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EXHIBIT 10.3
GENENTECH, INC.
MAGAININ PHARMACEUTICALS INC.
STOCK PURCHASE AGREEMENT
April 28, 2000
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TABLE OF CONTENTS
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ARTICLE 1
Authorization and Sale of Series a Preferred Stock and Common Stock
Section 1.01. Authorization of Series A Preferred Stock........................................................ 2
Section 1.02. Sale of Series A Preferred Stock................................................................. 2
Section 1.03. Authorization of Common Stock.................................................................... 2
Section 1.04. Sale of Common Stock............................................................................. 2
ARTICLE 2
Closing Dates; Delivery
Section 2.01. Closing Dates.................................................................................... 2
Section 2.02. Delivery and Payment............................................................................. 3
ARTICLE 3
Representations and Warranties of the Company
Section 3.01. Organization and Standing; Certificate of Incorporation, Certificate of Designations and Bylaws.. 3
Section 3.02. Corporate Power.................................................................................. 4
Section 3.03. Subsidiaries..................................................................................... 4
Section 3.04. Capitalization................................................................................... 4
Section 3.05. Authorization.................................................................................... 5
Section 3.06. Proprietary Rights............................................................................... 6
Section 3.07. Litigation, Etc.................................................................................. 6
Section 3.08. NASD Listing...................................................................................... 7
Section 3.09. Material Agreements.............................................................................. 7
Section 3.10. Title to Properties and Assets; Liens, Etc....................................................... 7
Section 3.11. Compliance with Other Instruments, None Burdensome, Etc.......................................... 7
Section 3.12. Employees........................................................................................ 8
Section 3.13. Registration Rights.............................................................................. 8
Section 3.14. Governmental Regulations, Etc.................................................................... 8
Section 3.15. Offering......................................................................................... 9
Section 3.16. Brokers or Finders............................................................................... 9
Section 3.17. Related-Party Transactions....................................................................... 9
Section 3.18. Permits.......................................................................................... 9
Section 3.19. Insurance........................................................................................ 9
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Section 3.20. Disclosure................................................................ 9
Section 3.21. SEC Filings............................................................... 10
Section 3.22. Financial Statements...................................................... 10
Section 3.23. Investment Company........................................................ 10
Section 3.24. Absence of Changes........................................................ 10
Section 3.25. Tax Returns............................................................... 11
Section 3.26. Environmental Safety and Laws............................................. 11
Section 3.27. Manufacturing and Marketing Rights........................................ 12
Section 3.28. Compliance with ERISA..................................................... 12
ARTICLE 4
Representations and Warranties of the Purchaser
Section 4.01. Preexisting Relationship with Company; Business and Financial Experience.. 12
Section 4.02. Blue Sky.................................................................. 12
Section 4.03. Private Placement......................................................... 13
Section 4.04. Rule 144.................................................................. 13
Section 4.05. Restrictions on Transfer; Restrictive Legends............................. 13
Section 4.06. Access to Data............................................................ 13
Section 4.07. Organization and Good Standing............................................ 14
Section 4.08. Authorization............................................................. 14
Section 4.09. Brokers or Finders........................................................ 14
ARTICLE 5
Conditions to Closing of the Purchaser
Section 5.01. Representations and Warranties Correct.................................... 15
Section 5.02. Covenants................................................................. 15
Section 5.03. Consents, Permits and Waivers............................................. 15
Section 5.04. Opinion of the Company=s Counsel.......................................... 15
Section 5.05. Blue Sky.................................................................. 15
Section 5.06. Certificate of Designations............................................... 15
Section 5.07. Legal Matters............................................................. 15
Section 5.08. Registration Rights Agreement............................................. 16
Section 5.09. Compliance Certificate.................................................... 16
Section 5.10. License Agreement......................................................... 16
Section 5.11. Proceedings and Documents................................................. 16
Section 5.12. Delivery of Stock Certificates............................................ 16
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ARTICLE 6
Conditions To Closing of the Company
Section 6.01. Representations and Warranties Correct........................................ 16
Section 6.02. Covenants..................................................................... 16
Section 6.03. Blue Sky...................................................................... 17
Section 6.04. Certificate of Designations................................................... 17
Section 6.05. Legal Matters................................................................. 17
Section 6.06. Registration Rights Agreement................................................. 17
Section 6.07. License Agreement............................................................. 17
ARTICLE 7
Financing upon Occurrence of A Merger Event or A Capitalization Event
Section 7.01. Loans by Purchaser............................................................ 17
Section 7.02. Closing Conditions for Loans.................................................. 17
ARTICLE 8
Covenants of Purchaser and the Company
Section 8.01. Restrictions on Sales of Common Stock During Calculation of Conversion Price.. 18
Section 8.02. No Superior or Parity Debt.................................................... 18
Section 8.03. HSR Filing.................................................................... 18
ARTICLE 9
Miscellaneous
Section 9.01. Governing Law................................................................. 19
Section 9.02. Entire Agreement; Amendment................................................... 19
Section 9.03. Notices, Etc.................................................................. 19
Section 9.04. Delays or Omissions........................................................... 20
Section 9.05. Expenses...................................................................... 20
Section 9.06. Counterparts.................................................................. 21
Section 9.07. Severability.................................................................. 21
Section 9.08. Titles and Subtitles.......................................................... 21
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SCHEDULE 1 Schedule of Exceptions
SCHEDULE 2 Schedule of Licenses, Options and Material Agreements Relating to the
Subject of the License Agreement
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EXHIBIT A Certificate of Designations, Preferences and Rights of Series A
Preferred Stock
EXHIBIT B Registration Rights Agreement
EXHIBIT C Compliance Certificate
EXHIBIT D Form of Note
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MAGAININ PHARMACEUTICALS INC.
STOCK PURCHASE AGREEMENT
This agreement (the "Agreement") is made effective as of April 28, 2000, by
and among Magainin Pharmaceuticals Inc., a Delaware corporation (the "Company"),
and Genentech, Inc. a Delaware corporation (the "Purchaser").
RECITALS
WHEREAS, the Company and the Purchaser entered into a Collaborative
Research and License Agreement dated as of the date hereof (the "License
Agreement"), pursuant to which the Purchaser will conduct research with respect
to IL-9 and the Company will grant Purchaser an exclusive license regarding the
development and commercialization thereof;
WHEREAS, pursuant to the License Agreement the parties have agreed to enter
into this Agreement;
WHEREAS, in connection with its obligation to fund certain research by the
Company pursuant to the License Agreement, the Purchaser has agreed to purchase
(i) up to 42,000 shares of the Company's Series A Preferred Stock at the per
share purchase price of $1,000 and (ii) 1,085,973 shares of the Company's Common
Stock at the per share purchase price of $4.60414;
WHEREAS, the Purchaser will initially purchase 500 shares of Series A
Preferred Stock, and will purchase up to 41,500 additional shares of Series A
Preferred Stock from time to time on a quarterly basis as determined by the
Joint Steering Committee established pursuant to the License Agreement (the
"Joint Steering Committee");
WHEREAS, the Conversion Shares underlying the Series A Preferred Stock and
the shares of Common Stock issued pursuant to this Agreement shall have
registration rights as evidenced by the Registration Rights Agreement in the
form attached hereto as Exhibit B (the "Registration Rights Agreement");
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth,
THE PARTIES HEREBY AGREE AS FOLLOWS;
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ARTICLE 1
Authorization and Sale of Series a Preferred Stock and Common Stock
Section 1.1. Authorization of Series A Preferred Stock. The Company has
authorized the issuance and sale of 80,000 shares (the "Preferred Shares") of
Series A Preferred Stock, par value $.001 per share (the "Series A Preferred"),
having the rights, preferences, privileges and restrictions set forth in the
Certificate of Designations, Preferences and Rights of Series A Preferred Stock
in substantially the form attached hereto as Exhibit A (the "Certificate of
Designations").
Section 1.2. Sale of Series A Preferred Stock. Subject to the terms and
conditions hereof, the Company will issue and sell to the Purchaser and the
Purchaser will buy from the Company up to a total of 42,000 Preferred Shares at
a per share purchase price of $1,000 (the "Per Share Price").
Section 1.3. Authorization of Common Stock. The Company has authorized
the issuance and sale of 1,085,973 shares (the "Common Shares" and together with
the Preferred Shares, the "Shares") of its Common stock, par value $.002 per
share (the "Common Stock") to the Purchaser.
Section 1.4. Sale of Common Stock. Subject to the terms and conditions
hereof, the Company will issue and sell to the Purchaser and the Purchaser will
buy from the Company a total of 1,085,973 Common Shares at a per share purchase
price of $4.60417.
ARTICLE 2
Closing Dates; Delivery
Section 2.1. Closing Dates. (a) It is anticipated that purchases and
sales of the Preferred Shares hereunder shall be consummated at thirty five (35)
closings (collectively, the "Closings" or each individually, a "Closing"). Each
Closing shall be held at the offices of the Purchaser, 1 DNA Way, South San
Francisco, CA at 4:00 p.m., local time, or at such other time and place upon
which the Company and the Purchaser shall agree. The first such closing (the
"First Closing") shall take place on May 10, 2000 or such other date upon which
the Company and the Purchaser shall agree (the date and time of the First
Closing is hereinafter referred to as the "First Closing Date"). The subsequent
closings (each a "Subsequent Closing") shall take place (i) on a quarterly basis
on March 31, June 30, September 30 and December 31 of each year starting
September 30, 2000 with the last Subsequent Closing on December 31, 2008 or (ii)
on such dates
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as established by the Joint Steering Committee (the date and time of each
Subsequent Closing is hereinafter referred to as a "Subsequent Closing Date").
(b) The Purchaser will purchase 500 Preferred Shares at the First
Closing.
(c) The number of Preferred Shares to be purchased by the Purchaser at
each Subsequent Closing shall be determined by the Joint Steering Committee in
accordance with procedures laid out in the License Agreement; provided that if
the License Agreement expires or is terminated, the Purchaser will have no
further obligation to purchase any additional Preferred Shares; provided further
that the sale of Preferred Shares and the Purchaser's obligation to purchase any
Preferred Shares will terminate upon the occurrence of a either a Merger Event
or a Capitalization Event (each as defined in the Certificate of Designations).
The Per Share Price and other terms of sales consummated at each Subsequent
Closing shall be substantially identical to the terms of the sales consummated
at the First Closing.
(d) The purchase and sale of the Common Shares hereunder shall be
consummated at the First Closing.
Section 2.2. Delivery and Payment. At each Closing, the Company will
deliver to the Purchaser, with respect to the Shares being purchased at such
Closing, a certificate or certificates, registered in the Purchaser's name,
representing the number of Shares to be purchased by the Purchaser at such
Closing, against payment of the purchase price therefor, by check payable to the
Company, by wire transfer in immediately available funds or by any combination
of the foregoing, per the Company's instructions.
ARTICLE 3
Representations and Warranties of the Company
Except as set forth on Schedule 1 attached hereto, and as updated by the
Company on each subsequent Closing Date, the Company represents and warrants to
the Purchaser that, as of the date of each Closing at which the Purchaser
consummates its purchase of Shares or at each Loan Closing (as defined in
Section 7.01) hereunder:
Section 3.1. Organization and Standing; Certificate of Incorporation,
Certificate of Designations and Bylaws. The Company is a corporation duly
organized and existing under, and by virtue of, the laws of the State of
Delaware and is in good standing under such laws. The Company has requisite
corporate
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power and authority to own and operate its properties and assets, and to carry
on its business as presently conducted and as proposed to be conducted. The
Company is presently qualified to do business as a foreign corporation in
Pennsylvania and there is no other jurisdiction in which the failure to be so
qualified would have a material adverse effect on the business or financial
condition of the Company. The Company has furnished to counsel for the Purchaser
copies of its Certificate of Incorporation, as amended to date (the "Certificate
of Incorporation"), Certificate of Designations and Amended and Restated Bylaws,
as amended to date (the "Bylaws"). Said copies are true, correct and complete
and reflect all amendments now in effect.
Section 3.2. Corporate Power. The Company has all requisite legal and
corporate power and authority to execute and deliver this Agreement and the
Registration Rights Agreement, to sell and issue the Shares hereunder, to issue
the Common Stock underlying the Preferred Shares (the "Conversion Stock") in
accordance with the provisions of the Certificate of Designations, to sell and
issue the Notes (as defined in Section 7.01), and to carry out and perform its
obligations under the terms of this Agreement and the Registration Rights
Agreement.
Section 3.3. Subsidiaries. The Company has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association or business entity.
Section 3.4. Capitalization. The authorized capital stock of the Company
will, upon the filing of the Certificate of Designations, consist of 45,000,000
shares of Common Stock and 9,211,031 shares of Preferred Stock, 80,000 of which
have been designated Series A Preferred. As of the First Closing Date, the
total number of outstanding shares of Common Stock will be 28,195,339. Upon the
filing of the Certificate of Designations and immediately prior to the First
Closing, no shares of Preferred Stock and 27,109,366 shares of Common Stock were
outstanding. The Series A Preferred shall have the rights, preferences,
privileges and restrictions set forth in the Certificate of Designations. All
currently outstanding shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable, and have been issued in
compliance with applicable securities laws. The Company has reserved 80,000
shares of Series A Preferred and 1,085,973 shares of Common Stock for issuance
hereunder and 4,000,000 shares of Common Stock for issuance upon conversion of
the Series A Preferred. Of the 160,000 shares of Common Stock of the Company
reserved for issuance under the Company's 1990 Stock Option Plan, options to
purchase 160,000 shares have been granted, and no shares remain available to
underlie future option grants. Of the 2,500,000 shares of Common Stock of the
Company reserved for issuance under the Company's 1992 Stock Option Plan, as
amended, options to purchase 2,063,850 shares have been granted,
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and 436,150 shares remain available to underlie future option grants. Of the
1,500,000 shares of Common Stock of the Company reserved for issuance under the
Company's 1998 Equity Compensation Plan, 1,325,625 shares have been accounted
for through the grant of options to purchase Common Stock and restricted stock
awards and 174,375 shares remain available to underlie future option grants or
awards of restricted stock. In addition, as of the First Closing, there are
outstanding options to purchase 485,612 shares of the Company's Common Stock
that are not subject to any of the stock option plans or employee compensation
plans of the Company. Warrants to purchase 1,387,949 shares of the Company's
Common Stock are held by third parties. Of these, warrants to purchase 1,158,210
shares contain antidilution provisions that increase the number of shares
subject to the warrants and decrease the exercise price if the Company issues
Common Stock and/or other securities convertible into Common Stock at certain
prices. Except as set forth above and as provided in the Company's Certificate
of Incorporation, there are no options, warrants or other rights to purchase or
acquire any of the Company's authorized and unissued capital stock.
Section 3.5. Authorization. All corporate action on the part of the
Company, its directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement, the Registration Rights
Agreement and the License Agreement by the Company, the authorization, sale,
issuance and delivery of the Shares and the Conversion Stock and the performance
of all of the Company's obligations hereunder and under the Registration Rights
Agreement has been taken or will be taken prior to the First Closing. This
Agreement and the Registration Rights Agreement, when executed and delivered by
the Company, shall constitute valid and binding obligations of the Company,
enforceable in accordance with their terms (except as to rights of
indemnification in the Registration Rights Agreement which may be
unenforceable), subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies. The Preferred
Shares and the Common Shares, when issued in compliance with the provisions of
this Agreement, will be validly issued, fully paid and nonassessable, and will
have the rights, preferences, privileges and restrictions described in the
Certificate of Designations and the Certificate of Incorporation, respectively;
the Common Stock issuable upon conversion of the Preferred Shares has been duly
and validly reserved and, when issued in compliance with the provisions of the
Certificate of Designations, will be validly issued, fully paid and
nonassessable; and the Shares and the Conversion Stock will be free of any liens
or encumbrances (assuming the Purchaser takes the Shares with no notice thereof)
other than any liens or encumbrances created by or imposed upon the holders;
provided, however, that the Shares and the Conversion Stock may be subject to
restrictions on transfer
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under state or federal securities laws and restrictions set forth in the
Registration Rights Agreement. The issuance of the Shares is not subject to any
preemptive rights or rights of first refusal.
Section 3.6. Proprietary Rights. The Company has title and ownership of,
or rights to use, all patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights and processes
necessary for its business as now conducted without any conflict with or
infringement of the rights of others, except as would not have a material
adverse effect on the Company. Except as set forth in Schedule 2 hereof, there
are no outstanding options, licenses, or agreements of any kind relating to the
subject of the License Agreement and the transactions and the research
contemplated by the License Agreement, nor is the Company bound by or a party to
any options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity.
The Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade proprietary
rights of any other person or entity and that management reasonably believes
will have a material adverse effect on the Company. To the best knowledge of
the Company, none of its employees is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would interfere with the use of his or her best efforts to promote the interests
of the Company or that would conflict with the Company's business as proposed to
be conducted. Neither the execution nor delivery of this Agreement or the
Registration Rights Agreement, nor the carrying on of the Company's business by
the employees of the Company, nor the conduct of the Company's business as
proposed, will, to the best of the Company's knowledge, conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which the Company or any of
such employees is now obligated except as would not have a material adverse
effect on the Company. The Company does not believe it is or will be necessary
to utilize any inventions of any of its employees (or people it currently
intends to hire) made prior to their employment by the Company.
Section 3.7. Litigation, Etc. There are no actions, suits, proceedings or
investigations pending or, to the Company's knowledge, threatened against the
Company or its properties before any court or governmental agency which
management believes is likely to have a material adverse effect on the Company.
The foregoing includes, without limitation, actions pending or threatened (or
any basis therefor known to the Company) involving the prior employment of any
of
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the Company's employees, their use in connection with the Company's business of
any information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers. The
Company is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
Section 3.8. NASD Listing. The Common Stock is, and the Conversion Stock
will upon issuance be, listed for trading on the Nasdaq National Market.
Section 3.9. Material Agreements. All of the contracts and agreements to
which the Company is a party and which are in effect as of the First Closing
Date and which the Company considers to be material are listed on as exhibits to
the Company's Form 10-K for the period ended December 31, 1999. All such
contracts and agreements are valid, binding and in full force and effect in all
material respects, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies, and the
Company has not received any indication of an intention to terminate any such
contract or agreement by any of the parties to any such contract or agreement.
Section 3.10. Title to Properties and Assets; Liens, Etc. Except with
respect to assets consisting of Proprietary Rights which are covered by Section
3.06 hereof, the Company has good and marketable title to its properties and
assets, and has good title to all its leasehold interests (except where the
failure to have such title would not, individually or in the aggregate, have a
material adverse effect) in each case subject to no mortgage, pledge, lien,
encumbrance or charge, other than (i) the lien of current taxes not yet due and
payable, and (ii) possible minor liens and encumbrances which, when considered
individually or together, do not materially detract from the value of the
property subject thereto or materially impair the operations of the Company, and
which have not arisen otherwise than in the ordinary course of business and such
properties and assets are sufficient to enable the Company to carry on its
business as presently conducted and, to the Company's knowledge, as proposed to
be conducted.
Section 3.11. Compliance with Other Instruments, None Burdensome, Etc.
The Company is not in violation of: any term of its Certificate of
Incorporation, or its Bylaws; in any material respect of any term or provision
of any mortgage, indebtedness, indenture, contract, agreement, instrument,
judgment or decree; and, to the best of its knowledge, is not in violation of
any order, statute, rule or regulation applicable to the Company except for such
violations that would not, individually or in the aggregate, have a material
adverse effect.
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The execution, delivery and performance of and compliance with this Agreement,
and the issuance of the Shares and the Conversion Stock, have not resulted and
will not result in any violation of, or conflict with, or constitute a default
under, the Company's Certificate of Incorporation, or its Bylaws, and have not
and will not result in any material violation of, or conflict with, or
constitute a material default under, any of its agreements nor result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of the Company.
Section 3.12. Employees. All of the Company's material contracts with
employees are filed as exhibits to the Company's Form 10-K for the period ended
December 31, 1999. To the best of the Company's knowledge, no employee of the
Company nor any consultant with whom the Company has contracted is in violation
of any term of any employment contract, non-disclosure agreement or any other
similar contract or agreement relating to the relationship of such employee or
consultant with the Company. Except as disclosed in the Company's Form 10-K (or
the exhibits to the Form 10-K) for the period ended December 31, 1999, no
employee of the Company has been granted the right to continued employment by
the Company or to any material compensation following termination of employment
with the Company. The Company is not aware that any officer or key employee, or
that any group of key employees, intends to terminate their employment with the
Company, nor does the Company have a present intention to terminate the
employment of any officer, key employee or group of key employees. Each
employee of the Company has executed an appropriate confidential information and
invention assignment agreement.
Section 3.13. Registration Rights. The Company has not granted or agreed
to grant any registration rights, including piggyback rights, to any person or
entity, except for rights that the Company believes have expired by their terms.
Section 3.14. Governmental Regulations, Etc. Except as required pursuant
to the Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934 (the "Exchange Act"), as amended and state securities laws,
the Company is not subject to any Federal or state law or regulation limiting
its ability to execute and deliver this Agreement, or to offer, sell or issue
the Shares or the Conversion Stock, or consummate any other transaction
contemplated hereby, other than (a) the filing of the Certificate of
Designations in the office of the Delaware Secretary of State prior to the First
Closing and (b) the qualification (or taking of such action as may be necessary
to secure an exemption from qualification, if available) of the offer and sale
of the Shares and the Conversion Stock under applicable Blue Sky laws, which
filings and qualifications, if required, will be accomplished in a timely
manner.
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Section 3.15. Offering. Subject to the accuracy of the Purchaser's
representations in Section 4 hereof, the offer, sale and issuance of the Shares
and the Conversion Stock constitute transactions exempt from the registration
requirements of Section 5 of the Securities Act.
Section 3.16. Brokers or Finders. Neither the Company nor the Purchaser,
as a result of any action taken by the Company, have incurred or will incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or the
transactions contemplated hereby.
Section 3.17. Related-Party Transactions. No employee, officer, or
director of the Company or member of such person's immediate family is indebted
to the Company, nor is the Company indebted (or committed to make loans or
extend or guarantee credit) to any of them, except for indebtedness or
commitments to make loans or extend or guarantee credit that do not,
individually or in the aggregate, exceed $60,000. To the best of the Company's
knowledge, none of such persons has any direct or indirect ownership interest in
any firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation that competes
with the Company, except that employees, officers, or directors of the Company
and members of their immediate families may own stock in publicly traded
companies that may compete with the Company. No member of the immediate family
of any officer or director of the Company is directly or indirectly interested
in any material contract with the Company.
Section 3.18. Permits. The Company has all franchises, permits, licenses,
and any similar authority necessary for the conduct of its business as now being
conducted, the lack of which could materially and adversely affect the business,
properties, prospects, or financial condition of the Company, and the Company
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted. The Company is not
in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.
Section 3.19. Insurance. The Company has insurance policies in effect
covering the risks associated with its business and properties which are of such
character and in such amounts as are customarily maintained by entities engaged
in the same or similar business and similarly situated.
Section 3.20. Disclosure. No representation or warranty made by the
Company in this Agreement, any schedule or exhibit hereto, or any certificate
delivered hereunder, when taken together, contains any untrue statement of a
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material fact, or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances under which they were made.
Section 3.21. SEC Filings. (a) The Company has delivered or made
available to the Purchaser (i) its annual reports on Form 10-K for its fiscal
year ended December 31, 1999 and 1998, (ii) its proxy or information statements
relating to meetings of or actions taken without a meeting by the Company's
stockholders held since December 15, 1998, and (iii) all of its other reports,
statements, schedules and registration statements filed with the SEC since
January 1, 1999 (the documents referred to in this Section 3.21, collectively,
the "Company SEC Documents").
(b) As of its filing date, each Company SEC Document complied as to form
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, as the case may be.
(c) As of its filing date, each Company SEC Document filed pursuant to
the Exchange Act did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
Section 3.22. Financial Statements. The audited financial statements
and unaudited interim financial statements of the Company included in the
Company SEC Documents fairly present, in all material respects, in conformity
with GAAP applied on a consistent basis (except as may be indicated in the notes
thereto), the financial position of the Company as of the dates thereof and its
results of operations and cash flows for the periods then ended (subject to
normal year-end adjustments and to the omission of certain footnotes required by
GAAP in the case of any unaudited interim financial statements). The Company has
no liabilities or obligations, absolute or contingent, that are required by GAAP
to be set forth in such financials, that have not been so set forth.
Section 3.23. Investment Company. The Company is not, and after the
issuance and sale of the Shares or the Conversion Stock will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 3.24. Absence of Changes. Except as specifically set forth in
this Agreement, since December 31, 1999: (a) the Company has not entered into
any transaction that was not in the ordinary course of business; (b) there has
been no material adverse change in the condition (financial or otherwise) of the
business, prospects, property, assets or liabilities of the Company; (c) there
has
<PAGE>
been no damage to, destruction of or loss of physical property (whether or not
covered by insurance) materially and adversely affecting the assets, financial
condition, operating results, prospects, business or operations of the Company;
(d) the Company has not declared or paid any dividend or made any distribution
on its stock, of redeemed or purchased or otherwise acquired any of its stock or
incurred any material tax liability; (e) the Company has not changed any
compensation arrangement or agreement with any of its key employees or executive
officers, or changed the rate of pay of its employees as a group, other than in
the ordinary course of business; (f) the Company has not received notice that
there has been a loss of a material customer of the Company; (g) the Company has
not changed or amended any contract by which the Company or any of its assets
are bound or subject that would have a material adverse effect on the Company;
(h) there has been no resignation or termination of employment of any officer or
key employee of the Company, and the Company does not know of any impending
resignation or termination of employment of any such officer or key employee
that if consummated would have a material adverse effect on the Company; (i)
there has been no labor dispute involving the Company or any of its employees
and, to the knowledge of the Company and none is pending or threatened; (j)
there has been no material and adverse change in the contingent obligation of
the Company (nor in any material contingent obligation of the Company regarding
any director, stockholder or key employee or officer of the Company) by way of
guaranty, endorsement, indemnity, warranty or otherwise; (k) there have been no
loans or guarantees made by the Company to any of its employees, officers or
directors other than travel advances and other advances made in the ordinary
course of business; (l) there has been no waiver by the Company of a valuable
right or of a debt owing to the Company that would have a material adverse
effect on the Company; (m) there has not been any satisfaction or discharge of
any material lien, claim or encumbrance or any payment of any material
obligation by the Company except in the ordinary course of business and that is
not material to the assets, properties, financial condition, operating results
or business of the Company; (n) the Company has not sold or transferred any
patent, service mark, trade name, copyright, trade secret or proprietary right
necessary for its business; and (o) there has been no other event or condition
of any character that would have a material adverse effect on the Company.
Section 3.25. Tax Returns. All federal, state and local tax returns, if
any, required to be filed by the Company have been timely filed, and all
federal, state and local taxes, if any, required to be paid with respect to the
periods covered by such returns have been paid.
Section 3.26. Environmental Safety and Laws. The Company, to the best of
its knowledge, is not in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety (except where the
<PAGE>
failure to be in compliance would not have a material adverse effect), and,
based on the Company's business as currently conducted and to the best of its
knowledge, no material expenditures are or will be required in order to comply
with any existing statute, law or regulation.
Section 3.27. Manufacturing and Marketing Rights. Except for the
Development, Supply and Distribution Agreement dated as of February 12, 1997
between the Company and SmithKline Beecham Corporation, the Company has not
granted rights to manufacture, produce, license, market or sell its products to
any person and is not bound by any agreement that affects the Company's
exclusive right to develop, manufacture, assemble, distribute, market or sell
its products.
Section 3.28. Compliance with ERISA. The Company has fulfilled its
obligations under the minimum funding standards of the Employee Retirement
Income Security Act of 1974, as amended from time to time ("ERISA"), and the
Internal Revenue Code of 1986, as amended from time to time (the "Code") with
respect to each of its employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding requirements under Section 412 of
the Code and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code with respect to each such plan.
ARTICLE 4
Representations and Warranties of the Purchaser
The Purchaser hereby severally represents and warrants to the Company that,
as of the date of each Closing at which the Purchaser consummates its purchase
of Shares hereunder,
Section 4.1. Preexisting Relationship with Company; Business and Financial
Experience. It (i) has a prior business and/or personal relationship with the
Company and/or its officers and directors, and (ii) by reason of its business or
financial experience or the business or financial experience of its professional
advisors who are unaffiliated with the Company, and who are not compensated by
the Company, it has the capacity to protect its own interests in connection with
the purchase of the Shares and underlying Conversion Stock.
Section 4.2. Blue Sky. The Purchaser's address set forth in Section
9.03(a) represents the Purchaser's true and correct state of domicile, upon
which
<PAGE>
the Company may rely for the purpose of complying with applicable "Blue Sky"
laws.
Section 4.3. Private Placement. (a) It understands that (i) the offering
and sale of the Shares and the Conversion Stock is intended to be exempt from
registration under the Securities Act pursuant to Section 4(2) of the Securities
Act and (ii) there is no public market or other market for the Preferred Shares
and there can be no assurance that the Purchaser will be able to sell or dispose
of the Preferred Shares.
(b) The Shares and the Conversion Stock to be acquired by the Purchaser
pursuant to this Agreement are being acquired for its own account without a view
to the public distribution of such Shares or the Conversion Stock or any
interest therein; provided that the Purchaser shall have the right at all times
to sell or otherwise dispose of all or any part of the Shares or the Conversion
Stock so acquired by the Purchaser pursuant to a registration statement, or
exemption therefrom, under the Securities Act.
(c) The Purchaser has sufficient knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and risks of
its investment in the Shares and the underlying Conversion Stock and the
Purchaser is capable of bearing the economic risks of such investment, including
a complete loss of its investment in the Shares and the Conversion Stock.
Section 4.4. Rule 144. It is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about the
Company, the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being effected through a
"broker's transaction" or in a transaction directly with a "market maker," and
the number of shares being sold during any three month period not exceeding
specified limitations.
Section 4.5. Restrictions on Transfer; Restrictive Legends. It
understands that the transfer of the Shares and the Conversion Stock is
restricted by applicable state and Federal securities laws and by the provisions
of the Registration Rights Agreement, and that the certificates representing the
Shares and the Conversion Stock will be imprinted with legends restricting
transfer except in compliance therewith.
Section 4.6. Access to Data. The Purchaser has been given the opportunity
to ask questions of, and receive answers from the Company
<PAGE>
concerning the terms and conditions of the Shares and the Conversion Stock and
other related matters. The Purchaser further represents and warrants to the
Company that the Company has made available to Purchaser or its agents all
documents and information relating to an investment in the Shares and the
Conversion Stock requested by or on behalf of Purchaser. In evaluating the
suitability of an investment in the Shares and the Conversion Stock, the
Purchaser has not relied upon any other representations or other information
(whether oral or written) made by or on behalf of the Company other than as
contemplated by the two preceding sentences. It understands that such
discussions, as well as any written information issued by the Company, were
intended to describe certain aspects of the Company's business and prospects but
were not a thorough or exhaustive description.
Section 4.7. Organization and Good Standing. The Purchaser is a
corporation duly organized and validly existing under the laws of the State of
California and is in good standing as a domestic corporation under the laws of
such state, and has the requisite corporate power and authority to own its
properties and carry on its business as now being conducted.
Section 4.8. Authorization. The Purchaser has full right, requisite
corporate power, authority and capacity to enter into this Agreement and the
Registration Rights Agreement, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. All action on the part of the
Purchaser's partners, board of directors, and stockholders, as applicable,
necessary for the authorization, execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Purchaser, the purchase
of and payment for the Shares and the Conversion Stock and the performance of
all of the Purchaser's obligations hereunder and under the Registration Rights
Agreement has been taken or will be taken prior to the First Closing. This
Agreement and the Registration Rights Agreement, when executed and delivered by
the Purchaser, shall constitute valid and binding obligations of the Purchaser,
enforceable in accordance with their terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
Section 4.9. Brokers or Finders. Neither the Company nor the Purchaser,
as a result of any action taken by the Purchaser, have incurred or will incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or the
transactions contemplated hereby.
ARTICLE 5
<PAGE>
Conditions to Closing of the Purchaser
The Purchaser's obligation to purchase the Shares is, unless waived in
writing by the Purchaser, subject to the fulfillment as of the date of the First
Closing, and each Subsequent Closing, of the following conditions:
Section 5.1. Representations and Warranties Correct. The representations
and warranties made by the Company in Section 3 hereof shall be true and correct
in all material respects as of the date of the Closing at which the Purchaser
consummates its purchase of Shares hereunder and the Purchaser shall have
accepted the exceptions, if any, to the Company's representations and warranties
as updated in Schedule 1 at each Closing.
Section 5.2. Covenants. All covenants, agreements and conditions
contained in this Agreement, the License Agreement and the Registration Rights
Agreement to be performed or complied with by the Company on or prior to the
First Closing Date shall have been performed or complied with in all material
respects.
Section 5.3. Consents, Permits and Waivers. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement, the License
Agreement and the Registration Rights Agreement (except for such as may be
properly obtained subsequent to such Closing).
Section 5.4. Opinion of the Company's Counsel. The Purchaser shall have
received from Morgan, Lewis & Bockius LLP, counsel to the Company, an opinion
addressed to the Purchaser, dated as of the date of the First Closing and each
Subsequent Closing at which the Purchaser consummates its purchase of Shares
hereunder, in a form agreed to by the parties.
Section 5.5. Blue Sky. The Company shall have obtained all necessary Blue
Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Shares and the
underlying Conversion Stock.
Section 5.6. Certificate of Designations. The Certificate of Designations
shall have been filed in the office of the Delaware Secretary of State.
Section 5.7. Legal Matters. All material matters of a legal nature which
pertain to this Agreement and the transactions contemplated hereby shall have
been reasonably approved by counsel to the Purchaser.
<PAGE>
Section 5.8. Registration Rights Agreement. The Company shall have
executed and delivered the Registration Rights Agreement in substantially the
form attached hereto as Exhibit B.
Section 5.9. Compliance Certificate. The Company shall have delivered to
the Purchaser a certificate of the Company executed by the Chief Executive
Officer of the Company, dated as of the date of the Closing at which the
Purchaser consummates its purchase of Shares hereunder in substantially the form
attached hereto as Exhibit C.
Section 5.10. License Agreement. The Company and the Purchaser shall have
entered into the License Agreement.
Section 5.11. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated in connection with
the Purchaser's purchase of the Shares and all documents incident thereto shall
be reasonably satisfactory in form and substance to the Purchaser and the
Purchaser's counsel, and they shall have received all such counterpart original
and certified or other copies of such documents as they may reasonably request.
Section 5.12. Delivery of Stock Certificates. The Company shall have
caused the delivery to the Purchaser of stock certificates representing the
Purchaser's ownership of the Shares.
ARTICLE 6
Conditions To Closing of the Company
The Company's obligation to sell and issue the Shares at each Closing is,
unless waived in writing by the Company, subject to the fulfillment as of the
date of such Closing of the following conditions:
Section 6.1. Representations and Warranties Correct. The representations
made in Section 4 hereof by the Purchaser purchasing at such Closing shall be
true and correct as of the date of such Closing.
Section 6.2. Covenants. All covenants, agreements, and conditions
contained in this Agreement to be performed or complied with by the Purchaser on
or prior to the date of such Closing shall have been performed or complied with
in all material respects.
<PAGE>
Section 6.3. Blue Sky. The Company shall have obtained all necessary Blue
Sky law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Shares and the
underlying Conversion Stock.
Section 6.4. Certificate of Designations. The Certificate of Designations
shall have been filed in the office of the Delaware Secretary of State.
Section 6.5. Legal Matters. All material matters of a legal nature which
pertain to this Agreement and the transactions contemplated hereby shall have
been reasonably approved by counsel to the Company.
Section 6.6. Registration Rights Agreement. The Purchaser shall have
executed and delivered the Registration Rights Agreement in substantially the
form attached hereto as Exhibit C.
Section 6.7. License Agreement. The Company and the Purchaser shall have
entered into the License Agreement.
ARTICLE 7
Financing upon Occurrence of A Merger Event or A Capitalization Event
Section 7.1. Loans by Purchaser. Upon the termination of Purchaser's
obligations to purchase Preferred Shares due to the occurrence of a either a
Merger Event or a Capitalization Event, Purchaser shall provide Seller with the
quarterly financing determined by the Joint Steering Committee in the form of
loans (each a "Loan") on each Subsequent Closing that occurs after the
occurrence of a Merger Event or a Capitalization Event (each such Subsequent
Closing, a "Loan Closing"). Seller shall provide Purchaser with a promissory
note substantially in the form attached hereto as Exhibit D to evidence each
Loan.
Section 7.2. Closing Conditions for Loans. The conditions to closing
each Loan are as follows:
(a) The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the date of the
Loan Closing at which the Purchaser issues a Loan hereunder and the Purchaser
shall have accepted the exceptions, if any, to the Company's representations and
warranties as updated in Schedule 1 at each Loan Closing;
<PAGE>
(b) The Purchaser shall have received from Morgan, Lewis & Bockius LLP,
counsel to the Company, an opinion addressed to the Purchaser, dated as of the
date of each Loan Closing at which the Purchaser issues a Loan hereunder, in a
form agreed to by the parties;
(c) The Company shall have performed its obligations under this
Agreement, the Registration Rights Agreement and the License Agreement;
(d) The Company shall have delivered to the Purchaser a certificate of
the Company executed by the Chief Executive Officer of the Company, dated as of
the date of the Loan Closing at which the Purchaser issues a Loan hereunder, in
substantially the form attached hereto as Exhibit C;
(e) The Company shall have obtained all governmental approvals required
in connection with the lawful sale and issuance of the Note(s);
(f) The sale and issuance by the Company, and the purchase by the
Purchaser, of the Note(s) shall be legally permitted by all laws and regulations
to which the Purchaser and the Company are subject; and
(g) The Company shall not be in default on any Note(s).
ARTICLE 8
Covenants of Purchaser and the Company
Section 8.1. Restrictions on Sales of Common Stock During Calculation of
Conversion Price. Purchaser, as a holder of Preferred Shares, shall comply with
the restrictions on sale of its shares of Common Stock as set forth in
paragraphs 5(a) and 5(d) of the Certificate of Designations.
Section 8.2. No Superior or Parity Debt. At any time that any Note is
outstanding, the Company shall not, without prior written consent of the
Purchaser, enter into any form of indebtedness that will be on parity with, or
superior to, the indebtedness evidenced by the Notes.
Section 8.3. HSR Filing. The Company shall fully cooperate with the
Purchaser to effectuate any filing that may be required at any time under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 in connection with
Purchaser's investment in the Company.
<PAGE>
ARTICLE 9
Miscellaneous
Section 9.1. Governing Law. This Agreement shall be governed in all
respects by the internal laws of the State of New York without regard to
conflict of laws provisions.
Section 9.2. Entire Agreement; Amendment. This Agreement, including the
exhibits hereto, constitutes the full and entire understanding and agreement
among the parties with regard to the subjects hereof and thereof, and no party
shall be liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or therein.
Except as expressly provided herein, neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought.
Section 9.3. Notices, Etc. All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by facsimile
transmission, by hand or by messenger, addressed:
(a) if to a Purchaser, to:
Genentech, Inc.
1 DNA Way
South San Francisco, CA 94080
Attn: Stephan Juelsgaard
Fax: (650) 952-9881
or at such other address as such Purchaser shall have furnished to the Company,
with a copy to:
Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, CA 94025
Attn: Daniel G. Kelly, Jr., Esq.
Fax: (650) 752-2113
<PAGE>
(b) if to the Company, to:
Magainin Pharmaceuticals Inc.
5110 Campus Drive
Plymouth Meeting, PA 19462-1123
Attn: Michael R. Dougherty
Fax: (610) 941-5399
or at such other address as the Company shall have furnished to the Purchaser,
with a copy to:
Morgan, Lewis & Bockius, LLP
1701 Market Street
Philadelphia, PA 19103
Attn: David R. King, Esq.
Fax: (215) 963-5299
Each such notice or other communication shall for all purposes of this Agreement
be treated as effective or having been given when received if delivered
personally, if sent by facsimile, the first business day after the date of
confirmation that the facsimile has been successfully transmitted to the
facsimile number for the party notified, or, if sent by mail, at the earlier of
its receipt or 72 hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
Section 9.4. Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party,
upon any breach or default of another party under this Agreement, shall impair
any such right, power or remedy of such party nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any breach or default under
this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.
Section 9.5. Expenses. The Company and the Purchaser shall bear its own
expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby.
<PAGE>
Section 9.6. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, and all of which together
shall constitute one instrument.
Section 9.7. Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision, which shall be replaced with an enforceable
provision closest in intent and economic effect as the severed provision;
provided that no such severability shall be effective if it materially changes
the economic benefit of this Agreement to any party.
Section 9.8. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
<PAGE>
The foregoing agreement is hereby executed effective as of the date first
set forth above.
"COMPANY" "PURCHASER"
Magainin Pharmaceuticals Inc., Genentech, Inc.,
a Delaware corporation a Delaware corporation
By: /s/ Michael R. Dougherty By: /s/ Arthur D. Levinson
------------------------------ ----------------------------
Michael R. Dougherty Arthur D. Levinson, Ph.D.
President and Chief Executive Chairman and Chief Executive
Officer Officer
<PAGE>
SCHEDULE 1
Schedule of Exceptions
----------------------
The following are the exceptions to the representations and warranties of
Magainin Pharmaceuticals Inc. (the "Company") set forth in Section 3 of the
Series A Preferred Stock Purchase Agreement dated as of April 28, 2000 (the
"Agreement") to which this is an exhibit. All capitalized terms used and not
otherwise defined herein shall have the meanings given them in the agreement.
With respect to each Subsequent Closing, this Schedule of Exceptions shall be
deemed to have been amended by any supplemental disclosure statements so
designated and delivered to the Purchaser in a Subsequent Closing prior to such
closing. The section numbers below correspond to the section numbers in the
Agreement.
None
<PAGE>
SCHEDULE 2
Schedule of Licenses, Options and Material Agreements Relating to the Subject of
--------------------------------------------------------------------------------
the License Agreement
---------------------
1. License Agreement between Ludwig Institute for Cancer Research and Magainin
Pharmaceuticals Inc. dated December 20, 1996.
<PAGE>
EXHIBIT A
---------
(To Stock Purchase Agreement)
Certificate of Designations
---------------------------
Attached.
<PAGE>
EXHIBIT B
---------
(To Stock Purchase Agreement)
Registration Rights Agreement
-----------------------------
Attached.
<PAGE>
EXHIBIT C
---------
(To Stock Purchase Agreement)
[Compliance Certificate]
----------------------
MAGAININ PHARMACEUTICALS INC.
Executive Officer's Certificate
I, ____________________, ______________ of Magainin Pharmaceuticals Inc., a
Delaware corporation ("Seller"), do hereby certify as follows:
1. The representations and warranties of Seller contained in the Stock
Purchase Agreement dated as of April 28, 2000 (the "Stock Purchase Agreement")
between Seller and Genentech, Inc., a Delaware corporation ("Buyer"), and in any
certificate or other writing delivered by Seller pursuant to the Stock Purchase
Agreement, are true at and as of the date hereof, as if made at and as of the
date hereof.
2. All covenants, agreements and conditions contained in the Stock
Purchase Agreement, the Registration Rights Agreement dated as of April 28, 2000
(the "Registration Rights Agreement") between Seller and Buyer and in the
Collaborative Research and License Agreement dated as of April 28, 2000 (the
"License Agreement") between Seller and Buyer, have been performed or complied
with in all material respects.
3. Seller has obtained all consents, permits and waivers necessary or
appropriate for consummation of the transactions contemplated by the Stock
Purchase Agreement, the Registration Right Agreement and the License Agreement.
4. Seller has performed in all material respects all of its obligations
under the Stock Purchase Agreement, the Registration Rights Agreement and the
License Agreement required to be performed by it on or prior to the date hereof.
IN WITNESS WHEREOF, I have signed this certificate.
Dated: [ ], 2000
<PAGE>
EXHIBIT D
---------
(To Stock Purchase Agreement)
[Form of Note]
------------
THE SECURITIES REPRESENTED BY THIS NOTE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
PROMISSORY NOTE
$_________ __________, ____
Philadelphia, Pennsylvania
For Value Received, Magainin Pharmaceuticals Inc., a Delaware corporation
("Borrower"), hereby unconditionally promises to pay to the order of Genentech,
Inc., A Delaware Corporation ("Lender"), in lawful money of the United States of
America and in immediately available funds, the principal sum of [ ]
dollars ($[ ]) (the "Note"), together with accrued and unpaid interest
thereon, payable on the dates and in the manner set forth below.
(a) Principal Repayment. The outstanding principal amount of the Note
shall be payable one year after the date of issuance (the "Maturity Date"),
provided, however, that the Company may at any time prepay in whole or in part
the outstanding principal amount under the Note, plus accrued and unpaid
Interest, without penalty.
(b) Interest Rate. Borrower further promises to pay interest on the
sum of the unpaid principal balance of the Note outstanding on each day, from
the date of this Note until all such principal amounts shall have been repaid in
full, which interest shall be payable at the rate of [2% plus the highest prime
rate of major banking institutions as reported in the Federal Reserve H.15
weekly bulletin in the three (3) month period immediately preceding the date of
issuance of the Note] per annum. Interest shall be payable at the Maturity Date
and shall be calculated on the basis of a 360-day year for the actual number of
days elapsed.
<PAGE>
(c) Place of Payment. All amounts payable hereunder shall be payable
to Lender at the address it specifies to Borrower in writing.
(d) Application of Payments. All payments on this Note shall be
applied first to accrued interest and thereafter to the outstanding principal
balance hereof.
(e) Default. Borrower's failure to pay timely any of the principal
amount due under this Note on the date the same becomes due and payable or any
accrued interest or other amounts due under this Note on the date the same
becomes due and payable or within ten (10) calendar days after written receipt
of notice of failure to pay shall constitute a default under this Note (an
"Event of Default"). If an Event of Default is not cured within thirty (30)
days of the receipt of notice of failure to pay, all unpaid principal, accrued
interest and other amounts owing thereunder shall, at the option of Lender, be
immediately collectible by Lender pursuant to applicable law.
(f) Assignment by Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by Borrower without the prior written consent of
Lender.
(g) Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier or personal delivery at the
respective addresses of the parties as set forth herein or on the register
maintained by Borrower. Any party hereto may by notice so given change its
address for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
(h) Waiver. Borrower waives presentment and demand for payment, notice
of dishonor, protest and notice of protest of this Note, and shall pay all costs
of collection when incurred, including, without limitation, reasonable
attorneys' fees, costs and other expenses. The right to plead any and all
statutes of limitations as a defense to any demands hereunder is hereby waived
to the fullest extent permitted by law.
(i) Attorney's Fees. In the event of default by the Borrower (or its
assignee) in the payment of interest due on this Note, Lender shall be entitled
to receive and Borrower (or its assignee) agrees to pay all costs of collection
incurred by Lender, including, without limitation, reasonable attorney"s fees
for consultation and suit.
<PAGE>
(j) Governing Law. This Note shall be governed by, and construed and
enforced in accordance with, the laws of the State of California, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction.
(k) Successors and Assigns. The provisions of this Note shall inure to
the benefit of and be binding on any successor to Borrower and shall extend to
any holder hereof.
IN WITNESS WHEREOF, the Borrower has executed this Note as of the date
first written above.
BORROWER
Magainin Pharmaceuticals Inc.
By: _________________________
