or
(ii) if no such record date shall have been so fixed, then (A) at the
close of
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<PAGE>
business on the day next preceding the on which notice of
the meeting shall be given; or (B) if notice of meeting shall be
waived, at the close of business on the day next the day on which
the meeting shall be held.
(b) Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors in such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes. Persons holding stock of the Corporation in a fiduciary capacity shall
be entitled to vote such stock. Persons whose stock is pledged shall be entitled
to vote, unless in the transfer by the pledgor on the books of the Corporation
he shall have expressly empowered the pledgee to vote thereon, in which case
only the pledgee or his proxy may represent such stock and vote thereon. Stock
having voting power standing of record in the names of two or more persons or
other entities, whether fiduciaries, members of a partnership, joint tenants in
common, tenants by entirety or otherwise, or with respect to which two or more
persons or other entities have the same fiduciary relationship, shall be voted
in accordance with the provisions of the General Corporation Law of the State of
Delaware.
(c) Any such voting rights may be exercised by the stockholder entitled thereto
in person or by his proxy appointed by an instrument in writing, subscribed by
such stockholder or by his attorney thereunto authorized, and delivered to the
secretary of the meeting; provided, however, that no proxy shall be voted or
acted upon after three years from its date, unless said proxy shall provide for
a longer period. The attendance at any meeting of a stockholder who may
theretofore have given a proxy shall not have the effect of revoking the same
unless he shall in writing so notify the secretary of the meeting prior to the
voting of the proxy. At any meeting of the stockholders, all matters, except as
otherwise provided in the Certificate of Incorporation, in these Bylaws or by
law, shall be decided by the vote of a majority in voting interest of the
stockholders present, in person or by proxy, and entitled to vote thereat and
thereon, a quorum being present. The vote at any meeting of the Stockholders on
any question need not be by ballot, unless so directed by the chairman of the
meeting. On a vote by ballot, each ballot shall be signed by the stockholder
voting or by his proxy, if there be such proxy, and it shall state the number of
shares voted.
2.7 List of Stockholders. The Secretary of the Corporation shall prepare and
--------------------
make, at least 10 days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at the meeting, arranged in alphabetical order
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least 10 days prior to the meeting, either at
a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting, during the whole time thereof, and may be
inspected by any stockholder who is present.
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2.8 Inspectors of Election. If at any meeting of the stockholders a vote by
----------------------
written ballot shall be taken on any question, the chairman of such meeting may
appoint an inspector or inspectors to act with respect to such vote. Each
inspector so appointed shall first subscribe an oath to faithfully execute the
duties of an inspector at such meeting, with strict impartiality and according
to the best of his ability. Such inspectors shall decide upon the qualification
of the voters, report the number of shares represented at the meeting and
entitled to vote on such question, conduct and accept the votes, and, when the
voting is completed, ascertain and report the number of shares voted,
respectively, for and against the question. Reports of inspectors shall be in
writing, subscribed and delivered by them to the Secretary of the Corporation.
The inspectors need not be stockholders of the Corporation, and any officer of
the Corporation may be an inspector on any question other than a vote for or
against a proposal in which he shall have a material interest.
2.9 Action Without Meeting. Any action required to be taken at any annual or
----------------------
special meeting of stockholders of the Corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice, and without a vote if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
holders of outstanding shares of stock having not less than the minimum number
of votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted. Prompt
notice of the taking of the corporate action without a meeting, where by less
than unanimous written consent, shall be given to those stockholders who have
not consented in writing.
ARTICLE III.
BOARD OF DIRECTORS
3.1 General Powers. The property, business and affairs of the Corporation shall
--------------
be managed by the Board.
3.2 Number and Term of Office. The number of directors shall not be less than
-------------------------
three and not more than 15, as determined by the Board. Each of the directors of
the Corporation shall hold office until his successor shall have been duly
elected and shall qualify or until he shall resign or shall have been removed in
the manner hereinafter provided.
3.3 Election of Directors. The directors shall initially consist of the persons
---------------------
elected as such by the incorporator and thereafter shall be elected annually by
the stockholders of the Corporation entitled to vote thereon, and the persons
receiving the greatest number of votes, up to the number of directors to be
elected, shall be the directors.
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3.4 Resignations. Any director of the Corporation may resign at any time by
------------
giving written notice to the Board or to the Secretary of the Corporation. Any
such resignation shall take effect at the time specified therein, or, if the
time be not specified, it shall take effect immediately upon its receipt; unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
3.5 Vacancies. Except as otherwise provided in the Certificate of
---------
Incorporation, any vacancy in the Board, whether because of death, resignation,
disqualification, an increase in the number of directors or any other cause, may
be filled by vote of the majority of the remaining directors, although less than
a quorum. Each director so chosen to fill a vacancy shall hold office until his
successor shall have been elected and shall qualify or until he shall resign or
shall have been removed in the manner hereinafter provided.
3.6 Place of Meeting, Etc. The Board may hold any of its meetings at such place
---------------------
or places within or without the State of Delaware as the Board may from time to
time by resolution designate or as shall be designated by the person or persons
calling the meeting or in the notice or a waiver of notice of any such meeting.
Directors may participate in any regular or special meeting of the Board by
means of conference telephone or similar communications equipment pursuant to
which all persons participating in the meeting of the Board can hear each other,
and such participation shall constitute presence in person at such meeting.
3.7 First Meeting. The Board shall meet as soon as practicable after each
-------------
annual election of directors, and notice of such first meeting shall not be
required.
3.8 Regular Meetings. Regular meetings of the Board may be held at such times
----------------
as the Board shall from time to time by resolution determine. If any day fixed
for a regular meeting shall be a legal holiday at the place where the meeting is
to be held, then the meeting shall be held at the same hour and place on the
next succeeding business day that is not a legal holiday. Except as provided by
law, notice of regular meetings need not be given.
3.9 Special Meetings. Special meetings of the Board shall be held whenever
----------------
called by the Chief Executive Officer or a majority in number of directors then
serving on the Board. Except as otherwise provided by law, notice of the time
and place of each such special meeting shall be mailed to each director,
addressed to him at his residence or usual place of business, at least five days
before the day on which the meeting is to be held or shall be sent to him at
such place by facsimile, wireless, telegraph, or cable or be delivered
personally not less than 24 hours before the time at which the meeting is to be
held.
Except where otherwise required by law or by these Bylaws, notice of the
purpose of a special meeting need not be given. Notice of any meeting of the
Board shall not be required to be given to any director who is present at such
meeting, except a director who shall attend such meeting for the express purpose
of objecting at the beginning of the
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meeting to the transaction of any business because the meeting is not lawfully
called or convened.
3.10 Quorum and Manner of Acting. Except as otherwise provided in the
---------------------------
Certificate of Incorporation, in these Bylaws or by law, the presence of a
majority of the authorized number of directors shall be required to constitute a
quorum for the transaction of business at any meeting of the Board, and all
matters shall be decided at any such meeting, a quorum being present, by the
affirmative votes of a majority of the directors present. In the absence of a
quorum, a majority of directors present at any meeting may adjourn the same,
from time to time, until a quorum shall be present. Notice of any adjourned
meeting need not be given. The directors shall act only as a Board, and the
individual directors shall have no power as such.
3.11 Action by Consent. Any action required or permitted to be taken at any
-----------------
meeting of the Board or of any committee thereof may be taken without a meeting
if a written consent thereto is signed by all members of the Board or of such
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board or committee.
3.12 Removal of Directors. Subject to the provisions of the Certificate of
--------------------
Incorporation, any director may be removed at any time, either with or without
cause, by an affirmative vote of stockholders having a majority of the shares
entitled to elect directors of the Corporation.
3.13 Compensation. The directors shall receive only such compensation for their
------------
services as directors as may be allowed by resolution of the Board. The Board
may also provide that the Corporation shall reimburse each director for any
expense incurred by him on account of his attendance at any meetings of the
Board or committees of the Board. Neither the payment of such compensation nor
the reimbursement of such expenses shall be construed to preclude any director
from serving the Corporation or its subsidiaries in any other capacity and
receiving compensation therefor.
3.14 Committees. The Board may, by resolution passed by a majority of the whole
----------
Board, designate one or more committees, each committee to consist of one or
more of the directors of the Corporation. Any such committee, to the extent
provided in the resolution of the Board and except as otherwise limited by law,
shall have and may exercise all the powers and authority of the Board in the
management of the business and affairs of the Corporation and may authorize the
seal of the Corporation to be affixed to all papers which may require it. Any
such committee shall keep written minutes of its meetings and report the same to
the Board at the next regular meeting of the Board. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board to
act at the meeting in the place of any such absent or disqualified member.
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ARTICLE IV.
OFFICERS
4.1 Executive Officers: Number and Titles. The executive officers of the
-------------------------------------
Corporation shall consist solely of those persons elected by the Board and
designated as executive officers. The executive officers of the Corporation
shall consist of a Chairman of the Board, a Chief Executive Officer, a
President, a Secretary, a Treasurer, and, in the discretion of the Board, a
Chief Financial Officer, a Chief Operating Officer, and one or more executive or
senior vice presidents carrying such descriptive titles, if any, as the Board
may designate. Any two or more executive offices may be held by the same person.
4.2 Election, Term of Office, and Qualifications. Notwithstanding a multi-year
--------------------------------------------
employment agreement with any executive officer, the executive officers of the
Corporation shall be elected annually by the Board at the first meeting thereof
held after the annual meeting of the stockholders of the Corporation. Each
executive officer shall hold office at the pleasure of the Board until his
successor shall have been duly elected and qualified or until his death or
earlier resignation or removal from office. The election to office shall not
confer on the individual elected any contractual rights to continued employment.
Any two or more offices may be held by the same person. No officer need be a
stockholder, a director, a resident of any particular State, or a citizen of the
United States.
4.3 Subordinate Officers, Assistants, Agents, and Employees. In addition to the
-------------------------------------------------------
executive officers specified in Section 4.1 above, the Board may appoint other
vice presidents, assistants, agents, and employees as it may deem necessary or
advisable, each of whom shall hold office for such period, have such authority,
and perform such duties as the Board may from time to time determine. The Board
may delegate to any executive officer of the Corporation or any committee of the
Board the power to appoint, remove, and prescribe the duties of any such
subordinate officers, assistants, agents, or employees.
4.4 Removal and Suspension. Any executive officer, subordinate officer,
----------------------
assistant, agent, or employee of the Corporation may be removed, with or without
cause, at any time as follows: (i) in the case of any executive officer, only by
resolution of the Board; (ii) in the case of any subordinate officer, assistant,
agent, or employee appointed by the Board, only by resolution of the Board; and
(iii) in the case of any other subordinate officer, assistant, agent, or
employee, by any executive officer of the Corporation or committee of the Board
upon whom such power of removal may have been conferred by the Board. The
removal of any executive officer, subordinate officer, assistant, agent, or
employee shall not impair or prejudice the contractual rights, if any, of such
person. The Chief Executive Officer may suspend, with or without cause and
without prior notice, any executive officer, subordinate officer, assistant,
agent, or employee, pending final action of the Board with respect to such
continued suspension, removal, or reinstatement of such person.
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4.5 Resignations. Any officer may resign at any time by giving written notice
------------
of his resignation to the Board, the Chief Executive Office, or the Secretary of
the Corporation. Any such resignation shall take effect at the time specified
therein or, if the time is not specified, upon receipt thereof by the Board, the
Chief Executive Officer, or the Secretary, as the case may be; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. No resignation shall relieve the person of any
contractual obligations that he may have to the Corporation.
4.6 Vacancies. A vacancy in any office, whether because of death, resignation,
---------
removal, disqualification, or otherwise, may be filled for the unexpired portion
of the term thereof in the manner prescribed by these Bylaws for regular
appointments or elections to such office.
4.7 The Chairman of the Board. The Chairman of the Board shall preside at all
-------------------------
meetings of the stockholders, the Board, and any committee on which he serves.
The Chairman in his role as an executive officer shall not have any authority
with respect to the business, financial affairs, or day-to-day operations of the
Corporation. At the request of the Chairman, or in case of his absence or
inability to act, unless otherwise directed by the Board, the Chief Executive
Officer shall perform the duties of the Chairman and, when so acting, shall have
all the powers of, and be subject to all the restrictions upon, the Chairman.
4.8 The Chief Executive Officer. The Chief Executive Officer shall be the
---------------------------
highest ranking executive officer of the Corporation and, subject to the
supervision of the Board, shall have all authority and power with respect to,
and shall be responsible for, the general management of the business, financial
affairs, and day-to-day operations of the Corporation. The Chief Executive
Officer shall see that all orders and resolutions of the Board are carried into
effect and shall perform such other duties and have such other authority and
powers as the Board may from time to time prescribe. At the request of the Chief
Executive Officer, or in case of his absence or inability to act, unless
otherwise directed by the Board, the President shall perform the duties of the
Chief Executive Officer and, when so acting, shall have all the powers of, and
be subject to all the restrictions upon, the Chief Executive Officer.
4.9 The President and Chief Operating Officer. Unless the Board shall designate
-----------------------------------------
otherwise, the President shall be the Chief Operating Officer of the
Corporation. The President and Chief Operating Officer shall report to the Chief
Executive Officer and shall have, subject to the control of the Chief Executive
Officer and the Board, active supervision and management over the day-to-day
operations of the Corporation and over its subordinate officers, assistants,
agents, and employees. At the request of the President, or in case of his
absence or inability to act, unless otherwise directed by the Board, the Chief
Executive Officer shall perform the duties of the President and, when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
President.
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4.10 The Treasurer and Chief Financial Officer. Unless the Board shall
-----------------------------------------
designate otherwise, the Treasurer shall be the Chief Financial Officer of the
Corporation. The Treasurer and Chief Financial Officer shall report to the Chief
Executive Officer and shall have, subject to the control of the Chief Executive
Officer and the Board, the general care and custody of the funds and securities
of the Corporation and the authority and power with respect to, and the
responsibility for, the Corporation's accounting, auditing, reporting, and
financial record-keeping methods and procedures; controls and procedures with
respect the receipt, tracking, and disposition of the revenues and expenses of
the Corporation; the establishment and maintenance of depository, checking,
savings, investment, and other accounts of the Corporation; relations with
accountants, financial institutions, lenders, underwriters, and analysts; the
development and implementation of funds management and short-term investment
strategies; the preparation of financial statements and all tax returns and
filings of the Corporation; and the supervision and management of all
subordinate officers and personnel associated with the foregoing.
4.11 The Secretary. The Secretary shall take and transcribe the minutes of all
-------------
meetings of the Board, of any committee, and of the stockholders, or consents in
lieu thereof, shall insert such minutes and consents in the Corporation's minute
books, and shall cause notice of such meetings to be given when requested by any
person authorized to call such meetings. The Secretary may sign with the Chief
Executive Officer or President, in the name of the Corporation, all contracts of
the Corporation and affix the seal of the Corporation thereto. The Secretary
shall have charge and custody of the Corporation's seal, minute book, stock
certificate books, and stock transfer ledger. The Secretary shall perform such
other duties as may be prescribed from time to time by the Board of Directors or
as may be delegated from time to time by the Chief Executive Officer.
4.12 The Vice Presidents. Each Executive Vice President shall have such powers
-------------------
and perform such duties as the Board may from time to time prescribe. Each Vice
President shall have such powers and perform such duties as the executive
officer or committee empowered to appoint such Vice President shall from time to
time prescribe.
4.13 Compensation. The compensation of the executive officers of the
------------
Corporation shall be fixed from time to time by the Board or a committee
thereof, or by written agreement authorized by the Board or a committee thereof.
No officer shall be prevented from receiving such compensation by reason of the
fact that he is also a director of the Corporation, provided, however, that such
person shall abstain from voting as a director on the issue of his compensation.
Nothing contained herein shall preclude any officer from serving the
Corporation, or any subsidiary corporation, in any other capacity and receiving
proper compensation therefor.
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ARTICLE V.
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
5.1 Execution of Contracts. The Board, except as in these Bylaws otherwise
----------------------
provided, may authorize any officer or officers, agent or agents, to enter into
any contract or execute any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.
5.2 Checks, Drafts, Etc. All checks, drafts, or other orders for payment of
-------------------
money, notes, or other evidence of indebtedness issued in the name of or payable
to the Corporation shall be signed or endorsed by such person or persons and in
such manner as from time to time shall be determined by resolution of the Board.
Each such officer, assistant, agent or attorney shall give such bond, if any, as
the Board may require.
5.3 Deposits. All funds of the Corporation not otherwise employed shall be
--------
deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Board may select or as may be
selected by any officer or officers, assistant or assistants, agent or agents,
or attorney or attorneys of the Corporation to whom such power shall have been
delegated by the Board. For the purpose of deposit and collection for the
account of the Corporation, the Chief Executive Officer, the President, any Vice
President or the Treasurer (or any other officer or officers, assistant or
assistants, agent or agents, or attorney or attorneys of the Corporation who
shall from time to time be determined by the Board) may endorse, assign, and
deliver checks, drafts and other orders for the payment of money which are
payable to the order of the Corporation.
5.4 General and Special Bank Accounts. The Board may from time to time
---------------------------------
authorize the opening and keeping of general and special bank accounts with such
banks, trust companies or other depositories as the Board may select or as may
be selected by any officer or officers, assistant or assistants, agent or
agents, or attorney or attorneys of the Corporation to whom such power shall
have been delegated by the Board. The Board may make such special rules and
regulations with respect to such bank accounts, not inconsistent with the
provisions of these Bylaws, as it may deem expedient.
ARTICLE VI.
SHARES AND THEIR TRANSFER
6.1 Certificates for Stock. Every owner of stock of the Corporation shall be
----------------------
entitled to have a certificate or certificates, to be in such form as the Board
shall prescribe, certifying the number and class of shares of the stock of the
Corporation owned by him. The certificates representing shares of such stock
shall be numbered in the order in which they shall be issued and shall be signed
in the name of the Corporation by the Chairman
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of the Board, Chief Executive Officer, the President, or a Vice President, and
by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer. Any or all of the signatures on the certificates may be a facsimile.
In case any officer, transfer agent or registrar who has signed, or whose
facsimile signature has been placed upon, any such certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, such certificate may nevertheless be issued by the Corporation with the
same effect as though the person who signed such certificate, or whose facsimile
signature shall have been placed thereupon, were such officer, transfer agent or
registrar at the date of issue. A record shall be kept of the respective names
of the persons, firms or corporations owning the stock represented by such
certificates, the number and class of shares respectively represented by such
certificates, the respective dates thereof, and, in case of cancellation, the
respective dates of cancellation. Every certificate surrendered to the
Corporation for exchange or transfer shall be cancelled, and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so cancelled, except in cases provided
for in Section 6.4.
6.2 Transfers of Stock. Transfers of shares of stock of the Corporation shall
------------------
be made only on the books of the Corporation by the registered holder thereof or
by his attorney thereunto authorized by power of attorney, duly executed and
filed with the Secretary, or with a transfer clerk or a transfer agent,
appointed as provided in Section 6.3, and upon surrender of the certificate or
certificates for such shares, properly endorsed, and the payment of all taxes
thereon. The person in whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof for all purposes as regards the
Corporation. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, such fact shall be so expressed in the entry of
transfer if, when the certificate or certificates shall be presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
6.3 Regulations. The Board may make such rules and regulations as it may deem
-----------
expedient, not inconsistent with these Bylaws, concerning the issue, transfer
and registration of certificates for shares of the stock of the Corporation. It
may appoint, or authorize any officer or officers to appoint, one or more
transfer clerks or one or more transfer agents and one or more registrars and
may require all certificates for stock to bear the signature or link signatures
of any of them.
6.4 Lost, Stolen, Destroyed and Mutilated Certificates. In any case of loss,
--------------------------------------------------
theft, destruction or mutilation of any certificate of stock, another may be
issued in its place upon proof of such loss, theft, destruction, or mutilation
and upon the giving of a bond of indemnity to the Corporation, in such form and
in such sum as the Board may direct; provided, however, that a new certificate
may be issued without requiring any bond when, in the judgment of the Board, it
is proper so to do.
6.5 Fixing Date for Determination of Stockholders of Record. In order that the
-------------------------------------------------------
Corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, to express consent to
corporate action in
11
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writing without a meeting, to receive payment of any dividend or other
distribution or allotment of any rights, to exercise any rights in respect of
any other change, conversion, or exchange of stock, or for the purpose of any
other lawful action, the Board may fix, in advance, a record date, which shall
not be more than 60 nor less than 10 days before the date of any such meeting of
stockholders nor more than 60 days prior to any other action. If, in any case
involving the determination of stockholders for any purpose other than notice of
or voting at a meeting of stockholders or expressing consent to corporate action
without a meeting, the Board shall not fix such a record date, the record date
for determining stockholders for such purpose shall be the close of business on
the day on which the Board shall adopt the resolution relating thereto. A
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of such meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting.
ARTICLE VII.
INDEMNIFICATION
7.1 Action, Etc. Other Than by or in the Right of the Corporation. The
-------------------------------------------------------------
Corporation shall indemnify any person who was or is a party, or is threatened
to be made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of the fact that he
is or was a director, officer or employee of the Corporation, or that, being
such a director, officer or employee, he is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise (all persons serving or
having served in such capacities hereinafter referred to as "indemnitees"),
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; provided, however, that,
except as provided in Section 7.6 hereof with respect to proceedings to enforce
rights to indemnification, the Corporation shall indemnify any such indemnitee
in connection with any proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by two-thirds of the
Board. The termination of any action, suit or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the indemnitee did not act in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Corporation and, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
7.2 Actions, Etc., by or in the Right of the Corporation. The Corporation shall
----------------------------------------------------
indemnify any person who was or is a party, or is threatened to be made a party,
to any
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threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was an indemnitee (as defined above) against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless, and only to the extent that, the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
7.3 Indemnification for Expenses. To the extent that an indemnitee of the
----------------------------
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 7.1 or 7.2, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
7.4 Determination of Right of Indemnification. Any indemnification under
-----------------------------------------
Section 7.1 or 7.2 (unless ordered by a court) shall be made by the Corporation
unless a determination is reasonably and promptly made (i) by the Board by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding; or (ii) if such a quorum is not obtainable, or even
if obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion; or (iii) by the stockholders, that such
person acted in bad faith and in a manner that such person did not believe to be
in or not opposed to the best interests of the Corporation or, with respect to
any criminal proceeding, that such person believed or had reasonable cause to
believe that his conduct was unlawful.
7.5 Advances of Expenses. Expenses (including attorneys' fees) incurred by an
--------------------
indemnitee in defending any civil, criminal, administrative or investigative
action, suit or proceeding or any appeal therefrom shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding if the Corporation shall have received an undertaking by or on behalf
of the indemnitee to repay any amounts so advanced in the event that he is
ultimately determined not to be entitled to be indemnified by the Corporation as
authorized in this Article.
7.6 Right of Indemnitee to Indemnification Upon Application. Any
-------------------------------------------------------
indemnification pursuant to Sections 7.1 and 7.4 or Sections 7.2 and 7.4 or any
advance made pursuant to Section 7.5 of this Article, shall be made promptly
(and, in any event, within 90 days, in the case of indemnification, and 60 days,
in the case of an advancement, of the receipt by the Secretary of the
Corporation of the written request of the indemnitee), unless, with respect to
applications under Sections 7.1, 7.2 or 7.5, a determination is promptly made by
the Board or by a majority vote of disinterested directors that the indemnitee
acted in a
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manner set forth in such Sections as to justify the Corporation's not
indemnifying or making an advance to the indemnitee. In the event no quorum of
disinterested directors is obtainable, the Board shall promptly direct that
independent legal counsel shall decide whether the indemnitee acted in the
manner set forth in such Sections as to justify the Corporation's not
indemnifying or making an advance to the indemnitee. The right to
indemnification or advances, as granted by this Article, shall be enforceable by
the indemnitee in any court of competent jurisdiction if the Board or
independent legal counsel denies the claim, whether in whole or in part, or if
no disposition of such claim is made within ninety days. The indemnitee's costs
and expenses incurred in connection with successfully establishing his right to
indemnification, whether in whole or in part, in any such proceeding shall also
be indemnified by the Corporation.
7.7 Other Rights and Remedies. The rights provided by or granted pursuant to
-------------------------
this Article shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under the
Certificate of Incorporation, any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in an indemnitee's
official capacity and as to action in another capacity while vested with such
official capacity. All rights provided pursuant to this Article shall be deemed
to be provided by a contract between the Corporation and the indemnitee who
serves in such official capacity at any time while these Bylaws are in effect
and are intended to be retroactive and available with respect to actions taken
in an official capacity or actions taken while vested with such official
capacity prior to the adoption hereof. Any repeal or modification of any
provisions hereof shall not affect any rights or obligations existing at the
time of such repeal or modification.
7.8 Insurance. Upon resolution passed by the Board, the Corporation may (i)
---------
purchase and maintain insurance on behalf of any person who is or was an
indemnitee against any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article; or (ii) create a trust fund, grant a security
interest or use other means (including, without limitation, a letter of credit)
to ensure the payment of such sums as may become necessary to effect
indemnification as provided herein.
7.9 Other Enterprises, Fines and Serving at the Corporation's Request. For
-----------------------------------------------------------------
purposes of this Article, references to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit plan; references to
"serving at the request of the Corporation" shall include any service as a
director, officer, employee or agent of the Corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to an employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best interests of the
Corporation" as referred to in this Article.
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7.10 Beneficiaries of this Article. The rights provided by, or granted pursuant
-----------------------------
to the provisions of this Article shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE VIII.
MISCELLANEOUS
8.1 Fiscal Year. The fiscal year of the Corporation shall be determined by
-----------
resolution of the Board. In the absence of such resolution, the fiscal year of
the Corporation shall be the calendar year.
8.2 Seal. The Board shall provide a corporate seal, which shall be in the form
----
of a circle and shall bear the name of the Corporation and words and figures
showing that the Corporation was incorporated in the State of Delaware and the
year of incorporation.
8.3 Waiver of Notices. Whenever notice is required to be given by these Bylaws
-----------------
or the Certificate of Incorporation, the person entitled to said notice may
waive such notice in writing, either before or after the time stated therein,
and such waiver shall be deemed equivalent to notice.
8.4 Amendments. These Bylaws, or any of them, may be altered, amended or
----------
repealed, and new Bylaws may be made, (i) by the Board, by vote of a majority of
the number of directors then in office as directors acting at any meeting of the
Board; or (ii) by the stockholders holding shares of a class of stock entitled
to vote for the election of directors, at any annual meeting of stockholders,
without previous notice, or at any special meeting of stockholders, provided
that notice of such proposed amendment, modification, repeal or adoption is
given in the notice of special meeting. Any bylaws made or altered by the
stockholders may be altered or repealed by either the Board or the stockholders.
15
<PAGE>
EXHIBIT 10.46
Form of Put Right Certificate
The Put Rights evidenced by this Certificate were originally issued on
November 24, 1999 and have not been registered or qualified under the Securities
Act of 1933, as amended, or any state securities laws, and may not be sold or
transferred unless (A) the same number of shares of Put Stock (as defined
herein) underlying the Put Rights so transferred are concurrently transferred to
the same transferee and (B) such Put Rights or Put Stock (as defined herein)
underlying such put rights so transferred are registered or qualified pursuant
to such Act and applicable state securities laws or an exemption therefrom under
said Act or such applicable State securities laws is available.
The Put Rights evidenced by this Certificate are subject to certain restrictions
on transfer and certain rights specified in this Put Right Certificate and in
the Securities Agreement dated as of November 24, 1999, as amended from time to
time, between Nexell Therapeutics Inc. and the original holder of this
Certificate and the other parties that are signatories thereto, a copy of which
will be mailed to any requesting Holder by Nexell Therapeutics Inc. within five
days of written request therefor.
The Put Rights evidenced by this Certificate expire at 5:00 p.m., New York, New
York Time, on November 24, 2004 (or at such earlier time as may be prescribed by
Section 7 hereof) and may not be exercised after such date.
Certificate No. R-___ __________ Put Rights
Date: _____________________ PPN 65332H 5#7
In Witness Hereof, the undersigned, Baxter International Inc., A
Delaware corporation ("Baxter"), hereby certifies and agrees that
_______________________________, or registered assigns (the "Holder"), is the
owner of the number of Put Rights set forth above (the "Put Rights"), each of
which entitles the Holder to cause Baxter to purchase for cash from the Holder
the Put Stock (as defined herein) of Nexell Therapeutics Inc., a Delaware
corporation ("Nexell"), at the Purchase Price (as defined herein) during the
Exercise Period (as defined herein).
Section 1. Definitions. Capitalized terms used herein, unless
otherwise defined, shall have following meanings:
"Acceptable Acquiring Company" shall mean a corporation (a) engaged in
the health care business, (b) whose common stock is at the time listed on a
national securities exchange or traded on the NASDAQ National Market and is
current in its periodic
Exhibit B
(to Securities Agreement)
<PAGE>
reporting with the Securities and Exchange Commission and (c) which has annual
revenues of at least $500,000,000 and a market capitalization of at least $2
billion.
"Affiliate" shall mean any Person (a) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, a Holder, (b) which beneficially owns or holds 10% or more
of any class of the Voting Stock of a Holder or (c) 10% or more of the Voting
Stock (or in the case of a Person which is not a corporation, 10% or more of the
equity interest) of which is beneficially owned or held by a Holder. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of Voting Stock, by contract or otherwise.
"Approved Significant Transaction" is defined in Section 7(c)(iii).
"Closing Date" shall mean the date on which the transactions
contemplated by the Securities Agreement were consummated, which date is
November 24, 1999.
"Competitive Business Line" shall mean either (a) the business of
cellular therapy or the development of health care products involving cellular
therapy or (b) the sale, marketing or manufacture of medical devices for use in
the health care industry.
"Competitor" shall mean (a) any Person which is engaged in a
Competitive Business Line or (b) any Person which at the time owns more than
forty percent (40%) of the Voting Stock of such Competitor and in connection
therewith exercises control over management of a Person that is engaged in a
Competitive Business Line, provided in any event that:
(i) the provision of investment advisory services by a Person
to a Plan which is owned or controlled by a Person which would
otherwise be a Competitor shall not in any event cause the Person
providing such services to be deemed to be a Competitor;
(ii) in no event shall an Institutional Holder be deemed a
Competitor unless such Institutional Holder owns or holds more than 50%
of the Voting Stock of, and in connection therewith exercises control
over management of, a Person that is engaged in a Competitive Business
Line;
(iii) in no event shall an Institutional Holder be deemed a
Competitor if such Institutional Holder is a pension plan sponsored by
a Person which would otherwise be a Competitor but which is a regular
investor in privately placed securities and such pension plan has
established procedures which will prevent confidential information
supplied to such pension plan by the Company from being transmitted or
otherwise made available to such plan sponsor; and
(iv) an Institutional Holder that would otherwise be deemed a
Competitor pursuant to the foregoing provisions of this definition by
virtue of its
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<PAGE>
ownership or control as a portfolio investment of the equity securities
of any Person primarily engaged in a Competitive Business Line, shall
not be deemed a Competitor if such Institutional Holder has established
procedures which will prevent confidential information supplied to such
Institutional Holder by the Company from being transmitted or otherwise
made available to such Person.
"Institutional Holder" shall mean (a) any original Holder of Put Right
Certificates and (b) any bank, trust company, savings and loan association or
other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form.
"Overdue Rate" means that rate of interest that is 1% over the rate of
interest publicly announced by Citibank, N.A. in New York, New York (or its
successors) as its "base" or "prime" rate.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity, limited liability company or government (whether national,
Federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
"Put Stock" shall mean the capital stock of Nexell that Baxter is
required to purchase upon exercise of the Put Rights evidenced by this Put Right
Certificate and the other similar Put Right Certificates issued in connection
with the Securities Agreement. Initially, the Put Stock shall be the shares of
Series B Cumulative Convertible Preferred Stock, $0.001 par value, of Nexell
issued concurrently with the Put Right Certificates on the Closing Date. The Put
Stock may be adjusted from time to time for any of the events set forth in
Section 8. Neither the Class A Warrants nor the Class B Warrants of Nexell
issued pursuant to the Securities Agreement shall constitute "Put Stock."
"Required Holders" shall mean the holder or holders of not less than
10% in interest of the Put Stock at the time outstanding.
"Securities Agreement" shall mean the Securities Agreement, dated as of
November 24, 1999, between Nexell and the purchasers named therein pursuant to
which this Put Right Certificate, the Put Stock and certain warrants to purchase
common stock of Nexell were issued and sold.
"Subsidiary" shall mean, as to any Person, any corporation, association
or other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
3
<PAGE>
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries).
"Voting Stock" shall mean securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
Section 2. Grant of Put Right. Baxter hereby grants to the Holder the
Put Rights evidenced by this Put Right Certificate to cause Baxter to purchase
all (but not less than all) of the Put Stock held at the time of exercise by
such Holder and then held by all of such Holder's Affiliates at any time during
the period beginning at 9:00 a.m. (New York, New York time) on November 24, 2002
and ending at 5:00 p.m. (New York, New York time) on November 24, 2004 (the
"Exercise Period") for an aggregate cash purchase price (the "Purchase Price")
as calculated pursuant to Section 4(b) below. Baxter agrees to so purchase from
the Holder, upon exercise of the Put Rights, the Put Stock for the Purchase
Price.
Section 3. Method of Exercise. The Holder may exercise the Put Rights
hereby granted to it on any date during the Exercise Period by executing and
delivering to Baxter (i) a written notice of exercise (the "Exercise Notice"),
(ii) a copy of this Put Right Certificate, and (iii) a copy of the Put Stock
certificates representing all of the Put Stock held by such Holder to be
purchased by Baxter, duly endorsed for transfer or accompanied by a duly
executed instrument of assignment at the office for notices to Baxter as
prescribed in Section 20. The original certificates representing the Put Stock
shall be delivered to Baxter at the time of payment by Baxter of the Purchase
Price. Baxter agrees that, within ten (10) business days after receiving the
Exercise Notice, it will notify all other holders who have outstanding Put
Rights with respect to any Put Stock that Baxter has received such Exercise
Notice.
Section 4. Payment of Purchase Price. (a) On or before the 30th day
(or pursuant to Section 10(d), the 46th day) after receipt of the Exercise
Notice (the "Payment Date"), Baxter agrees that it shall pay in full the
Purchase Price to the exercising Holder by Federal wire transfer of immediately
available funds to an account, or by such other reasonable means, specified by
the Holder in the Exercise Notice.
(b) The Purchase Price to be paid by Baxter shall be an amount equal
to (i) $1000.00 per share of Put Stock to be purchased (subject to adjustment as
provided in Section 8) multiplied by the rate of 105.91% per annum (computed on
the basis of a 360-day year of twelve 30-day months), compounded semi-annually
for the period beginning on the Closing Date to and including the date on which
the Purchase Price is paid, less (ii) an amount equal to the product of (A) the
aggregate amount of cash dividends received by the Holder in respect of each
such share during the same period and (B) 0.50.
(c) Baxter may elect to cause one of its Subsidiaries to purchase the
Put Stock. In such event, upon written notice to the Holder, Baxter will cause
full payment to be made by such Subsidiary to the Holder and the Holder shall
make delivery of the original
4
<PAGE>
certificates to such Subsidiary upon receipt of the payment of the Purchase
Price, thus satisfying the obligations of both Baxter and the Holder under this
Section 4. Notwithstanding the foregoing, the election by Baxter to cause a
Subsidiary to purchase the Put Stock shall not relieve Baxter of its obligations
as the primary obligor under this Put Right Certificate.
Section 5. Default by Baxter. The performance by Baxter of the
obligations set forth herein shall not be excused by reason of any failure by
Baxter to have sufficient funds required to satisfy said obligations or by
reason of any restriction, whether direct or indirect, and of whatever nature,
on the ability of Baxter to satisfy said obligations. Without limiting the
foregoing, any amounts payable hereunder in respect of the Put Rights shall bear
interest at the Overdue Rate, compounded semi-annually, from the Payment Date
to, but not including, the date of actual payment thereof. In the event and to
the extent that Baxter shall fail, for any reason, to satisfy any obligation
hereunder, in addition to any other rights and remedies the Holder may have at
law or in equity, the Holder shall retain its position as a holder of the Put
Stock with full right to exercise its rights as a holder of the Put Stock
without regard to having previously sent an Exercise Notice to Baxter.
Section 6. Transfer Restrictions. (a) Subject to the further
provisions of this Section 6, the Put Rights evidenced by this Put Right
Certificate may be transferred or assigned by the Holder in whole or in part and
from time to time.
(b) The Put Rights evidenced by this Put Right Certificate may not be
transferred by the Holder except upon the concurrent transfer to the same
transferee of the number of shares of Put Stock underlying the Put Rights so
transferred (the "Underlying Put Stock"). Any purported transfer of Put Rights
without the concurrent transfer of such number of Underlying Put Stock to the
same transferee shall be deemed invalid and of no force or effect.
(c) This Put Right Certificate shall not be transferable or assignable
to any Competitor of Baxter or of Nexell. Any purported transfer of Put Rights
to a Competitor shall be deemed invalid and of no force or effect.
(d) The Put Rights evidenced by this Put Right Certificate shall not
be transferable or assignable in part in denominations of less than 5% of the
aggregate number of all shares of Put Stock at the time outstanding (or such
lesser amount as shall constitute the Holder's entire investment in the Put
Stock).
(e) This Put Right Certificate shall not be transferable or assignable
unless a registration statement with respect hereto has become effective under
the Securities Act of 1933, as amended, or any applicable state securities laws,
or unless an exemption from such registration is available with respect hereto.
5
<PAGE>
Section 7. Termination. The Put Rights evidenced by this Put Right
Certificate and all of the rights and obligations of the parties hereunder shall
terminate upon the earliest to occur of:
(a) November 24, 2004;
(b) with respect to each Put Right, the date on which the
Holder converts the Put Stock underlying such Put Right evidenced by
this Put Right Certificate into shares of Nexell's common stock; and
(c) the effective date of any merger, consolidation or
reorganization of Nexell in which Nexell is not the surviving entity (a
"Significant Transaction") and:
(i) the Holder of this Put Right Certificate receives cash
or cash equivalents in respect of 100% of the Put Stock
underlying the Put Rights evidenced by this Put Right Certificate
in an amount greater than (A) in the case of a Significant
Transaction occurring on or prior to November 24, 2002, $4.26 per
share of common stock of Nexell issuable upon conversion of the
Put Stock (as adjusted for any stock dividends, stock splits,
stock combinations, recapitalizations and similar events) and (B)
in the case of a Significant Transaction occurring after November
24, 2002 and on or prior to November 24, 2004, $4.95 per share of
common stock of Nexell issuable upon conversion of the Put Stock
(as so adjusted); or
(ii) the Holder of this Put Right Certificate receives
common stock (or equivalent equity interests) of an Acceptable
Acquiring Company in respect of 100% of the Put Stock underlying
the Put Rights evidenced by this Put Right Certificate valued (as
provided below) at greater than (A) in the case of a Significant
Transaction occurring on or prior to November 24, 2002, $4.26 per
share of common stock of Nexell issuable upon conversion of the
Put Stock (as adjusted for any stock dividends, stock splits,
stock combinations, recapitalizations and similar events) and (B)
in the case of a Significant Transaction occurring after November
24, 2002 and on or prior to November 24, 2004, $4.95 per share of
common stock of Nexell issuable upon conversion of the Put Stock
(as so adjusted); such valuation shall be (x) determined, at the
expense of Nexell, by an independent investment banking firm
selected by Nexell and reasonably satisfactory to the holders of
66-2/3% or more of the Put Stock then outstanding and (y)
delivered in writing to all Holders of the Put Rights prior to
the effective date of such Significant Transaction; or
(iii) in connection with a Significant Transaction where
neither (i) nor (ii) above applies, the Holder of this Put Right
Certificate receives
6
<PAGE>
such consideration in respect of 100% of the Put Stock underlying
the Put Rights evidenced by this Put Right Certificate as shall
be approved by the holders of 75% or more of the Put Stock then
outstanding (an "Approved Significant Transaction").
Section 8. Dilution Adjustments. If, at any time or times after the
original issuance of this Put Right Certificate on the Closing Date, Nexell
shall (a) declare a dividend on the Put Stock payable in shares of its capital
stock, (b) subdivide the outstanding Put Stock, (c) combine the outstanding Put
Stock into a smaller number of shares of Put Stock or (d) issue any shares of
capital stock or other securities of Nexell or another company in exchange for
the Put Stock (whether by reason of merger, consolidation, recapitalization,
reclassification, reorganization, split-up, combination of shares or otherwise),
then the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination, merger,
consolidation, recapitalization, reclassification or reorganization, and the
number and kind of Put Stock (or other shares of capital stock or other
securities) subject to such Put Rights on such date, shall be proportionately
adjusted so that upon the exercise by the Holder of the Put Rights evidenced by
this Put Right Certificate, Baxter shall be required to purchase the aggregate
number and kind of Put Stock (or other shares of capital stock or other
securities) upon payment of the Purchase Price which, if such Put Rights had
been exercised immediately prior to such date and at a time when the Put Stock
transfer books of Nexell were open, Baxter would have owned upon such exercise
and payment, or have been entitled to receive, by virtue of such dividend,
subdivision, combination, merger, consolidation, recapitalization,
reclassification or reorganization. Not fewer than 30 days prior to the record
date for any such dividend or the effective date for any such subdivision,
combination, merger, consolidation, recapitalization, reclassification or
reorganization, Nexell shall send to the Holder and to Baxter a certificate
signed by its chief financial officer (i) setting forth in reasonable detail a
description of such dividend, subdivisions, combination, merger, consolidation,
recapitalization, reclassification or reorganization and all adjustments to be
made pursuant to this Section 8 to the Purchase Price and to the number and kind
of Put Stock (or other shares of capital stock or other securities) subject to
the Put Rights evidenced by this Put Right Certificate and (ii) referencing this
Section 8 and the right of Baxter and the Required Holders to challenge such
adjustments within 30 days following receipt of such officer's certificate in
the manner set forth in the following sentence. The adjustments set forth in
such officer's certificate shall be binding on Nexell, Baxter and the Holder
unless, within 30 days following receipt of such officer's certificate, either
Baxter or the Required Holders shall notify Nexell and each of the Holders of
Put Right Certificates or Baxter, as applicable, of its or their disagreement
with such adjustment, in which event such adjustments shall be determined (at
the expense of Nexell) by a firm of independent certified public accountants of
recognized national standing selected by Nexell and reasonably satisfactory to
Baxter and the holders of more than 66-2/3% in interest of the Put Stock at the
time outstanding and shall be set forth in a separate report from such
accountants delivered promptly to Nexell, the Holders and Baxter following the
determination by such accountants.
7
<PAGE>
Section 9. Status of Purchased Put Stock. The Put Stock shall be
deemed to be issued and outstanding for purposes of this Put Right Certificate
and for all other purposes until such time as Baxter shall deliver to the Holder
the Purchase Price as provided in Section 4, after which time the Put Stock
shall be deemed to have been acquired by Baxter. Upon acquisition by Baxter, the
Put Stock shall be deemed owned and held by Baxter and shall remain outstanding
for all purposes.
Section 10. Purchase of Put Right Certificates. Baxter will not,
directly or indirectly, through any subsidiary or affiliate or otherwise,
purchase or make any offer to purchase any of the Put Right Certificates, unless
the offer has been made to repurchase the Put Right Certificates pro rata from
all Holders thereof at the same time and at the same price and upon the same
terms. Upon the exercise of all or any portion of any Put Right Certificate and
complete performance by Baxter pursuant thereto, such Put Right Certificate or
portion thereof as exercised shall be cancelled and Baxter shall have no status
for any purpose as a Holder of any Put Right Certificate.
Section 11. Representations and Warranties of Baxter. Baxter hereby
represents and warrants to the Holder that, on the date this Put Right
Certificate is issued:
(a) The execution and delivery of this Put Right Certificate
and compliance by Baxter with all of the provisions hereof (i) are
within the corporate powers of Baxter, (ii) have been duly authorized
by all necessary corporate action on the part of Baxter, and (iii) are
legal and will not conflict with nor result in any breach of any of the
provisions of, or constitute a default under, or result in the creation
of any lien or encumbrance upon any property of Baxter under the
provisions of, any loan agreement, charter instrument, by-law or other
agreement or instrument to which Baxter is a party or by which it may
be bound or to which any of its properties may be subject.
(b) This Put Right Certificate has been duly executed and
delivered by Baxter and constitutes the legal, valid and binding
obligation of Baxter enforceable in accordance with its terms.
(c) The Put Agreement dated as of November 24, 1999 between
Nexell and Baxter is in full force and effect, all conditions precedent
required by Baxter to the issuance of this Put Right Certificate as
provided in the Put Agreement have been satisfied without waiver and no
default under the Put Agreement has occurred.
(d) There will be provided to Baxter a substantial economic
benefit and adequate consideration for the execution and delivery of
this Put Right Certificate because, among other reasons, a portion of
the proceeds from the original issuance of the Series B Preferred Stock
will be used by Nexell to prepay in full certain 6-1/2% subordinated
debentures of Nexell held by Baxter and because Baxter owns other
capital stock in Nexell.
8
<PAGE>
(e) Neither the nature of Baxter, its business or property,
nor any relationship between Baxter and any other Person, nor any
circumstances in connection with the execution and delivery of this Put
Right Certificate or the purchase of the Put Stock required hereunder
is such as to require a consent, approval or authorization of, or
filing, registration or qualification with, any governmental authority
or any stock exchange on the part of Baxter in connection with the
execution, delivery and performance hereof, except that notification
may be required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), in connection with the actual
purchase of the Put Stock. In the event that any notification is
required under the HSR Act in connection with the purchase by Baxter of
the Put Stock, or in the event any other consent, approval or
authorization of, or declaration or filing with, or other action by,
any person (including, without limitation, any governmental authority)
is required after the date hereof as a condition precedent to the
performance by Baxter of this Put Right Certificate and/or the purchase
by Baxter of the Put Stock, upon the exercise by the Holder in
accordance with the terms hereof, then each of Baxter, Nexell and, at
the request of Baxter, the Holder shall use its reasonable best efforts
to obtain the same not later than the date upon which Baxter is
obligated to perform its obligations hereunder; provided that Baxter
shall pay all out-of-pocket expenses incurred by the Holder in
connection therewith. If any such condition precedent cannot be
satisfied or rendered inapplicable to such performance or purchase on
or prior to the 45th day following the exercise of the Put Right
evidenced by this Put Right Certificate in accordance with Section 3,
then (i) on the 46th day following such exercise, Baxter shall pay (in
accordance with Section 4) the Purchase Price with respect to the Put
Stock as to which the Put Rights have been so exercised and (ii) from
and after such date, the Holder shall, at Baxter's sole direction,
deposit such Put Stock in an escrow, a voting trust or other similar
arrangement, hold such Put Stock in trust for the benefit of Baxter or
otherwise hold or dispose of such Put Stock at Baxter's sole written
direction and hold or distribute the proceeds of any sale, redemption
or other disposition of such Put Stock at Baxter's sole written
direction; provided that Baxter shall pay all out-of-pocket expenses
incurred by such Holder in connection therewith and shall indemnify
such Holder from all claims which might be made against such Holder in
following Baxter's directions pursuant to this Section 11(d).
Section 12. Notice Not Required. Baxter hereby waives, to the fullest
extent permitted by law, any right to require that any action on or in respect
of any shares of Put Stock be brought against Nexell or that resort be had to
any direct or indirect security for the Put Stock or any other remedy before
proceeding hereunder against Baxter. The liability of Baxter hereunder shall, to
the fullest extent permitted by law, in no way be affected or impaired by any
acceptance by the Holder of any direct or indirect security for, or other
guaranties of, any indebtedness, liability or obligation of Nexell or any other
person to the Holder or by any failure, delay, neglect or omission by the Holder
to realize upon or protect any such indebtedness, liability or obligation or any
shares of Put Stock or other instrument evidencing the same or any direct or
indirect security therefor or by
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<PAGE>
any approval, consent, waiver or other action taken, or omitted to be taken, by
the Holder. Baxter hereby waives any and all defenses, counterclaims or offsets
which it might or could have by reason thereof, it being understood that Baxter
shall at all times be bound by this Put Right Certificate and remain liable
hereunder.
Section 13. Nature of Obligations. (a) The obligations of Baxter under
this Put Right Certificate and the rights of the Holder to enforce such
obligations by any proceedings, whether by action at law, suit in equity or
otherwise, are absolute, unconditional and irrevocable and shall not be subject
to any reduction, limitation, impairment or termination, whether by reason of
any claim of any character whatsoever or otherwise and shall not be subject to
any defense, set-off, counterclaim, reduction or deduction whatsoever.
(b) The obligations of Baxter hereunder shall be binding upon Baxter
and its successors and assigns, and shall, to the fullest extent permitted by
law, remain in full force and effect irrespective of:
(1) the genuineness, validity, regularity or enforceability
of the Put Stock or any other instruments relating thereto or any of
the terms of any thereof, the continuance of any obligation on the part
of Nexell or any other person on the Put Stock or the power or
authority or the lack of power or authority of Nexell to issue the Put
Stock or execute and deliver the Certificate of Designation or the
Securities Agreement or to perform any of its obligations thereunder or
the existence or continuance of Nexell or any other person as a legal
entity; or
(2) any default, failure or delay, willful or otherwise, in
the performance by Nexell or any other person of any obligations of any
kind or character whatsoever of Nexell or any other person (including,
without limitation, the obligations and undertakings of Nexell or any
other person under the Put Stock, the Certificate of Designation, the
Securities Agreement or otherwise); or
(3) any creditors' rights, bankruptcy, stay, receivership or
other insolvency proceeding of Nexell or any other person or in respect
of the property of Nexell or any other person or any merger,
consolidation, reorganization, dissolution, liquidation or winding up
of Nexell or any other person; or
(4) impossibility or illegality of performance on the part of
Nexell or any other person of its obligations under the Put Stock, the
Certificate of Designation, the Securities Agreement, or any other
instruments; or
(5) in respect of Nexell or any other person, any change of
circumstances, whether or not foreseen or foreseeable, whether or not
imputable to Nexell or any other person, or other impossibility of
performance through action of any Federal or state regulatory body or
agency, change of law or any other causes affecting performance, or any
other force majeure, whether or not
10
<PAGE>
beyond the control of Nexell or any other person and whether or not of
the kind hereinbefore specified; or
(6) the failure of Baxter to receive any benefit from or as
a result of its execution, delivery and performance of this Put Right
Certificate; or
(7) any assignment, sale, transfer or other disposition by
Baxter of all or any portion of its investment in the capital stock of
Nexell, except any such transaction which expressly results in the
termination of the Put Rights as provided in Section 7(c); or
(8) any failure or lack of diligence in collection or
protection, failure in presentment or demand for payment, protest,
notice of protest, notice of default and of nonpayment, any failure to
give notice to Baxter of failure of Nexell or any other person to keep
and perform any obligation, covenant or agreement under the terms of
the Put Stock, the Certificate of Designation, the Securities
Agreement, or failure to resort for payment to Nexell or to any other
person or to any guaranty or to any property, security, liens or other
rights or remedies; or
(9) any defense whatsoever that Nexell or any other person
might have to the obligations in respect of the Put Stock or to the
performance or observance of any of the provisions of the Certificate
of Incorporation, whether through the satisfaction or purported
satisfaction by Nexell or any other person of its debts due to any
cause such as bankruptcy, insolvency, receivership, merger,
consolidation, reorganization, dissolution, liquidation, winding-up or
otherwise; or
(10) any act or failure to act with regard to the Put Stock,
the Certificate of Designation, the Securities Agreement or anything
which might vary the risk of Baxter; or
(11) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, Baxter in respect of the
obligations of Baxter under this Put Right Certificate;
provided, however, that the specific enumeration of the above-mentioned acts,
failures or omissions shall not be deemed to exclude any other acts, failures or
omissions, though not specifically mentioned above, it being the purpose and
intent of this Put Right Certificate that the obligations of Baxter shall be
absolute and unconditional and shall not be discharged, impaired or varied
except on the terms expressly provided in this Put Right Certificate.
Section 14. Rank of Obligation. The obligations of Baxter under this
Put Right Certificate rank pari passu in right of payment with all other
indebtedness (actual or contingent) of Baxter which is not secured or the
subject of any statutory trust or
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<PAGE>
preference or which is not expressly subordinated in right of payment to any
other indebtedness.
Section 15. Expenses. Baxter agrees to pay directly all of the
expenses of the Holder (a) in connection with any amendments, waivers or
consents requested by Baxter pursuant to the provisions of this Put Right
Certificate including those resulting from any work-out, renegotiation or
restructuring relating to the performance by Baxter of its obligations under
this Put Right Certificate and all related costs and expenses (including,
without limitation, reasonable attorney fees, but excluding internal legal costs
and expenses allocated by a Holder to such matters) (b) incurred in enforcing or
defending any rights under or in respect of this Put Right Certificate
(excluding internal legal costs and expenses allocated by a Holder to such
matters), provided that Baxter shall only be required to pay such expenses if
the Holder enforcing or defending its rights hereunder shall prevail in the
proceedings arising from such enforcement or defense.
Section 16. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial. This Put Right Certificate, including the validity hereof and the rights
and obligations of the parties hereunder, and all amendments and supplements
hereof and all waivers and consents hereunder, shall be construed in accordance
with and governed by the Laws of the State of Illinois without giving effect to
any choice of law or conflicts of law provision or rule that would cause the
application of the laws of any other jurisdiction. Any legal action or
proceeding with respect to this Put Right Certificate or any document related
hereto shall be brought in the courts of the State of New York sitting in the
County of New York or of the United States of America for the State of New York
sitting in the county of new york or in the courts of the state of illinois
sitting in the County of Cook or of the United States of America for the State
of Illinois sitting in the Northern District of Illinois, and, by execution and
delivery and/or acceptance of this Put Right Certificate, Baxter, Nexell and the
holder of this Put Right Certificate each hereby accepts the non-exclusive
jurisdiction of the aforesaid courts.
In addition, Nexell, Baxter and the Holder hereby irrevocably and
unconditionally waive any objection which they may now or hereafter have to the
laying of venue of any of the aforesaid actions, suits or proceedings arising
out of or in connection with this Put Right Certificate or any document related
hereto brought in any of the aforesaid courts, and hereby further irrevocably
and unconditionally waive and agree not to plead or claim that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient
forum.
Baxter, Nexell and the Holder hereby irrevocably waive all right to a
trial by jury in any suit, action or other proceeding instituted by or against
it in respect of its obligations hereunder or the transactions contemplated
hereby.
12
<PAGE>
Section 17. Amendment and Waiver. This Put Right Certificate may be
amended, and the observance of any term hereof may be waived, with and only with
the written consent of Baxter, Nexell and the Holder. Any amendment or waiver
consented to as provided above shall be binding upon Baxter, Nexell, the Holder
and each future Holder hereof. No such amendment or waiver will extend to or
affect any obligation, covenant, agreement or default not expressly amended or
waiver or impair any right consequent thereto. No course of dealing between
Baxter, Nexell and the Holder nor any delay in exercising any rights hereunder
shall operate as a waiver of any rights of the Holder.
Section 18. Exchange of Put Right Certificates. At any time and from
time to time prior to the expiration or termination of the Put Rights evidenced
by this Put Right Certificate, upon surrender by the Holder of this Put Right
Certificate at the principal offices of Baxter in Deerfield, Illinois (with the
assignment or, as the case may be, partial assignment form at the end hereof
duly executed, as applicable), Baxter will deliver in exchange therefor, at
Baxter's reasonable expense, a new Put Right Certificate or Put Right
Certificates of like tenor and date evidencing the Put Rights entitling such
Holder or such Holder's transferee to cause Baxter to purchase a like aggregate
number of shares of Put Stock as the Put Rights evidenced by the surrendered Put
Right Certificate or Put Right Certificates shall have entitled such Holder to
cause Baxter to purchase.
Section 19. Registered Certificate. Baxter shall keep at its principal
executive office a register for the initial registration and registration of
transfers of the Put Right Certificates. The name and address of each holder of
one or more Put Right Certificates, each transfer thereof and the name and
address of each transferee of one or more Put Right Certificates shall be
registered in such register. Prior to due presentment for registration of
transfer, the person in whose name any Put Right Certificate shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and Baxter shall not be affected by any notice or knowledge to the
contrary. Baxter shall give to the Holder promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Put Right Certificates.
Section 20. Notices. All notices and other communications provided for
hereunder shall be in writing and, if to the Holder of this Put Right
Certificate, delivered or mailed prepaid by registered or certified mail or
overnight air courier, or by facsimile communication, in each case addressed to
the address of such Holder appearing on Schedule I to the Securities Agreement
(in the case of the initial Holder) or such other address as such Holder or any
subsequent Holder of this Put Right Certificate may designate to Baxter or
Nexell in writing, and if to Baxter or Nexell, delivered or mailed prepaid by
registered or certified mail or prepaid overnight air courier, or by facsimile
communication, in each case addressed to the recipient as follows:
13
<PAGE>
If to Baxter: Baxter International Inc.
One Baxter Parkway
Deerfield, Illinois 60045
Attn: Treasurer
Facsimile: (847) 948-4509
With a copy to:
Attn: General Counsel
Facsimile: (847) 948-2450
If to Nexell: Nexell Therapeutics Inc.
9 Parker
Irvine, California 92618-1605
Attn: President
Facsimile: (949) 470-6645
With a copy to:
Bryan Cave LLP
120 Broadway, Suite 300
Santa Monica, California 90401-2305
Attn: Thomas S. Loo
Facsimile: (310) 576-2200
or to such other address as Baxter or Nexell shall designate in writing to each
other and to each Holder of Put Right Certificates; provided, however, that a
notice by overnight air courier shall only be effective if delivered to a street
address designated for such purpose, and a notice by facsimile communication
shall only be effective if confirmed by transmission of a copy thereof by
prepaid overnight air courier. Each notice, request, demand, approval or other
communication which is sent in accordance with this Section 20 shall be deemed
given and received for all purposes of this Put Right Certificate when actually
received in writing by such party.
Section 21. Successors and Assigns. This Put Right Certificate shall
be binding upon and inure to the benefit of and be enforceable by Baxter, Nexell
and the Holder and their respective successors and permitted assigns.
Notwithstanding the foregoing, neither Baxter nor Nexell may assign any of its
rights or obligations hereunder without the prior written consent of the Holder.
Section 22. Severability. Should any part of this Put Right
Certificate for any reason be declared invalid or unenforceable, such decision
shall not affect the validity or enforceability of any remaining portion, which
remaining portion shall remain in force and effect as if this Put Right
Certificate had been executed with the invalid or unenforceable portion thereof
eliminated and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Put Right Certificate
without including therein any such part, parts or portion which may, for any
reason, be hereafter declared invalid or unenforceable.
14
<PAGE>
Section 23. Descriptive Headings. Titles to sections herein are
for information purposes only and are not to be construed as part of the
agreements between the parties hereto.
Section 24. Counterparts. This Put Right Certificate may be executed
in counterparts, all of which taken together shall constitute one and the same
agreement.
15
<PAGE>
In Witness Whereof, Baxter and Nexell Therapeutics Inc. have executed
this Put Right Certificate as of the date first set forth above.
Baxter International Inc.
By /s/
--------------------------------
Name:_____________________________
Title:____________________________
Nexell Therapeutics Inc.
By /s/
--------------------------------
Name:_____________________________
Title:____________________________
16
<PAGE>
Form of Election to Exercise
To: Baxter International Inc.
[Address]
The undersigned, _________________________________, pursuant to the
provisions of the within Put Right Certificate, hereby elects to exercise
________ Put Rights and to cause Baxter International Inc. to purchase _____
shares of the Series B Preferred Stock of Nexell Therapeutics, Inc. pursuant to
the attached Put Right Certificate.
Payment of the Purchase Price in respect of the foregoing should be
made as follows:
Signature
Address
Dated:
<PAGE>
Assignment
For Value Received ___________________ hereby sells, assigns and
transfers unto _______________________________________________________________
[name, and address of transferee] the within Put Right Certificate and the all
rights, title and interest evidenced thereby and irrevocably constitutes and
appoints __________________, attorney, to transfer such Put Right Certificate.
Signature
Address
Dated:
<PAGE>
Partial Assignment
For Value Received ___________________ hereby sells, assigns and
transfers unto _______________________________________________________________
[name, and address of transferee] ________ Put Rights evidenced by the within
Put Right Certificate and the all rights, title and interest evidenced thereby
and irrevocably constitutes and appoints __________________, attorney, to
transfer such Put Rights.
Signature
Address
Dated:
<PAGE>
EXHIBIT 10.47
================================================================================
This Warrant and the Common Stock issuable upon exercise hereof have not been
registered or qualified under the Securities Act of 1933, as amended, or any
state securities laws, and may not be sold or transferred unless Registered or
qualified pursuant to such Act and applicable state securities laws or an
exemption therefrom under said Act or any such state securities laws is
available.
This Warrant and the Common Stock issuable upon exercise hereof are subject to
certain restrictions on transfer and certain rights specified in the Securities
Agreement dated as of November 24, 1999, as amended from time to time, among
Nexell Therapeutics Inc., the original Holder of this Warrant and the other
parties that are signatories thereto, a copy of which will be mailed to any
requesting Holder within five (5) days of written request therefor.
No. AWR-___ Adjusted Number of Shares
Class A Warrant to Purchase
Shares of Common Stock
of
Nexell Therapeutics Inc.
================================================================================
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Section Heading Page
<S> <C>
Section 1. Exercise of Warrant................................................................ 1
Section 2. Reservation........................................................................ 2
Section 3. Protection Against Dilution........................................................ 3
Section 3.1. Stock Dividends, Subdivisions and Combinations..................................... 3
Section 3.2. Issuance of Additional Shares of Common Stock...................................... 3
Section 3.3. Issuance of Warrants or Other Rights, Convertible Securities....................... 4
Section 3.4. Other Provisions Applicable to Adjustments......................................... 4
Section 3.5. Extraordinary Dividends............................................................ 6
Section 3.6. Additional Adjustments, etc........................................................ 6
Section 3.7. Adjustment of Number of Shares Purchasable......................................... 7
Section 3.8. Minimum Adjustment................................................................. 7
Section 3.9. Notice of Adjustments.............................................................. 7
Section 4. Mergers, Consolidations, Sales Reorganizations or Reclassification................. 8
Section 5. Dissolution or Liquidation......................................................... 9
Section 6. Notice of Extraordinary Dividends.................................................. 9
Section 7. Fractional Shares.................................................................. 9
Section 8. Fully Paid Stock; Taxes............................................................ 10
Section 9. Restrictions on Transferability.................................................... 10
Section 9.1. In General......................................................................... 10
Section 9.2. Restrictive Legends................................................................ 10
Section 9.3. Transfers to Competitors........................................................... 11
Section 9.4. Transfers with Related Securities.................................................. 11
Section 9.5. Minimum Transfers.................................................................. 11
Section 10. Partial Exercise and Partial Assignment............................................ 11
Section 10.1. Partial Exercise................................................................... 11
Section 10.2. Assignment......................................................................... 11
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 11. Preemption......................................................................... 12
Section 12. Warrant Denominations.............................................................. 12
Section 13. Definitions........................................................................ 12
Section 14. Lost, Stolen Warrants, Etc......................................................... 17
Section 15. Warrant Holder Not Shareholder..................................................... 17
Section 16. Exercise of Remedies............................................................... 18
Section 17. Notices............................................................................ 18
Section 18. Severability....................................................................... 18
Section 19. Register; Closing of Transfer Books................................................ 19
Section 20. Financial Statements; Notice of Exercise Period.................................... 19
Section 21. [Intentionally Omitted]............................................................ 19
Section 22. Restrictions on Capital Structure.................................................. 19
Section 23. Successors and Assigns............................................................. 20
Section 24. Index and Captions................................................................. 20
Section 25. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.................... 20
Signature.............................................................................................. 22
</TABLE>
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<PAGE>
No. AWR-____ Adjusted Number of Shares
Class A Warrant to Purchase
Shares of Common Stock
of
Nexell Therapeutics Inc.
This is to Certify that, for value received and subject to the provisions
hereinafter set forth,
[Purchaser]
or assigns,
is entitled to purchase from Nexell Therapeutics Inc., a Delaware corporation
(the "Company"), at any time during the Exercise Period, the Adjusted Number of
Shares (as hereinafter defined) of Common Stock, $.001 par value, of the
Company, subject to the terms, provisions and conditions hereinafter set forth
at a price equal to $.01 per share.
The aggregate price of the Common Stock shall be equal to the price per
share multiplied by the Adjusted Number of Shares which would be purchasable
hereunder at the Initial Exercise Time if no adjustment described in Section 3
were made. The aggregate price is herein sometimes referred to as the "Aggregate
Warrant Price" and is not subject to adjustment. The price per share is,
however, subject to adjustment as hereinafter provided (such price, or such
price as last adjusted, as the case may be, being herein referred to as the "per
share Warrant Price"). The Adjusted Number of Shares purchasable hereunder is
likewise subject to adjustment as hereinafter provided.
The terms which are capitalized herein shall have the meanings specified in
Section 13 hereof, unless the context shall otherwise require.
Section 1. Exercise of Warrant.
Subject to the conditions hereinafter set forth, this Warrant may be
exercised in whole or in part at any time during the Exercise Period. Any
exercise of this Warrant, whether in whole or in part, shall be made by the
surrender of this Warrant (with the subscription form at the end hereof duly
completed and executed) at the principal office of the Company in Irvine,
California and upon payment of the Aggregate Warrant Price (or, if exercised in
part, upon payment of a proportionate part thereof) for the shares so purchased,
which payment shall be made by the wire transfer or other delivery to the
Company of one or more types of Permitted Consideration.
<PAGE>
In the event that Preferred Stock shall be delivered to the Company as
payment of all or any portion of the Warrant Price, the amount of the Warrant
Price to be paid by means of such delivery shall equal the aggregate of the then
applicable liquidation preference of the shares of Preferred Stock so delivered
(based on an initial liquidation preference of $1,000.00 per share) or such
lesser amount of such liquidation preference as shall be designated by the
Holder hereof.
In the event that Preferred Stock shall be delivered to the Company as
payment of all or any portion of the Warrant Price and the aggregate liquidation
preference of such shares shall be in excess of the amount of per share
liquidation preference sought to be applied by the Holder of this Warrant in
respect of the Warrant Price, said Holder shall provide the Company with notice
to such effect and the Company shall (without charge to the Holder) issue to
said Holder a new Preferred Stock certificate for the number of shares with an
aggregate per share liquidation preference equal to such excess as provided in
Section 5.05 of the Securities Agreement.
In the event that Warrants shall be delivered to the Company as payment of
all or any portion of the Warrant Price, the amount of the Warrant Price deemed
to be paid by means of such delivery shall equal (a) the aggregate number of
Underlying Shares related to any Warrants so delivered, multiplied by (b) the
per share Warrant Price then in effect.
If this Warrant is exercised in respect of less than all of the shares of
Common Stock at the time purchasable hereunder, the Holder hereof shall be
entitled to receive a new Warrant covering the number of shares in respect of
which this Warrant shall not have been exercised and setting forth the Aggregate
Warrant Price applicable to such shares.
This Warrant and all rights and options hereunder shall expire at the
earlier of (a) 5:00 p.m. (New York, New York time) on the Expiration Date or (b)
the exercise by the Holder of the Put Right Certificates issued by Baxter
International Inc., a Delaware corporation, to such Holder concurrently with,
and as part of an investment unit including, this Warrant and certain Series B
Preferred Stock, and shall be wholly null and void to the extent this Warrant is
not exercised before such expiration.
The Company shall pay all reasonable expenses, taxes and other charges
payable in connection with the preparation, execution and delivery of stock
certificates pursuant to this Section, regardless of the name or names in which
such stock certificates shall be registered.
Section 2. Reservation.
The Company will at all times prior to the Expiration Date reserve and keep
available such number of authorized shares of its Common Stock, solely for the
purpose of delivery upon the exercise of the rights represented by this Warrant,
as may at such time be deliverable (based upon the number of shares of Common
Stock outstanding at any such time) upon the exercise of this Warrant and such
shares issuable upon the exercise of this Warrant shall at no time have an
aggregate par value which is in excess of the Aggregate Warrant Price.
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<PAGE>
Section 3. Protection Against Dilution.
The per share Warrant Price and the number of shares deliverable hereunder
shall be adjusted from time to time as hereinafter set forth:
Section 3.1. Stock Dividends, Subdivisions and Combinations. In case
after the date hereof the Company shall:
(a) take a record of the Holders of its Common Stock for the
purpose of entitling them to receive a dividend and declared to be payable
in, or other declared distribution of, Common Stock, or
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then the per share Warrant Price shall be adjusted to that price determined by
multiplying the per share Warrant Price in effect immediately prior to such
event by a fraction (i) the numerator of which shall be the total number of
outstanding shares of Common Stock of the Company immediately prior to such
event, and (ii) the denominator of which shall be the total number of
outstanding shares of Common Stock of the Company immediately after such event.
Section 3.2. Issuance of Additional Shares of Common Stock. In case
after the date hereof the Company shall (except as hereinafter provided) issue
any Additional Shares of Common Stock for a consideration per share less than
the then effective per share Warrant Price, then the per share Warrant Price
upon each such issuance shall be adjusted to that price determined by
multiplying the per share Warrant Price in effect immediately prior to such
event by a fraction:
(a) the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of full shares of Common
Stock which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at the then
effective per share Warrant Price, and
(b) the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of such Additional Shares
of Common Stock so issued.
The provisions of this Section 3.2 shall not apply to any Additional Shares
of Common Stock which are distributed to holders of Common Stock as a stock
dividend or subdivision, for which an adjustment is provided for under
Section 3.1. No adjustment of the per share Warrant Price shall be made under
this Section 3.2 upon the issuance of any Additional Shares of Common Stock
which are issued pursuant to the exercise of any warrants or other subscription
or
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<PAGE>
purchase rights or pursuant to the exercise of any conversion or exchange rights
in any Convertible Securities, if any such adjustment shall previously have been
made upon the issuance of such warrants or other rights or upon the issuance of
such Convertible Securities (or upon the issuance of any warrants or other
rights therefor) pursuant to Section 3.3.
Section 3.3. Issuance of Warrants or Other Rights, Convertible
Securities. In case the Company shall issue any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or issue
Convertible Securities (other than Series A Preferred Stock issued as a dividend
on the Series A Preferred Stock in accordance with the Company's Certificate of
Incorporation) and the consideration per share for which Additional Shares of
Common Stock may at any time thereafter be issuable pursuant to such warrants or
other rights or pursuant to the terms of such Convertible Securities shall be
less than the effective per share Warrant Price, then the per share Warrant
Price shall be adjusted as provided in Section 3.2 above on the basis that:
(a) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall
be deemed to have been issued as of the earlier of: (i) the date on which
the Company shall enter a firm contract or commitment for the issuance of
such warrants, other rights or Convertible Securities or (ii) the date of
actual issuance of such warrants, other rights or Convertible Securities,
and
(b) the aggregate consideration for such maximum number of
Additional Shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Company for the issuance of
such Additional Shares of Common Stock pursuant to such warrants or other
rights or pursuant to the terms of such Convertible Securities.
No adjustment of the per share Warrant Price shall be made under this
Section 3.3 upon the issuance of any Convertible Securities which are issued
pursuant to the exercise of any warrants or other subscription or purchase
rights therefor, to the extent such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to this Section 3.3.
Section 3.4. Other Provisions Applicable to Adjustments. The following
provisions shall be applicable to the making of adjustments in the per share
Warrant Price hereinbefore provided in this Section 3:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
options, warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities shall be
issued for a cash consideration, the consideration received by the Company
therefor shall be deemed to be the amount of the cash received by the
Company therefor, or, if such Additional Shares of Common Stock or
Convertible Securities or options, warrants or other rights are offered by
the Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible
-4-
<PAGE>
Securities or options, warrants or other rights are sold to underwriters or
dealers for public offering without a subscription offering, the initial
offering price, in any such case excluding any amounts paid or receivable
for accrued interest or accrued dividends and without deduction of any
compensation, discounts or expenses paid or incurred by the Company for and
in the underwriting thereof, or otherwise in connection with the issue
thereof. To the extent that such issuance shall be for a consideration
other than cash, then, except as herein otherwise expressly provided, the
amount of such consideration shall be deemed to be the fair value of such
consideration at the time of such issuance as determined in good faith by
the Board of Directors of the Company. The consideration for any Additional
Shares of Common Stock issuable pursuant to any options, warrants or other
rights to subscribe for or purchase the same shall be the consideration
received by the Company for issuing such options, warrants or other rights
plus the additional consideration payable to the Company upon the exercise
of such options, warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the Company
for issuing any options, warrants or other rights to subscribe for or
purchase such Convertible Securities plus the consideration paid or payable
to the Company in respect of the subscription for or purchase of such
Convertible Securities plus the additional consideration, if any, payable
to the Company upon the exercise of the right of conversion or exchange of
such Convertible Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividend upon any class of equity securities other than
Common Stock, the Company shall be deemed to have received for such
Additional Shares of Common Stock or Convertible Securities a consideration
equal to the amount of such dividend so paid or satisfied.
(b) Readjustment of Per Share Warrant Price. Upon expiration of the
right of exercise, conversion or exchange of any Convertible Securities, or
upon the expiration of any rights, options or warrants, or upon the
termination of any firm contract or commitment for the issuance of such
rights, options, warrants or Convertible Securities, or upon any increase
in the minimum consideration receivable by the Company for the issuance of
Additional Shares of Common Stock pursuant to such Convertible Securities,
rights, options or warrants, if any such Convertible Securities shall not
have been converted or exchanged, or if any such rights, options or
warrants shall not have been exercised, the number of shares of Common
Stock deemed to be issued and outstanding by reason of the fact that they
were issuable upon conversion or exchange of any such Convertible
Securities or upon exercise of any such rights, options or warrants shall
no longer be computed as set forth above, and the per share Warrant Price
shall forthwith be readjusted and thereafter be the price which it would
have been (but reflecting any other adjustments in the per share Warrant
Price made pursuant to the provisions of this Section 3 after the issuance
of such Convertible Securities, rights, options or warrants) had the
adjustment of the per share Warrant Price made upon the issuance or sale of
such Convertible Securities or the issuance of such rights, options or
warrants been made on the basis of the issuance only of the number of
Additional Shares of Common Stock actually issued upon conversion or
exchange of such Convertible Securities or upon the exercise of such
rights, options or warrants, or upon the basis of such increased minimum
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<PAGE>
consideration, as the case may be, and thereupon only the number of
Additional Shares of Common Stock actually so issued plus the number
thereof then issuable upon the basis of such increased minimum
consideration shall be deemed to have been issued and only the
consideration actually received plus such increased minimum consideration
receivable by the Company (computed in accordance with Section 3.4(a))
shall be deemed to have been received by the Company.
(c) No Rounding Per Share Warrant Price. Any determination of per
share Warrant Price hereunder shall be expressed in United States Dollars,
cents and portions of cents and shall not be subject to rounding.
Section 3.5. Extraordinary Dividends. In case the Company shall declare
a dividend upon its Common Stock (except a dividend payable in shares of Common
Stock referred to in Section 3.1(a) or a dividend payable in warrants, rights or
Convertible Securities referred to in Section 3.3) payable otherwise than out of
earnings or surplus (other than revaluation surplus or paid-in surplus), the per
share Warrant Price in effect immediately prior to the declaration of such
dividend shall be reduced by an amount equal, in the case of a dividend in cash,
to the amount thereof payable per share of Common Stock or, in the case of any
other dividend, to the fair value thereof per share of Common Stock as
determined in good faith by the Board of Directors of the Company. For the
purposes of the foregoing, a dividend payable other than in cash shall be
considered payable out of earnings or surplus (other than revaluation surplus or
paid-in surplus) only to the extent that such earnings or surplus are charged an
amount equal to the fair value of such dividend as determined by the Board of
Directors of the Company. If such dividend is paid or the Company declares and
becomes legally liable to pay such dividend, such reduction shall take effect as
of the date on which a record is taken for the purpose of such dividend or, if a
record is not taken, the date as of which the Holders of the Common Stock of
record entitled to such dividend are to be determined. Appropriate readjustment
of the per share Warrant Price shall be made in the event that any dividend
referred to in this Section 3.5 shall be lawfully abandoned.
Section 3.6. Additional Adjustments, etc. If any other transaction or
event shall occur (excluding any transaction or event explicitly referred to in
this Section 3, but including, without limitation, any issuance repurchase,
redemption, or other distribution in respect of any shares or capital stock or
other securities of the Company or of any other person) as to which the other
provisions of this Section 3 are not strictly applicable but the failure to make
any adjustment to the per share Warrant Price would not fairly protect the
exercise rights and other rights of the Holder of this Warrant, then, and as a
condition to the consummation of any such transaction or event, and in each such
case, the Board of Directors shall promptly determine the adjustment, if any, on
a basis consistent with the essential intent and principles established in this
Section 3, which is necessary to preserve, without dilution, the exercise rights
of this Warrant and, promptly following such determination, the Company shall
furnish to each Holder of the Warrants a certificate setting forth such
adjustment and showing in detail the facts upon which such adjustment is based.
The adjustment set forth in such certificate shall be binding upon the Company
and the Holders of the Warrants unless, within 30 days following receipt of such
certificate, the Holders of 20% or more of the outstanding Warrants (determined
by the number of shares of Common Stock represented by each such Warrant if
exercised) shall notify the
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Company of their disagreement with such adjustment, in which event such
adjustment shall be determined at the expense of the Company by its independent
auditors (so long as such auditors' accounting firm ranks among the five largest
national accounting firms) or by an independent investment banking firm or other
professional of recognized national standing selected by the Company and, in all
such cases (including the Company's selection of its auditors), reasonably
satisfactory to the Required Holders, which shall give its opinion as to the
adjustment, if any, on a basis consistent with the essential intent and
principles established in this Section 3, which is necessary to preserve,
without dilution, the exercise rights of each Warrant. The opinion of any such
auditor, banking firm or other professional shall be conclusive evidence of the
correctness of any computation made under this Section 3. The Company shall pay
all fees and expenses in connection with any such opinion. Upon receipt of such
opinion, the Company will promptly deliver a copy thereof to each Holder of any
Warrant and the Company shall (subject to obtaining necessary director and
stockholder actions), take all actions necessary or appropriate under the laws
of the State of Delaware and the Certificate of Incorporation consistent with
such opinion to effect the intent and principles hereof.
Section 3.7. Adjustment of Number of Shares Purchasable. Upon each
adjustment of the per share Warrant Price, the Adjusted Number of Shares of
Common Stock (for each level of Adjusted Number of Shares corresponding to the
ranges of "Current Market Price on the First Day of the Exercise Period" as set
forth in the definition thereof) purchasable hereunder shall be adjusted by
multiplying the Adjusted Number of Shares of Common Stock (in each such level)
which would have been purchasable hereunder if there had been no such adjustment
of the per share Warrant Price (though taking into account all prior adjustments
of the per share Warrant Price) by a fraction, the numerator of which shall be
the per share Warrant Price in effect immediately prior to such adjustment and
the denominator of which shall be the per share Warrant Price in effect
immediately following such adjustment.
Section 3.8. Minimum Adjustment. Except as hereinafter provided, no
adjustment of the per share Warrant Price hereunder shall be made if such
adjustment results in a change of the per share Warrant Price then in effect of
less than 0.001%. Any adjustment of less than 0.001% shall be carried forward
and shall be made at the time of and together with any subsequent adjustment
which, together with the adjustment or adjustments so carried forward, amounts
to 0.001% or more of the per share Warrant Price then in effect. However, upon
the exercise of this Warrant, the Company shall make all necessary adjustments
not theretofore made to the per share Warrant Price up to and including the date
upon which this Warrant is exercised.
Section 3.9. Notice of Adjustments. (a) Whenever the per share Warrant
Price or number of shares deliverable upon exercise of this Warrant shall be
adjusted pursuant to this Section 3, the Company at is expense shall promptly
prepare a certificate signed by the Chief Financial Officer or the Chief
Operating Officer and by the Treasurer or an Assistant Treasurer of the Company
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated
(including a description of the basis on which the Board of Directors of the
Company made any determination hereunder), and shall promptly cause copies of
such certificate to be mailed in the manner provided in Section 17 hereof to the
Holder of this Warrant.
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(b) The adjustment set forth in the certificate furnished pursuant to
Section 3.9(a) shall be final and binding upon the Company and the holders of
the Warrants unless, within 30 days following receipt of such certificate, the
Holders of 20% or more of the outstanding Warrants (determined by the number of
shares of Common Stock represented by each such Warrant if exercised) shall
notify the Company of their disagreement with such adjustments, in which event,
such adjustments shall be determined at the expense of the Company by its
independent auditors (so long as such auditors' accounting firm ranks among the
five largest national accounting firms) or by an independent investment banking
firm or other professional of recognized national standing selected by the
Company and in all such cases (including the Company's selection of its
auditors) reasonably satisfactory to the Required Holders, such determination to
be set forth in a separate report from such auditor, banking firm or other
professional delivered promptly to the Company and each Holder of the Warrants
following the such determination. The Company shall, upon the written request
made at any time by any Holder of the Warrants, furnish to such Holder a
certificate setting forth (i) all adjustments that shall have been made with
respect to the Warrants pursuant to this Section 3, (ii) the per share Warrant
Price at the time in effect and (iii) the number of shares of Common Stock which
at the time would be received upon the exercise of the then outstanding
Warrants.
Section 4. Mergers, Consolidations, Sales, Reorganizations or
Reclassification.
In the case of any consolidation or merger of the Company with another
entity (regardless of whether the Company is a surviving entity), or the sale of
all or substantially all of its assets to another entity, or any reorganization,
recapitalization or reclassification of the Common Stock or other equity
securities of the Company, then, as a condition of such consolidation, merger,
sale, reorganization, recapitalization or reclassification, lawful and adequate
provision shall be made whereby the Holder of this Warrant shall thereafter have
the right to receive upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore
purchasable hereunder, such shares of stock, securities or assets (including,
without limitation, cash) as may (by virtue of such consolidation, merger, sale,
reorganization, recapitalization or reclassification) be issued or payable with
respect to or in exchange for a number of outstanding shares of Common Stock
equal to the number of shares of Common Stock immediately theretofore so
purchasable hereunder had such consolidation, merger, sale, reorganization,
recapitalization or reclassification not taken place, and in any such case,
appropriate provisions shall be made with respect to the rights and interests of
the Holder of this Warrant to the end that the provisions hereof (including,
without limitation, provisions for adjustment of the per share Warrant Price)
shall thereafter be applicable, as nearly as may be, in relation to any shares
of stock, securities or assets thereafter deliverable upon exercise of this
Warrant. The Company shall not effect any such consolidation, merger, sale,
reorganization, recapitalization or reclassification, unless prior to or
simultaneously with the consummation thereof, the successor entity (if other
than the Company) resulting from such consolidation, merger, reorganization,
recapitalization or reclassification or the entity purchasing such assets shall
assume by written instrument executed and mailed or delivered to the Holder of
this Warrant, the obligation to deliver to such Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
Holder may be entitled to receive.
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Section 5. Dissolution or Liquidation.
In the event of any proposed distribution of the assets of the Company
in dissolution or liquidation except under circumstances when the foregoing
Section 4 shall be applicable, the Company shall mail notice thereof in the
manner provided in Section 17 hereof to the Holder of this Warrant and shall
make no distribution to shareholders until the expiration of 30 days from the
date of mailing of the aforesaid notice and, in any such case, the Holder of
this Warrant may exercise the purchase rights with respect to this Warrant
within 30 days from the date of mailing such notice and all rights herein
granted not so exercised within such 30-day period shall thereafter become null
and void.
Section 6. Notice of Extraordinary Dividends.
If the Board of Directors of the Company shall declare any dividend or
other distribution on its Common Stock except out of earnings or surplus or by
way of a stock dividend payable on its Common Stock, the Company shall mail
notice thereof in the manner provided in Section 17 hereof to the Holder of this
Warrant not less than 30 days prior to the record date fixed for determining
shareholders entitled to participate in such dividend or other distribution and
the Holder of this Warrant shall not participate in such dividend or other
distribution or be entitled to any rights on account or as a result thereof
(except adjustments in the per share Warrant Price as provided in Section 3.5),
unless and to the extent that this Warrant may be exercised pursuant to its
terms and is so exercised prior to such record date. The provisions of this
paragraph shall not apply to distributions made in connection with transactions
covered by Section 4 hereof.
Section 7. Fractional Shares.
Fractional shares shall not be issued upon the exercise of this Warrant,
but in any case where the Holder hereof would, except for the provisions of this
paragraph, be entitled to receive a fractional share upon the complete exercise
of this Warrant, the Company shall, upon the exercise of this Warrant for the
largest number of whole shares then called for, pay to the Holder of this
Warrant a sum in cash equal to the proportional part of the per share Warrant
Price represented by such fractional share.
Section 8. Fully Paid Stock; Taxes.
The Company covenants and agrees that the shares of stock represented by
each and every certificate for its Common Stock to be delivered on the exercise
of the purchase rights and the payment of the applicable purchase price herein
provided for shall, at the time of such delivery, be validly issued and
outstanding and be fully paid and nonassessable. The Company further covenants
and agrees that it will pay when due and payable any and all Federal, State and
local taxes (other than taxes in respect of income) which may be payable in
respect of the delivery of this Warrant or any Common Stock or certificates
therefor upon the exercise of the purchase rights herein provided for pursuant
to the provisions hereof. The Company shall not, however, be required to pay any
tax which may be payable solely in respect of any transfer and
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delivery of stock certificates in a name other than that of the Holder
exercising this Warrant, and any such tax shall be paid by such holder at the
time of presentation.
Section 9. Restrictions on Transferability.
Section 9.1. In General. This Warrant and the Common Stock issued upon
the exercise hereof shall not be transferable except upon the conditions
hereinafter specified, which conditions are intended to insure compliance with
the provisions of the Securities Act (or any similar Federal statute at the time
in effect) and any applicable State securities laws in respect of the transfer
of this Warrant or any such Common Stock.
The Holder of each Warrant or any Restricted Stock, by its acceptance
thereof, agrees to sell or otherwise transfer such Warrant or Restricted Stock,
as the case may be, in compliance with and so as not to result upon consummation
of such sale or transfer in any violation of applicable law.
Section 9.2. Restrictive Legends. Each Warrant shall bear on the face
thereof a legend substantially in the form of the notice endorsed on the first
page of this Warrant.
Each certificate for shares of Common Stock initially issued upon the
exercise of any Warrant and each certificate for shares of Common Stock issued
to a subsequent transferee of such certificate shall, unless otherwise permitted
by the provisions of this Section 9.2, bear on the face thereof a legend reading
substantially as follows:
"The shares evidenced by this Certificate have not
been registered or qualified under the Securities
Act of 1933, as amended, or any state securities
laws and may not be sold or transferred unless
registered or qualified pursuant to such Act and
applicable state securities laws or an exemption
from registration under such Act or such
applicable state securities laws is available, and
are transferable only upon the conditions
specified in the Warrant pursuant to which such
shares were issued."
In the event that a registration statement covering the Underlying Shares
or the Restricted Stock shall become effective under the Securities Act and
under any applicable State securities laws or in the event that the Company
shall receive an opinion of counsel to the Holder of this Warrant (which may be
internal counsel to such Holder) that, in the opinion of such counsel, such
legend is not, or is no longer, necessary or required (including, without
limitation, because of the availability of the exemptions afforded by Rule 144
or Rule 144A of the General Rules and Regulations of the Commission), the
Company shall, or shall instruct its transfer agents and registrars to, remove
such legend from the certificates evidencing the Restricted Stock or issue new
certificates without such legend in lieu thereof. The Company agrees to bear all
expenses in connection with the matters covered by this Section 9.2.
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Section 9.3. Transfers to Competitors. No Holder of a Warrant or any
Restricted Stock may Transfer any Warrant or any Restricted Stock beneficially
owned by such Holder to a Competitor.
Section 9.4. Transfers with Related Securities. No Holder of a Warrant
may transfer a Warrant or any portion thereof unless the Holder concurrently
transfers to the same transferee that number of the shares of Series B Preferred
Stock held by such Holder which represents the same proportion of the Holder's
investment in the Series B Preferred Stock as the Warrant or portion thereof
being transferred represents in its investment in the Warrants immediately prior
to the transfer.
Section 9.5. Minimum Transfers. No Holder of a Warrant may transfer any
Warrant in part in denominations of less than 5% of the aggregate number of all
shares of Common Stock into which all Warrants at the time outstanding are
exercisable (or such lesser amount as shall constitute such Holder's entire
investment in the Warrants).
Section 10. Partial Exercise and Partial Assignment.
Section 10.1. Partial Exercise. If this Warrant is exercised in part only,
the Holder shall surrender this Warrant upon such exercise and shall receive a
new Warrant, registered in the name of the Holder or its nominee and setting
forth a new number of shares in respect of which this Warrant shall not have
been exercised as provided for in Section 1 and a new Aggregate Warrant Price in
the first paragraph of page one hereof, which shall be proportionately adjusted
to reflect such partial exercise.
Section 10.2. Assignment. Subject to Section 9, this Warrant may be
assigned either in whole or in part by surrender of this Warrant at the
principal office of the Company in Irvine, California (with the assignment or,
as the case may be, partial assignment form at the end hereof duly executed). If
this Warrant is being assigned in whole and the Holder hereof previously has not
partially exercised this Warrant, the assignee shall receive a new Warrant
(registered in the name of such assignee or its nominee) which new Warrant shall
cover the number of shares assigned and the Aggregate Warrant Price applicable
to such shares. If this Warrant is being assigned in part and the Holder hereof
previously has not partially exercised this Warrant, the assignor and assignee
shall each receive a new Warrant (which, in the case of the assignee, shall be
registered in the name of the assignee or its nominee), each of which new
Warrants shall cover the number of shares not so assigned and the number of
shares so assigned, respectively, and in each case setting forth the
proportionate Aggregate Warrant Price applicable to such shares. If this Warrant
is being assigned in whole and the holder hereof previously has partially
exercised this Warrant, the assignee shall receive a new Warrant (registered in
the name of such assignee or its nominee), which new Warrant shall cover the
number of shares so assigned and set forth the proportionate Aggregate Warrant
Price applicable to such assigned shares. If this Warrant is being assigned in
part and the Holder hereof previously has partially exercised this Warrant, the
assignor and assignee shall each receive a new Warrant (which, in the case of
the assignee, shall be registered in the name of the assignee or its nominee),
each of which new Warrants shall cover the number of shares not so assigned and
in respect of which no such exercise has been made in the case of the assignor
and the number of shares so assigned in the
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case of the assignee, and in each case setting forth the proportionate Aggregate
Warrant Price applicable to such shares.
Section 11. Reserved.
Section 12. Warrant Denominations.
Warrants are issuable or transferable in the minimum denomination of 10
shares or any integral multiple thereof (as nearly as may be practicable and
subject to required adjustments hereunder), and the Warrants of each
denomination are interchangeable upon surrender thereof at the office of the
Company for Warrants of other denominations (not less than such minimum
denomination, as adjusted), but aggregating the same number of shares as the
Warrants so surrendered. All Warrants will be dated the same date as this
Warrant.
Section 13. Definitions.
In addition to the terms defined elsewhere in this Warrant, the following
terms have the following respective meanings:
The term "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the Closing Date, except:
(a) Common Stock issued upon exercise of the Warrants and the Class B
Warrants and Common Stock issued upon conversion Series B Preferred Stock
at the Conversion Price (as defined in the Board Resolutions creating the
Series B Preferred Stock;
(b) Common Stock issued to officers, directors, employees and members
of the Scientific Advisory Board of the Company and Common Stock issued
pursuant to employee stock option or stock purchase plans approved by the
Board of Directors, provided that the aggregate number of shares of Common
Stock issued and/or issuable to such persons and pursuant to all such plans
and agreements shall not in the aggregate at any time exceed 9,000,000
shares (as such number of shares shall be appropriately adjusted by the
Board of Directors for stock splits, dividends, combinations and other
similar events), it being understood that the shares of Common Stock
excluded pursuant to this clause (b) are in addition to shares excluded
pursuant to clause (d);
(c) Common Stock issued in connection with a corporate collaboration,
development agreement, or commercial relationship which is not primarily
for the purpose of obtaining financing, approved by the Board of Directors
and for consideration equal to or greater than the fair market value of
such shares of Common Stock at the time of issue;
(d) Up to 16,560,176 shares of Common Stock issued upon conversion or
exercise of convertible securities, options and warrants outstanding on
November 24,
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1999 (as such number of shares shall be appropriately adjusted by the Board
of Directors for stock splits, dividends, combinations and other similar
events), which amount includes 25,557,091 shares of Common Stock issuable
upon conversion of the Series A Preferred Stock;
(e) Common Stock issued upon conversion of the Series A Preferred
Stock;
(f) Common Stock valued at up to $10,000,000 issued as consideration
in connection with a single acquisition transaction to be made be the
Company on or before December 31, 2000 involving a medical therapeutics
company consistent with the Company's business plan;
(g) Up to 250,000 shares of Common Stock issued substantially
concurrently with the initial issuance of the Series B Preferred Stock to
holders of the Company's warrants existing at such time and resulting from
the operation of dilution protection provisions in such warrants arising
principally from the issuance of the Warrants; and
(h) Common Stock issued with the affirmative vote or written consent
of the holders of 66-2/3% or more of the then outstanding Warrants
(determined by the number of shares of Common Stock represented by each
such Warrant if exercised).
The term "Adjusted Number of Shares" shall mean, subject to adjustment as
described in Section 3.7, as of the Exercise Date, that number set forth in the
chart below corresponding to the Current Market Price of the Common Stock of the
Company on such date:
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---------------------------------------------------------------------------
If the Current Market Price on the The Adjusted Number of Shares
First Day of the Exercise Period is: Shall be:
---------------------------------------------------------------------------
Less than or equal to $3.00 [Holder's Pro Rated Share of]
6,000,000
---------------------------------------------------------------------------
$3.01 to $3.50 (inclusive) 5,000,000
---------------------------------------------------------------------------
$3.51 to $4.00 (inclusive) 4,000,000
---------------------------------------------------------------------------
$4.01 to $4.50 (inclusive) 3,000,000
---------------------------------------------------------------------------
$4.51 to $5.00 (inclusive) 2,000,000
---------------------------------------------------------------------------
$5.01 or greater 0
---------------------------------------------------------------------------
The term "Aggregate Warrant Price" shall mean, as of the date of any
determination, the amount computed as provided in the first paragraph of this
Warrant.
The term "Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks in Los Angeles, California or New York, New York are
required by law to close or are customarily closed.
The term "Class B Warrants" shall mean the Class B Warrants to purchase
Common Stock of the Company issued on the Closing Date pursuant to the
Securities Agreement and all other warrants issued in exchange or substitution
therefor.
The term "Closing Date" shall have the meaning ascribed to such term in the
Securities Agreement.
The term "Commission" shall mean the Securities and Exchange Commission, or
any other Federal agency at the time administering the Securities Act.
The term "Common Stock" as used herein shall include (a) the Company's
Common Stock, $0.001 par value, authorized on the Closing Date, and (b) any
other class or series of capital stock of the Company now or hereafter
authorized the right of which to share in distributions either of earnings or
assets of the Company is without limit as to any amount or percentage as and to
the extent no amounts payable on or in respect of such Common Stock and no
rights arising in connection therewith have preference over any other Common
Stock upon dissolution, liquidation or winding up of the Company.
The term "Competitive Business Line" shall mean either (a) the business of
cellular therapy or the development of health care products involving cellular
therapy or (b) the sale, marketing or manufacture of medical devices for use in
the health care industry.
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The term "Competitor" shall mean (a) any Person which is engaged in a
Competitive Business Line or (b) any Person which at the time owns more than
forty percent (40%) of the Voting Stock of such Competitor and in connection
therewith exercises control over management of a Person that is engaged in a
Competitive Business Line, provided in any event that:
(i) the provision of investment advisory services by a Person to a
Plan which is owned or controlled by a Person which would otherwise be a
Competitor shall not in any event cause the Person providing such services
to be deemed to be a Competitor;
(ii) in no event shall an Institutional Holder be deemed a
Competitor unless such Institutional Holder owns or holds more than 50% of
the Voting Stock of, and in connection therewith exercises control over
management of, a Person that is engaged in a Competitive Business Line;
(iii) in no event shall an Institutional Holder be deemed a
Competitor if such Institutional Holder is a pension plan sponsored by a
Person which would otherwise be a Competitor but which is a regular
investor in privately placed Securities and such pension plan has
established procedures which will prevent confidential information supplied
to such pension plan by the Company from being transmitted or otherwise
made available to such plan sponsor; and
(iv) an Institutional Holder that would otherwise be deemed a
Competitor pursuant to the foregoing provisions of this definition by
virtue of its ownership or control as a portfolio investment of the equity
Securities of any Person primarily engaged in a Competitive Business Line,
shall not be deemed a Competitor if such Institutional Holder has
established procedures which will prevent confidential information supplied
to such Institutional Holder by the Company from being transmitted or
otherwise made available to such Person.
The term "Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for Additional Shares of Common Stock, either immediately or upon the arrival of
a specified date or the happening of a specified event, including, without
limitation, securities of any class or classes which are convertible into shares
of Common Stock and for which the Company exchanges any shares of Series B
Preferred Stock.
The term "Current Market Price" shall mean, at the date of determination
thereof, an amount equal to the Market Price as of the Business Day occurring
most recently prior to such determination (the "Determination Date"). The
"Market Price" as of such Business Day shall be the average of the last reported
sale prices reported on The Nasdaq Stock Market's National Market, as furnished
by NASDAQ (or such other market which is on the date of determination the
principal market by trading volume for the Common Stock) for the immediately
preceding ten trading days ending on (and including) such Business Day, or, if
no sales take place on such days on such system, the average of the closing bid
and asked prices for such days as officially quoted by NASDAQ (or such other
principal market), or, if such price at the time is not available from such
system, the market price for such Business Day shall be the average of the
reported
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closing bid and asked prices for such days in the over-the-counter market, as
furnished by NASDAQ, or, if such price at the time is not available from such
system, such price shall be determined in good faith by the Company's Board of
Directors and concurred in by the Required Holders.
The term "Exercise Date" shall mean the date on which this Warrant is
exercised.
The term "Exercise Period" shall mean the period beginning at 9:00 A.M.
(New York, New York time) on November 24, 2004 and ending at 5:00 P.M. (New
York, New York time) on December 16, 2004 (the "Expiration Date").
The term "Expiration Date" shall mean December 16, 2004.
The term "Holders" shall mean all of the holders of the Warrants or
Restricted Stock issued pursuant thereto and the term "Holder" shall mean any
holder of any Warrant, Underlying Shares or Restricted Stock issued pursuant
thereto.
The term "Initial Exercise Time" shall mean 9:00 a.m. (New York, New York
time) on November 24, 2004.
The term "Institutional Holder" shall mean (a) any original purchaser of
the Warrants, (b) any holder of more than 10% of the Warrants and/or Restricted
Stock, and (c) any bank, trust company, savings and loan association or other
financial institution, any pension plan, any investment company, any insurance
company, any broker or dealer, or any other similar financial institution or
entity, regardless of legal form, provided that for purposes of the definition
of "Competitor," a holder of the type described in clause (b) (and no other
clause) shall not be included in the term "Institution Holder."
The term "Permitted Consideration" shall mean each of the following (or any
combination thereof): (a) cash or other funds immediately available to the
Company; (b) shares of Series B Preferred Stock; and (c) Warrants.
The term "Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, and a government and
any agency or political subdivision thereof.
The term "Required Holders" shall mean, at the time of any determination,
the Holders of (a) 66-2/3% of the Warrants (determined by the number of shares
of Common Stock represented by each such Warrant as if exercised) and
(b) 66-2/3% of the Restricted Stock.
The term "Restricted Stock" shall mean the shares of Common Stock of the
Company issued upon the exercise of any of the Warrants and evidenced by a
certificate required to bear the legend specified in Section 9.2 hereof.
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The term "Securities Act" shall mean the Securities Act of 1933, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
The term "Securities Agreement" shall mean the Securities Agreement dated
as of November 24, 1999, between the Company and the institutional investors
which are parties thereto, as amended from time to time.
The term "Series B Preferred Stock" shall mean the Company's Series B
Cumulative Convertible Preferred Stock, $.001 par value, authorized on the
Closing Date.
The term "Transfer" shall mean any sale, transfer, assignment, pledge or
creation of any other encumbrance.
The term "Underlying Shares" shall mean the shares of Common Stock of the
Company issuable upon exercise of any of the Warrants.
The term "Warrants" as used herein shall refer to, collectively, this Class
A Warrant and all other warrants issued in exchange or substitution for this
Class A Warrant.
Section 14. Lost, Stolen Warrants, Etc.
In case this Warrant shall be mutilated, lost, stolen or destroyed, the
Company may issue a new Warrant of like date, tenor and denomination and deliver
the same in exchange and substitution for and upon surrender and cancellation of
the mutilated Warrant, or in lieu of the Warrant lost, stolen or destroyed, upon
receipt of evidence satisfactory to the Company of the loss, theft or
destruction of such Warrant, and upon receipt of indemnity satisfactory to the
Company. If the original Holder of this Warrant or any subsequent Institutional
Holder is the owner of this Warrant at the time of it shall be lost, stolen or
destroyed, then the affidavit of an authorized officer of such owner, setting
forth the fact of such loss, theft or destruction and of its ownership of this
Warrant at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Warrant other than the written
agreement of such owner to indemnify the Company.
Section 15. Warrant Holder Not Shareholder.
Except as provided in Section 22 and as otherwise provided by law, this
Warrant does not confer upon the Holder hereof any right to vote or to consent
or to receive notice as a shareholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof as hereinbefore provided.
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Section 16. Exercise of Remedies.
In the event that the Company shall fail to observe any provision contained
in this Warrant, the Holder hereof and/or any Holder of Common Stock issued
hereunder, as the case may be, may enforce its rights hereunder by suit in
equity, by action at law, or by any other appropriate proceedings in aid of the
exercise of any power granted in this Warrant and, without limiting the
foregoing, said Holder shall be entitled to the entry of a decree for specific
performance and to such other and further relief as such court may decree.
Section 17. Notices.
All communications provided for hereunder shall be in writing and, if to
the Holder of this Warrant or any Common Stock issued hereunder, delivered or
mailed prepaid by registered or certified mail or overnight air courier, or by
facsimile communication, in each case addressed to the address of such Holder
appearing on Schedule I to the Securities Agreement (in the case of the initial
Holder of this Warrant) or such other address as such Holder or any subsequent
Holder of this Warrant or any such Common Stock may designate to the Company in
writing, and if to the Company, delivered or mailed by registered or certified
mail or overnight air courier, or by facsimile communication, addressed to the
Company at:
Nexell Therapeutics Inc.
9 Parker
Irvine, California 92618
Attention: President,
Telecopy No.: 949-470-6645
or to such other address as the Company may in writing designate to any such
Holder; provided that a notice to the initial Holder of this Warrant or any
Common Stock issued hereunder by overnight air courier shall only be effective
if delivered to said initial Holder at a street address designated for such
purpose in said Schedule I, and a notice to any Holder of this Warrant or any
Common Stock issued hereunder by facsimile communication shall only be effective
if confirmed by transmission of a copy thereof by prepaid overnight air courier.
Section 18. Severability.
Should any part of this Warrant for any reason be declared invalid, such
decision shall not affect the validity of any remaining portion, which remaining
portion shall remain in force and effect as if this Warrant had been executed
with the invalid portion thereof eliminated, and it is hereby declared the
intention of the parties hereto that they would have executed and accepted the
remaining portion of this Warrant without including therein any such part, parts
or portion which may, for any reason, be hereafter declared invalid.
-18-
<PAGE>
Section 19. Register; Closing of Transfer Books.
The Company agrees to maintain at its principal offices books for the
registration and transfer of the Warrants. The right to exercise this Warrant
shall not be suspended during any period that the stock transfer books of the
Company for its Common Stock may be closed. The Company shall not be required,
however, to deliver certificates of its Common Stock upon such exercise while
such books are duly closed for any purpose, but the Company may postpone the
delivery of the certificates for such Common Stock until the opening of such
books, and they shall, in such case, be delivered forthwith upon the opening
thereof, or as soon as practicable thereafter.
Section 20. Financial Statements; Notice of Exercise Period.
(a) The Company covenants and agrees that Section 4.01 of the Securities
Agreement is incorporated by reference mutatis mutandis with the same force and
effect as if such covenant were set forth in full herein, whether or not the
Preferred Stock of the Company issued pursuant to the Securities Agreement are
converted in full and the Securities Agreement thereby discharged and
terminated, with the effect and result that the Company will deliver each and
all of the financial statements, reports, notices and other information referred
to in said Section 4.01 as and to the extent therein provided, provided that if
the Holder of this Warrant shall at any time so request, the Company shall cease
its delivery of the information referred to in said Section 4.01 until such time
as the Holder shall again require delivery.
(b) Between August 1, 2004 and September 1, 2004, the Company agrees to
give each Holder of the Warrants written notice of the initiation of the
Exercise Period, referencing the Warrants and specifying the date on which the
Exercise Period begins and the date on which the Exercise Period ends. If the
Company fails to provide such written notice to a Holder during the time period
specified, then the Exercise Period hereunder shall be extended to a date which
is 15 business days following the date upon which such Holder does in fact
receive such written notice (or such later date as may be the Expiration Date
originally provided for under this Warrant).
Section 21. [Intentionally Omitted].
Section 22. Restrictions on Capital Structure.
The Company will not, without the written consent of the Required Holders,
take any action which:
(a) materially restricts the right or ability of the Company to
perform its obligations under the Warrants; or
(b) amends or changes its certificate of incorporation or bylaws
(each as currently amended and/or restated) if such amendment or change
would materially limit or prohibit the Company from complying with the
terms of the Warrants or would otherwise materially and adversely affect
the rights of the Holders under the Warrants.
-19-
<PAGE>
Section 23. Successors and Assigns.
This Agreement shall be binding upon each of Company and the Holder of this
Warrant and each of their respective successors and permitted assigns.
Notwithstanding the foregoing, the Company may not assign any of its rights or
obligations hereunder without the prior written consent of the Holder.
Section 24. Index and Captions.
The index and the descriptive headings of the various sections of this
Warrant are for convenience only and shall not affect the meaning or
construction of the provisions hereof.
Section 25. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
This Warrant, including the construction, validity and performance hereof
and the obligations arising hereunder, and all amendments and supplements hereof
and all waivers and consents hereunder, shall be construed in accordance with
and governed by the laws of the State of New York without giving effect to any
choice of law or conflicts of law provision or rule that would cause the
application of the laws of any other jurisdiction. Any legal action or
proceeding with respect to this Warrant or any document related hereto shall be
brought in the courts of the State of New York sitting in the County of New York
or of the United States of America for the State of New York sitting in the
County of New York or the courts of the State of Illinois sitting in the County
of Cook or of the United States of America for the State of Illinois sitting in
the Northern District of Illinois, and, by execution and delivery and/or
acceptance of this Warrant, the Company and the Holder of this Warrant each
hereby accepts the non-exclusive jurisdiction of the aforesaid courts.
In addition, the Company hereby irrevocably and unconditionally waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions, suits or proceedings arising out of or in connection with
this Warrant or any document related hereto brought in any of the aforesaid
courts, and hereby further irrevocably and unconditionally waives and agrees not
to plead or claim that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
The Company and the Holder of this Warrant each hereby irrevocably waives
all right to a trial by jury in any suit, action or other proceeding instituted
by or against it in respect of its obligations hereunder or the transactions
contemplated hereby.
-20-
<PAGE>
In Witness Whereof, Nexell Therapeutics Inc. has caused this Warrant to be
signed by its _______________________ and to be dated this ___ day of November,
1999.
Nexell Therapeutics Inc.
By /s/
_______________________________
Name: ___________________________
Title: __________________________
-21-
<PAGE>
Form of Notice of Exercise Period
[Date]
[August 1, 2004 - September 1, 2004]
To the Holders of the
Class A Warrants Listed
On the Attached Schedule
Re: Exercise Period of Class A Warrants
of
Nexell Therapeutics Inc.
Ladies and Gentlemen:
Reference is hereby made to that certain Securities Agreement dated as of
November 24, 1999 pursuant to which the following securities were issued and
sold to the Purchasers named therein: (a) the Series B Cumulative Convertible
Preferred Stock of Nexell Therapeutics Inc. (the "Company"), (b) the Put Right
Certificates issued by Baxter International Inc. entitling the holders thereof
to require Baxter International Inc. to purchase the Series B Preferred Stock on
or before November 24, 2004, (c) the Class A Warrants of the Company entitling
the holders thereof to purchase Common Stock of the Company during the exercise
period specified below and (d) the Class B Warrants of the Company entitling the
holders thereof to purchase Common Stock of the Company on or before
December 16, 2004.
As required by Section 20(b) of the Class A Warrants, the Company hereby
notifies you that the exercise period of the Class A Warrants begins on
November 24, 2004 and ends on December 16, 2004.
Nexell Therapeutics Inc.
By: __________________________
Name:_________________________
Title:________________________
Exhibit A
(to Class A Warrant)
<PAGE>
Subscription
Nexell Therapeutics Inc.
The undersigned, _________________________________, pursuant to the
provisions of the within Warrant, hereby elects to purchase _____ shares of
Common Stock pursuant to the attached Warrant.
Signature
Address
Dated:
<PAGE>
Assignment
For Value Received _______________________ hereby sells, assigns and
transfers unto ___________________ the within Warrant and all rights evidenced
thereby and does irrevocably constitute and appoint ___________________,
attorney, to transfer the said Warrant on the books of Nexell Therapeutics Inc.
Signature
Address
Dated:
<PAGE>
Partial Assignment
For Value Received ___________________ hereby sells, assigns and transfers
unto _______________ that portion of the within Warrant and the rights evidenced
thereby which will on the date hereof entitle the Holder to purchase ______
shares of Common Stock of Nexell Therapeutics Inc. and irrevocably constitutes
and appoints __________________, attorney, to transfer that part of the said
Warrant on the books of said Company.
Signature
Address
Dated:
<PAGE>
EXHIBIT 10.48
================================================================================
This Warrant and the Common Stock issuable upon exercise hereof have not been
registered or qualified under the Securities Act of 1933, as amended, or any
state securities laws, and may not be sold or transferred unless registered or
qualified pursuant to such Act and applicable state securities laws or an
exemption therefrom under said Act or any such state securities laws is
available.
This Warrant and the Common Stock issuable upon exercise hereof are subject to
certain restrictions on transfer and certain rights specified in the Securities
Agreement dated as of November 24, 1999, as amended from time to time, among
Nexell Therapeutics Inc., the original Holder of this Warrant and the other
parties that are signatories thereto, a copy of which will be mailed to any
requesting Holder within five (5) days of written request therefor.
No. BWR-__________ [Holder's pro rata percentage of
3,000,000] SHARES
Class B Warrant to Purchase
Shares of Common Stock
of
Nexell Therapeutics Inc.
================================================================================
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Section Heading Page
<S> <C>
Section 1. Exercise of Warrant.................................... 1
Section 2. Reservation............................................ 2
Section 3. Protection Against Dilution............................ 3
Section 3.1. Stock Dividends, Subdivisions and Combinations......... 3
Section 3.2. Issuance of Additional Shares of Common Stock.......... 3
Section 3.3. Issuance of Warrants or Other Rights, Convertible
Securities............................................. 4
Section 3.4. Other Provisions Applicable to Adjustments............. 4
Section 3.5. Extraordinary Dividends................................ 6
Section 3.6. Additional Adjustments, Etc............................ 6
Section 3.7. Adjustment of Number of Shares Purchasable............. 7
Section 3.8. Minimum Adjustment..................................... 7
Section 3.9. Notice of Adjustments.................................. 7
Section 4. Mergers, Consolidations, Sales Reorganizations or
Reclassification....................................... 8
Section 5. Dissolution or Liquidation............................. 9
Section 6. Notice of Extraordinary Dividends...................... 9
Section 7. Fractional Shares...................................... 9
Section 8. Fully Paid Stock; Taxes................................ 9
Section 9. Restrictions on Transferability........................ 10
Section 9.1. In General............................................. 10
Section 9.2. Restrictive Legends.................................... 10
Section 9.3. Transfers To Competitors............................... 11
Section 9.4. Transfers With Related Securities...................... 11
Section 9.5. Minimum Transfers...................................... 11
Section 10. Partial Exercise and Partial Assignment................ 11
Section 10.1. Partial Exercise....................................... 11
Section 10.2. Assignment............................................. 11
Section 11. Reserved............................................... 12
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 12. Warrant Denominations.................................. 12
Section 13. Definitions............................................ 12
Section 14. Lost, Stolen Warrants, Etc............................. 16
Section 15. Warrant Holder Not Shareholder......................... 16
Section 16. Exercise Of Remedies................................... 16
Section 17. Notices................................................ 16
Section 18. Severability........................................... 17
Section 19. Register; Closing Of Transfer Books.................... 17
Section 20. Restrictions On Capital Structure ..................... 17
Section 21. Successors And Assigns................................. 18
Section 22. Index And Captions..................................... 18
Section 23. Governing Law;submission To Jurisdiction;waiver Of
Jury Trial............................................. 18
Signature............................................................... 20
</TABLE>
<PAGE>
No. BWR-___ [Holder's pro rata percentage of 3,000,000] Shares
Class B Warrant to Purchase
Shares of Common Stock
of
Nexell Therapeutics Inc.
This is to Certify that, for value received and subject to the
provisions hereinafter set forth,
[Purchaser]
or assigns,
is entitled to purchase from Nexell Therapeutics Inc., a Delaware corporation
(the "Company"), at any time during the period beginning at 9:00 A.M. (New York,
New York time) on November 24, 1999 and ending at 5:00 P.M. (New York, New York
time) December 16, 2004 (the "Expiration Date"), [Holder's pro rata percentage
of 3,000,000] shares of Common Stock, $.001 par value, of the Company, subject
to the terms, provisions and conditions hereinafter set forth at a price equal
to $3.00 per share.
The aggregate price of the Common Stock shall be equal to the price per
share multiplied by the number of shares initially purchasable hereunder. The
aggregate price is herein sometimes referred to as the "Aggregate Warrant Price"
and is not subject to adjustment. The price per share is, however, subject to
adjustment as hereinafter provided (such price, or such price as last adjusted,
as the case may be, being herein referred to as the "per share Warrant Price").
The said number of shares purchasable hereunder is likewise subject to
adjustment as hereinafter provided.
The terms which are capitalized herein shall have the meanings
specified in Section13 hereof, unless the context shall otherwise require.
Section 1. Exercise of Warrant.
Subject to the conditions hereinafter set forth, this Warrant may be
exercised in whole at any time and in part from time to time prior to the
Expiration Date. Any exercise of this Warrant, whether in whole or in part,
shall be made by the surrender of this Warrant (with the subscription form at
the end hereof duly completed and executed) at the principal office of the
Company in Irvine, California and upon payment of the Aggregate Warrant Price
(or, if exercised in part, upon payment of a proportionate part thereof) for the
shares so purchased,
<PAGE>
which payment shall be made by the wire transfer or other delivery to the
Company of one or more types of Permitted Consideration.
In the event that Preferred Stock shall be delivered to the Company as
payment of all or any portion of the Warrant Price, the amount of the Warrant
Price to be paid by means of such delivery shall equal the aggregate of the then
applicable liquidation preference of the shares of Preferred Stock so delivered
(based on an initial liquidation preference of $1,000.00 per share) or such
lesser amount of such liquidation preference as shall be designated by the
Holder hereof.
In the event that Preferred Stock shall be delivered to the Company as
payment of all or any portion of the Warrant Price and the aggregate liquidation
preference of such shares shall be in excess of the amount of per share
liquidation preference sought to be applied by the Holder of this Warrant in
respect of the Warrant Price, said Holder shall provide the Company with notice
to such effect and the Company shall (without charge to the Holder) issue to
said Holder a new Preferred Stock certificate for the number of shares with an
aggregate per share liquidation preference equal to such excess as provided in
Section 5.05 of the Securities Agreement.
In the event that Warrants shall be delivered to the Company as payment
of all or any portion of the Warrant Price, the amount of the Warrant Price
deemed to be paid by means of such delivery shall equal (a) the aggregate number
of Underlying Shares related to any Warrants so delivered, multiplied by (b) the
per share Warrant Price then in effect.
If this Warrant is exercised in respect of less than all of the shares
of Common Stock at the time purchasable hereunder, the Holder hereof shall be
entitled to receive a new Warrant covering the number of shares in respect of
which this Warrant shall not have been exercised and setting forth the Aggregate
Warrant Price applicable to such shares.
This Warrant and all rights and options hereunder shall expire at 5:00
p.m. (New York, New York time) on the Expiration Date, and shall be wholly null
and void to the extent this Warrant is not exercised before such expiration.
The Company shall pay all reasonable expenses, taxes and other charges
payable in connection with the preparation, execution and delivery of stock
certificates pursuant to this Section, regardless of the name or names in which
such stock certificates shall be registered.
Section 2. Reservation.
The Company will at all times prior to the Expiration Date reserve and
keep available such number of authorized shares of its Common Stock, solely for
the purpose of delivery upon the exercise of the rights represented by this
Warrant, as may at such time be deliverable (based upon the number of shares of
Common Stock outstanding at any such time) upon the exercise of this Warrant and
such shares issuable upon the exercise of this Warrant shall at no time have an
aggregate par value which is in excess of the Aggregate Warrant Price.
-2-
<PAGE>
Section 3. Protection Against Dilution.
The per share Warrant Price and the number of shares deliverable
hereunder shall be adjusted from time to time as hereinafter set forth:
Section 3.1. Stock Dividends, Subdivisions and Combinations. In case
after the date hereof the Company shall:
(a) take a record of the Holders of its Common Stock for the
purpose of entitling them to receive a dividend and declared to be
payable in, or other declared distribution of, Common Stock, or
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then the per share Warrant Price shall be adjusted to that price determined by
multiplying the per share Warrant Price in effect immediately prior to such
event by a fraction (i) the numerator of which shall be the total number of
outstanding shares of Common Stock of the Company immediately prior to such
event, and (ii) the denominator of which shall be the total number of
outstanding shares of Common Stock of the Company immediately after such event.
Section 3.2. Issuance of Additional Shares of Common Stock. In case
after the date hereof the Company shall (except as hereinafter provided) issue
any Additional Shares of Common Stock for a consideration per share less than
the then effective per share Warrant Price, then the per share Warrant Price
upon each such issuance shall be adjusted to that price determined by
multiplying the per share Warrant Price in effect immediately prior to such
event by a fraction:
(a) the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of full shares of
Common Stock which the aggregate consideration for the total number of
such Additional Shares of Common Stock so issued would purchase at the
then effective per share Warrant Price, and
(b) the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of such Additional
Shares of Common Stock so issued.
The provisions of this Section 3.2 shall not apply to any Additional
Shares of Common Stock which are distributed to holders of Common Stock as a
stock dividend or subdivision, for which an adjustment is provided for under
Section 3.1. No adjustment of the per share Warrant Price shall be made under
this Section 3.2 upon the issuance of any Additional Shares of Common Stock
which are issued pursuant to the exercise of any warrants or other subscription
or
-3-
<PAGE>
purchase rights or pursuant to the exercise of any conversion or exchange
rights in any Convertible Securities, if any such adjustment shall previously
have been made upon the issuance of such warrants or other rights or upon the
issuance of such Convertible Securities (or upon the issuance of any warrants or
other rights therefor) pursuant to Section 3.3.
Section 3.3. Issuance of Warrants or Other Rights, Convertible
Securities. In case the Company shall issue any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or issue
Convertible Securities (other than Series A Preferred Stock issued as a dividend
on the Series A Preferred Stock in accordance with the Company's Certificate of
Incorporation) and the consideration per share for which Additional Shares of
Common Stock may at any time thereafter be issuable pursuant to such warrants or
other rights or pursuant to the terms of such Convertible Securities shall be
less than the effective per share Warrant Price, then the per share Warrant
Price shall be adjusted as provided in Section 3.2 above on the basis that:
(a) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall
be deemed to have been issued as of the earlier of: (i) the date on which
the Company shall enter a firm contract or commitment for the issuance of
such warrants, other rights or Convertible Securities or (ii) the date of
actual issuance of such warrants, other rights or Convertible Securities,
and
(b) the aggregate consideration for such maximum number of
Additional Shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Company for the issuance of
such Additional Shares of Common Stock pursuant to such warrants or other
rights or pursuant to the terms of such Convertible Securities.
No adjustment of the per share Warrant Price shall be made under this
Section 3.3 upon the issuance of any Convertible Securities which are issued
pursuant to the exercise of any warrants or other subscription or purchase
rights therefor, to the extent such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to this Section 3.3.
Section 3.4. Other Provisions Applicable to Adjustments. The following
provisions shall be applicable to the making of adjustments in the per share
Warrant Price hereinbefore provided in this Section 3:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
options, warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities shall be
issued for a cash consideration, the consideration received by the Company
therefor shall be deemed to be the amount of the cash received by the
Company therefor, or, if such Additional Shares of Common Stock or
Convertible Securities or options, warrants or other rights are offered by
the Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible
-4-
<PAGE>
Securities or options, warrants or other rights are sold to underwriters or
dealers for public offering without a subscription offering, the initial
offering price, in any such case excluding any amounts paid or receivable
for accrued interest or accrued dividends and without deduction of any
compensation, discounts or expenses paid or incurred by the Company for and
in the underwriting thereof, or otherwise in connection with the issue
thereof. To the extent that such issuance shall be for a consideration
other than cash, then, except as herein otherwise expressly provided, the
amount of such consideration shall be deemed to be the fair value of such
consideration at the time of such issuance as determined in good faith by
the Board of Directors of the Company. The consideration for any Additional
Shares of Common Stock issuable pursuant to any options, warrants or other
rights to subscribe for or purchase the same shall be the consideration
received by the Company for issuing such options, warrants or other rights
plus the additional consideration payable to the Company upon the exercise
of such options, warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the Company
for issuing any options, warrants or other rights to subscribe for or
purchase such Convertible Securities plus the consideration paid or payable
to the Company in respect of the subscription for or purchase of such
Convertible Securities plus the additional consideration, if any, payable
to the Company upon the exercise of the right of conversion or exchange of
such Convertible Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividend upon any class of equity securities other than
Common Stock, the Company shall be deemed to have received for such
Additional Shares of Common Stock or Convertible Securities a consideration
equal to the amount of such dividend so paid or satisfied.
(b) Readjustment of Per Share Warrant Price. Upon expiration of
the right of exercise, conversion or exchange of any Convertible
Securities, or upon the expiration of any rights, options or warrants, or
upon the termination of any firm contract or commitment for the issuance of
such rights, options, warrants or Convertible Securities, or upon any
increase in the minimum consideration receivable by the Company for the
issuance of Additional Shares of Common Stock pursuant to such Convertible
Securities, rights, options or warrants, if any such Convertible Securities
shall not have been converted or exchanged, or if any such rights, options
or warrants shall not have been exercised, the number of shares of Common
Stock deemed to be issued and outstanding by reason of the fact that they
were issuable upon conversion or exchange of any such Convertible
Securities or upon exercise of any such rights, options or warrants shall
no longer be computed as set forth above, and the per share Warrant Price
shall forthwith be readjusted and thereafter be the price which it would
have been (but reflecting any other adjustments in the per share Warrant
Price made pursuant to the provisions of this Section 3 after the issuance
of such Convertible Securities, rights, options or warrants) had the
adjustment of the per share Warrant Price made upon the issuance or sale of
such Convertible Securities or the issuance of such rights, options or
warrants been made on the basis of the issuance only of the number of
Additional Shares of Common Stock actually issued upon conversion or
exchange of such Convertible Securities or upon the exercise of such
rights, options or warrants, or upon the basis of such increased minimum
-5-
<PAGE>
consideration, as the case may be, and thereupon only the number of
Additional Shares of Common Stock actually so issued plus the number
thereof then issuable upon the basis of such increased minimum
consideration shall be deemed to have been issued and only the
consideration actually received plus such increased minimum consideration
receivable by the Company (computed in accordance with Section 3.4(a))
shall be deemed to have been received by the Company.
(c) No Rounding Per Share Warrant Price. Any determination of
per share Warrant Price hereunder shall be expressed in United States
Dollars, cents and portions of cents and shall not be subject to rounding.
Section 3.5. Extraordinary Dividends. In case the Company shall declare
a dividend upon its Common Stock (except a dividend payable in shares of Common
Stock referred to in Section 3.1(a) or a dividend payable in warrants, rights or
Convertible Securities referred to in Section 3.3) payable otherwise than out of
earnings or surplus (other than revaluation surplus or paid-in surplus), the per
share Warrant Price in effect immediately prior to the declaration of such
dividend shall be reduced by an amount equal, in the case of a dividend in cash,
to the amount thereof payable per share of Common Stock or, in the case of any
other dividend, to the fair value thereof per share of Common Stock as
determined in good faith by the Board of Directors of the Company. For the
purposes of the foregoing, a dividend payable other than in cash shall be
considered payable out of earnings or surplus (other than revaluation surplus or
paid-in surplus) only to the extent that such earnings or surplus are charged an
amount equal to the fair value of such dividend as determined by the Board of
Directors of the Company. If such dividend is paid or the Company declares and
becomes legally liable to pay such dividend, such reduction shall take effect as
of the date on which a record is taken for the purpose of such dividend or, if a
record is not taken, the date as of which the Holders of the Common Stock of
record entitled to such dividend are to be determined. Appropriate readjustment
of the per share Warrant Price shall be made in the event that any dividend
referred to in this Section 3.5 shall be lawfully abandoned.
Section 3.6. Additional Adjustments, etc. If any other transaction or
event shall occur (excluding any transaction or event explicitly referred to in
this Section 3, but including, without limitation, any issuance repurchase,
redemption, or other distribution in respect of any shares or capital stock or
other securities of the Company or of any other person) as to which the other
provisions of this Section 3 are not strictly applicable but the failure to make
any adjustment to the per share Warrant Price would not fairly protect the
exercise rights and other rights of the Holder of this Warrant, then, and as a
condition to the consummation of any such transaction or event, and in each such
case, the Board of Directors shall promptly determine the adjustment, if any, on
a basis consistent with the essential intent and principles established in this
Section 3, which is necessary to preserve, without dilution, the exercise rights
of this Warrant and, promptly following such determination, the Company shall
furnish to each Holder of the Warrants a certificate setting forth such
adjustment and showing in detail the facts upon which such adjustment is based.
The adjustment set forth in such certificate shall be binding upon the Company
and the Holders of the Warrants unless, within 30 days following receipt of such
certificate, the Holders of 20% or more of the outstanding Warrants (determined
by the number of shares of Common Stock represented by each such Warrant if
exercised) shall notify the
-6-
<PAGE>
Company of their disagreement with such adjustment, in which event such
adjustment shall be determined at the expense of the Company by its independent
auditors (so long as such auditors' accounting firm ranks among the five largest
national accounting firms) or by an independent investment banking firm or other
professional of recognized national standing selected by the Company and, in all
such cases (including the Company's selection of its auditors), reasonably
satisfactory to the Required Holders, which shall give its opinion as to the
adjustment, if any, on a basis consistent with the essential intent and
principles established in this Section 3, which is necessary to preserve,
without dilution, the exercise rights of each Warrant. The opinion of any such
auditor, banking firm or other professional shall be conclusive evidence of the
correctness of any computation made under this Section 3. The Company shall pay
all fees and expenses in connection with any such opinion. Upon receipt of such
opinion, the Company will promptly deliver a copy thereof to each Holder of any
Warrant and the Company shall (subject to obtaining necessary director and
stockholder actions), take all actions necessary or appropriate under the laws
of the State of Delaware and the Certificate of Incorporation consistent with
such opinion to effect the intent and principles hereof.
Section 3.7. Adjustment of Number of Shares Purchasable. Upon each
adjustment of the per share Warrant Price, the number of shares of Common Stock
purchasable hereunder shall be adjusted by multiplying the number of shares of
Common Stock purchasable hereunder immediately prior to such adjustment of the
per share Warrant Price by a fraction, the numerator of which shall be the per
share Warrant Price in effect immediately prior to such adjustment and the
denominator of which shall be the per share Warrant Price in effect immediately
following such adjustment.
Section 3.8. Minimum Adjustment. Except as hereinafter provided, no
adjustment of the per share Warrant Price hereunder shall be made if such
adjustment results in a change of the per share Warrant Price then in effect of
less than $0.02. Any adjustment of less than $0.02 shall be carried forward and
shall be made at the time of and together with any subsequent adjustment which,
together with the adjustment or adjustments so carried forward, amounts to $0.02
or more of the per share Warrant Price then in effect. However, upon the
exercise of this Warrant, the Company shall make all necessary adjustments not
theretofore made to the per share Warrant Price up to and including the date
upon which this Warrant is exercised.
Section 3.9. Notice of Adjustments. (a) Whenever the per share Warrant
Price or number of shares deliverable upon exercise of this Warrant shall be
adjusted pursuant to this Section 3, the Company at is expense shall promptly
prepare a certificate signed by the Chief Financial Officer or the Chief
Operating Officer and by the Treasurer or an Assistant Treasurer of the Company
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated
(including a description of the basis on which the Board of Directors of the
Company made any determination hereunder), and shall promptly cause copies of
such certificate to be mailed in the manner provided in Section 17 hereof to the
Holder of this Warrant.
(b) The adjustment set forth in the certificate furnished pursuant to
Section 3.9(a) shall be final and binding upon the Company and the holders of
the Warrants unless, within 30 days following receipt of such certificate, the
Holders of 20% or more of the outstanding Warrants
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(determined by the number of shares of Common Stock represented by each such
Warrant if exercised) shall notify the Company of their disagreement with such
adjustments, in which event, such adjustments shall be determined at the expense
of the Company by its independent auditors (so long as such auditors' accounting
firm ranks among the five largest national accounting firms) or by an
independent investment banking firm or other professional of recognized national
standing selected by the Company and, in all such cases (including the Company's
selection of its auditors), reasonably satisfactory to the Required Holders,
such determination to be set forth in a separate report from such auditor,
banking firm or other professional delivered promptly to the Company and each
Holder of the Warrants following the such determination. The Company shall, upon
the written request made at any time by any Holder of the Warrants, furnish to
such Holder a certificate setting forth (i) all adjustments that shall have been
made with respect to the Warrants pursuant to this Section 3, (ii) the per share
Warrant Price at the time in effect and (iii) the number of shares of Common
Stock which at the time would be received upon the exercise of the then
outstanding Warrants.
Section 4. Mergers, Consolidations, Sales, Reorganizations or
Reclassifications.
In the case of any consolidation or merger of the Company with another
entity (regardless of whether the Company is a surviving entity), or the sale of
all or substantially all of its assets to another entity, or any reorganization,
recapitalization or reclassification of the Common Stock or other equity
securities of the Company, then, as a condition of such consolidation, merger,
sale, reorganization, recapitalization or reclassification, lawful and adequate
provision shall be made whereby the Holder of this Warrant shall thereafter have
the right to receive upon the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore
purchasable hereunder, such shares of stock, securities or assets (including,
without limitation, cash) as may (by virtue of such consolidation, merger, sale,
reorganization, recapitalization or reclassification) be issued or payable with
respect to or in exchange for a number of outstanding shares of Common Stock
equal to the number of shares of Common Stock immediately theretofore so
purchasable hereunder had such consolidation, merger, sale, reorganization,
recapitalization or reclassification not taken place, and in any such case,
appropriate provisions shall be made with respect to the rights and interests of
the Holder of this Warrant to the end that the provisions hereof (including,
without limitation, provisions for adjustment of the per share Warrant Price)
shall thereafter be applicable, as nearly as may be, in relation to any shares
of stock, securities or assets thereafter deliverable upon exercise of this
Warrant. The Company shall not effect any such consolidation, merger, sale,
reorganization, recapitalization or reclassification, unless prior to or
simultaneously with the consummation thereof, the successor entity (if other
than the Company) resulting from such consolidation, merger, reorganization,
recapitalization or reclassification or the entity purchasing such assets shall
assume by written instrument executed and mailed or delivered to the Holder of
this Warrant, the obligation to deliver to such Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
Holder may be entitled to receive.
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Section 5. Dissolution or Liquidation.
In the event of any proposed distribution of the assets of the Company
in dissolution or liquidation except under circumstances when the foregoing
Section 4 shall be applicable, the Company shall mail notice thereof in the
manner provided in Section 17 hereof to the Holder of this Warrant and shall
make no distribution to shareholders until the expiration of 30 days from the
date of mailing of the aforesaid notice and, in any such case, the Holder of
this Warrant may exercise the purchase rights with respect to this Warrant
within 30 days from the date of mailing such notice and all rights herein
granted not so exercised within such 30-day period shall thereafter become null
and void.
Section 6. Notice of Extraordinary Dividends.
If the Board of Directors of the Company shall declare any dividend or
other distribution on its Common Stock except out of earnings or surplus or by
way of a stock dividend payable on its Common Stock, the Company shall mail
notice thereof in the manner provided in Section 17 hereof to the Holder of this
Warrant not less than 30 days prior to the record date fixed for determining
shareholders entitled to participate in such dividend or other distribution and
the Holder of this Warrant shall not participate in such dividend or other
distribution or be entitled to any rights on account or as a result thereof
(except adjustments in the per share Warrant Price as provided in Section 3.5),
unless and to the extent that this Warrant may be exercised pursuant to its
terms and is so exercised prior to such record date. The provisions of this
paragraph shall not apply to distributions made in connection with transactions
covered by Section 4 hereof.
Section 7. Fractional Shares.
Fractional shares shall not be issued upon the exercise of this Warrant,
but in any case where the Holder hereof would, except for the provisions of this
paragraph, be entitled to receive a fractional share upon the complete exercise
of this Warrant, the Company shall, upon the exercise of this Warrant for the
largest number of whole shares then called for, pay to the Holder of this
Warrant a sum in cash equal to the proportional part of the per share Warrant
Price represented by such fractional share.
Section 8. Fully Paid Stock; Taxes.
The Company covenants and agrees that the shares of stock represented
by each and every certificate for its Common Stock to be delivered on the
exercise of the purchase rights and the payment of the applicable purchase price
herein provided for shall, at the time of such delivery, be validly issued and
outstanding and be fully paid and nonassessable. The Company further covenants
and agrees that it will pay when due and payable any and all Federal, State and
local taxes (other than taxes in respect of income) which may be payable in
respect of the delivery of this Warrant or any Common Stock or certificates
therefor upon the exercise of the purchase rights herein provided for pursuant
to the provisions hereof. The Company shall not, however, be required to pay any
tax which may be payable solely in respect of any transfer and
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delivery of stock certificates in a name other than that of the Holder
exercising this Warrant, and any such tax shall be paid by such holder at the
time of presentation.
Section 9. Restrictions on Transferability.
Section 9.1. In General. This Warrant and the Common Stock issued upon
the exercise hereof shall not be transferable except upon the conditions
hereinafter specified, which conditions are intended to insure compliance with
the provisions of the Securities Act (or any similar Federal statute at the time
in effect) and any applicable State securities laws in respect of the transfer
of this Warrant or any such Common Stock.
The Holder of each Warrant or any Restricted Stock, by its acceptance
thereof, agrees to sell or otherwise transfer such Warrant or Restricted Stock,
as the case may be, in compliance with and so as not to result upon consummation
of such sale or transfer in any violation of applicable law.
Section 9.2. Restrictive Legends. Each Warrant shall bear on the face
thereof a legend substantially in the form of the notice endorsed on the first
page of this Warrant.
Each certificate for shares of Common Stock initially issued upon the
exercise of any Warrant and each certificate for shares of Common Stock issued
to a subsequent transferee of such certificate shall, unless otherwise permitted
by the provisions of this Section 9.2, bear on the face thereof a legend reading
substantially as follows:
"The shares evidenced by this Certificate have not been registered
or qualified under the Securities Act of 1933, as amended, or any
state securities laws and may not be sold or transferred unless
registered or qualified pursuant to such Act and applicable state
securities laws or an exemption from registration under such Act
or such applicable state securities laws is available, and are
transferable only upon the conditions specified in the Warrant
pursuant to which such shares were issued."
In the event that a registration statement covering the Underlying
Shares or the Restricted Stock shall become effective under the Securities Act
and under any applicable State securities laws or in the event that the Company
shall receive an opinion of counsel to the Holder of this Warrant (which may be
internal counsel to such Holder) that, in the opinion of such counsel, such
legend is not, or is no longer, necessary or required (including, without
limitation, because of the availability of the exemptions afforded by Rule 144
or Rule 144A of the General Rules and Regulations of the Commission), the
Company shall, or shall instruct its transfer agents and registrars to, remove
such legend from the certificates evidencing the Restricted Stock or issue new
certificates without such legend in lieu thereof. The Company agrees to bear all
expenses in connection with the matters covered by this Section 9.2.
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Section 9.3. Transfers to Competitors. No Holder of a Warrant or any
Restricted Stock may Transfer any Warrant or any Restricted Stock beneficially
owned by such Holder to a Competitor.
Section 9.4. Minimum Transfers. No Holder of a Warrant may transfer any
Warrant in part in denominations of less than 5% of the aggregate number of all
shares of Common Stock into which all Warrants at the time outstanding are
exercisable (or such lesser amount as shall constitute such Holder's entire
investment in the Warrants).
Section 10. Partial Exercise and Partial Assignment.
Section 10.1. Partial Exercise. If this Warrant is exercised in part only,
the Holder shall surrender this Warrant upon such exercise and shall receive a
new Warrant, registered in the name of the Holder or its nominee and setting
forth a new number of shares in respect of which this Warrant shall not have
been exercised as provided for in Section 1 and a new Aggregate Warrant Price in
the first paragraph of page one hereof, which shall be proportionately adjusted
to reflect such partial exercise.
Section 10.2. Assignment. Subject to Section 9, this Warrant may be
assigned either in whole or in part by surrender of this Warrant at the
principal office of the Company in Irvine, California (with the assignment or,
as the case may be, partial assignment form at the end hereof duly executed). If
this Warrant is being assigned in whole and the Holder hereof previously has not
partially exercised this Warrant, the assignee shall receive a new Warrant
(registered in the name of such assignee or its nominee) which new Warrant shall
cover the number of shares assigned and the Aggregate Warrant Price applicable
to such shares. If this Warrant is being assigned in part and the Holder hereof
previously has not partially exercised this Warrant, the assignor and assignee
shall each receive a new Warrant (which, in the case of the assignee, shall be
registered in the name of the assignee or its nominee), each of which new
Warrants shall cover the number of shares not so assigned and the number of
shares so assigned, respectively, and in each case setting forth the
proportionate Aggregate Warrant Price applicable to such shares. If this Warrant
is being assigned in whole and the holder hereof previously has partially
exercised this Warrant, the assignee shall receive a new Warrant (registered in
the name of such assignee or its nominee), which new Warrant shall cover the
number of shares so assigned and set forth the proportionate Aggregate Warrant
Price applicable to such assigned shares. If this Warrant is being assigned in
part and the Holder hereof previously has partially exercised this Warrant, the
assignor and assignee shall each receive a new Warrant (which, in the case of
the assignee, shall be registered in the name of the assignee or its nominee),
each of which new Warrants shall cover the number of shares not so assigned and
in respect of which no such exercise has been made in the case of the assignor
and the number of shares so assigned in the case of the assignee, and in each
case setting forth the proportionate Aggregate Warrant Price applicable to such
shares.
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Section 11. Reserved.
Section 12. Warrant Denominations.
Warrants are issuable or transferable in the minimum denomination of 10
shares or any integral multiple thereof (as nearly as may be practicable and
subject to required adjustments hereunder), and the Warrants of each
denomination are interchangeable upon surrender thereof at the office of the
Company for Warrants of other denominations (not less than such minimum
denomination, as adjusted), but aggregating the same number of shares as the
Warrants so surrendered. All Warrants will be dated the same date as this
Warrant.
Section 13. Definitions.
In addition to the terms defined elsewhere in this Warrant, the following
terms have the following respective meanings:
The term "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the Closing Date, except:
(a) Common Stock issued upon exercise of the Warrants and the
Class A Warrants and Common Stock issued upon conversion Series B Preferred
Stock at the Conversion Price (as defined in the Board Resolutions creating
the Series B Preferred Stock);
(b) Common Stock issued to officers, directors, employees and
members of the Scientific Advisory Board of the Company and Common Stock
issued pursuant to employee stock option or stock purchase plans approved
by the Board of Directors, provided that the aggregate number of shares of
Common Stock issued and/or issuable to such persons and pursuant to all
such plans and agreements shall not in the aggregate at any time exceed
9,000,000 shares (as such number of shares shall be appropriately adjusted
by the Board of Directors for stock splits, dividends, combinations and
other similar events), it being understood that the shares of Common Stock
excluded pursuant to this clause (b) are in addition to shares excluded
pursuant to clause (d);
(a) Common Stock issued in connection with a corporate
collaboration, development agreement, or commercial relationship which is
not primarily for the purpose of obtaining financing, approved by the Board
of Directors and for consideration equal to or greater than the fair market
value of such shares of Common Stock at the time of issue;
(d) Up to 16,560,176 shares of Common Stock issued upon
conversion or exercise of convertible securities, options and warrants
outstanding on November 24, 1999 (as such number of shares shall be
appropriately adjusted by the Board of Directors for stock splits,
dividends, combinations and other similar events);
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(e) Common Stock issued upon conversion of the Series A Preferred
Stock;
(f) Common Stock valued at up to $10,000,000 issued as
consideration in connection with a single acquisition transaction to be
made by the Company on or before December 31, 2000 involving a medical
therapeutics company consistent with the Company's business plan;
(g) Up to 250,000 shares of Common Stock issued substantially
concurrently with the initial issuance of the Series B Preferred Stock to
holders of the Company's warrants existing at such time and resulting from
the operation of dilution protection provisions in such warrants arising
principally from the issuance of the Warrants; and
(h) Common Stock issued with the affirmative vote or written
consent of the holders of 66-2/3% or more of the then outstanding Warrants
(determined by the number of shares of Common Stock represented by each
such Warrant if exercised).
The term "Aggregate Warrant Price" shall mean, as of the date of any
determination, the amount computed as provided in the first paragraph of this
Warrant.
The term "Business Day" shall mean any day other than a Saturday,
Sunday or other day on which banks in Los Angeles, California or New York, New
York are required by law to close or are customarily closed.
The term "Class A Warrants" shall mean the Class A Warrants to purchase
Common Stock of the Company issued on the Closing Date pursuant to the
Securities Agreement and all other warrants issued in exchange or substitution
therefor.
The term "Closing Date" shall have the meaning ascribed to such term in
the Securities Agreement.
The term "Commission" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering the Securities
Act.
The term "Common Stock" as used herein shall include (a) the Company's
Common Stock, $0.001 par value, authorized on the Closing Date, and (b) any
other class or series of capital stock of the Company now or hereafter
authorized the right of which to share in distributions either of earnings or
assets of the Company is without limit as to any amount or percentage as and to
the extent no amounts payable on or in respect of such Common Stock and no
rights arising in connection therewith have preference over any other Common
Stock upon dissolution, liquidation or winding up of the Company.
The term "Competitive Business Line" shall mean either (a) the business
of cellular therapy or the development of health care products involving
cellular therapy or (b) the sale, marketing or manufacture of medical devices
for use in the health care industry.
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The term "Competitor" shall mean (a) any Person which is engaged in a
Competitive Business Line or (b) any Person which at the time owns more than
forty percent (40%) of the Voting Stock of such Competitor and in connection
therewith exercises control over management of a Person that is engaged in a
Competitive Business Line, provided in any event that:
(i) the provision of investment advisory services by a Person
to a Plan which is owned or controlled by a Person which would otherwise be
a Competitor shall not in any event cause the Person providing such
services to be deemed to be a Competitor;
(ii) in no event shall an Institutional Holder be deemed a
Competitor unless such Institutional Holder owns or holds more than 50% of
the Voting Stock of, and in connection therewith exercises control over
management of, a Person that is engaged in a Competitive Business Line;
(iii) in no event shall an Institutional Holder be deemed a
Competitor if such Institutional Holder is a pension plan sponsored by a
Person which would otherwise be a Competitor but which is a regular
investor in privately placed Securities and such pension plan has
established procedures which will prevent confidential information supplied
to such pension plan by the Company from being transmitted or otherwise
made available to such plan sponsor; and
(iv) an Institutional Holder that would otherwise be deemed a
Competitor pursuant to the foregoing provisions of this definition by
virtue of its ownership or control as a portfolio investment of the equity
Securities of any Person primarily engaged in a Competitive Business Line,
shall not be deemed a Competitor if such Institutional Holder has
established procedures which will prevent confidential information supplied
to such Institutional Holder by the Company from being transmitted or
otherwise made available to such Person.
The term "Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for Additional Shares of Common Stock, either immediately or upon the arrival of
a specified date or the happening of a specified event, including, without
limitation, securities of any class or classes which are convertible into shares
of Common Stock and for which the Company exchanges any shares of Series B
Preferred Stock.
The term "Expiration Date" is defined in the first paragraph on page 1
of this Warrant.
The term "Holders" shall mean all of the holders of the Warrants or
Restricted Stock issued pursuant thereto and the term "Holder" shall mean any
holder of any Warrant, Underlying Shares or Restricted Stock issued pursuant
thereto.
The term "Institutional Holder" shall mean (a) any original purchaser
of the Warrants, (b) any holder of more than 10% of the Warrants and/or
Restricted Stock, and (c) any bank, trust company, savings and loan association
or other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial
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institution or entity, regardless of legal form, provided that for purposes of
the definition of "Competitor," a holder of the type described in clause (b)
(and no other clause) shall not be included in the term "Institutional Holder."
The term "Permitted Consideration" shall mean each of the following (or
any combination thereof): (a) cash or other funds immediately available to the
Company; (b) shares of Preferred Stock; and (c) Warrants.
The term "Person" shall mean an individual, partnership, limited
liability company, corporation, trust or unincorporated organization, and a
government and any agency or political subdivision thereof.
The term "Required Holders" shall mean, at the time of any determination,
the Holders of (a) 66-2/3% of the Warrants (determined by the number of shares
of Common Stock represented by each such Warrant as if exercised) and (b) 66-
2/3% of the Restricted Stock.
The term "Restricted Stock" shall mean the shares of Common Stock of
the Company issued upon the exercise of any of the Warrants and evidenced by a
certificate required to bear the legend specified in Section 9.2 hereof.
The term "Securities Act" shall mean the Securities Act of 1933, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
The term "Securities Agreement" shall mean that certain Securities
Agreement dated as of November 24, 1999, between the Company and the
institutional investors which are parties thereto, as amended from time to time.
The term "Series B Preferred Stock" shall mean the Company's Series B
Cumulative Convertible Preferred Stock, $.001 par value, authorized on the
Closing Date.
The term "Transfer" shall mean any sale, transfer, assignment, pledge or
creation of any other encumbrance.
The term "Underlying Shares" shall mean the shares of Common Stock of the
Company issuable upon exercise of any of the Warrants.
The term "Warrants" as used herein shall refer to, collectively, this
Class B Warrant and all other warrants issued in exchange or substitution for
this Class B Warrant.
Section 14. Lost, Stolen Warrants, Etc.
In case this Warrant shall be mutilated, lost, stolen or destroyed, the
Company may issue a new Warrant of like date, tenor and denomination and deliver
the same in exchange and substitution for and upon surrender and cancellation of
the mutilated Warrant, or in lieu of the Warrant lost, stolen or destroyed, upon
receipt of evidence satisfactory to the Company of the
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loss, theft or destruction of such Warrant, and upon receipt of indemnity
satisfactory to the Company. If the original Holder of this Warrant or any
subsequent Institutional Holder is the owner of this Warrant at the time of it
shall be lost, stolen or destroyed, then the affidavit of an authorized officer
of such owner, setting forth the fact of such loss, theft or destruction and of
its ownership of this Warrant at the time of such loss, theft or destruction
shall be accepted as satisfactory evidence thereof and no further indemnity
shall be required as a condition to the execution and delivery of a new Warrant
other than the written agreement of such owner to indemnify the Company.
Section 15. Warrant Holder Not Shareholder.
Except as provided in Section 22 and as otherwise provided by law, this
Warrant does not confer upon the Holder hereof any right to vote or to consent
or to receive notice as a shareholder of the Company, as such, in respect of any
matters whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof as hereinbefore provided.
Section 16. Exercise Of Remedies.
In the event that the Company shall fail to observe any provision
contained in this Warrant, the Holder hereof and/or any Holder of Common Stock
issued hereunder, as the case may be, may enforce its rights hereunder by suit
in equity, by action at law, or by any other appropriate proceedings in aid of
the exercise of any power granted in this Warrant and, without limiting the
foregoing, said Holder shall be entitled to the entry of a decree for specific
performance and to such other and further relief as such court may decree.
Section 17. Notices.
All communications provided for hereunder shall be in writing and, if
to the Holder of this Warrant or any Common Stock issued hereunder, delivered or
mailed prepaid by registered or certified mail or overnight air courier, or by
facsimile communication, in each case addressed to the address of such Holder
appearing on Schedule I to the Securities Agreement (in the case of the initial
Holder of this Warrant) or such other address as such Holder or any subsequent
Holder of this Warrant or any such Common Stock may designate to the Company in
writing, and if to the Company, delivered or mailed by registered or certified
mail or overnight air courier, or by facsimile communication, addressed to the
Company at:
Nexell Therapeutics Inc.
9 Parker
Irvine, California 92618
Attention: President
Telecopy No.: 949-470-6645
or to such other address as the Company may in writing designate to any such
Holder; provided that a notice to the initial Holder of this Warrant or any
Common Stock issued hereunder by overnight air courier shall only be effective
if delivered to said initial Holder at a street address
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designated for such purpose in said Schedule I, and a notice to any Holder of
this Warrant or any Common Stock issued hereunder by facsimile communication
shall only be effective if confirmed by transmission of a copy thereof by
prepaid overnight air courier.
Section 18. Severability.
Should any part of this Warrant for any reason be declared invalid,
such decision shall not affect the validity of any remaining portion, which
remaining portion shall remain in force and effect as if this Warrant had been
executed with the invalid portion thereof eliminated, and it is hereby declared
the intention of the parties hereto that they would have executed and accepted
the remaining portion of this Warrant without including therein any such part,
parts or portion which may, for any reason, be hereafter declared invalid.
Section 19. Register; Closing of Transfer Books.
The Company agrees to maintain at its principal offices books for the
registration and transfer of the Warrants. The right to exercise this Warrant
shall not be suspended during any period that the stock transfer books of the
Company for its Common Stock may be closed. The Company shall not be required,
however, to deliver certificates of its Common Stock upon such exercise while
such books are duly closed for any purpose, but the Company may postpone the
delivery of the certificates for such Common Stock until the opening of such
books, and they shall, in such case, be delivered forthwith upon the opening
thereof, or as soon as practicable thereafter.
Section 20. Restrictions on Capital Structure.
The Company will not, without the written consent of the Required Holders,
take any action which:
(a) materially restricts the right or ability of the Company to
perform its obligations under the Warrants; or
(b) amends or changes its certificate of incorporation or
bylaws (each as currently amended and/or restated) if such amendment or
change would materially limit or prohibit the Company from complying with
the terms of the Warrants or would otherwise materially and adversely
affect the rights of the Holders under the Warrants.
Section 21. Successors and Assigns.
This Agreement shall be binding upon each of Company and the Holder of
this Warrant and each of their respective successors and permitted assigns.
Notwithstanding the foregoing, the Company may not assign any of its rights or
obligations hereunder without the prior written consent of the Holder.
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Section 22. Index And Captions.
The index and the descriptive headings of the various sections of this
Warrant are for convenience only and shall not affect the meaning or
construction of the provisions hereof.
Section 23. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
This Warrant, including the construction, validity and performance hereof
and the obligations arising hereunder, and all amendments and supplements
hereof and all waivers and consents hereunder, shall be construed in accordance
with and governed by the laws of the State of New York without giving effect to
any choice of law or conflicts of law provision or rule that would cause the
application of the laws of any other jurisdiction. Any legal action or
proceeding with respect to this Warrant or any document related hereto shall be
brought in the courts of the State of New York sitting in the County of New York
or of the United States of America for the State of New York sitting in the
County of New York or the courts of the State of Illinois sitting in the county
of Cook or of the United States of America for the State of Illinois sitting in
the Northern District of Illinois, and, by execution and delivery and/or
acceptance of this Warrant, the Company and the Holder of this Warrant each
hereby accepts the non-exclusive jurisdiction of the aforesaid courts.
In addition, the Company hereby irrevocably and unconditionally waives
any objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions, suits or proceedings arising out of or in connection
with this Warrant or any document related hereto brought in any of the aforesaid
courts, and hereby further irrevocably and unconditionally waives and agrees not
to plead or claim that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum.
The Company and the Holder of this Warrant each hereby irrevocably
waives all right to a trial by jury in any suit, action or other proceeding
instituted by or against it in respect of its obligations hereunder or the
transactions contemplated hereby.
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In Witness Whereof, Nexell Therapeutics Inc. has caused this Warrant to
be signed by its_____________________ and to be dated this___ day of November,
1999.
Nexell Therapeutics Inc.
By /s/
_____________________________
Name:
___________________________
Title:
___________________________
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Subscription
Nexell Therapeutics Inc.
The undersigned, _________________________________, pursuant to the
provisions of the within Warrant, hereby elects to purchase _____ shares of
Common Stock pursuant to the attached Warrant.
Signature
________________________
Address
________________________
Dated:
<PAGE>
Assignment
For Value Received _______________________ hereby sells, assigns and
transfers unto ___________________ the within Warrant and all rights evidenced
thereby and does irrevocably constitute and appoint ___________________,
attorney, to transfer the said Warrant on the books of Nexell Therapeutics Inc.
Signature
Address
Dated:
<PAGE>
Partial Assignment
For Value Received ___________________ hereby sells, assigns and
transfers unto _______________ that portion of the within Warrant and the rights
evidenced thereby which will on the date hereof entitle the Holder to purchase
______ shares of Common Stock of Nexell Therapeutics Inc. and irrevocably
constitutes and appoints __________________, attorney, to transfer that part of
the said Warrant on the books of said Company.
Signature
Address
Dated:
<PAGE>
EXHIBIT 10.49
Nexell Therapeutics Inc.
Registration Rights Agreement
This Registration Rights Agreement, dated as of November 24, 1999 (this
"Agreement"), between Nexell Therapeutics Inc. a Delaware corporation (the
"Company"), and the Persons executing a counterpart of this Agreement listed as
Investors on the signature pages of this Agreement.
Recitals
Whereas, pursuant to that certain Securities Agreement (the "Securities
Agreement") dated as of November 24, 1999, the Investors are, concurrently with
the execution and delivery of this Agreement, purchasing from the Company (a) in
the aggregate, 63,000 shares of the Company's Series B Cumulative Convertible
Preferred Stock, $.001 par value (the "Series B Preferred Stock"), which Series
B Preferred Stock is convertible into shares of Common Stock of the Company, all
as provided in the Certificate of Designation creating such Series B Preferred
Stock, (b) certain Class A Warrants (the "Class A Warrants") granting the
Investors the right to purchase that number of shares of Common Stock of the
Company at an initial exercise price of $0.01 per share, all as set forth in the
Class A Warrants issued to the Investors, and (c) certain Class B Warrants (the
"Class B Warrants") granting the Investors the right to purchase that number of
shares of Common Stock of the Company at an initial exercise price of $3.00 per
share, all as set forth in the Class A Warrants issued to the Investors; and
Whereas, the Investors have required as an absolute condition precedent
to the purchase of the Series B Preferred Stock, the Class A Warrants and the
Class B Warrants from the Company that the Company enter into this Agreement and
the Company desires that the Investors make such purchases and, accordingly,
agrees to enter into this Agreement and to grant the registration rights set
forth herein;
Now Therefore, in consideration of the mutual covenants set forth in
this Agreement, and for other good and valuable consideration, the Company and
the Investors agree as follows:
Section 1. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" means any entity controlling, controlled by or under common
control with a designated Person. For the purposes of this definition, "control"
shall have the meaning specified as of the date of this Agreement for that word
in Rule 405 promulgated by the Commission under the Securities Act.
<PAGE>
"Board" means the Board of Directors of the Company.
"Class A Warrants" is defined in the Recitals to this Agreement.
"Class B Warrants" is defined in the Recitals to this Agreement.
"Closing Date" means the date of this Agreement.
"Commission" means the Securities and Exchange Commission, and any
successor thereto.
"Common Stock" means (a) the Company's Common Stock, $0.001 par value,
authorized on the Closing Date, and (b) any other class or series of capital
stock of the Company now or hereafter authorized the right of which to share in
distributions either of earnings or assets of the Company is without limit as to
any amount or percentage as and to the extent no amounts payable on or in
respect of such Common Stock and no rights arising in connection therewith have
preference over any other Common Stock upon dissolution, liquidation or winding
up of the Company.
"Holder" or "Holders" means, individually or collectively, as
appropriate (a) the Investors and (b) any subsequent legal or beneficial owner
of Registrable Securities which has become a party to this Agreement in
accordance with the terms hereof.
"Investors" means John Hancock Mutual Life Insurance Company, John
Hancock Variable Life Insurance Company, Investors Partner Life Insurance
Company, Metropolitan Life Insurance Company, Massachusetts Mutual Life
Insurance Company, MassMutual Corporate Investors, MassMutual Participation
Investors and The Lincoln National Life Insurance Company, as the original
purchasers of the Series B Preferred Stock, the Class A Warrants and the Class B
Warrants.
"Investors' Preferred Stock" means shares of Series B Preferred Stock
acquired by the Investors pursuant to the Securities Agreement.
"Investors' Warrants" means, collectively, the Class A Warrants and the
Class B Warrants purchased by the Investors pursuant to the Securities
Agreement.
"Person" means an individual, partnership, corporation, business
trust, limited liability company, joint stock company, trust, unincorporated
association, joint venture, or other similar entity.
"Registrable Securities" means (a) Investors' Preferred Stock; (b)
Investors' Warrants; (c) Shares; (d) any securities of the Company which were
issued as, or were issued directly or indirectly upon the conversion of other
securities issued as, a dividend or other distribution with respect to, or in
replacement of, the Investors' Preferred Stock, Investors' Warrants or Shares;
and (e) any securities then issuable directly or indirectly upon the conversion
or exercise of other securities issued as a dividend or other
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<PAGE>
distribution with respect to, or in replacement of, the Investors' Preferred
Stock, Investors' Warrants or Shares; provided, however, that outstanding
Registrable Securities shall cease to be Registrable Securities at such time as
(x) such Registrable Securities have been effectively registered under the
Securities Act and sold by the Holder thereof in accordance with such
registration, (y) such Registrable Securities have been sold to the public
pursuant to Rule 144, or (z) with respect to any single Holder, such Holder
(taken together with each of its Affiliates) holds in the aggregate less than 1%
of the outstanding Common Stock of the Company (after giving effect to the
conversion of Investors' Preferred Stock and the exercise of Investors' Warrants
held by such Holder and its Affiliates) and such Holder is entitled to sell all
of its Registrable Securities in any 90 day period pursuant to Rule 144.
"Required Holders" shall mean, at the time of any determination, the
Holders of (a) 66-2/3% of the Investors' Preferred Stock (determined by the
number of shares of Common Stock represented by each such share of Investors'
Preferred Stock, as if converted), (b) 66-2/3% of the Class A Investors'
Warrants (determined by the number of shares of Common Stock represented by each
such Investors' Warrant, as if exercised) and (c) 66-2/3% of the Class B
Investors' Warrants (determined by the number of shares of Common Stock
represented by each such Class B Investors' Warrant, as if exercised).
"Rule 144" means Rule 144 promulgated by the Commission under the
Securities Act, as such rule may be amended from time to time, or any successor
rule thereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Agreement" is defined in the Recitals to this Agreement.
"Series B Preferred Stock" is defined in the Recitals to this
Agreement.
"Shares" means all shares of Common Stock into which the Investors'
Preferred Stock is convertible and for which the Investors' Warrants are
exercisable, together with any additional shares of Common Stock issued with
respect to such shares pursuant to any stock adjustment by the Company.
Section 2. Restrictions on Transferability of Registrable Securities;
Compliance with Securities Act.
Section 2.1. (a) Demand Registration. At any time on and after November
24, 2002, the Required Holders may make one request of the Company to effect the
registration (the "Demand Registration") or qualification under applicable
federal or state securities laws of such Holders' Registrable Securities. The
Company shall promptly (but no more than 10 days later) give written notice to
all remaining Holders of Registrable Securities of receipt of such notice, and,
subject to the last paragraph of this Section 2.1(a) and to the conditions of
Section 3 hereof, as expeditiously as possible, effect such registration or
qualification of all Registrable Securities of Holders with respect to which the
Company has received written requests for inclusion therein. All
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<PAGE>
requests made pursuant to this Section 2.1(a) will be delivered to the Company
in writing within 30 days after receipt of the Company's written notice of the
requested Demand Registration and will specify the aggregate number of
Registrable Securities requested to be registered.
If the managing underwriter engaged by the Company in connection with
an underwritten Demand Registration determines in good faith and for valid
business reasons that registration of all Registrable Securities requested to be
included in such registration would have a material adverse effect on the
marketability or the price of such offering, such managing underwriter shall
give prompt written notice of such determination to such requesting Holder or
Holders, setting forth in reasonable detail the reasons for such determination.
In such event, the Company, upon written notice to the Holders of such
Registrable Securities, shall have the right to limit the number of Registrable
Securities to be registered to the largest number which would not result in such
adverse effect on marketability or the price of such offering. Securities shall
be included in such registration in the following priority: (i) first,
securities to be issued and sold by the Company and Registrable Securities, pro
rata in accordance with the number of securities the Company and each Holder
have requested to be included in such registration, and (ii) second, any
securities of the Company requested to be included by Persons other than the
Company or Holders, pro rata in accordance with the number of securities each
such other holder has requested to be included in such registration; provided
that if the number of shares which the Holders of Registrable Securities request
to be included in such offering are reduced pursuant to this Section 2.1(a),
then such registration shall not constitute the Demand Registration which the
Holders are entitled to initiate, and the Holders may, thereafter, request a
Demand Registration of Registrable Securities pursuant to this Section 2.1(a).
Reductions of Registrable Securities made pursuant to this Section 2.1 and
pursuant to Section 2.2 shall be applied pro rata based on the number of
Registrable Securities requested to be included by each Holder.
(b) Registration Procedures. In connection with the Company's
obligations with respect to the Demand Registration pursuant to Section 2.1(a)
hereof, the Company shall use its best efforts to effect or cause the
registration of the Registrable Securities under the Securities Act to permit
the sale of such Registrable Securities by the Holders thereof in accordance
with the intended method of distribution thereof, and pursuant thereto, the
Company shall:
(i) prepare and file with the Commission, within 45 days of
a request made pursuant to Section 2.1(a) hereof, a registration
statement or registration statements with respect to the Demand
Registration on any form which may be utilized by the Company and which
shall permit the disposition of the Registrable Securities in
accordance with the intended method or methods thereof, and use its
best efforts to cause such registration statement or registration
statements to become effective as soon as practicable;
(ii) prepare and file with the Commission such amendments and
supplements to a registration statement or statements hereunder and the
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<PAGE>
prospectus used in connection therewith as may be necessary to maintain
the effectiveness of such registration statement for the applicable
period specified in Section 3(b) hereof, and comply with the provisions
of the Securities Act with respect to the disposition of all of the
Registrable Securities to be included in such registration statement
during such applicable period in accordance with the intended methods
of disposition by the Holders thereof set forth in the registration
statement;
(iii) provide the Holders of the Registrable Securities to be
included in a registration statement hereunder and the underwriters
(which term, for purposes of this Agreement, shall include a person
deemed to be an underwriter within the meaning of Section 2(11) of the
Securities Act), if any, of the securities being sold and counsel for
such underwriters and not more than one counsel for such Holders the
opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the
Commission, and each amendment or supplement thereto; and make
available for inspection by such persons such financial and other
information, books and records of the Company, and cause the officers,
directors and employees of the Company, and counsel and independent
certified public accountants for the Company, to respond to such
inquiries, as shall be reasonably necessary, in the opinion of the
respective counsel to such Holders and such underwriters, to conduct a
reasonable investigation within the meaning of the Securities Act;
(iv) promptly notify the selling Holders of Registrable
Securities to be included in a registration statement hereunder and the
managing underwriters, if any, of the securities being sold and (if
requested by any such person) confirm such advice in writing, (1) when
such registration statement, the prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with
respect to such registration statement or any post-effective amendment,
when the same has become effective, (2) of any request by the
Commission for amendments or supplements to such registration statement
or the prospectus or for additional or supplemental information, (3) of
the issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of any
proceedings for that purpose, (4) if at any time the representations
and warranties of the Company contemplated by paragraph (xi) below
cease to be true and correct in all material respects, (5) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale
in any jurisdiction or the initiation or threat of any proceeding for
such purpose, or (6) at any time when a prospectus is required to be
delivered under the Securities Act, of the happening of any event as a
result of which such registration statement, prospectus, any prospectus
supplement, or any document incorporated by reference in any of the
foregoing contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing;
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<PAGE>
(v) make reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a registration statement
hereunder or any post-effective amendment thereto at the earliest
practicable date;
(vi) if requested by the managing underwriter or underwriters
or the Holders of at least a majority in aggregate number of the
Registrable Securities being sold in connection with an underwritten
offering, promptly incorporate in a prospectus supplement or
post-effective amendment such information as such managing underwriter
or underwriters or such Holders of at least a majority in aggregate
number of the Registrable Securities being sold specify should be
included therein relating to the sale of the Registrable Securities,
including, without limitation, information with respect to the
aggregate number of Registrable Securities being sold to such
underwriters, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of the
Registrable Securities to be sold in such offering, except to the
extent that the Company is advised in a written opinion of outside
counsel that the inclusion of such information is reasonably likely to
violate the federal securities laws; and make all required filings of
such prospectus supplement or post-effective amendment promptly after
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment;
(vii) furnish to each Holder of Registrable Securities to be
included in a registration statement hereunder and each underwriter, if
any, of the securities being sold such number of copies of such
registration statement, each such amendment and supplement thereto (in
each case including all exhibits thereto), the prospectus included in
such registration statement and such other documents as such Holder and
underwriter, if any, may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Holder; the
Company consents to the use of the prospectus or any amendment or
supplement thereto by each of the selling Holders of Registrable
Securities and the underwriters in connection with the offering and
sale of the Registrable Securities covered by the prospectus or any
supplement or amendment thereto;
(viii) use its best efforts to (1) register or qualify the
Registrable Securities to be included in a registration statement
hereunder under such other securities laws or blue sky laws of such
jurisdictions as any Holder of such Registrable Securities and each
underwriter, if any, of the securities being sold shall reasonably
request, (2) keep such registrations or qualifications in effect for so
long as the registration statement remains in effect, as specified in
Section 3(b) hereof, and (3) take any and all such actions as may be
reasonably necessary or advisable to enable such Holder and
underwriter, if any, to consummate the disposition in such
jurisdictions of such Registrable Securities owned by such Holder;
provided, however, that the Company shall not be required for any such
purpose to (A) qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the
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<PAGE>
requirements of this paragraph (viii) or (B) consent to general service
of process in any such jurisdiction;
(ix) use its best efforts to cause all of the Registrable
Securities that are to be included in a registration statement
hereunder to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business
and operations of the Company to enable the Holder or Holders thereof
to consummate the disposition of such Registrable Securities;
(x) cooperate with the Holders of the Registrable Securities
to be included in a registration statement hereunder and the managing
underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and, in the case of an underwritten
offering, enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters
may request at least 2 business days prior to any sale of the
Registrable Securities;
(xi) enter into such customary agreements (including an
underwriting agreement) and take such other actions in connection
therewith as the Holders of at least a majority in aggregate number of
the Registrable Securities to be included in a registration statement
hereunder shall reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities and in such connection,
whether or not an underwriting agreement is entered into and whether or
not the disposition is an underwritten offering, (1) make such
representations and warranties to the Holders of such Registrable
Securities and the underwriters, if any, in form, substance and scope
as are customarily made in an underwritten offering; (2) obtain an
opinion of counsel to the Company in customary form and covering such
matters of the type customarily covered by such opinion as the Holders
of at least a majority in aggregate number of the Registrable
Securities to be included in such registration statement and the
underwriters, if any, may reasonably request, addressed to each selling
Holder and the underwriters, if any, and dated the effective date of
such registration statement and dated the effective date of a
post-effective amendment to the registration statement, if such is
filed (or, if such registration statement covers an underwritten
offering, dated the date of the closing as specified in the
underwriting agreement); (3) use its best efforts to obtain a "cold
comfort" letter from the independent certified public accountants of
the Company addressed to the selling Holders of Registrable Securities
and to the underwriters, if any, dated the effective date of such
registration statement and dated the effective date of a post-effective
amendment to the registration statement, if such is filed (and, if such
registration statement covers an underwritten offering, dated the date
of the closing as specified in the underwriting agreement), such letter
to be in customary form and covering such matters of the type
customarily covered by such letter; and (4) deliver such documents and
certificates as may be reasonably requested by the Holders of at least
a majority in aggregate number of the Registrable Securities being sold
and the managing underwriters, if any, to evidence compliance with
clause (1) above
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<PAGE>
and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company;
(xii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earning
statement covering a period of at least twelve months which shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule
158 of the Commission thereunder; and
(xiii) use its best efforts to cause all Shares to be listed,
subject to notice, on the Nasdaq National Market or a national
securities exchange.
Upon the occurrence of any event contemplated by paragraph (iv) above,
the Company shall, as soon as reasonably practicable, prepare and furnish to
each Holder whose Registrable Securities are included in such registration
statement and underwriter, if any, a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to the purchasers of
the Registrable Securities, such prospectus shall not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing. Each Holder of Registrable Securities
agrees that upon receipt of any notice from the Company of the happening of any
event of the kind described in paragraph (iv) hereof, such Holder shall
forthwith discontinue the disposition of Registrable Securities pursuant to the
applicable registration statement until such Holder receives copies of such
amended or supplemented registration statement or prospectus, and if so directed
by the Company, such Holder shall deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the prospectus covering such Registrable Securities at the time of
receipt of such notice.
The Company may require each Holder of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such Holder and the distribution of such Registrable
Securities as the Company may from time to time reasonably request in writing in
order to comply with the Securities Act. Each Holder of Registrable Securities
as to which any registration is being effected agrees to notify the Company as
promptly as practicable of any inaccuracy or change in information previously
furnished by such Holder to the Company or of the happening of any event in
either case as a result of which any prospectus relating to such registration
contains an untrue statement of a material fact regarding such Holder or the
distribution of such Registrable Securities or omits to state any material fact
regarding such Holder or the distribution of such Registrable Securities
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and to furnish promptly
to the Company any additional information required to correct and update any
previously furnished information or required so that such prospectus shall not
contain, with respect to such Holder or its intended method of distribution of
such Registrable Securities, an untrue statement of a material fact or omit to
state a material
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<PAGE>
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.
Section 2.2. Incidental Registration. The Company agrees that at any
time it proposes to register any of its securities under the Securities Act for
its own account or the account of any other Person (otherwise than pursuant to
Section 2.1(a) hereof or in connection with registration statements pursuant to
which shares of the Company's Common Stock are registered following
anti-dilution adjustments to the Company's publicly traded warrants) on Form S-l
or any other form of registration statement (other than Form S-4 or Form S-8 or
any successor forms) then available for the registration under the Securities
Act of securities of the Company, it will give at least 30 days' advance written
notice to all Holders of Registrable Securities of its intention to do so and
upon the written request of the Holder of any such Registrable Securities, given
within 15 days after receipt of any such notice from the Company, the Company
will in each instance, subject to the next paragraph of this Section 2.2, use
its best efforts to cause all such Registrable Securities held by any such
requesting Holder of Registrable Securities to be registered under the
Securities Act and registered or qualified under any state securities laws, all
to the extent necessary to permit the sale or other disposition thereof in the
manner stated in such request by the prospective seller of the Registrable
Securities so registered. Any Holder requesting registration of its Registrable
Securities shall in its request describe briefly the manner of any proposed
transfer of its Registrable Securities. Nothing in this Section 2.2 shall be
deemed to require the Company to proceed with any registration of its securities
after giving the notice herein provided. Registration pursuant to this Section
2.2 shall be in accordance with, and subject to the provisions of, the
"Registration Procedures" set forth in Section 2.1(b) hereof.
If the managing underwriter engaged by the Company in connection with
an underwritten public offering of the Company's securities proposed for
registration under the Securities Act determines in good faith and for valid
business reasons that registration of all Registrable Securities requested to be
included in such registration would have a material adverse effect on the
marketability or the price of such offering, such managing underwriter shall
give prompt written notice of such determination setting forth in reasonable
detail the reasons for such determination. In such event, the Company, upon
written notice to the Holders of such Registrable Securities, shall have the
right to limit the number of Registrable Securities to be registered to the
largest number which would not result in such adverse effect on marketability or
the price of such offering. Securities shall be included in such registration in
the following priority: (i) first, securities to be included by Persons other
than the Company exercising demand registration rights, if any, (ii) second,
securities to be included by the Company and Registrable Securities pro rata on
the basis of the number of securities the Company and each Holder have requested
to be included in such registration; and (iii) third, any securities of the
Company requested to be included by Persons other than Persons exercising demand
rights, the Company or Holders, pro rata in accordance with the number of such
securities each such holder has requested to be included in such registration.
Notwithstanding the foregoing, in no event shall a limitation result in the
registration of a number of Registrable Securities requested to be included in
such registration that comprise less than 20% of the
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total number of securities included in such registration (or such lesser
percentage as shall constitute 100% of the total number of Registrable
Securities requested to be included in such registration), other than a
limitation resulting from the priority of a Person exercising demand
registration rights as provided in clause (i).
Section 2.3. Expenses; Reliance. The Company will pay all expenses,
including, without limitation, registration fees, qualification fees, blue sky
fees, or legal expenses, including the reasonable fees and expenses of one
separate legal firm as counsel to the Holders whose Registrable Securities are
being registered, printing expenses and the costs of special audits, if any and
"cold comfort" letters, expenses of underwriters (excluding reasonable discounts
and commissions, but including the reasonable fees and expenses of any necessary
special experts) in connection with the registration or qualification requested
by any Holder or Holders of Registrable Securities pursuant to Sections 2.1 or
2.2.
Section 2.4. Indemnification and Contribution. (a) In connection with
any registration or qualification of Registrable Securities under Section 2.1 or
Section 2.2, the Company hereby indemnifies each Holder of the Registrable
Securities, and each underwriter thereof, including each Person, if any, who
controls each such Holder within the meaning of Section 15 of the Securities
Act, against all losses, claims, damages and liabilities caused by any untrue,
or alleged untrue, statement of a material fact contained in any registration
statement or prospectus or notification or offering circular (and as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus or caused by any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or alleged untrue
statement or omission based upon information furnished in writing to the Company
by such Holder or any such underwriter expressly for use therein, provided, that
the agreement of the Company to indemnify any underwriter and any person who
controls such underwriter contained herein with respect to any such preliminary
prospectus shall not inure to the benefit of any underwriter from whom the
person asserting any such claim, loss, damage, liability or action purchased the
stock which is the subject thereof, if at or prior to the written confirmation
of the sale of such stock, a copy of the prospectus (or the prospectus as
amended or supplemented) was not sent or delivered to such person, excluding the
documents incorporated therein by reference, and the untrue statement or
omission of a material fact contained in such preliminary prospectus was
corrected in the prospectus (or the prospectus as amended or supplemented); and
provided, further, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage or liability arises out of or is based
on any offers to sell or sales made by such Holder during any period when a
Holder is notified by the Company to discontinue sales pursuant to Section
2.1(b)(iv); and the Company and each officer, director and controlling Person of
the Company shall be indemnified by each Holder or by the underwriters, as the
case may be, for all such losses, claims, damages and liabilities caused by any
untrue, or alleged untrue, statement or omission, or alleged omission, based
upon information furnished in writing to the
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Company by each such Holder thereof or the underwriters, as the case may be,
expressly for any such use.
(b) Promptly upon receipt by a party indemnified under this Section of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 2.4, such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may have to any indemnified party otherwise than under this
Section 2.4. In case notice of commencement of any such action shall be given to
the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, and the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnifying party if representation of such indemnified
party by counsel for the indemnifying party would be inappropriate due to actual
or potential differing or conflicting interests between such indemnified party
and any other party represented by such counsel in such proceeding unless the
indemnified party agrees to pay the same. No indemnifying party shall be liable
for any settlement entered into without its consent.
(c) If the indemnification provided for in this Section 2.4 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any losses, claims, damages, liabilities or expenses to which such
indemnified party would be otherwise entitled under Section 2.4(a), then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding. In no event shall any Holder be required to
contribute an amount greater than the dollar amount of the proceeds received by
such Person with respect to the sale of any Registrable Securities.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.4(c) were determined by pro rata
allocation or by any other
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<PAGE>
method of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The contribution provided for in
this Section 2.4(c) shall survive, with respect to a Holder of Registrable
Securities, the transfer of Registrable Securities by such Holder and shall
remain in full force and effect regardless of any investigation made by or on
behalf of any indemnified party. The indemnification provided for in this
Section 2.4, with respect to a Holder of Registrable Securities, shall survive
the transfer of Registrable Securities by the Holders and any registration of
Registrable Securities.
Section 2.5. Additional Registration Rights. The Company agrees that,
if at any time on or after the Closing Date the Company grants to any Person the
right to request the Company to effect the registration or qualification or
filing for exemption under applicable federal or state securities laws of any
securities of the Company, whether pursuant to any subsequent agreement or
understanding reached on or after the Closing Date or pursuant to any amendment
or supplement to any agreement existing on or prior to the Closing Date or
otherwise, each such agreement, understanding, amendment or supplement providing
for such rights (a) shall permit the holders of Registrable Securities to
participate in any such registration requested by the holders of such rights
(subordinate to the rights of the holders requesting such registration to
participate therein, but pro rata with the Company and all other holders of
shares of Common Stock of the Company to be included in any such underwritten
registration) if in the opinion of the managing underwriter of any such
underwritten registration such shares may be included in such registration
without having a material adverse effect on the marketability or the price of
any shares of Common Stock of the Company proposed to be offered by the holder
or holders of such rights in such underwritten registration and (b) may permit
the holders of such rights to participate in any registration requested pursuant
to Section 2.1(a) so long as (i) such right to participate is expressly
subordinate to the rights of the Holders of the Registrable Securities to
participate therein and (ii) if in the opinion of the managing underwriter of
any such registration such shares may be included in such registration without
having a material adverse effect on the marketability or the price of any shares
of Common Stock of the Company proposed to be offered by the Holder or Holders
of Registrable Securities.
Section 2.6. Restrictive Legends. Each certificate
representing Registrable Securities and each certificate issued in exchange
therefor shall bear on the face thereof a legend substantially as follows:
"The securities evidenced by this certificate have not been
registered or qualified under the Securities Act of 1933, as amended,
or any state securities laws, and may not be sold or transferred unless
registered or qualified pursuant to such Act and applicable state
securities laws or an exemption from registration under such Act or
such applicable state securities laws is available."
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<PAGE>
In the event that a registration statement covering Registrable
Securities shall become effective under the Securities Act and under any
applicable state securities laws or in the event that the Company shall receive
an opinion of counsel to a Holder of Registrable Securities (which may be
internal counsel to such Holder) that, in the opinion of such counsel, such
legend is not, or is no longer, necessary or required (including, without
limitation, because of the availability of the exemptions afforded by Rule 144
or Rule 144A of the General Rules and Regulations of the Commission), the
Company shall, or shall instruct its transfer agents and registrars to, remove
such legend from the certificates evidencing such securities or issue new
certificates without such legend in lieu thereof. The Company agrees to bear all
expenses in connection with the matters covered by this Section 2.6.
Section 2.7. Miscellaneous. The Company shall comply with all reporting
requirements set forth or referred to in Rule 144 promulgated under the
Securities Act and will do all such other things as may be necessary to permit
the expeditious sale at any time of any Registrable Securities by the Holder
thereof in accordance with and to the extent permitted by said Rule 144, as the
case may be, or any other similar Rule or Rules promulgated by the Commission
from time to time.
Section 3. Limitations on Registration Rights.
Notwithstanding any contrary provisions of this Agreement:
(a) The Company shall not be required to effect more than one
Demand Registration; provided that no registration shall be counted as
a Demand Registration under Section 2.1(a) hereof until such time, as
any, as the registration statement filed in connection therewith shall
be declared effective, provided, further, that no registration shall be
counted as a Demand Registration under Section 2.1(a) if, in connection
therewith, the underwriter shall reduce the number of shares which the
Holders of Registrable Securities requested to be included in such
registration.
(b) The Company agrees to keep any registration under Section
2.1 or Section 2.2 effective for a period of not less than (i) in the
case of a registration on Form S-1, 90 days and (ii) in the case of a
registration on Form S-3, 180 days. The occurrence of any events
contemplated in Section 2.1(b)(iv) hereof will result in an extension
of the required effective period under this Section 3(b) of one day for
each day that a registration statement or prospectus is not accurate
and complete, and not appropriately amended or supplemented.
(c) The Company may delay the filing of a registration
statement relating to a Demand Registration under Section 2.1(a) hereof
if (i) the Company has filed, or has taken substantial steps toward
filing, a registration statement relating to the sale of any of the
Company's securities in an underwritten offering and the managing
underwriter of such offering is of the opinion that the filing of a
registration statement with respect to a Demand Registration would
adversely
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<PAGE>
affect the offering by the Company of its securities, or (ii) the Board
of Directors of the Company determines in good faith, by resolution,
that the filing of a registration statement, if not so deferred, would
adversely affect a then-proposed or pending Company financing,
acquisition, merger or other corporate transaction; provided, however,
that such delay may not exceed 90 days and such right may not be
exercised by the Company more than once in any 12-month period, and,
provided, further, that any such delay will result in an extension of
the required effective period under Section 3(b) hereof of one day for
each day of delay pursuant to this Section 3(c).
Section 4. Lockup Agreement.
Each Holder agrees in connection with any registration of any of the
Company's securities in a firm commitment underwritten offering that, upon the
request of the underwriters managing such offering of the Company's securities,
he or it will not sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any securities of the Company (other than
the securities included in the registration) without the prior written consent
of such underwriters, for such period of time, not to exceed 120 days, from the
effective date of such registration as the Company or the underwriters may
specify. In connection with any registration pursuant to Section 2.1 or 2.2
which is a firm commitment underwritten offering, the Company agrees that it
will enter into an agreement with the Holders and the underwriters restricting
the Company's ability to effect sales of its securities, provided that such
agreement is in customary form and for a reasonable period of time from the
effective date of such registration.
Section 5. Designation Of Underwriter.
In the case of any registration effected pursuant to this Agreement,
the managing underwriters shall be selected by the Board and shall be subject to
the approval of a majority of the holders of Shares (determined by the number of
shares of Common Stock represented by such Shares, as if converted or exercised)
included in such registration, which such approval shall not be unreasonably
withheld.
Section 6. Miscellaneous.
Section 6.1. Amendment. This Agreement may be amended to effect any
amendment to or waiver under this Agreement, by a written agreement signed by
the Company and the Required Holders. Any amendment or waiver effected in
accordance with this Section 6.1 shall be binding upon the parties hereto and
their successors and assigns.
Section 6.2. Severability. In the event that any court or any
governmental authority or agency declares all or any part of any Section of this
Agreement to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any other Section of this Agreement, and in the event that
only a portion of any Section is so
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<PAGE>
declared to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate the balance of such Section.
Section 6.3. Successors and Assigns. The rights granted pursuant to
this Agreement may be assigned by a Holder or its transferee in connection with
a sale or transfer (other than to the public) permitted by the Securities
Agreement. All representations, warranties, covenants and agreements of the
parties contained in this Agreement or made in writing in connection herewith,
shall, except as otherwise provided herein, be binding upon and inure to the
benefit of their respective successors and permitted assigns. Notwithstanding
the foregoing, the Company may not assign any of its rights or obligations
hereunder without the prior written consent of the Required Holders.
Section 6.4. Notices. All communications provided for hereunder shall
be in writing and, if to a Holder, delivered or mailed prepaid by registered or
certified mail or overnight air courier, or by facsimile communication, in each
case addressed to the address of such Holder appearing on Schedule I to the
Securities Agreement (in the case of Investors) or such other address as such
Holder or any subsequent Holder may designate to the Company in writing, and if
to the Company, delivered or mailed by registered or certified mail or overnight
air courier, or by facsimile communication, addressed to the Company at:
Nexell Therapeutics Inc.
9 Parker
Irvine, California 92618
Attention: President
Telecopy No.: 949-470-6645
or to such other address as the Company may in writing designate to any such
Holder; provided, however, that a notice to a Holder by overnight air courier
shall only be effective if delivered to said Holder at a street address
designated for such purpose in said Schedule I, and a notice to any Holder by
facsimile communication shall only be effective if confirmed by transmission of
a copy thereof by prepaid overnight air courier. Any notice called for hereunder
shall be deemed given when received.
Section 6.6. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial. This Agreement, including the construction, validity and performance
hereof and the obligations arising hereunder, and all amendments and supplements
hereof and all waivers and consents hereunder, shall be construed in accordance
with and governed by the laws of the State of New York without giving effect to
any choice of law or conflicts of law provision or rule that would cause the
application of the laws of any other jurisdiction. Any legal action or
proceeding with respect to this Agreement or any document related hereto shall
be brought in the courts of the State of New York sitting in the County of New
York or of the United States of America for the State of New York sitting in the
County of New York or the courts of the State of Illinois sitting in the County
of Cook or of the United States of America for the State
-15-
<PAGE>
of Illinois sitting in the Northern District of Illinois and, by execution and
delivery and/or acceptance of this Agreement, the Company and the Holders each
hereby accepts the non-exclusive jurisdiction of the aforesaid courts.
In addition, the Company hereby irrevocably and unconditionally waives
any objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions, suits or proceedings arising out of or in connection
with this Agreement or any document related hereto brought in any of the
aforesaid courts, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.
The Company and the Holders each hereby irrevocably waives all right to
a trial by jury in any suit, action or other proceeding instituted by or against
it in respect of its obligations hereunder or the transactions contemplated
hereby.
Section 6.6. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but all of which
shall together constitute one and the same Agreement.
Section 6.7. Headings. The headings used herein are solely for
the convenience of the parties and shall not control or affect the meaning or
construction of any provisions hereof.
Section 6.8. Entire Agreement. This Agreement and the other documents
and agreements executed by the parties hereto on this date or referred to herein
or therein together constitute the entire agreement and understanding of the
parties hereto in respect of the subject matter referred to herein and therein,
and there are no restrictions, promises, representations, warranties, covenants,
or undertakings with respect to the subject matter hereof, other than those
expressly set forth or referred to herein or therein.
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<PAGE>
In Witness Whereof, the parties hereto have caused this Registration
Rights Agreement to be executed on the day first above written.
The Company: Nexell Therapeutics Inc.
By /s/
________________________________
Investors: [Investor]
By /s/
________________________________
[Investor]
By /s/
________________________________
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<PAGE>
EXHIBIT 10.50
SIDE LETTER AGREEMENT
This SIDE LETTER AGREEMENT ("Agreement") dated as of November 24, 1999
is made between Nexell Therapeutics Inc., a Delaware corporation (the
"Company"), Baxter International Inc., a Delaware corporation ("Baxter"), and,
for purposes of Paragraph 4 hereof only, the other parties signatory hereto.
WHEREAS, in connection with that certain Securities Agreement dated as
of even date herewith between the Company and the purchasers identified in
Schedule 1 thereto and in consideration of the repayment by the Company of those
certain convertible subordinated debentures, currently held by Baxter, Baxter is
granting a Put Right as a component of each share of Series B Preferred Stock
purchased at the Private Placement Closing (as described in the Put Agreement
between the Company and Baxter dated of even date herewith (the "Put
Agreement")); and
WHEREAS, in connection with the foregoing, the Company and Baxter are
entering into the Put Agreement, which sets forth certain procedures with
respect to the Private Placement and provides for certain representations and
warranties by each of the Company and Baxter; and
WHEREAS, terms not defined herein shall have the meaning ascribed to
them in the Company's Private Placement Memorandum dated July 1999.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties agree as follows:
1. Conversion Price. The Conversion Price for the Series B Preferred
purchased by Baxter (the "Put Series B Preferred") shall be adjusted on November
24, 2004 (or earlier if 100% of the Series B Preferred are put to Baxter), but
only in the event that an amount in excess of $15,000,000 is purchased by Baxter
(computed on the basis of the liquidation preference for such stock), as
follows: (i) for the Put Series B Preferred in an amount up to $53,000,000
(computed on the basis of the liquidation preference for such stock) (the
"Threshold"), the Conversion Price shall be adjusted to equal the closing price
of the Common Stock on the respective date or dates such Series B Preferred were
purchased by Baxter pursuant to such Put (including purchases below the
$15,000,000 amount) less a discount of 5% (subject to a floor price equal to the
closing price of the Common Stock on November 24, 1999 unless shareholder
approval is obtained if required by the rules of the NASDAQ Stock Market); (ii)
for the Put Series B Preferred in excess of the Threshold, the Conversion Price
shall be adjusted to equal the closing price of the Common Stock on November 24,
1999. The foregoing calculations shall yield a single adjusted Conversion Price
based on a blended, weighted average of the adjustments provided for above.
2. Interest. The dollar amount of the Put Series B Preferred shall
be deemed to accrue interest from the respective date(s) the Series B Preferred
is [are] purchased by
<PAGE>
Baxter to the date the Conversion Price is determined at a rate equal to the
applicable three year U.S. Treasury Note rate at the date of each such purchase,
plus 100 basis points. Such deemed accrued interest shall be included in the
calculation of the dollar amount of the Put Series B Preferred then outstanding
and thus in the determination of the number of shares of Common Stock into which
the Put Series B Preferred shall convert (i.e., the accrued interest shall be
payable in kind in additional shares of Series B Preferred, computed on the
basis of the then applicable liquidation preference for the Series B Preferred,
and such shares shall have the adjusted Conversion Price determined in
accordance with Paragraph 1 hereof, if applicable).
3. Shareholder Approval. The Company and Baxter acknowledge and
agree that any adjustment to the Conversion Price will only be made following
approval by the Company's shareholders to the extent required by the rules of
The NASDAQ Stock Market or otherwise. The Company agrees to use reasonable best
efforts to accomplish this, if necessary.
4. Voting Agreement. If the Threshold is met, Baxter's obligation
under its December 17, 1997 Voting Agreement with the Company and others to vote
its shares of Common Stock in support of nominees for directors of the Company
proposed by the Company's Board of Directors shall terminate, as well as the
irrevocable proxy granted by Baxter to the Chief Executive Officer of the
Company in connection therewith.
5. Alternative Adjustments. Notwithstanding any other provision in
this Agreement to the contrary, in the event the Conversion Price for the Put
Series B Preferred cannot be adjusted as indicated in Paragraph 1 hereof
(because, for example, at the end of the Put Period, at least one holder of the
Series B Preferred has not exercised its Put Right and thus remains a holder of
Series B Preferred, and if it is impermissible under Delaware law or otherwise
for the Conversion Price applicable to such holder to be different than the
Conversion Price applicable to Baxter as the holder of the Put Series B
Preferred), then in such event the Company agrees to take such action as is
appropriate to exchange the Put Series B Preferred (including any shares issued
to Baxter under Paragraph 2 hereof) for an equal number of shares of a new
series of preferred stock of the Company, having identical terms, conditions,
preferences and rights of the Series B Preferred, except that the Conversion
Price will reflect the adjustments provided in Paragraph 1 hereof.
6. Representations and Warranties.
(a) The Company represents and warrants to Baxter that the Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has taken all corporate action
necessary for it to execute, deliver and perform this Agreement (subject to
Paragraphs 3 and 5 hereof), and the Company has full power and authority to
enter into this Agreement and perform its obligations hereunder. This Agreement
is the valid and legally binding agreement of the Company enforceable in
accordance with its terms.
2
<PAGE>
(b) Baxter represents and warrants to the Company that Baxter is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Baxter has taken all corporate action necessary for it
to execute, deliver and perform this Agreement, and Baxter has full power and
authority to enter into this Agreement and perform its obligations hereunder.
This Agreement is the valid and legally binding agreement of Baxter enforceable
in accordance with its terms.
7. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective permitted successors
and assigns.
8. Assignment. Neither party hereto may assign or transfer this
Agreement without the prior written consent of the other party hereto; provided,
however, that either party hereto may assign this Agreement to any person or
entity with or into which such party may merge or consolidate or to whom all or
substantially all of its assets or businesses may be sold and that Baxter may
assign this Agreement to any wholly-owned subsidiary of Baxter.
9. Entire Agreement. This Agreement, together with the Put Agreement
and the Put Right Certificates, sets forth the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, written and oral, among the parties hereto as to such subject
matter.
10. Waiver. The waiver by either party hereto of any breach of any
provision of this Agreement shall not constitute or operate as a waiver of any
other breach of such provision or of any other provision hereof, nor shall any
failure to enforce any provision hereof operate as a waiver of such provision or
of any other provision hereof.
11. Expenses. Except as expressly provided in this Agreement and
subject to any rights based on a breach of this Agreement, each party hereto
shall bear its own costs and expenses incident hereto.
12. Amendments. This Agreement may not be amended, nor may any
provision hereof be modified or waived, except by an instrument in writing duly
signed by both parties hereto.
13. Notices. All notices and other communications required or
permitted to be given hereunder shall be deemed sufficiently given if sent by
certified mail, postage prepaid, return receipt requested, by facsimile
transmission (with receipt confirmed) or by air courier service (with receipt
confirmed), addressed as follows:
If to the Company:
Nexell Therapeutics, Inc.
9 Parker
Irvine, CA 92618-1605
Attention: President
Facsimile: (949) 470-6645
3
<PAGE>
with a copy to:
Bryan Cave LLP
120 Broadway, Suite 300
Santa Monica, CA 90401-2305
Attention: Thomas S. Loo, Esq.
Facsimile: (310) 576-2200
If to Baxter:
Baxter International Inc.
One Baxter Parkway
1627 Lake Cook Road
Deerfield, IL 60015-4633
Attention: Treasurer
Facsimile: (847) 848-4509
with a copy to:
Baxter International Inc.
One Baxter Parkway
1627 Lake Cook Road
Deerfield, IL 60015
Attention: General Counsel
Facsimile: (847) 948-2450
or at such other address as it may have furnished in writing to the other party
hereto.
14. Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions hereof shall not be affected thereby, and there shall be
substituted for the provision at issue a valid and enforceable provision as
similar as possible to the provision at issue.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois, without reference to the
principles of conflict of laws thereof.
16. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning, interpretation,
enforceability or validity of this Agreement.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same document.
4
<PAGE>
In Witness Whereof, the Company and Baxter have each caused this
Agreement to be executed by their duly authorized officers as of the date first
written above.
Nexell Therapeutics Inc.
By: /s/
_______________________________
Name:
______________________________
Title:
_____________________________
Baxter International Inc.
By: /s/
________________________________
Name:
______________________________
Title:
_____________________________
The provisions of Paragraph 4 hereof are accepted and agreed to:
/s/ Lindsay A. Rosenwald /s/ Donald G. Drapkin
- ----------------------------------- -----------------------------------
Lindsay A. Rosenwald, M.D. Donald G. Drapkin
Paramount Capital Asset Management Inc. /s/ Richard L. Dunning
-----------------------------------
Richard L. Dunning
By:/s/ Lindsay A. Rosenwald
--------------------------------
Lindsay A. Rosenwald, M.D.
/s/ Laurence D. Fink
-----------------------------------
Laurence D. Fink
/s/ Eric A. Rose
-----------------------------------
Eric A. Rose, M.D.
5
<PAGE>
EXHIBIT 10.51
PUT AGREEMENT
This Put Agreement, dated as of November 24, 1999 (the "Agreement"), is
made between Nexell Therapeutics Inc., a Delaware corporation ("the Company"),
and Baxter International Inc., a Delaware corporation ("Baxter").
Whereas, in connection with that certain Securities Agreement dated of even
date herewith between the Company and the signatories thereto, and in
consideration of the repayment by the Company of those certain convertible
subordinated debentures currently held by Baxter, Baxter desires to grant a Put
Right in connection with the Series B Preferred purchased at the Private
Placement Closing (as described below).
Now, Therefore, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties agree as follows:
Section 1. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 under the Exchange Act;
provided, however, that Baxter shall not be considered an Affiliate of the
Company and the Company shall not be considered an Affiliate of Baxter for
purposes of this Agreement.
"Common Stock" shall mean the Common Stock of the Company, $.001 par value.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any similar Federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time.
"Liens" shall mean all security interests, mortgages, liens, claims,
pledges, charges, voting agreements or other encumbrances of any nature
whatsoever.
"Material Adverse Effect" shall mean a material adverse effect on the
business, assets, liabilities, results of operations or financial condition of
the Company and its subsidiaries taken as a whole or the ability of the Company
to perform its obligations under this Agreement of the Put Rights or to
consummate the transactions contemplated hereby or thereby.
"Person" shall mean an individual, partnership, corporation, limited
liability company, association, joint venture, trust or unincorporated
organization, government or agency or political subdivision thereof or other
entity.
"Placement Agent" shall mean a registered broker-dealer appointed to
effect the Private Placement.
<PAGE>
"Private Placement" shall have the meaning provided in Section 2 below.
"Private Placement Closing" shall mean the closing of the Private
Placement.
"Private Placement Closing Date" shall mean the date on which the Private
Placement Closing occurs.
"Private Placement Memorandum" shall have the definition ascribed to it in
Paragraph 4 of the Closing Certificate attached as Exhibit D to the Securities
Agreement.
"Put Right" shall mean a right in the form of Exhibit A hereto.
"Preferred Stock" shall mean the Preferred Stock of the Company, $.001 par
value.
"Purchase Price" shall mean the price paid for each share of Series B
Preferred by the purchasers at the Private Placement Closing.
"Put Stock" shall mean the capital stock of the Company that Baxter is
required to purchase upon exercise of the Put Right. Initially, the Put Stock
shall be the share of Series B Preferred Stock issued in connection with the Put
Right. The Put Stock may be adjusted from time to time, as required, for any of
the events set forth in Section 10.1 of this Agreement.
"Rules and Regulations" shall mean the rules and regulations promulgated by
the SEC under the Securities Act and the Exchange Act.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time.
"Securities Agreement" shall mean the Securities Agreement dated of even
date herewith between the Company and the purchasers named in Schedule 1
thereto.
"Series B Preferred" shall mean the shares of Series B Preferred Stock of
the Company, $.001 par value.
"Side Letter" shall mean the letter agreement between the Company and
Baxter in substantially the form of Exhibit B hereto.
"Subsidiary" has the meaning set forth in Rule 12b-2 under the Exchange
Act.
"Warrants" shall mean the Class A Warrants and Class B Warrants issued by
the Company pursuant to the Securities Agreement.
2
<PAGE>
Section 2. Private Placement.
The Company shall use its reasonable best efforts to effect a private
placement with the purchasers named in the Securities Agreement (the "Private
Placement") of $63,000,000 of Series B Preferred, the Put Rights and the
Warrants in a transaction exempt from the registration requirements of the
Securities Act.
Section 3. Put Rights.
At the Private Placement Closing, Baxter agrees to issue one Put Right as a
component of each Series B Preferred purchased at the Private Placement Closing.
In connection with the inclusion of the Put Rights in the Private Placement, the
Company may include in the Private Placement Memorandum such information
relating to Baxter as may be included in publicly available reports which have
been filed by Baxter with the SEC pursuant to the Securities Act or the Exchange
Act.
Section 4. Private Placement Procedures.
In connection with the Private Placement the Company shall:
4.1 prepare a Private Placement Memorandum, together with such
amendments and supplements thereto as may be necessary to comply in all material
respects with the provisions of the Securities Act, the Exchange Act, the Rules
and Regulations, any state blue sky or securities law or other federal or state
law with respect to the sale or other disposition of the Series B Preferred, Put
Rights and Warrants. Such Private Placement Memorandum shall include only such
references to the Put Rights and to Baxter and its obligations thereunder as
shall be approved by Baxter;
4.2 use its best efforts to perfect exemptions for the Series B Preferred,
Put Rights and Warrants covered by the Private Placement Memorandum under the
Securities Act and all applicable Rules and Regulations and such other
securities or blue sky laws of such jurisdictions as shall be necessary in order
to effect the Private Placement, except that the Company shall not for any such
purpose be required to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;
4.3 deliver to Baxter an opinion of independent counsel to the Company,
which opinion shall be addressed to Baxter or upon which Baxter is entitled to
rely and which shall be in form and substance satisfactory to Baxter in its
reasonable judgment, to the effect that the Private Placement is exempt from the
registration requirements of the Securities Act and all applicable Rules and
Regulations and such other securities or blue sky laws of all applicable
jurisdictions;
4.4 enter into and perform its obligations under an agreement, in usual
and customary form, with the Placement Agent and under the Securities Agreement,
including, without limitation, to deliver to the purchasers in the Securities
Agreement an
3
<PAGE>
opinion of counsel to the Company in the usual and customary form for the
Private Placement;
4.5 notify Baxter, at any time when a Private Placement Memorandum is
required to be delivered under applicable law, of the happening of any event of
which it has knowledge as a result of which the Private Placement Memorandum, as
then in effect, contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and to suspend all offers and sales of the Series B Preferred, Put Rights and
Warrants immediately until such misstatement or omission has been corrected; and
4.6 make available to the Placement Agent, and authorize the Placement
Agent on behalf of the Company to make available to each offeree, prior to the
sale of Series B Preferred and Put Rights to such offeree, the opportunity to
ask questions of and receive answers from representatives of the Company, and
the opportunity to obtain additional information, with respect to the Company
and the terms and conditions of the Private Placement in order to permit such
offeree to verify the accuracy of the information contained in the Private
Placement Memorandum and of any other information referred to herein.
Section 5. Indemnification.
5.1 Indemnity by Company. To the extent permitted by law, the Company will
indemnify and hold harmless Baxter, the officers and directors of Baxter, each
underwriter (as defined in the Securities Act) or placement agent, and each
Person, if any, who controls (within the meaning of the Securities Act or
Exchange Act) Baxter or any such underwriter or placement agent, against any
breaches by the Company of its representations and warranties and against any
losses, claims, damages, liabilities or expenses (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, liabilities and
expenses (or actions in respect thereof) arise out of or are based upon any of
the following statements, omissions or violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Private Placement Memorandum, (ii) the omission or alleged
omission to state in the Private Placement Memorandum a material fact required
to be stated therein, or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or (iii) any
violation or alleged violation of the Securities Act, the Exchange Act, any
state blue sky or securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state blue sky or securities law in
connection with the Private Placement. The Company will reimburse Baxter, each
officer or director of Baxter, each such underwriter or placement agent, and
each person, if any, who controls (within the meaning of the Securities Act or
Exchange Act) Baxter or any such underwriter or placement agent for any
reasonable or other expenses incurred by them (including reasonable fees and
disbursements of counsel) in connection with investigating or defending any such
loss, claim, damage, liability, expense or action;
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provided, however, that the Company shall not be liable to Baxter, the officers
or directors of Baxter, each such underwriter or placement agent, or any Person
who controls (within the meaning of the Securities Act or Exchange Act) Baxter
or any such underwriter or placement agent in any such case for any such loss,
claim, damage, liability, expense or action to the extent that it arises out of
or is based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with the
Private Placement Memorandum by Baxter or any Affiliate, officer, director or
controlling Person of Baxter.
5.2 Indemnity by Baxter. To the extent permitted by law, Baxter will
indemnify the Company, its directors and officers and each Person who controls
the Company (within the meaning of the Securities Act or Exchange Act) against
any losses, claims, damages, liabilities and expenses resulting from any
breaches by Baxter of its representations and warranties hereunder or Violation,
but only to the extent that such Violation is contained in or results from any
information so furnished in writing by Baxter specifically for use in the
Private Placement Memorandum. Notwithstanding anything to the contrary contained
herein, Baxter shall have no obligation to indemnify under this Section 5.2 to
the extent that it has corrected information and provided that corrected
information to the Company and the Placement Agent for use in a revised Private
Placement Memorandum and a Violation based upon the earlier incorrect
information occurs following such time.
5.3 Notice; Right to Defend. Promptly after receipt by an indemnified
party under this Section 5 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this Section
5, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in, and,
if the indemnifying party agrees in writing that it will be responsible for any
costs, expenses, judgments, damages and losses incurred by the indemnified party
with respect to such claim, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have the right to
retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Section 5 only if and to the extent that such
failure is prejudicial to its ability to defend such action, and the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party other than under this
Section 5.
5.4 Contribution. If the indemnification provided for in this Section 5 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
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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 benefits received by the indemnifying party
on the one hand and of the indemnified party on the other hand in connection
with the Private Placement or, if such allocation is not permitted by applicable
law, not only such relative benefits but also the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other
hand 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 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 or alleged
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.
5.5 Survival of Indemnity. The indemnification and contribution provided
by this Section 5 shall be a continuing right to indemnification and
contribution and shall survive the Private Placement Closing and the expiration
or termination of this Agreement or of the Put Rights.
Section 6. Representations, Warranties and Covenant of the Company.
The Company represents and warrants to Baxter that:
6.1 The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is qualified to do
business in every jurisdiction in which the failure to be so qualified would
have a Material Adverse Effect. The Company has all requisite corporate power
and authority and all material licenses, permits and authorizations necessary to
own and operate its properties, to carry on its businesses as now conducted and
presently proposed to be conducted and to carry out the transactions
contemplated by this Agreement.
6.2 The Private Placement Memorandum (i) does not, at the time delivered
to any offeree or at the time of the Private Placement Closing, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading and (ii)
complies in all material respects with all applicable provisions of the
Securities Act and the Exchange Act and the Rules and Regulations, and
applicable state blue sky or securities laws. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
provided in writing by Baxter or the Placement Agent specifically for use in the
Private Placement Memorandum;
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6.3 The Placement Agent will be furnished with copies of the Private
Placement Memorandum in the quantities requested;
6.4 No action directed to, or which could reasonably be expected to result
in, preventing or suspending the use of the Private Placement Memorandum has
been taken or is pending or, to the knowledge of the Company, threatened by the
SEC or any state regulatory authority.
6.5 The financial statements of the Company, together with the notes
thereto, included in the Private Placement Memorandum present fairly the
financial position of the Company as of the dates thereof and the results of
operations and changes in financial position of the Company for the periods
covered thereby, and have been prepared in conformity with generally accepted
accounting principles consistently applied, except as otherwise stated therein.
6.6 The Company has an authorized capitalization as set forth in the
Securities Agreement, and, after giving effect to the issuance and sale of the
Series B Preferred, Put Rights and Warrants, will have on the Private Placement
Closing Date the adjusted authorized capitalization as set forth in the
Securities Agreement. The correct number of issued and outstanding shares of
Common Stock and Preferred Stock of the Company as of November 24, 1999 is set
forth in the Securities Agreement, and all such shares of Common Stock and
Preferred Stock have been duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of or subject to any preemptive
rights. As of November 24, 1999, there is no outstanding option, warrant or
other right calling for the issuance of, and no commitment, plan or arrangement
to issue, any shares of capital stock of the Company or any security convertible
into or exchangeable for capital stock of the Company other than as set forth in
the Private Placement Memorandum or the Securities Agreement.
6.7 The Series B Preferred will be, as of the Private Placement Closing
Date, duly and validly authorized, and when issued and delivered to the
purchasers in the Private Placement against payment therefor, will be duly and
validly issued, fully paid and nonassessable. The issuance of the Series B
Preferred is not subject to any preemptive rights. The descriptions of the
Series B Preferred and any other securities of the Company in the Securities
Agreement conform in all material respects to the rights set forth in the
instruments defining the same, and the certificates used to evidence the shares
of Series B Preferred will be in due and proper form. All actions of the Company
in connection with the offer and sale of the outstanding capital stock of the
Company have been, and the offer and sale of the Series B Preferred and Put
Rights will be, effected in compliance in all material respects with applicable
law. Upon payment and delivery in accordance herewith, each of the purchasers in
the Private Placement will receive good, valid and marketable title to its
respective Series B Preferred, free and clear of all Liens.
6.8 The Company has taken all corporate action necessary for it to
execute, deliver and perform this Agreement, and the Company has full corporate
power and authority to enter into this Agreement and perform its obligations
hereunder. This
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Agreement is the valid and legally binding agreement of the Company enforceable
in accordance with its terms, except as rights to indemnification may be
unenforceable insofar as they relate to violations of state or federal
securities laws and except as enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
affecting creditors' rights generally or by equitable principles.
6.9 KPMG LLP, whose reports on the audited financial statements of the
Company have been included in the Private Placement Memorandum, are independent
public accountants with respect to the Company, within the meaning of the Rules
and Regulations.
6.10 The Company has not, within six months of the date hereof, directly or
indirectly, sold or offered, or attempted to offer or dispose of, any equity or
debt securities or substantially similar securities of the Company to, or
solicited offers to buy any thereof from, or otherwise approached or negotiated
in respect thereof with, any offeree in such manner as to require the
registration of the Series B Preferred and Put Rights under the Securities Act.
6.11 Based in part on the representations made by the purchasers in the
Securities Agreement, the offer and sale of the Series B Preferred, Put Rights
and Warrants in the Securities Agreement are exempt from the registration
requirements of the Securities Act and all applicable Rules and Regulations and
such other securities or blue sky laws of all applicable jurisdictions.
6.12 The sale of the Series B Preferred and Warrants by the Company
hereunder and the performance of the transactions contemplated hereby is not
prohibited by any applicable law, administrative or governmental rule or
regulation or order of a court of competent jurisdiction. No action, suit or
proceeding exists or, to the Company's knowledge, is threatened that would
prevent, restrain or condition in any material respect the issuance of the
Series B Preferred and Put Rights by the Company and Baxter in the Private
Placement, and no condition or event exists or has occurred that would have a
Material Adverse Effect.
6.13 The representations and warranties made by the Company in the
Securities Agreement are hereby made to Baxter as if set forth herein.
In addition, the Company makes the following covenant:
6.14 In the event that Baxter purchases the Put Stock, or Baxter sells or
causes to be sold the Put Stock to a third party because Baxter is prohibited
from purchasing or owning such stock, due to any law, rule, regulation, order or
ruling of any court or governmental entity having jurisdiction over Baxter, the
Company agrees to extend to Baxter or to such third parties, as the case may be,
the same rights extended to the original holders of the Subject Securities under
the Registration Rights Agreement between the Company and the signatories
thereto dated of even date herewith.
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Section 7. Representations and Warranties of Baxter.
7.1 Baxter represents and warrants that the information provided in
writing by Baxter specifically for use in the Private Placement Memorandum, as
updated by Baxter from time to time, does not, at the time it is furnished to
the Company for use in the Private Placement Memorandum or at the time of the
Private Placement Closing, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. Except as specifically set forth in the previous
sentence, Baxter makes no representation or warranty with respect to the Private
Placement Memorandum.
7.2 Baxter further represents and warrants to the Company as follows:
7.2.1 This Put Agreement has been duly authorized, executed and
delivered by Baxter and constitutes the valid and legally binding obligation of
Baxter enforceable against it in accordance with its terms.
7.2.2 The execution, delivery and performance of this Put Agreement
and the purchase by Baxter of the Put Stock upon the exercise by the Holder of
the Put Right in accordance with the terms of the Put Right Certificate will not
violate or constitute a default under any term of the charter or by-laws of
Baxter or any term of any agreement, document, instrument, judgment, decree,
order, law, statute, rule or regulation applicable to Baxter or any of its
properties and assets.
7.2.3 Other than any notification that may be required under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), in
connection with the purchase by Baxter of the Put Stock, no consent, approval or
authorization of, or declaration or filing with, or other action by, any Person
(including, without limitation, any governmental authority) is required, in any
such case that is applicable to Baxter, as of the date hereof as a condition
precedent to the valid execution, delivery and performance by Baxter of this Put
Agreement and/or the purchase by Baxter of the Put Stock upon the exercise by
the Holder in accordance with the terms of the Put Right Certificate. In the
event that any notification is required under the HSR Act in connection with the
purchase by Baxter of the Put Stock, or in the event any other consent, approval
or authorization of, or declaration or filing with, or other action by, any
person (including, without limitation, any governmental authority) is required
after the date hereof as a condition precedent to the performance by Baxter of
this Put Agreement and/or the purchase by Baxter of the Put Stock upon the
exercise of the Put Rights, then the parties shall perform their respective
obligations as set forth in Section 11(e) of the Put Right Certificates.
Section 8. Conditions.
8.1 Conditions to Baxter's Obligation to Issue Put Rights. The obligation
of Baxter to issue the Put Rights at the Private Placement Closing Date shall be
subject to
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the satisfaction (or waiver in writing by Baxter) on or prior to the Private
Placement Closing of the following conditions.
8.1.1 Representations and Warranties; Covenants. The representations
and warranties of the Company contained in this Agreement shall be true and
correct in all material respects as of the Private Placement Closing Date, and
there shall be no breach or failure to perform any of the covenants and
agreements of the Company contained in this Agreement which has not been cured
on or prior to the Private Placement Closing Date.
8.1.2 No Material Adverse Change. Subsequent to the date of the most
recent financial statements in the Private Placement Memorandum and except as
set forth in the Private Placement Memorandum, the Company's filings with the
SEC or the Securities Agreement, there has been no material adverse change in
the business, assets, liabilities, results of operations or financial condition
of the Company or the ability of the Company to perform its obligations under
this Agreement or to consummate the transactions contemplated hereby or thereby.
8.1.3 Validity of Private Placement. The Company shall not have taken
or failed to take any action, at any time at or prior to Private Placement
Closing Date, which conflicts or could reasonably be expected to conflict with,
or otherwise makes unavailable, the exemption for the offering and sale of the
Series B Preferred, Put Rights and Warrants from the registration provisions of
the Securities Act, or from any applicable state securities or blue sky laws,
rules and regulations. The issuance and sale of the Series B Preferred, Put
Rights and Warrants in the Private Placement shall be legally permitted under
applicable blue sky or state securities laws.
8.1.4 Closing Documents. The Company shall have delivered to Baxter
the following documents:
(a) a certificate signed by the Chief Executive Officer,
President or the Chief Financial Officer, dated the Closing Date, certifying the
Purchase Price and certifying that the conditions specified in Sections 8.1.1
and 8.1.2 have been satisfied;
(b) certified copies of resolutions duly adopted by the
Company's Board of Directors authorizing: (A) the execution, delivery and
performance of this Agreement; and (B) the Private Placement;
(c) a reliance letter from outside counsel to the Company
permitting Baxter to rely on the opinion given on the Closing Date to the
purchasers under the Securities Agreement;
(d) the Side Letter executed by the Company; and
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(e) such other documents relating to the transactions
contemplated by this Agreement as Baxter or its counsel may reasonably request.
8.2 Conditions to the Company's Obligation to Effect the Private
Placement. The obligation of the Company to effect the Private Placement shall
be subject to the satisfaction (or waiver in writing by the Company) on or prior
to the Private Placement Closing Date of the following conditions.
8.2.1 Representations and Warranties; Covenants. The representations
and warranties of Baxter contained in this Agreement shall be true and correct
in all material respects as of the Private Placement Closing Date and there
shall be no breach or failure to perform any of the covenants and agreements of
Baxter contained in this Agreement which has not been cured on or prior to the
Private Placement Closing Date.
8.2.2 Compliance with Law; No Litigation or Other Adverse Effect.
Subject to the provisions of Section 11 (e) of the Put Right Certificates, the
issuance of the Put Rights by Baxter hereunder and the performance by Baxter of
the transactions contemplated hereby shall not be prohibited by any applicable
law, administrative or governmental rule or regulation or order of a court of
competent jurisdiction. No action, suit or proceeding shall exist or be
threatened, to the knowledge of Baxter, that would prevent, restrain or
condition in any material respect the issuance of the Put Rights by Baxter in
the Private Placement, and no condition or event shall exist or occur that would
have a material adverse effect on the ability of Baxter to consummate the
transactions contemplated hereby.
8.2.3 Closing Documents. Baxter shall have delivered to the Company a
certificate signed by an officer of the Company, dated the Closing Date,
certifying that the conditions specified in Sections 8.2.1 and 8.2.2 have been
satisfied.
8.2.4 Side Letter. Baxter shall have delivered to the Company the
Side Letter executed by Baxter.
Section 9. Termination.
This Agreement may be terminated:
9.1 by mutual written consent of Baxter and the Company; or
9.2 automatically, without any action by Baxter or the Company, if the
Private Placement Closing has not occurred by November 30, 1999.
Section 10. General.
10.1 Adjustments for Stock Splits, Consolidations, Etc. The initial
designation of Put Stock, the Purchase Price and the Put Purchase Price are
based on the Series B Preferred as constituted as of the date of this Agreement.
If the Company shall at any
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time after the date of this Agreement (i) declare a dividend on Series B
Preferred (or any other Put Stock) payable in shares of its capital stock, (ii)
subdivide the outstanding Series B Preferred (or any other Put Stock), (iii)
combine the outstanding Series B Preferred (or any other Put Stock) into a
smaller number of shares of Series B Preferred (or any other Put Stock) or (iv)
issue any shares of its capital stock in a reclassification of the Series B
Preferred (or any other Put Stock) (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), the Purchase Price and Put Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock subject to such Put Rights on such date, shall be
proportionately adjusted so that upon exercise by the holders of the Put Rights
(the "Holders") Baxter shall be entitled to receive the aggregate number and
kind of shares of capital stock upon payment of the Put Purchase Price which, if
such Put Rights had been exercised immediately prior to such date and at a time
when the Series B Preferred (or other Put Stock, as the case may be) transfer
books of the Company were open, Baxter would have owned upon such exercise and
payment and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification.
Not later than 10 business days prior to the record date of any such
dividend or the effective date for any such subdivision, combination or
reclassification, the Company shall send to Baxter a certificate signed by its
Chief Financial Officer setting forth in reasonable detail a description of such
dividend, subdivision, combination or reclassification and all adjustments to be
made pursuant to this Section 9 to the Purchase Price and Put Purchase Price and
the number and kinds of capital stock subject to the Put Rights. The adjustments
set forth in such certificate shall be binding on the Company, Baxter and the
Holders unless, within 30 days following receipt of such certificate, either
Baxter or Holders representing not less than 66-2/3% in interest of the Put
Stock shall notify the Company and each of the Holders or Baxter, as applicable,
of its or their disagreement with such adjustments, in which event such
adjustment will be determined (at the expense of the Company) by a firm of
independent certified public accountants of recognized national standing
selected by the Company and reasonably satisfactory to Baxter and the Holders of
more than 75% in interest of the Put Stock at the time outstanding and shall be
set forth in a separate report from such accountants delivered promptly to the
Company, the Holders and Baxter following the determination by such accountants.
10.2 Binding Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective permitted successors and
assigns.
10.3 Assignment. Neither party hereto may assign or transfer this Agreement
without the prior written consent of the other party hereto; provided, however,
that either party hereto may assign this Agreement to any Person with or into
which such party may merge or consolidate or to whom all or substantially all of
its assets or businesses may be sold and that Baxter may assign this Agreement
to any wholly-owned subsidiary of Baxter, provided that Baxter remains liable
for its obligations hereunder.
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10.4 Entire Agreement. This Agreement and the Put Right Certificates
evidencing the Put Rights set forth the entire understanding of the parties
hereto with respect to the subject matter hereof and thereof and supersede all
prior agreements, written and oral, among the parties hereto as to such subject
matter.
10.5 Waiver. The waiver by either party hereto of any breach of any
provision of this Agreement shall not constitute or operate as a waiver of any
other breach of such provision or of any other provision hereof, nor shall any
failure to enforce any provision hereof operate as a waiver of such provision or
of any other provision hereof.
10.6 Expenses. Except as expressly provided in this Agreement and subject
to any rights based on a breach of this Agreement, each party hereto shall bear
its own costs and expenses incident hereto.
10.7 Amendments. This Agreement may not be amended, nor may any provision
hereof be modified or waived, except by an instrument in writing duly signed by
both parties hereto.
10.8 Notices. All notices and other communications required or permitted to
be given hereunder shall be deemed sufficiently given if sent by certified mail,
postage prepaid, return receipt requested, by facsimile transmission (with
receipt confirmed) or by air courier service (with receipt confirmed), addressed
as follows:
If to the Company:
Nexell Therapeutics, Inc.
9 Parker
Irvine, CA 92618-1605
Attention: President
Facsimile: (949) 470-6645
with a copy to:
Bryan Cave LLP
120 Broadway, Suite 300
Santa Monica, CA 90401-2305
Attention: Thomas S. Loo
Facsimile: (310) 576-2200
If to Baxter:
Baxter International Inc.
One Baxter Parkway
1627 Lake Cook Road
Deerfield, IL 60015-4633
Attention: Treasurer
Facsimile: (847) 848-4509
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with a copy to:
Baxter International Inc.
One Baxter Parkway
1627 Lake Cook Road
Deerfield, IL 60015
Attention: General Counsel
Facsimile: (847) 948-2450
or at such other address as it may have furnished in writing to the other party
hereto.
10.9 Severability. If any provision of this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality or enforceability of
the other provisions hereof shall not be affected thereby, and there shall be
substituted for the provision at issue a valid and enforceable provision as
similar as possible to the provision at issue.
10.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without reference to the
principles of conflict of laws thereof.
10.11 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning, interpretation, enforceability
or validity of this Agreement.
10.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same document.
In Witness Whereof, the Company and Baxter have each caused this Agreement
to be executed by their duly authorized officers as of the date first written
above.
Nexell Therapeutics Inc.
By: /s/
--------------------------------
Name:______________________________
Title:_____________________________
Baxter International Inc.
By: /s/
--------------------------------
Name:______________________________
Title:_____________________________
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EXHIBIT A
FORM OF PUT RIGHT CERTIFICATE
<PAGE>
EXHIBIT B
FORM OF SIDE LETTER
<PAGE>
Exhibit 99.1
Nexell Therapeutics Inc.
[LOGO] 9 Parker
Irvine, California
92618 1605
t.949 470 9011
f.949 586 2420
www.nexellinc.com
FOR IMMEDIATE RELEASE
- ---------------------
Contact: Tad Heitmann
Nexell Therapeutics Inc.
949/470-6516
NEXELL THERAPEUTICS COMPLETES $63 MILLION FINANCING
IRVINE, CA, November 29, 1999 - Nexell Therapeutics Inc. (NASDAQ:NEXL), one of
the world's leading suppliers of therapeutic and diagnostic products based on
stem cell technology, announced today that it has raised $63 million in a
private placement with institutional investors. The transaction is a structured
financing consisting of a new Series B Preferred Stock, convertible into Nexell
Common Stock at $2.75 per share, backed by put rights granted by Baxter
International Inc. (NYSE: BAX), and certain warrants. The Company will use a
portion of proceeds to retire approximately $34 million in convertible
subordinated debentures held by Baxter and will use the remainder for general
corporate purposes.
Investors in this private placement include John Hancock Mutual Life Insurance
Company, Metropolitan Life Insurance Company and Massachusetts Mutual Life
Insurance Company. Lehman Brothers acted as placement agent for this
transaction.
"This financing is a significant milestone for the Company," said Richard L.
Dunning, Chairman and CEO of Nexell Therapeutics. "It substantially increases
our financial flexibility by injecting new capital, at a very large premium to
market, and retiring all existing convertible debt. Nexell can now go forward to
execute its aggressive growth plans with a strong cash position and no debt. We
are also pleased to bring these institutions on as investors in the Company to
share in the exciting future of our cell therapy business."
The transaction involved the issuance of 63,000 shares of Series B Preferred
Stock, one Put Right per share of Preferred Stock, and Warrants. The Series B
Preferred Stock carries an annual cash dividend of 3 percent. Between November
24, 2002 and November 24, 2004, investors may put their Preferred Stock to
Baxter for return of their principal and a fixed rate of interest. The warrants
consist of a class of warrants exercisable for 3 million shares of Common Stock
for five years at a price of $3.00 per share and a class of performance warrants
that become exercisable after five years at $.01 per share. The number of
performance warrants that may be exercised adjust based upon the Company's
closing price at the date of exercise, from a range of zero (above $5.00 per
share) up to a maximum of 6 million shares (at or below $3.00 per share).
<PAGE>
"Baxter remains the largest shareholder in Nexell and is committed to helping it
unlock the potential value and clinical benefits of cell therapy," said Victor
W. Schmitt, President Venture Management, Baxter Healthcare Corporation.
In July, 1999, Nexell received U.S. Food and Drug Administration approval to
sell its Isolex(R) 300i Cell Selection System as a restricted device for the
selection of hematopoietic stem cells and the removal of tumor cells from
autologous peripheral blood grafts used to restore cancer patients' immune and
blood-forming systems following high dose chemotherapy. It is the only stem cell
selection system commercially available in the United States. During the same
period, Nexell assumed control of sales and distribution in the United States
from Baxter and rolled out its new field sales and technical support
organization in early August. A similar transition is underway in Europe.
There are also a number of Isolex(R) systems currently in use in the United
States under investigational protocols (IDE's) in gene therapy and dendritic
cell therapy, engineered transplants with alternative donors and for autoimmune
diseases.
Nexell Therapeutics Inc.
Located in Irvine, California, Nexell Therapeutics Inc. is a cell therapy
company whose mission is to put the power of the cell into the hands of healers.
Nexell is developing and marketing innovative ex vivo cell therapies and in
vitro diagnostics for cancer, autoimmune, metabolic and genetic diseases.
Nexell's lead product, the Isolex(R) 300i Cell Selection System, is currently
marketed in the United States, the European Union, Canada and several other
countries, as a component of aggressive cancer therapy. In addition, Nexell
markets the Cytonex(TM) ImmunoCytoChemistry Staining Kit and an extensive line
of cell therapy preparation, storage and expansion products including the
Cryocyte(TM), SteriCell(R) and Lifecell(R) brands.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. The forward-looking statements contained
in this release are subject to certain risks and uncertainties. Actual results
could differ materially from current expectations. Among the factors which could
affect the Company's actual results and could cause results to differ from those
contained in the forward-looking statements contained herein are: the timely
commencement and success of the Company's clinical trials and other research
endeavors, delays in receiving FDA or other regulatory approvals, the
development of competing therapies and/or technologies, the terms of any future
strategic alliances, the possible need for additional capital, and any
additional factors described from time to time in the Company's periodic reports
on Form 10-K and 10-Q, and any prospectus describing the Company's securities.
# # #
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<PAGE>
EXHIBIT 99.2
NEXELL THERAPEUTICS INC. and Subsidiaries
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
Actual Proforma Proforma
Oct. 31, 1999 Adjustments Oct. 31, 1999
---------------- ---------------- -----------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 12,121,000 $ 26,963,000 $ 39,084,000
Trade receivables 2,643,000 2,643,000
Receivables from related party 293,000 293,000
Inventory - finished goods 4,549,000 4,549,000
Other current assets 2,350,000 (376,000) 1,974,000
-------------- -------------- --------------
Total current assets 21,956,000 26,587,000 48,543,000
Fixed assets, net 10,990,000 10,990,000
Intangible assets, net 43,757,000 43,757,000
Other assets 1,059,000 1,059,000
-------------- -------------- --------------
Total assets $ 77,762,000 $ 26,587,000 $ 104,349,000
============== ============== ==============
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses $ 5,704,000 $ $ 5,704,000
Accounts payable to related party 9,458,000 9,458,000
Capital leases current portion 115,000 115,000
-------------- -------------- --------------
Total current liabilities 15,277,000 -- 15,277,000
Long-term debt due to related party 33,759,000 (33,759,000) --
-------------- -------------- --------------
Total liabilities 49,036,000 (33,759,000) 15,277,000
-------------- -------------- --------------
Commitments and contingencies -- -- --
SHAREHOLDERS' EQUITY
Preferred Stock; $.001 par value; 1,150,000 shares authorized:
Series A Convertible Preferred Stock; 70,252 shares
issued and outstanding at October 31, 1999. 100 100
Series B Convertible Preferred Stock; 63,000 shares
issued and outstanding at October 31, 1999. -- 100 100
Common Stock; $.001 par value; 160,000,000 shares
authorized; 72,715,000 shares issued and outstanding at 73,000 73,000
October 31, 1999.
Additional paid-in capital 192,319,900 60,518,900 252,838,800
Unearned compensation (200,000) (200,000)
Accumulated other comprehensive income (loss) (8,000) (8,000)
Accumulated deficit (163,459,000) (173,000) (163,632,000)
-------------- -------------- --------------
Total shareholders' equity 28,726,000 60,346,000 89,072,000
-------------- -------------- --------------
Total liabilities and shareholders' equity $ 77,762,000 $ 26,587,000 $ 104,349,000
============== ============== ==============
</TABLE>
