<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
MicroCarb Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
000594 9421
- --------------------------------------------------------------------------------
(CUSIP Number)
Gregory C. Zakarian, Vice President, CFO, MicroCarb Inc., 300 Professional
Drive, Gaithersburg, Maryland 20879, Telephone (301) 590-0731
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
May 7, 1996
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP NO. 000594 9421 PAGE OF PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
SmithKline Beecham Biologicals Manufacturing s.a.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Belgium
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7 SOLE VOTING POWER
NUMBER OF
SHARES 4,793,685
BENEFICIALLY -----------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING -0-
PERSON -----------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
4,793,685
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10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,793,685
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
39%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 2 of 7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SmithKline Beecham Biologicals Manufacturing s.a.
Schedule 13D
ITEM 1. SECURITY AND ISSUER
(a) TITLE OF CLASS OF SECURITIES
Common Stock, $.01 par value per share
(b) NAME AND ADDRESS OF PRINCIPAL EXECUTIVE OFFICES
OF ISSUER
MicroCarb Inc.
300 Professional Drive
Gaithersburg, Maryland 20879
ITEM 2. IDENTITY AND BACKGROUND
(a) NAMES OF REPORTING PERSON
SmithKline Beecham Biologicals Manufacturing s.a. (SBBM), a company
organized under the laws of Belgium.
(b) RESIDENCE OR BUSINESS ADDRESS
The principal business address for SBBM is:
Rue de L'Institut 89
B-1330 Rixensart
Belguim
(c) PRESENT PRINCIPAL OCCUPATION/EMPLOYMENT AND
NAME, PRINCIPAL BUSINESS AND ADDRESS OF
ORGANIZATION IN WHICH SUCH EMPLOYMENT IS
CONDUCTED
SBBM is engaged in commercial, industrial and financial activities
relating to real and personal property for SmithKline Beecham (SB)'s worldwide
vaccines business, SmithKline Beecham Biologicals.
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SmithKline Beecham Biologicals Manufacturing s.a.
Schedule 13D
(d) CRIMINAL CONVICTIONS IN THE PREVIOUS FIVE YEARS
None
(e) VIOLATION OF FEDERAL OR STATE SECURITIES LAWS
None
(f) CITIZENSHIP
Not Applicable
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER
CONSIDERATION
Source of Funds: Working Capital
Consideration: US$3 million.
ITEM 4. PURPOSE OF TRANSACTION
On May 7, 1996, SB, through its affiliates, SBBM and SmithKline Beecham
Corporation (SB CORP), entered into a series of agreements with MicroCarb Inc.
(MICRO) to form MicroCarb Human Vaccines Inc., a Delaware corporation (MHVI),
grant certain licenses to MHVI and SB CORP to develop and commercialize certain
bacterial human vaccines, sell certain shares of the common stock of MHVI to
SBBM, grant SBBM an option to acquire certain additional shares of MHVI, grant
SBBM an option to exchange certain shares of common stock of MHVI owned by it
for certain shares of common stock of MICRO and provide a warrant to SBBM to
purchase certain shares of common stock of MICRO, all as summarized below.
On May 7, 1996, MICRO granted a license to MHVI with respect to certain
intellectual property and technology owned by MICRO and applicable to human
vaccines. This license constitutes a transfer of a material amount of the
assets of MICRO. MICRO received 737.5 shares of the common stock of MHVI
(representing 73.75% of the outstanding capital stock of MHVI) in exchange for
such license.
On May 7, 1996, SBBM acquired 262.5 shares of the common stock of MHVI
(representing 26% of the outstanding capital stock of MHVI) pursuant to a
stock purchase agreement (the "Stock Purchase Agreement") among SBBM, MHVI
<PAGE> 5
and MICRO. The Stock Purchase Agreement provides, among other things, that
SBBM may acquire from MICRO (i) 87.5 shares of the common stock of MHVI
(representing 8.75% of the outstanding capital stock of MHVI) for $1,000,000 on
any date prior to November 1, 1997 and (ii) 87.5 shares of the common stock of
MHVI (representing 8.75% of the outstanding capital stock of MHVI) for
$1,000,000 on any date prior to November 1, 1998.
MICRO granted SBBM the option to exchange up to a total of 350 shares of
the common stock of MHVI (representing 35% of the outstanding capital stock of
MHVI) for a total of 4,793,685 shares of the common stock of MICRO pursuant to
the terms of an exchange option agreement (the "Exchange Option Agreement")
between MICRO and SBBM. As noted in the preceding paragraph, SBBM presently
owns 262.5 shares of the common stock of MHVI.
On May 7, 1996 SBBM acquired a warrant (the "Warrant") to acquire certain
shares of the common stock of MICRO. The number of shares of common stock of
MICRO that SBBM may acquire under the Warrant is dependent upon several
factors, including (i) the number of shares of common stock of MICRO acquired
by certain holders of options (the "Index Options") and warrants (the "Index
Warrants") to purchase shares of common stock of MICRO by virtue of the
exercise of their options and warrants, (ii) whether or not SBBM purchases
either or both of the two additional allotments of 87.5 shares of common stock
of MHVI referred to above and (iii) whether or not SB CORP provides certain
research and development funding to MICRO.
All of the securities acquired have been purchased for investment
purposes. SBBM intends to review from time to time the business affairs and
financial position of MICRO. Decisions for future investments will depend on
the performance of MICRO and feasibility of the technology developed by MHVI
rather than on general economic and industry conditions. Based on such
evaluation and review, and SBBM's own financial plans, SBBM may consider from
time to time various alternative courses of action. Subject to the standstill
arrangement described in Item 5 below, such action may include the acquisition
of additional shares through open market purchases, privately negotiated
transactions or otherwise. Alternatively, such actions may involve the sale of
all or a portion of the shares in the open market, in privately negotiated
transactions, through a public offering or otherwise.
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SmithKline Beecham Biologicals Manufacturing s.a.
Schedule 13D
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) AMOUNT AND PERCENT BENEFICIALLY OWNED
Name No. of Shares Percent
---- ------------- -------
SBBM 4,793,685 39% (1)
(1) As noted in Item 4, SBBM presently owns 262.5 shares of common stock of
MHVI. SBBM has the right under the Exchange Option Agreement to exchange such
262.5 shares of common stock of MHVI for 3,595,264 shares of common stock of
MICRO. This right could be exercised within the next 60 days.
As noted in Item 4, SBBM has the right under the Stock Purchase Agreement
to purchase an additional 87.5 shares of the common stock of MHVI and SBBM also
has the right under the Exchange Option Agreement to exchange such 87.5 shares
of common stock of MHVI for 1,198,421 shares of common stock of MICRO. These
rights could be exercised within the next 60 days.
SBBM cannot presently exercise the Warrant and purchase shares of common
stock of MICRO thereunder as the holders of Index Options and Index Warrants
have not, to the knowledge of SBBM, exercised such options and warrants and
purchased shares of common stock of MICRO.
(b) POWER TO VOTE AND DISPOSE OF SHARES
In the event that SBBM acquires shares of common stock of MICRO pursuant
to the exercise of its rights under the Exchange Option Agreement or the
Warrant, SBBM would have the sole power to vote and dispose of all such shares
of common stock of MICRO. SBBM has no power to vote or dispose of shares of
common stock of MICRO. SBBM has no power to vote or dispose of shares of
common stock of MICRO until SBBM acquires shares of common stock of MICRO
pursuant to the exercise of its rights under the Exchange Option Agreement or
the Warrant.
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SmithKline Beecham Biologicals Manufacturing s.a.
Schedule 13D
For a ten-year period expiring on May 7, 2006, MICRO has a first right of
offer on any sales by SBBM of shares of MICRO common stock in excess of 5% of
the then outstanding number of shares of common stock as specified in Section
11.8 of the Stock Purchase Agreement.
(c) TRANSACTIONS IN THE CLASS OF SECURITIES
None
(d) RIGHT TO RECEIVE OR POWER TO DIRECT THE RECEIPT
OF DIVIDENDS FROM, OR PROCEEDS FROM THE SALE
OF, SUCH SECURITIES
None known by SB
(e) DATE ON WHICH CEASED TO BE BENEFICIAL OWNER OF
MORE THAN 5% OF SECURITIES
Not applicable
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Please see the description in Item 4 of the rights of SBBM (i) under the
Stock Purchase Agreement to acquire additional shares of common stock of MHVI
and (ii) under the Exchange Option Agreement to exchange shares of common stock
of MHVI for shares of common stock of SBBM. Please see the description in Item
5(b) of MICRO's right of first offer with respect to sales by SBBM of shares of
common stock of MICRO.
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SmithKline Beecham Biologicals Manufacturing s.a.
Schedule 13D
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1. Stock Purchase Agreement dated May 6, 1996
Exhibit 2. Exchange Option Agreement dated May 6, 1996
Exhibit 3. Warrant
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
SMITHKLINE BEECHAM BIOLOGICALS
MANUFACTURING s.a.
By: /s/Edward J. Buthusiem
-----------------------
Edward J. Buthusiem
Attorney-in-fact
Date: May 16, 1996
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(LOGO)
SmithKline Beecham
Pharmaceuticals
SB Bio Manufacturing
POWER OF ATTORNEY
-----------------
THIS DEED is made on April 30, 1996 by SMITHKLINE BEECHAM BIOLOGICALS
MANUFACTURING S.A. ("the Company") whose registered office is at Rixensart,
BELGIUM, rue de l'Institut, 89.
1. The Company hereby irrevocably appoints Mr. Edward J. BUTHUSIEM (the
"Attorney"), as its true and lawful Attorney for a period of two (2) months
from the date hereof to execute (whether under hand or under seal), make and to
in its name or otherwise on its behalf all deeds, agreements, instruments, acts
and things which may be necessary or desirable to carry into effect Definite
Agreements and other transactions contemplated by a Letter of Intent dated
December 21, 1995 (As Amended) signed by SmithKline Beecham Biologicals S.A.,
an Affiliate of the Company, of Rixensart, Belgium and MicroCarb Inc., of
Gaithersburg, Maryland 20879, UNITED STATES OF AMERICA.
2. All acts of the Attorney pursuant to any of the powers conferred upon the
Attorney shall be valid and binding on the Company and its successors and
assigns for all purposes and the Company undertakes to indemnify and keep
indemnified the attorney from and against all costs, claims, expenses,
proceedings, obligations and liabilities incurred or suffered by the Attorney
by reason directly or indirectly of the exercise or purported exercise of any
powers conferred upon the Attorney hereunder.
IN WITNESS whereof this Deed has been executed by the Company the day and year
first above written.
SMITHKLINE BEECHAM BIOLOGICALS MANUFACTURING S.A.
/s/ Jean Stephenne /s/ Jean-Pierre Suin
- ------------------------- ------------------------------
Jean STEPHENNE Jean-Pierre SUIN
Director Director
<PAGE> 1
EXHIBIT 1
CONFIDENTIAL TERMS HAVE BEEN OMITTED
AND FILED SEPARATELY WITH THE COMMISSION
STOCK PURCHASE AGREEMENT
by and among
MicroCarb Human Vaccines Inc.
MicroCarb Inc.
and
SmithKline Beecham Biologicals Manufacturing s.a.
May 6, 1996
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TABLE OF CONTENTS
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ARTICLE I INTERPRETIVE PROVISIONS................................. 2
Section 1.1 Definitions............................................. 2
Section 1.2 Interpretive Rules...................................... 7
ARTICLE II GRANT OF LICENSES AND EXCHANGE FOR
THE PURCHASED STOCK..................................... 8
Section 2.1 Grant of SKB Transitory License......................... 8
Section 2.2 Purchase Price.......................................... 8
Section 2.3 Payment of the Purchase Price........................... 8
Section 2.4 Assignment of SKB Transitory License;
Issuance of SKB Purchased Stock......................... 8
Section 2.5 Grant of MicroCarb-Vaccines License;
Issuance of MicroCarb Purchased
Stock................................................... 8
Section 2.6 Tax Matters............................................. 9
ARTICLE III THE CLOSING............................................. 9
Section 3.1 Closing................................................. 9
Section 3.2 Deliveries by the Related Parties....................... 9
Section 3.3 Deliveries by SKB....................................... 10
Section 3.4 Deliveries by Vaccines.................................. 11
ARTICLE IV RELATED AGREEMENTS...................................... 11
Section 4.1 Exchange Option Agreement............................... 11
Section 4.2 Warrant................................................. 11
Section 4.3 Registration Rights Agreement........................... 11
Section 4.4 SKB Transitory License ................................. 12
Section 4.5 MicroCarb-Vaccines License ............................. 12
Section 4.6 Amendment of Transitory License
Agreement and Restatement of
Rights and Obligations under
the MicroCarb-Vaccines
License Agreement ...................................... 12
Section 4.7 Research and Development, Research
Support and License Agreement........................... 12
Section 4.8 Stockholders Agreement.................................. 12
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ARTICLE V REPRESENTATIONS AND WARRANTIES CONCERNING VACCINES...... 13
Section 5.1 Valid and Binding Agreements............................ 13
Section 5.2 Corporate Organization.................................. 13
Section 5.3 Capitalization.......................................... 14
Section 5.4 Subsidiaries and Affiliates............................. 14
Section 5.5 No Violation, Etc....................................... 14
Section 5.6 Consents and Approvals.................................. 15
Section 5.7 Broker's or Finder's Fees............................... 15
ARTICLE VI REPRESENTATIONS AND WARRANTIES
OF MICROCARB............................................ 15
Section 6.1 Valid and Binding Agreements............................ 15
Section 6.2 Corporate Organization.................................. 16
Section 6.3 Capitalization.......................................... 16
Section 6.4 Subsidiaries and Affiliates............................. 17
Section 6.5 No Violation, Etc....................................... 18
Section 6.6 Consents and Approvals.................................. 18
Section 6.7 Contracts and Commitments............................... 18
Section 6.8 Intellectual Property................................... 19
Section 6.9 Disclosure.............................................. 21
Section 6.10 Environmental Matters................................... 21
Section 6.11 Broker's or Finder's Fees............................... 22
Section 6.12 Adequacy and Sufficiency of Assets...................... 22
Section 6.13 Commission Documents.................................... 22
Section 6.14 Authorization of Reserved Shares........................ 22
Section 6.15 Litigation.............................................. 22
Section 6.16 Insurance............................................... 23
Section 6.17 Employees............................................... 23
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF
SKB..................................................... 23
Section 7.1 Organization, Standing and Power........................ 23
Section 7.2 Valid and Binding Agreements............................ 23
Section 7.3 No Violation............................................ 23
Section 7.4 Consents and Approvals.................................. 24
Section 7.5 Broker's or Finder's Fees............................... 24
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ARTICLE VIII COVENANTS............................................... 24
Section 8.1 Compliance with Law..................................... 24
Section 8.2 Operation of Business Prior to
Closing................................................. 25
Section 8.3 Access.................................................. 25
Section 8.4 Broker's or Finder's Fees............................... 25
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS
OF SKB.................................................. 25
Section 9.1 Representations and Warranties.......................... 25
Section 9.2 Covenants, Agreements and Conditions.................... 26
Section 9.3 Corporate Proceedings; Consents
and Approvals........................................... 26
Section 9.4 Proceedings............................................. 26
Section 9.5 Deliveries.............................................. 26
Section 9.6 Opinion................................................. 26
Section 9.7 Insurance .............................................. 26
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE RELATED PARTIES.................................. 27
Section 10.1 Representations and Warranties.......................... 27
Section 10.2 Covenants, Agreements and Conditions.................... 27
Section 10.3 Proceedings............................................. 27
Section 10.4 Corporate Proceedings; Consents and
Approvals............................................... 27
Section 10.5 Deliveries.............................................. 28
ARTICLE XI POST CLOSING MATTERS AND COVENANTS...................... 28
Section 11.1 Indemnification......................................... 28
Section 11.2 Purchase of Additional Shares........................... 30
Section 11.3 Restrictions on the Transfer of
Vaccines Common Stock................................... 31
Section 11.4 Preemptive Rights....................................... 32
Section 11.5 Further Assurances...................................... 32
Section 11.6 Sale and Leaseback Agreement............................ 32
Section 11.7 Insurance............................................... 33
Section 11.8 Standstill Obligations.................................. 33
Section 11.9 Transfer by SKB of Common Stock......................... 35
Section 11.10 Non-Solicitation of Employees........................... 36
Section 11.11 Use of the Purchase Price, First Purchase
Option Consideration and Second Purchase
Option Consideration.................................... 36
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iv
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ARTICLE XII MISCELLANEOUS........................................... 36
Section 12.1 Survival of Representations, Warranties and Agreements. 36
Section 12.2 Concerning the Purchase Price .......................... 37
Section 12.3 Notices................................................. 37
Section 12.4 Governing Law........................................... 38
Section 12.5 Modification; Wavier.................................... 38
Section 12.6 Entire Agreement........................................ 39
Section 12.7 Assignment; Successors and Assigns...................... 39
Section 12.8 Public Announcements.................................... 39
Section 12.9 Expenses................................................ 39
Section 12.10 Severability............................................ 39
Section 12.11 No Third Party Beneficiary.............................. 39
Section 12.12 Arbitration............................................. 39
Section 12.13 Specific Performance.................................... 40
Section 12.14 Execution in Counterpart................................ 41
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v
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") dated May 6, 1996 and
effective as of March 1, 1996 (the "Effective Date"), by and among SmithKline
Beecham Biologicals Manufacturing s.a., a Belgian company ("SKB"), MicroCarb
Human Vaccines Inc., a Delaware corporation ("Vaccines") and MicroCarb Inc., a
Delaware corporation ("MicroCarb," together with Vaccines shall be referred to
herein as the "Related Parties").
RECITALS
WHEREAS, SKB and its Affiliates are engaged in the business of
marketing human vaccines.
WHEREAS, MicroCarb is the holder of certain Intellectual Property
relating to its research and development of human vaccines products, including
certain third-party licenses related to such Intellectual Property.
WHEREAS, SKB and MicroCarb desire to enter into a business relationship
with each other for the research, development, marketing and licensing of the
Intellectual Property (as defined below) for certain human vaccines products in
accordance with this Agreement and the agreements contemplated by this
Agreement.
WHEREAS, on the date hereof, MicroCarb and SKB will enter into a
license agreement (the "SKB Transitory License"), pursuant to which MicroCarb,
among other things, grants SKB a royalty-free (subject to the HSC Licenses, as
hereinafter defined), irrevocable, perpetual and exclusive right and license in
the Intellectual Property in the Field in a territory which consists of the
United Kingdom, Belgium, France, Germany, Italy and Spain, with the right to
grant sublicenses, in consideration for the payment by SKB to MicroCarb of a
total of Three Million Dollars ($3,000,000).
WHEREAS, on the date hereof, MicroCarb and Vaccines will enter into a
license agreement (the "MicroCarb-Vaccines License"), pursuant to which
MicroCarb, among other things, grants Vaccines a royalty-free, irrevocable,
perpetual and exclusive right and license in the Intellectual Property in the
Field in a territory which consists of the entire world other than the United
Kingdom, Belgium, France, Germany, Italy and
<PAGE> 7
Spain, with the right to grant sublicenses in exchange for Seven Hundred and
Thirty-Seven and One-Half (737.5) shares (the "MicroCarb Purchased Stock") of
common stock, par value $.01 per share of Vaccines (the "Vaccines Common
Stock").
WHEREAS, on the date hereof, SKB, Vaccines and MicroCarb will execute
an assignment of transitory license agreement and restatement of rights and
obligations under the MicroCarb- Vaccines License pursuant to which (i) SKB will
agree to assign to Vaccines all of its rights, responsibilities and obligations
of the SKB Transitory License in exchange for Two Hundred and Sixty-Two and
One-Half (262.5) shares (the "SKB Purchased Stock") of Vaccines Common Stock,
(ii) MicroCarb and Vaccines will agree to consolidate and clarify their
respective rights under the MicroCarb-Vaccines License to reflect that the
territory covered thereunder shall include every country in the world, and (iii)
MicroCarb and Vaccines will agree to irrevocably release, hold harmless and
indemnify SKB from any claims arising out of the SKB Transitory License.
WHEREAS, on the date hereof, MicroCarb, Vaccines and SmithKline Beecham
Corporation, a Pennsylvania corporation and affiliate of SKB ("SmithKline") will
enter into a Research and Development, Research Support and License Agreement,
pursuant to which (i) Vaccines grants SmithKline an exclusive license with
respect to the Intellectual Property in the SBB Field for certain human vaccines
products, (ii) SmithKline agrees to make certain research and development
payments to MicroCarb, (iii) MicroCarb agrees to provide certain research
support services to SmithKline, and (iv) following the satisfaction of certain
conditions precedent, SmithKline agrees to make certain milestone and royalty
payments to Vaccines.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants which are to be made and performed by
the respective parties, it is hereby agreed as follows:
ARTICLE I--INTERPRETIVE PROVISIONS
Section 1.1 Definitions.
The following terms when used in this Agreement have the meanings set
forth below:
2
<PAGE> 8
(a) "13D Group" means any group of Persons formed for the purpose of
acquiring, holding, voting or disposing of Common Stock (or any other class of
the Equity Securities) which would be required under the Exchange Act to file a
statement on Schedule 13D with the Commission as a "person" within the meaning
of Section 13(d)(3) of the Exchange Act if such group beneficially owned
sufficient securities to require such a filing under the Exchange Act.
(b) "Affiliate" of another Person means (i) a Person which directly or
indirectly owns, is owned by or is under common ownership with another Person to
the extent of at least fifty percent (50%) of the equity (or such lesser
percentage which is the maximum allowed to be owned by a foreign corporation in
a particular jurisdiction) having the power to vote on or direct the affairs of
the entity and any Person actually controlled by, controlling or under common
control with another Person.
(c) "Assignment and Restatement Agreement" has the meaning set forth
in Section 4.6.
(d) "Business" means all research, development and other activities to
be conducted by MicroCarb and/or Vaccines pursuant to the Research and
Development, Research Support and License Agreement.
(e) "Bylaws" means the bylaws of Vaccines, and any amendments thereto.
(f) "Certificate of Incorporation" means the certificate of
incorporation of Vaccines, and any amendments thereto, filed with the Secretary
of State of the State of Delaware.
(g) "Closing" and "Closing Date" have the meanings set forth in
Section 3.1.
(h) "Commission" means the United States Securities and Exchange
Commission.
(i) "Commission Documents" has the meaning set forth in Section 6.13.
(j) "Common Stock" means the common stock of MicroCarb, $0.01 par
value per share.
3
<PAGE> 9
(k) "Deposit" means the Five Hundred Thousand Dollars ($500,000)
heretofore paid by SKB to MicroCarb on account of the SKB Transitory License.
(l) "Environmental Laws" has the meaning set forth in Section 6.10.
(m) "Equity Securities" shall mean the Common Stock and the Preferred
Stock, par value $.01 per share, of MicroCarb.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder by the Commission.
(o) "Exchange Option Agreement" has the meaning set forth in Section
4.1.
(p) "Field" means any and all prophylactic and/or therapeutic vaccines
for use in humans, but excluding development of commercial products for use in
passive immunization.
(q) "First Purchase Option" has the meaning set forth in Section 11.2.
(r) "First Purchase Option Shares" has the meaning set forth in
Section 11.2.
(s) "GalaGen" means GalaGen, Inc., a Delaware corporation.
(t) "GalaGen License" means that certain Technology License Agreement,
dated as of October 26, 1992, by and between GalaGen and MicroCarb.
(u) "HSC Licenses" shall mean the license agreements set forth on
Appendix B to the MicroCarb-Vaccines License.
(v) "Intellectual Property" means all Patents and Technology.
(w) "Issuance Notice" has the meaning set forth in Section 11.4.
(x) "MicroCarb Purchased Stock" has the meaning set forth in the fifth
WHEREAS clause.
4
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(y) "MicroCarb-Vaccines License" has the meaning set forth in the
fifth WHEREAS clause.
(z) "Offering Price" has the meaning set forth in Section 11.9.
(aa) "Pasteur" means Pasteur Merieux Serums et Vaccins S.A.
(ab) "Pasteur License" means that certain License Agreement, dated
December 1, 1994, by and between MicroCarb and Pasteur Merieux Serums et
Vaccins S.A.
(ac) "Patents" means all patents and patent applications owned and/or
controlled and/or used by MicroCarb and/or Vaccines (pursuant to license
agreement or otherwise) in or applicable to the Field at the commencement of or
during the term of the Research and Development, Research Support and License
Agreement, including any continuations, continuations-in-part, divisions,
patents of addition, reissues, renewals or extensions (other than SPC) thereof.
(ad) "Person" means and includes an individual, a partnership, a joint
venture, a corporation or trust, an unincorporated organization, a group or a
government or other department or agency thereof.
(ae) "Product" means products in the SBB Field which embody or utilize
any Intellectual Property.
(af) "Purchase Price" has the meaning set forth in Section 2.2.
(ag) "Purchase Option" has the meaning set forth in Section 11.2.
(ah) "Purchase Option Closing Certificate" has the meaning set forth in
Section 11.2.
(ai) "Purchase Option Closing Date" has the meaning set forth in
Section 11.2.
(aj) "Purchase Option Notice" has the meaning set forth in Section
11.2.
(ak) "Purchase Option Shares" has the meaning set forth in Section
11.2.
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(al) "Purchased Stock" means the MicroCarb Purchased Stock and the SKB
Purchased Stock.
(am) "Registration Rights Agreement" has the meaning set forth in
Section 4.3.
(an) "Related Agreements" means the Warrant, the Exchange Option
Agreement, the Registration Rights Agreement, the Stockholders Agreement, the
MicroCarb-Vaccines License, the SKB Transitory License, the Assignment and
Restatement Agreement and the Research and Development, Research Support and
License Agreement.
(ao) "Related Parties" means MicroCarb and Vaccines.
(ap) "Research and Development, Research Support and License Agreement"
has the meaning set forth in Section 4.7.
(aq) "Reserved Shares" has the meaning set forth in Section 6.14.
(ar) "SBB Field" means any and all prophylactic and/or therapeutic
human infectious diseases vaccines, but excluding development of commercial
products for use in passive immunization.
(as) "SKB Purchased Stock" has the meaning set forth in the sixth
WHEREAS clause.
(at) "SKB Transitory License" has the meaning set forth in the fourth
WHEREAS clause.
(au) "SPC" means all Supplementary Protection Certificates for
medicinal products and their equivalents provided under the Council Regulation
(EEC) N(0) 1768/92 of June 18, 1992.
(av) "Second Purchase Option" has the meaning set forth in Section
11.2.
(aw) "Second Purchase Option Expiration Date" has the meaning set forth
in Section 11.2.
(ax) "Second Purchase Option Shares" has the meaning set forth in
Section 11.2.
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(ay) "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder by the Commission.
(az) "Stockholders Agreement" means the Stockholders Agreement entered
into by MicroCarb and SKB on April 30, 1996.
(ba) "Technology" means any and all culture media, cell lines, assay
systems, DNA fragments, genes, constructs, plasmids, vectors, development
strains, expression systems, clones, colonies, promoters, epitopes,
microorganisms, and any other biological materials and deposits thereof (such
as, for example, deposits made with the American Type Culture Collection or the
European Type Culture Collection under the Budapest Treaty), any and all
copyrights, copyright registrations and applications for copyright
registrations, any and all inventions, any and all trade secrets, present or
future data, technical information, know-how, and confidential or proprietary
information (including without limitation all chemical, pharmacological,
toxicological, clinical, assay, control and manufacturing data and any other
similar information) and/or improvements to any of the foregoing, in or
applicable to the Field which are or become owned or used by MicroCarb and/or
Vaccines (pursuant to license agreement or otherwise) at the commencement of or
during the term of the Research and Development, Research Support and License
Agreement.
(bb) "Threshold Percentage" has the meaning set forth in Section 11.7.
(bc) "Transfer Notice" has the meaning set forth in Section 11.9.
(bd) "Transfer Stock" has the meaning set forth in Section 11.9.
(be) "Vaccines Common Stock" has the meaning set forth in the fifth
WHEREAS clause.
(bf) "Warrant" has the meaning set forth in Section 4.2.
Section 1.2 Interpretive Rules. For purposes of this Agreement, except as
otherwise expressly provided herein or unless the context otherwise requires:
(a) defined terms include the plural as well as the singular and the use of any
gender shall be deemed to include the other gender; (b) references to
"Articles," "Sections" and other subdivisions and to "Schedules"
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and "Exhibits" without reference to a document, are to designated Articles,
Sections and other subdivisions of, and to Schedules and Exhibits to, this
Agreement; (c) the use of the term "including" means "including but not limited
to"; and (d) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision.
ARTICLE II--GRANT OF LICENSES AND EXCHANGE OF LICENSES FOR THE
PURCHASED STOCK
Section 2.1 Grant of SKB Transitory License. Upon the terms and subject to all
of the conditions set forth herein, on the Closing Date, MicroCarb agrees to,
among other things, grant to SKB the SKB Transitory License.
Section 2.2 Purchase Price. The aggregate purchase price (the "Purchase Price")
to be paid by SKB to MicroCarb for the SKB Transitory License and the other
rights and benefits conferred hereunder shall be Three Million Dollars
($3,000,000).
Section 2.3 Payment of the Purchase Price. On the Closing Date, SKB shall, by
wire transfer or bank check of immediately available funds, pay to MicroCarb the
Purchase Price minus the Deposit.
Section 2.4 Assignment of SKB Transitory License; Issuance of SKB Purchased
Stock. Upon the terms and subject to all of the conditions set forth herein, on
the Closing Date, SKB agrees to assign all of its right, title and interest in
the SKB Transitory License to Vaccines. In consideration for such assignment,
Vaccines agrees to issue to SKB the SKB Purchased Stock, free and clear of all
liens, pledges, security interests, claims, restrictions, options, rights of
first refusal, charges or encumbrances whatsoever.
Section 2.5 Grant of MicroCarb-Vaccines License; Issuance of MicroCarb Purchased
Stock. Upon the terms and subject to all of the conditions set forth herein, on
the Closing Date, MicroCarb agrees to, among other things, grant to Vaccines the
MicroCarb-Vaccines License. In consideration for such grant, Vaccines agrees to
issue to MicroCarb the MicroCarb Purchased Stock, free and clear of all liens,
pledges, security interests, claims, restrictions, options, rights of first
refusal, charges or encumbrances whatsoever.
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Section 2.6 Tax Matters. MicroCarb, SKB and Vaccines acknowledge and intend that
(i) the assignment of the SKB Transitory License by SKB to Vaccines and (ii) the
grant by MicroCarb to Vaccines of the MicroCarb-Vaccines License are transfers
of "property" within the meaning of Section 351 of the United States Internal
Revenue Code of 1986, as amended (the "Code"). The parties further acknowledge
and intend that MicroCarb and SKB are members of a control group for purposes of
Section 351 of the Code and solely for that purpose, and that the assignment and
grant noted in the immediately preceding sentence are intended to qualify for
non-recognition treatment under that section. The parties acknowledge and intend
that SKB's basis for federal income tax and other purposes in the SKB Purchased
Stock is Three Million Dollars ($3,000,000).
ARTICLE III - THE CLOSING
Section 3.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held at 10:00 a.m., Washington, D.C. time, on
May 6, 1996, or on such other date as may be agreed upon by the parties hereto,
and deemed to have occurred and shall be effective as of the close of business
on such date (the "Closing Date") at the law offices of Dickstein, Shapiro &
Morin, L.L.P., 2101 L Street, N.W., Washington, D.C., or at such other place as
may be agreed upon by the parties hereto.
Section 3.2 Deliveries by the Related Parties. At the Closing, the Related
Parties shall deliver the following items to SKB:
(a) The SKB Transitory License referred to in Section 4.4, duly
executed by MicroCarb;
(b) The MicroCarb-Vaccines License referred to in Section 4.5, duly
executed by each of the Related Parties;
(c) Certificates and telegrams from appropriate authorities, dated as
of the Closing Date, as to the good standing of, qualification to do business
of, and payment of taxes by each of the Related Parties in their respective
jurisdictions where they are so incorporated and qualified;
(d) The opinion of MicroCarb's counsel referred to in Section 9.6;
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(e) The certificates referred to in Sections 9.1, 9.2 and 9.7;
(f) The Exchange Option Agreement referred to in Section 4.1, duly
executed by each of the Related Parties;
(g) The Warrant referred to in Section 4.2, duly executed by MicroCarb;
(h) The Registration Rights Agreement referred to in Section 4.3, duly
executed by MicroCarb;
(i) The Stockholders Agreement referred to in Section 4.8, duly
executed by MicroCarb;
(j) The Research and Development, Research Support and License
Agreement referred to in Section 4.7, duly executed by each of the Related
Parties;
(k) The Assignment and Restatement Agreement referred to in Section
4.6, duly executed by each of the Related Parties; and
(l) All other previously undelivered items required to be delivered by
the Related Parties to SKB at or prior to the Closing pursuant to this Agreement
or otherwise required in connection herewith unless waived in writing by SKB.
Section 3.3 Deliveries by SKB. At the Closing, SKB shall deliver the following
items to MicroCarb or, if applicable, Vaccines:
(a) The payment as required under Section 2.3;
(b) The Assignment and Restatement Agreement referred to in Section
4.6, duly executed by SKB;
(c) The Exchange Option Agreement referred to in Section 4.1, duly
executed by SKB;
(d) The Registration Rights Agreement referred to in Section 4.3, duly
executed by SKB;
(e) The Stockholders Agreement referred to in Section 4.8, duly
executed by SKB;
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(f) The Research and Development, Research Support and License
Agreement referred to in Section 4.7, duly executed by SmithKline;
(g) The certificates referred to in Sections 10.1 and 10.2; and
(h) All other previously undelivered items required to be delivered by
SKB at or prior to the Closing pursuant to this Agreement or otherwise required
in connection herewith unless waived in writing by MicroCarb.
Section 3.4 Deliveries by Vaccines. At the Closing, Vaccines shall deliver the
following items:
(a) to SKB, a stock certificate evidencing the SKB Purchased Stock; and
(b) to MicroCarb, a stock certificate evidencing the MicroCarb
Purchased Stock.
ARTICLE IV--RELATED AGREEMENTS
Section 4.1 Exchange Option Agreement. At the Closing, MicroCarb, Vaccines and
SKB shall enter into the exchange option agreement, in the form attached hereto
as Exhibit 4.1 (the "Exchange Option Agreement"), pursuant to which SKB will
have the irrevocable option, exercisable in whole or, as specified in the
Exchange Option Agreement, in part at any time during a seven year and six month
period commencing on the Effective Date, to exchange up to a total of Three
Hundred and Fifty (350) shares of Vaccines Common Stock for a total of 4,793,685
shares of Common Stock.
Section 4.2 Warrant. At the Closing, MicroCarb shall deliver to SKB one
warrant, in the form attached hereto as Exhibit 4.2 (the "Warrant"), pursuant to
which SKB will have a warrant to purchase certain shares of Common Stock,
exercisable at the price per share and subject to the terms specified in the
Warrant.
Section 4.3 Registration Rights Agreement. At the Closing, SKB and MicroCarb
shall enter into a registration rights agreement, in the form attached hereto as
Exhibit 4.3 (the "Registration Rights Agreement"), pursuant to which the holder
or holders of shares of Common Stock issued upon exercise of the Exchange Option
Agreement and the Warrant will have certain
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demand and piggyback registration rights and other rights pertaining thereto.
Section 4.4 SKB Transitory License. At the Closing, MicroCarb and SKB shall
enter into the SKB Transitory License in the form attached hereto as Exhibit
4.4.
Section 4.5 MicroCarb-Vaccines License. At the Closing, MicroCarb and Vaccines
shall enter into the MicroCarb-Vaccines License in the form attached hereto as
Exhibit 4.5 (the "MicroCarb-Vaccines License").
Section 4.6 Assignment of Transitory License Agreement and Restatement of
Rights and Obligations under the MicroCarb-Vaccines License Agreement. At the
Closing, SKB, Vaccines and MicroCarb shall execute an assignment of transitory
license agreement and restatement of rights and obligations under the
MicroCarb-Vaccines License (the "Assignment and Restatement Agreement") pursuant
to which (i) SKB shall assign to Vaccines all of its rights, responsibilities
and obligations of the SKB Transitory License in exchange for the SKB Purchased
Stock, (ii) MicroCarb and Vaccines shall consolidate and clarify their
respective rights under the MicroCarb-Vaccines License to reflect that the
territory covered thereunder will include every country in the world, and (iii)
MicroCarb and Vaccines will irrevocably release, hold harmless and indemnify SKB
from any claims relating to the SKB Transitory License.
Section 4.7 Research and Development, Research Support and License Agreement.
At the Closing, Vaccines, SmithKline and MicroCarb shall enter into a research
and development, research support and license agreement, in the form attached
hereto as Exhibit 4.7 (the "Research and Development, Research Support and
License Agreement"), pursuant to which (i) Vaccines grants SmithKline an
exclusive license with respect to the Intellectual Property in the SBB Field,
(ii) SmithKline agrees to make certain research and development payments to
MicroCarb, (iii) MicroCarb will provide certain research support services to
SmithKline, and (iv) following the satisfaction of certain conditions precedent,
SmithKline shall make certain royalty and milestone payments to Vaccines.
Section 4.8 Stockholders Agreement. At the Closing, MicroCarb and SKB shall
execute a stockholders agreement, in the form attached hereto as Exhibit 4.8
(the "Stockholders Agreement"),
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which will set forth the relative rights and obligations of SKB and MicroCarb as
stockholders of Vaccines.
ARTICLE V--REPRESENTATIONS AND WARRANTIES
CONCERNING VACCINES
MicroCarb, on its behalf, represents and warrants to SKB, and SKB in
agreeing to consummate the transactions contemplated by this Agreement and the
Related Agreements has relied upon such representations and warranties, that:
Section 5.1 Valid and Binding Agreements. Vaccines has all requisite corporate
power and authority and has taken all necessary corporate action to enter into
this Agreement and the Related Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby. This Agreement and
the Related Agreements to which Vaccines is a party have been duly and validly
executed and delivered by Vaccines, and constitute valid and binding agreements
of Vaccines, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization or similar laws relating to creditors' rights
generally.
Section 5.2 Corporate Organization.
(a) Vaccines is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the requisite
corporate power and authority to carry on its business.
(b) Vaccines is duly licensed or qualified to do business as a foreign
corporation, and is in good standing, in Maryland. Vaccines is not qualified to
conduct business in any other jurisdictions.
(c) The copies of the Certificate of Incorporation, and all amendments
thereto, of Vaccines as certified by the appropriate authorities of Delaware,
and the Bylaws, as amended to date, of Vaccines, as certified by its Secretary,
which have heretofore been delivered to SKB, are true, complete and correct
copies of the Certificate of Incorporation and the Bylaws of Vaccines, as
amended and in effect on the date hereof, and will be true, complete and correct
as of the Closing Date.
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Section 5.3 Capitalization.
(a) The authorized capital stock of Vaccines consists solely of one
thousand (1,000) shares of Vaccines Common Stock, of which no shares of Vaccines
Common Stock are issued and outstanding. The Purchased Stock is duly authorized,
and when issued, sold and delivered in accordance with this Agreement, will be
validly issued, fully paid and nonassessable, and will be free of restrictions
on transfer other than restrictions on transfer under the Stockholders Agreement
and under applicable state and federal securities laws. None of the Purchased
Stock was issued in violation of the preemptive rights of any Person.
(b) Except as set forth in Section 5.3(a), the MicroCarb Purchased
Stock to be issued to MicroCarb pursuant to the transactions contemplated by
this Agreement and the grant by MicroCarb to SKB of the Purchase Options, (i)
there are no shares of Vaccines Common Stock outstanding, (ii) there are no
outstanding subscriptions, options, warrants or rights to purchase or acquire
any shares of Vaccines Common Stock, (iii) no shares of Vaccines Common Stock
are reserved for issuance for any purpose, and (iv) there are no contracts,
commitments, agreements, understandings, arrangements or restrictions, whether
written or oral, to which Vaccines is a party or by which Vaccines is bound
relating to any shares of Vaccines Common Stock, whether or not outstanding.
Section 5.4 Subsidiaries and Affiliates. Vaccines owns no capital stock of any
other Person or has any other type of interest (whether ownership or other) in
any Person. Vaccines is not subject to any obligation or requirement to provide
funds for, or to make any investment (in the form of a loan, capital
contribution or otherwise) to or in, any Person.
Section 5.5 No Violation, Etc. Neither the execution and delivery of this
Agreement or the Related Agreements to which Vaccines is a party nor the
consummation of the transactions contemplated hereby or thereby nor compliance
by Vaccines, with any of the provisions hereof or thereof will (i) violate or
conflict with any provisions of the Certificate of Incorporation or Bylaws, (ii)
violate or conflict with any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to it, or (iii) violate,
or conflict with, or result in a breach in any provision of, or constitute a
default (or any event that, with or without due notice or lapse of time, or
both, would constitute such a default) under, or
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result in the termination of, accelerate the performance required by, or result
in the creation of any lien, security interest, charge or other encumbrance upon
the properties or assets of Vaccines under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation of which Vaccines is a party
or by which it or any of its assets are bound.
Section 5.6 Consents and Approvals. No permit, consent, approval or
authorization of, or declaration, filing or registration with, any governmental
authority is necessary in connection with the execution and delivery by Vaccines
of this Agreement or the Related Agreements or the consummation by Vaccines of
the transactions contemplated hereby or thereby and no consent of any third
party is required to consummate any of the transactions contemplated hereby or
thereby.
Section 5.7 Broker's or Finder's Fees. No agent, broker, investment banker,
person or firm acting on behalf of the Related Parties or under the authority of
the Related Parties is or will be entitled to any broker's or finder's fee or
any other commission or similar fee directly or indirectly from any of the
parties hereto in connection with any of the transactions contemplated hereby.
ARTICLE VI--REPRESENTATIONS
AND WARRANTIES OF MICROCARB
MicroCarb represents and warrants to SKB, and SKB in agreeing to
consummate the transactions contemplated by this Agreement and the Related
Agreements has relied upon such representations and warranties, that:
Section 6.1 Valid and Binding Agreements. MicroCarb has all requisite corporate
power and authority and has taken all necessary corporate action to enter into
this Agreement and the Related Agreements and to consummate the transactions
contemplated hereby and thereby. This Agreement and the Related Agreements have
been duly and validly executed and delivered by MicroCarb, and constitute valid
and binding agreements of MicroCarb, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, reorganization or similar laws relating to
creditors' rights generally.
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Section 6.2 Corporate Organization.
(a) MicroCarb is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the requisite
power and authority to carry on its business as currently conducted and to own
the properties and assets it now owns.
(b) MicroCarb is duly licensed or qualified to do business as a foreign
corporation, and is in good standing, in Maryland. The nature of MicroCarb's
business does not require it to be qualified to conduct business in any other
jurisdictions.
(c) The copies of the articles of incorporation, and all amendments
thereto, of MicroCarb as certified by the appropriate authorities of Delaware,
and the by-laws, as amended to date, of MicroCarb, as certified by its
Secretary, which have heretofore been delivered to SKB, are true, complete and
correct copies of the articles of incorporation and by-laws of MicroCarb, as
amended and in effect on the date hereof, and will be true, complete and correct
as of the Closing Date.
(d) The minute books and records of MicroCarb, copies of which have
been delivered to SKB prior to the date hereof, are the original minute books
and records of MicroCarb; contain all proceedings of the shareholders, the board
of directors and any committees thereof with respect to MicroCarb and any of its
shareholders; and are true, correct and complete in all material respects; and
there have been no changes, alterations or additions thereto which have not been
furnished to SKB prior to the date hereof.
Section 6.3 Capitalization.
(a) The authorized capital stock of MicroCarb consists solely of
65,000,000 shares of the Common Stock, of which 12,326,619 shares are issued and
outstanding, and 5,000,000 shares of preferred stock, par value $.01 per share,
of which none are issued or outstanding. The issued and outstanding shares of
the Common Stock are duly authorized, validly issued, fully paid and
nonassessable, and none of the issued and outstanding shares of the Common Stock
were issued in violation of the preemptive rights of any Person.
(b) Except as set forth in Section 6.3(a) and on Schedule 6.3, (i)
there are no shares of capital stock or other
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Equity Securities of MicroCarb outstanding, (ii) there are no outstanding
subscriptions, options, warrants or rights to purchase or acquire any Equity
Securities of MicroCarb, (iii) no Equity Securities of MicroCarb are reserved
for issuance for any purpose, and (iv) there are no contracts, commitments,
agreements, understandings, arrangements or restrictions, whether written or
oral, to which MicroCarb is a party or by which MicroCarb is bound relating to
any shares of the capital stock or other Equity Securities of MicroCarb, whether
or not outstanding. Exhibits A-1 and A-2 to the Warrant are true and correct in
all respects and accurately identify each outstanding option and warrant to
purchase shares of Common Stock for a price which does not exceed one dollar
($1.00) per share, except for escrowed options representing a total of 20,003
shares of Common Stock; provided, however, that the identities of the holders of
MicroCarb Class B Warrants set forth on Exhibit A-2 are true and correct in all
material respects. Each outstanding option issued by MicroCarb to purchase
units, consisting of shares of Common Stock and warrants exercisable for shares
of Common Stock (the "Unit Purchase Options") contains the same terms and
conditions (except for the number of units exercisable thereunder) as set forth
(i) in the case of Unit Purchase Options issued by MicroCarb in connection with
the October 1993 initial public offering of shares of Common Stock, that certain
Unit Purchase Option, dated October 25, 1993, granted to D.H. Blair Investment
Banking Corp. ("Blair"), or (ii) in the case of Unit Purchase Options issued by
MicroCarb in connection with the April 1995 private placement of shares of
Common Stock, that certain Unit Purchase Option, dated April 18, 1995, granted
to Blair. Each outstanding warrant issued by MicroCarb which is exercisable for
shares of Common Stock bears the same terms and conditions set forth on the form
of warrant certificate attached to (i) in the case of warrants issued by
MicroCarb in connection with the October 1993 initial public offering of shares
of Common Stock, that certain Warrant Agreement, dated December 17, 1992, by and
among MicroCarb, American Stock Transfer & Trust Company, as Warrant Agent (the
"Warrant Agent") and Blair, or (ii) in the case of warrants issued by MicroCarb
in connection with the April 1995 private placement of shares of Common Stock,
that certain Warrant Agreement, dated April 18, 1995 and effective as of March
24, 1994, by and among MicroCarb, the Warrant Agent and Blair.
Section 6.4 Subsidiaries and Affiliates. MicroCarb owns no capital stock of any
other Person or has any other type of interest (whether ownership or other) in
any other Person.
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MicroCarb is not subject to any obligation or requirement to provide funds for,
or to make any investment (in the form of a loan, capital contribution or
otherwise) to or in, any Person.
Section 6.5 No Violation, Etc. Neither the execution and delivery of this
Agreement or the Related Agreements nor the consummation of the transactions
contemplated hereby or thereby nor compliance by MicroCarb, with any of the
provisions hereof will (i) violate or conflict with any provisions of
MicroCarb's articles of incorporation or by-laws, (ii) violate or conflict with
any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to it, or (iii) violate, or conflict with, or result in a
breach in any provision of, or constitute a default (or any event that, with or
without due notice or lapse of time, or both, would constitute such a default)
under, or result in the termination of, accelerate the performance required by,
or result in the creation of any lien, security interest, charge or other
encumbrance upon the Purchased Stock or any of the properties or assets of
MicroCarb under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation of which MicroCarb is a party or by which it or any of
its assets is bound.
Section 6.6 Consents and Approvals. No permit, consent, approval or
authorization of, or declaration, filing or registration with, any governmental
authority is necessary in connection with the execution and delivery by
MicroCarb of this Agreement or the Related Agreements or the consummation by
MicroCarb of the transactions contemplated hereby or thereby and no consent of
any third party is required to consummate any of the transactions contemplated
hereby or thereby.
Section 6.7 Contracts and Commitments.
(a) Schedule 6.7 contains a complete and accurate list and brief
description of all contracts, agreements and commitments, whether oral or
written, of MicroCarb that involve commitments in excess of $50,000 and have a
term of six (6) months or more or that are not in the ordinary course of
business.
(b) The agreements set forth in Schedule 6.7 and in the Schedules under
this Article VI are hereinafter referred to collectively as the "Material
Agreements." None of the Material Agreements has been assigned or is the subject
of any security
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agreement. Except as otherwise set forth in Schedule 6.7, (i) each of the
Material Agreements is a valid and binding obligation of MicroCarb and, to
MicroCarb's knowledge, of the other party or parties thereto, enforceable in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization or similar laws relating to creditors' rights
generally; (ii) neither MicroCarb nor, to MicroCarb's knowledge, any other party
thereto has terminated, canceled, modified or waived any term or condition of
any Material Agreement; and (iii) neither MicroCarb nor, to MicroCarb's
knowledge, any other party to any Material Agreement is in default under any
Material Agreement and there exists no event, condition or occurrence that,
after notice or lapse of time, or both, would constitute such a default either
by MicroCarb or, to the knowledge of MicroCarb, by any party to any such
Material Agreement. None of the Material Agreements contains any covenant or
other restriction preventing or limiting the consummation of the transactions
contemplated by this Agreement or the Related Agreements. MicroCarb has
delivered to SKB a copy of each of the written Material Agreements and a
description of the terms and conditions of any oral Material Agreements.
(c) Each of MicroCarb's past and present directors, consultants and
officers has executed a Confidentiality Agreement, and each of MicroCarb's past
and present scientific employees has executed an Inventions Disclosure Agreement
and a Non-Disclosure and Inventions Assignment Agreement, all in forms similar
to those filed as Exhibits 10.5, 10.6 and 10.7 to that certain Registration
Statement on Form SB-2 filed by MicroCarb with the Commission on September 28,
1995.
Section 6.8 Intellectual Property.
(a) Schedule 6.8(a) contains a correct and complete list of: (i) all
Patents, all copyright registrations and applications for copyright
registrations, and all deposits of biological materials of the Intellectual
Property and the jurisdictions in or by which such assets have been registered,
filed or issued; and (ii) all contracts, agreements or understandings pursuant
to which MicroCarb has authorized any Person to use any of the Intellectual
Property. With the exception of U.S. Patent Application Serial No. [CONFIDENTIAL
TERMS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION] and all
corresponding foreign patents and patent applications corresponding hereto and
all continuations and divisions thereof
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(the "[CONFIDENTIAL TERMS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION] Application") which is co-owned by MicroCarb and the United States
of America and certain march-in rights of the United States of America,
Department of the Navy with respect to Campylobacter, and, with the exception of
rights granted to Pasteur pursuant to the Pasteur License, MicroCarb owns,
possesses and, as of the Closing Date, will own or possess, all right, title and
interest in and to or will have license rights in the Intellectual Property.
With the exception of the rights granted to Pasteur, the march-in rights of the
United States of America, Department of the Navy, and the rights owned by the
United States of America with respect to the [CONFIDENTIAL TERMS HAVE BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] Application, MicroCarb has the
sole and exclusive right to use and license other Persons to use the
Intellectual Property and none of the past or present employees, officers,
directors or shareholders of MicroCarb, or any other Person, has any rights with
respect thereto. The consummation of the transactions contemplated hereby will
not alter or impair any rights to use and license others to use the Intellectual
Property. MicroCarb has not received any notice or claim of infringement or any
claim challenging or questioning the validity or effectiveness of MicroCarb's
rights in or to any of the items of Intellectual Property, and MicroCarb is
aware of no valid basis for any such claim. Except as set forth on Schedule
6.8(b), MicroCarb is not liable, nor has it made any contract or arrangement
whereby it may become liable, to any Person for any royalty or other
compensation for use of any of the items of Intellectual Property.
(b) When executed and delivered, the MicroCarb-Vaccines License
together with the Assignment and Restatement Agreement will effectively license
Vaccines with respect to all Intellectual Property and all other rights as shall
be necessary for Vaccines to execute and deliver the Research and Development,
Research Support and License Agreement and grant the license and other rights
which are expressly granted to SmithKline in the Research and Development,
Research Support and License Agreement. When executed and delivered, the
Research and Development, Research Support and License Agreement will
effectively grant the license and other rights which are expressly granted to
SmithKline therein. When executed and delivered, with the exception of rights
granted to Pasteur pursuant to the Pasteur License, the Research and
Development, Research Support and License Agreement will effectively grant all
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rights to use the Intellectual Property in the SBB Field to SmithKline. Although
no investigation has been conducted, except as expressly stated above, MicroCarb
is not aware of any third party rights which would be in conflict with practice
of the Intellectual Property as contemplated in the Research and Development,
Research Support and License Agreement. The GalaGen License does not convey to
GalaGen any rights or interests with respect to the Intellectual Property
including any improvements within the SBB Field. Except for all rights to any
product comprising or derived from that certain [CONFIDENTIAL TERMS HAVE BEEN
OMITTED AND FILED SEPARATELY WITH THE COMMISSION] to which U.S. Patent
Application Serial No. [CONFIDENTIAL TERMS HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION] (and all continuations, divisionals and
corresponding foreign applications) relates, throughout the world except Asia,
the Pasteur License does not convey to Pasteur any rights or interests with
respect to the Intellectual Property including improvements in the SBB Field.
(c) MicroCarb has no knowledge of the existence of any pre-clinical or
clinical data or information concerning the Products which suggests there may
exist toxicity, safety and/or efficacy concerns which may impair the utility
and/or safety of such Products.
Section 6.9 Disclosure. No representation or warranty made by or on behalf of
MicroCarb contained in this Agreement or the Related Agreements, and no
statement contained in the Schedules hereto or thereto or any certificate or
other document furnished to SKB pursuant to the provisions hereof or thereof,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which such statements are
made, not misleading.
Section 6.10 Environmental Matters. To the best of its knowledge, MicroCarb (a)
is in compliance with any and all applicable federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (b) has received all permits, licenses or
other approvals required of it under applicable Environmental Laws to conduct
its business, (c) is in compliance with all terms and conditions of any such
permit, license or approval, and (d), except for liabilities associated
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with the clean-up costs of Ramp Industries, Inc. located at Denver, Colorado,
has no liabilities arising under any Environmental Laws (including, clean-up
costs and potential liabilities to third parties).
Section 6.11 Broker's or Finder's Fees. No agent, broker, investment banker,
person or firm acting on behalf of MicroCarb or under the authority of MicroCarb
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee directly or indirectly from any of the parties hereto in
connection with any of the transactions contemplated hereby.
Section 6.12 Adequacy and Sufficiency of Assets. The assets and properties owned
or leased or services to be contracted by MicroCarb are adequate and sufficient
for the conduct of its business and the carrying out of the Business by
MicroCarb as contemplated by the Research and Development, Research Support and
License Agreement.
Section 6.13 Commission Documents. MicroCarb has timely filed with the
Commission all material filings (the "Commission Documents") required to be
filed by it pursuant to the Exchange Act and the Securities Act, and the
Commission Documents complied in all material respects with the Exchange Act and
the Securities Act, and none of the Commission Documents contain any untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements contained therein not misleading.
Section 6.14 Authorization of Reserved Shares. On the Closing Date, the
issuance, sale and delivery by MicroCarb of the Common Stock issuable upon the
exercise of the Exchange Option Agreement and the Warrant (the "Reserved
Shares") have been duly authorized by all requisite corporate action of
MicroCarb and have been duly reserved for issuance, and when so issued, sold,
paid for and delivered in accordance with the terms of the Exchange Option
Agreement or the Warrant, the Reserved Shares will be validly issued, fully paid
and nonassessable, and not subject to any preemptive rights of stockholders of
MicroCarb.
Section 6.15 Litigation. Except as set forth on Schedule 6.15, there are no (a)
legal, administrative or arbitrable claims, actions, suits, proceedings,
investigations or inquiries pending or threatened by or pending or, to the
knowledge of MicroCarb, threatened against MicroCarb, and (b) judgments,
decrees, arbitration awards, agreements or orders binding upon MicroCarb.
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No material claims have been asserted against MicroCarb since its incorporation
on September 15, 1992. Except as set forth on Schedule 6.15, MicroCarb is not
aware and has no reason to be aware of any basis for any claim, action, suit,
proceeding, investigation or inquiry.
Section 6.16 Insurance. Schedule 6.16 sets forth for each insurance policy of
MicroCarb: (i) the type of coverage provided by such policy, (ii) the maximum
limits, both individual and aggregate, of the coverage of such policy, (iii) any
applicable deductibles and (iv) the termination date. All of the insurance
policies summarized in Schedule 6.16 are in full force and effect and MicroCarb
has not received any notice of cancellation, non-renewal or material increase in
premiums for any of the insurance policies set forth in Schedule 6.16.
Section 6.17 Employees. To the best of MicroCarb's knowledge, there are no
former employees or consultants that are currently employed by or otherwise
affiliated with any Persons engaged in businesses competitive with the business
of MicroCarb.
ARTICLE VII--REPRESENTATIONS AND WARRANTIES OF SKB
SKB represents and warrants to the Related Parties, and the Related
Parties in agreeing to consummate the transactions contemplated by this
Agreement and the Related Agreements have relied upon such representations and
warranties, that:
Section 7.1 Organization, Standing and Power. SKB is a corporation duly
organized under the laws of Belgium and has the requisite corporate power and
authority to carry on its business as now being conducted and to own the
properties and assets it presently owns. SKB is an Affiliate of SmithKline.
Section 7.2 Valid and Binding Agreements. All necessary corporate action on the
part of SKB has been taken to authorize the execution and delivery of this
Agreement and the Related Agreements, the performance of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby. This Agreement and the Related Agreements have been duly and
validly executed and delivered by SKB and constitute valid and binding
agreements of SKB, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization or similar laws or equitable principles
relating to creditors' rights generally.
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Section 7.3 No Violation. Neither the execution and delivery of this Agreement
or the Related Agreements nor the consummation of the transactions contemplated
hereby or thereby nor compliance by SKB with any of the provisions hereof or
thereof will (a) violate or conflict with the organizational documents of SKB,
or (b) violate or conflict with any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to SKB, or (c) violate or
conflict with, or result in a breach of any of the provisions of, or constitute
a default (or any event which, with or without due notice or lapse of time, or
both, would constitute such a default) under, or result in the termination of,
or accelerate the performance required by, or result in the creation of any
lien, security interest, charge or other encumbrance upon the stock or any of
the properties or assets of SKB under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument of which SKB is a party or by which it or
any of its assets is bound.
Section 7.4 Consents and Approvals. No permit, consent, approval or
authorization of, or declaration, filing or registration with, any governmental
authority is necessary in connection with the execution and delivery of this
Agreement or the Related Agreements by SKB or the consummation by SKB of the
transactions contemplated hereby or thereby and no consent of any third party is
required to consummate any of the transactions contemplated hereby or thereby.
Section 7.5 Broker's or Finder's Fees. No agent, broker, investment banker,
person or firm acting on behalf of SKB or under the authority of SKB is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee directly or indirectly from any of the parties hereto in connection with any
of the transactions contemplated hereby.
ARTICLE VIII--COVENANTS
Section 8.1 Compliance with Law. The Related Parties will promptly comply in
all material respects with all laws and regulations (including, without
limitation, those relating to the protection of the environment) applicable to
their respective businesses, properties and assets and all laws and regulations
with which compliance is required by the Related Parties for the valid
consummation of the transactions contemplated hereby and under any of the
Related Agreements and will promptly notify SKB
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of any legal, administrative or other proceedings, investigations, inquiries,
complaints, notices of violation or other asserted claims, judgments,
injunctions or restrictions, pending, outstanding or, to the knowledge of either
of the Related Parties, threatened or contemplated, which could affect any of
the Related Parties' respective businesses, properties or assets.
Section 8.2 Operation of Business Prior to Closing. Prior to the Closing Date,
and except as otherwise contemplated by this Agreement or with the specific
prior written consent of SKB, MicroCarb covenants that it will conduct its
business in the ordinary course and in a manner consistent with the conduct of
its business in the immediately preceding calendar year.
Section 8.3 Access. At all times prior to the Closing Date, the Related Parties
shall upon reasonable notice, provide SKB and its representatives with full
access during regular business hours to, and will make available for inspection
and review, all properties, personnel, books, records and accounts of the
Related Parties in order that SKB may have full opportunity to make such
investigation as it shall desire to make of the businesses of the Related
Parties.
Section 8.4 Broker's or Finder's Fees. The Related Parties and SKB each agree
to pay their respective broker's or finder's fees and commissions owed to any
agent, broker, investment banker, Person or firm in connection with any of the
transactions contemplated hereby.
ARTICLE IX--CONDITIONS PRECEDENT
TO OBLIGATIONS OF SKB
All obligations of SKB that are to be discharged under this Agreement
at the Closing are subject to the fulfillment, at Closing or effective as of the
Closing Date, of each of the following conditions (unless expressly waived in
writing by SKB at any time at or prior to the Closing) and the Related Parties
shall use their respective best efforts to cause each of such conditions to be
satisfied:
Section 9.1 Representations and Warranties. On the Closing Date, the
representations and warranties concerning Vaccines and MicroCarb set forth in
Articles V and VI, respectively, of this Agreement shall be true and correct in
all material respects, both as of the effective date of this Agreement and as of
the
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Closing Date as though such representations and warranties had been made on and
as of the Closing Date and SKB shall have received at the Closing a certificate,
dated the Closing Date, signed by the President of MicroCarb to such effect.
Section 9.2 Covenants, Agreements and Conditions. MicroCarb and Vaccines shall
have performed and complied with all covenants, agreements and conditions
contained in this Agreement required to be performed by them on or prior to the
Closing Date, and SKB shall have received at the Closing a certificate, dated
the Closing Date, signed by the President of Vaccines and by the President of
MicroCarb to such effect. In addition, in such certificate, MicroCarb and
Vaccines shall each acknowledge the performance and compliance with all
covenants, agreements and conditions contained in this Agreement required to be
performed or complied with by SKB between March 1, 1996 and the Closing and
agree to be estopped from ever asserting any breach by SKB of the performance
thereof or compliance therewith prior to the Closing Date.
Section 9.3 Corporate Proceedings; Consents and Approvals. All corporate and
other proceedings to be taken and all consents to be obtained in connection with
the transactions contemplated by this Agreement by the Related Parties and all
documents incident thereto shall be reasonably satisfactory in form and
substance to SKB and its counsel, Dickstein, Shapiro & Morin, L.L.P., each of
whom shall have received all such originals or certified or other copies of such
documents as either may reasonably request.
Section 9.4 Proceedings. No action or proceeding shall be pending or threatened
to restrain or prevent the consummation of the transactions contemplated hereby.
Section 9.5 Deliveries. The Related Parties shall have delivered to SKB the
items referred to in Sections 3.2 and 3.4.
Section 9.6 Opinion. SKB shall have received a written opinion, dated the
Closing Date, from Pennie & Edmonds, counsel to MicroCarb, in the form attached
hereto as Exhibit 9.6.
Section 9.7 Insurance. On the Closing Date, MicroCarb shall have in full force
and effect a general liability insurance policy in an amount not less than
[CONFIDENTIAL TERMS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION]
per occurrence, with a deductible of not more than [CONFIDENTIAL TERMS HAVE BEEN
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OMITTED AND FILED SEPARATELY WITH THE COMMISSION], and SKB shall have received a
certificate of insurance to such effect executed by an authorized agent of the
issuer of such policy dated not later than five (5) days prior to the Closing
Date.
ARTICLE X--CONDITIONS PRECEDENT
TO OBLIGATIONS OF THE RELATED PARTIES
All obligations of the Related Parties that are to be discharged under
this Agreement at the Closing are subject to the fulfillment at the Closing or
effective as of the Closing Date, of each of the following conditions (unless
expressly waived in writing by the Related Parties at any time at or prior to
the Closing) and SKB shall use its best efforts to cause each of such conditions
to be satisfied:
Section 10.1 Representations and Warranties. On the Closing Date, the
representations and warranties concerning SKB set forth in Article VII of this
Agreement shall be true and correct in all material respects, as of the
effective date of this Agreement and as of the Closing Date as though such
representations and warranties had been made on and as of the Closing Date and
MicroCarb shall have received at the Closing a certificate, dated the Closing
Date, signed by an officer of SKB to such effect.
Section 10.2 Covenants, Agreements and Conditions. SKB shall have performed and
complied with all covenants, agreements and conditions contained in this
Agreement required to be performed by it on or prior to the Closing Date, and
MicroCarb shall have received at the Closing a certificate, dated the Closing
Date, signed by an officer of SKB to such effect. In addition, in such
certificate, SKB shall acknowledge the performance and compliance with all
covenants, agreements and conditions contained in this Agreement required to be
performed or complied with by MicroCarb or Vaccines between March 1, 1996 and
the Closing Date and agree to be estopped from ever asserting any breach by
MicroCarb or Vaccines of the performance thereof or compliance therewith prior
to the Closing Date.
Section 10.3 Proceedings. No action or proceeding shall be pending or threatened
to restrain or prevent the consummation of the transactions contemplated hereby.
Section 10.4 Corporate Proceedings; Consents and Approvals. All corporate and
other proceedings to be taken and all consents to be obtained in connection with
the transactions contemplated
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by this Agreement and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Related Parties and their counsel,
Covington & Burling, each of whom shall have received all such originals or
certified or other copies of such documents as either may reasonably request.
Section 10.5 Deliveries. SKB shall have delivered to the Related Parties the
items referred to in Section 3.3.
ARTICLE XI--POST CLOSING MATTERS AND COVENANTS
Section 11.1 Indemnification.
(a) MicroCarb shall protect, defend, hold harmless and indemnify SKB,
its Affiliates and their respective officers, directors, employees and agents,
and their respective successors and permitted assigns from, against and in
respect of any and all losses, liabilities, deficiencies, penalties, fines,
costs, damages and expenses whatsoever (including, without limitation,
reasonable professional fees and costs of investigation, litigation, settlement,
and judgment and interest) ("Losses") that may be suffered or incurred by reason
of any of the following:
(1) Any breach of any representation or warranty made by
MicroCarb in this Agreement or contained in any certificate executed by
MicroCarb and delivered to SKB in connection with this Agreement;
(2) Any liabilities or obligations arising out of any conflict in
the carrying out of the Business in accordance with the Research and
Development, Research Support and License Agreement (including the use
or practice of Intellectual Property by any party to this Agreement or
any of their respective Affiliates) with the rights of (a) GalaGen
pursuant to the GalaGen License, (b) Pasteur Merieux Serums et Vaccines
S.A. pursuant to the Pasteur License, (c) HSC Research and Development
Limited Partnership pursuant to the HSC Licenses, (d) the ownership
rights of the United States of America in the [CONFIDENTIAL TERMS HAVE
BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION] Application, (e)
the march-in rights of the United States of America, Department of the
Navy with respect to Campylobacter and (f) the rights of any Person not
identified in Section 11.1(a)(2)(a) through 11.1(a)(2)(e) (other than
MicroCarb) under any contract or arrangement specifically set forth in
Schedule 6.8(b);
(3) Any liability for United States or Maryland income taxes
imposed with respect to the 1996 calendar year that SKB or Vaccines may
incur in connection with (i) the grant by MicroCarb to SKB of the SKB
Transitory
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License, the assignment by SKB to Vaccines of the SKB Transitory
License and the issuance by Vaccines to SKB of the SKB Purchased Stock
in exchange therefor or (ii) the grant by MicroCarb to Vaccines of the
MicroCarb-Vaccines License and the issuance by Vaccines to MicroCarb of
the MicroCarb Purchased Stock in exchange therefor;
(4) Any breach of any covenant or agreement made by MicroCarb in
this Agreement;
(5) Any breach of any representation or warranty made by
MicroCarb in any Purchase Option Closing Certificate; and
(6) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including, without
limitation, interest, penalties reasonable legal fees and accounting
fees) incident to the foregoing and the enforcement of the provisions
of this Section 11.1.
(b) SKB shall protect, defend, hold harmless and indemnify MicroCarb,
its Affiliates and their respective officers, directors, employees and agents,
and their respective successors and permitted assigns from, against and in
respect of any and all Losses that may be suffered or incurred by reason of any
of the following:
(1) Any breach of any representation or warranty made by SKB in
this Agreement or contained in any certificate executed by SKB and
delivered to MicroCarb in connection with this Agreement;
(2) Any breach of any covenant or agreement made by SKB in this
Agreement; and
(3) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including, without
limitation, interest, penalties reasonable legal fees and accounting
fees) incident to the foregoing and the enforcement of the provisions
of this Section 11.1.
(c) Whenever either MicroCarb or SKB shall learn of a claim (the
"Indemnified Party") of $5,000 or more which, if allowed (whether voluntarily or
by judicial or quasi-judicial tribunal or agency), would give rise to an
obligation of the other party (the "Indemnifying Party") to indemnify an
Indemnified Party pursuant to this Section 11.1, before paying the same or
agreeing thereto, the Indemnified Party shall promptly notify the Indemnifying
Party in writing of all such facts within the Indemnified Party's knowledge with
respect to such claim and the amount thereof. If, prior to the expiration of
fifteen (15) days from the mailing of such notice, the Indemnifying Party shall
request, in writing, that such claim not be paid, the Indemnified Party shall
not pay the same, provided
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the Indemnifying Party acknowledges in writing its indemnification obligation
with respect to the matter and proceed promptly, at the expense of it (including
employment of counsel reasonably satisfactory to the Indemnified Party), to
settle, compromise or litigate, in good faith, such claim. After notice from the
Indemnifying Party requesting the Indemnified Party not to pay such claim and
the Indemnifying Party's assumption of the defense of such claim at its expense,
the Indemnifying Party shall not be liable to the Indemnified Party in
connection with the defense thereof. However, the Indemnified Party shall have
the right to participate at its expense and with counsel of its choice in such
settlement, compromise or litigation and shall have the right to direct and
control the negotiations, settlement and litigation. The Indemnified Party shall
not be required to refrain from paying any claim which has matured by a court
judgment or decree, unless an appeal is duly taken therefrom and execution
thereof has been stayed, nor shall it be required to refrain from paying any
claim where the delay in paying such claim would result in the foreclosure of a
lien upon any of the properties or assets then held by the Indemnified Party or
where any delay in payment would cause the Indemnified Party an economic loss.
The failure to provide notice as provided in this Section 11.1(c) shall not
excuse the Indemnifying Party from its continuing obligations hereunder.
(b) For purposes of this Section 11.1, any assertion of fact and/or law
by a third party that, if true, would constitute a breach of a representation or
warranty made by MicroCarb or SKB, as the case may be, or make operational an
indemnification obligation hereunder, shall, on the date that notice of such
assertion is made, immediately invoke that party's obligation to protect,
defend, hold harmless and indemnify MicroCarb or SKB, as the case may be,
pursuant to Section 11.1.
Section 11.2 Purchase of Additional Shares.
(a) Subject to the terms and conditions hereof, in connection with the
transactions contemplated by this Agreement and the Related Agreements,
MicroCarb hereby grants SKB an option to purchase from MicroCarb: (i) 87.5
shares of Vaccines Common Stock (the "First Purchase Option Shares"), such
option (the "First Purchase Option") shall be exercisable at any time following
the Closing Date and expiring on the twentieth (20th) month anniversary of the
Effective Date, in consideration for payment by SKB to MicroCarb of One Million
Dollars ($1,000,000) (the "First Purchase Option Consideration"); and (ii) 87.5
shares of Vaccines Common Stock (the "Second Purchase Option Shares," together
with the First Purchase Option Shares shall be referred to as the "Purchase
Option Shares"), such option (the "Second Purchase Option," together with the
First Purchase Option shall be referred to as the "Purchase Options") shall be
exercisable at any time following the Closing Date and expiring
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on the thirty-second (32nd) month anniversary of the Effective Date (the "Second
Purchase Option Expiration Date"), in consideration for payment by SKB to
MicroCarb of One Million Dollars ($1,000,000) (the "Second Purchase Option
Consideration"). SKB may exercise either of the Purchase Options by providing
written notice to MicroCarb of its intent to exercise such Purchase Option (the
"Purchase Option Notice").
(b) The closings of the purchase and sale of First Purchase Option
Shares and the Second Purchase Option Shares shall take place on such date and
at such place as shall be mutually agreed upon by the parties, but in no case
later than thirty (30) business days from the date of the Purchase Option
Notice. Each such time and date shall be referred to as the "Purchase Option
Closing Date." On each Purchase Option Closing Date, SKB and MicroCarb shall
take the following actions, with the obligations of each party subject to the
performance by the other of its obligations under this Section 11.2:
(1) MicroCarb shall deliver to SKB certificates representing the
First Purchase Option Shares or, if applicable, the Second Purchase
Option Shares, duly endorsed or accompanied by stock powers duly
executed in blank or otherwise in forms acceptable for transfer on the
books of Vaccines, with all requisite stock transfer tax stamps
attached;
(2) MicroCarb shall deliver to SKB a certificate certifying (i)
that, with the exception of any changed circumstances specifically
reflected in such certificates, the representations and warranties
relating to Vaccines and MicroCarb contained in Articles V and VI of
this Agreement are true and correct in all material respects, as of
such Purchase Option Closing Date as though such representations and
warrants had been made on or as of such Purchase Option Closing Date,
(ii) MicroCarb's continued performance of and compliance with each of
its obligations under this Agreement, and (iii) that MicroCarb has in
full force and effect the insurance coverage required under Section
11.8 (the "Purchase Option Closing Certificate"); and
(3) SKB shall, by wire transfer or bank check of immediately
available funds, pay to MicroCarb such First Purchase Option
Consideration or, if applicable, the Second Purchase Option
Consideration.
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Section 11.3 Restrictions on the Transfer of Vaccines Common Stock. Except as
provided for in Section 11.2, neither MicroCarb nor any of its transferees
(direct or indirect) shall sell, exchange, deliver, assign, pledge, mortgage,
hypothecate or otherwise encumber, transfer or otherwise dispose of, any of its
shares of Vaccines Common Stock, whether voluntary, involuntary or by operation
of law, at any time prior to the Second Purchase Option Expiration Date. On or
after the Second Purchase Option Expiration Date, MicroCarb and its transferees
shall comply with the provisions of the Stockholders Agreement which restrict
the transfer of shares of Vaccines Common Stock prior to selling, assigning,
transferring or conveying any shares of Vaccines Common Stock.
Section 11.4 Preemptive Rights. If MicroCarb, on any date after the Closing Date
on which SKB owns either not less than One Hundred (100) shares of Vaccines
Common Stock or not less than Ten Thousand (10,000) shares of Common Stock,
proposes to offer and sell any Equity Securities including without limitation
the sale of any Equity Securities upon the conversion of a convertible debt
financing of MicroCarb referred to in clause (ii) below, but not including any
Equity Securities related to an employee benefit plan, director compensation
plan or dividend reinvestment plan, or in connection with a merger,
consolidation, strategic partnering, stock exchange or swap, or pooling of
interests, MicroCarb agrees to by written notice (the "Issuance Notice") provide
SKB with a right to participate in (i) the purchase of up to twenty-eight
percent (28%) of such securities at the same price and on the same terms as such
securities are to be offered to other Persons or (ii) the loan of up to
twenty-eight percent (28%) of the total amount advanced pursuant to a
convertible debt financing of MicroCarb on the same terms and conditions as are
offered to other Persons. SKB shall have thirty (30) business days after its
receipt of the Issuance Notice to exercise its pre-emptive rights hereunder.
Such Issuance Notice shall describe in detail the Equity Securities being
offered, the purchase price thereof and the payment terms.
Section 11.5 Further Assurances. Each party hereto shall at its own expense
cooperate with the others, and execute and deliver, or cause to be executed and
delivered, all such other instruments, including instruments of conveyance,
assignment and transfer, and take all such other actions as may be reasonably
requested by the other parties hereto from time to time,
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consistent with the terms of this Agreement, to effectuate the purposes and
provisions of this Agreement.
Section 11.6 Sale and Leaseback Agreement. Commencing immediately after the
Closing Date, MicroCarb agrees to make full and timely payments owed by it in
accordance with the terms and conditions of that certain Master Lease Agreement,
dated August 13, 1993, by and between Aberlyn Capital Management Limited
Partnership, and any schedules or riders thereto.
Section 11.7 Insurance. MicroCarb agrees to keep in full force and effect the
general liability insurance policy described in Section 9.7 or an insurance
policy having no less favorable coverage. MicroCarb agrees to obtain and keep in
full force and effect from time to time such additional insurance policies with
such additional coverages (i) as are necessary or appropriate to insure its
assets, activities and business at such time considering the nature of the
business it is now currently conducting and the risks associated with such
business activities, and (ii) which are comparable to the insurance policies
maintained by biotechnology companies of a similar size, and conducting similar
activities, to MicroCarb at such time.
Section 11.8 Standstill Obligations. For a period of ten (10) years from the
Closing Date, except with the prior consent of MicroCarb, which consent may not
be unreasonably withheld, SKB and its Affiliates shall not, directly or
indirectly, acquire any Equity Securities (except by way of (i) stock splits,
stock dividends or other distributions or offerings made available to other
holders of Common Stock generally, or (ii) stock options, warrants or other
rights to purchase Common Stock approved by the Board of Directors of MicroCarb)
if the effect of such acquisition would be to increase the total percentage
interest of SKB and its Affiliates in any class of the Equity Securities to more
than twenty-eight percent (28%) (the "Threshold Percentage") of the then
outstanding shares of any class of the Equity Securities; provided that:
(a) SKB may acquire Equity Securities without regard to the
limitations set forth above if any of the following events shall occur:
(i) If a bona fide tender or exchange offer is made by any Person
or 13D Group (other than an Affiliate of SKB) to acquire shares of
Common Stock which, if added to the shares of Common Stock, if any,
already owned by
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such Person or 13D Group, would represent ownership of the then
outstanding shares of Common Stock greater than the Threshold
Percentage; or
(ii) If it is publicly disclosed or SKB otherwise learns that
shares of Common Stock representing more than twenty percent (20%) of
the then outstanding shares of Common Stock, have been acquired in a
nonpublic transaction or that a bona fide offer has been made to
acquire more than twenty percent (20%) of the then outstanding shares
of Common Stock in a nonpublic transaction by any Person or 13D Group
(other than an Affiliate of SKB).
(b) SKB shall not be obligated to dispose of any shares of Common
Stock if the aggregate percentage ownership of SKB is increased as a result of
(i) a recapitalization of MicroCarb, (ii) a repurchase of shares of Common Stock
by MicroCarb or (iii) any other reason not in violation of this Agreement.
(c) If any event identified in Section 11.8(a)(i) or (ii) occurs, SKB
shall be permitted to take such action and make such offers as may be considered
to be of the same nature and type of action or offer and directed to the same
Person or Persons and for the same resulting number of shares as that which is
being taken by such Person or 13D Group. In proceeding with any action or offer
permitted under this Section 11.8, SKB shall be permitted to offer more
favorable terms such as price, cash versus securities or other such terms as may
be consistent with an offer of the same nature and type of consideration as that
which is being proposed by such Person or 13D Group.
(d) In the event that SKB or an Affiliate sells, assigns or otherwise
transfers five percent (5%) or more of the then outstanding shares of Common
Stock, or sells, assigns or otherwise transfers any shares of Common Stock to a
Person to whom SKB or an Affiliate has previously sold, assigned or transferred
any shares of Common Stock, or to any Person, so that upon such sale, assignment
or transfer, such Person owns in the aggregate five percent (5%) or more of the
then outstanding shares of Common Stock at a price per share of Common Stock
which is greater than the sum of (a) $.37 and (b) the product of (i) the number
of months from the Closing Date to the date of such sale, assignment or other
transfer pursuant to Section 11.9(c) and (ii) $.37 and (iii) .0167, than the
standstill obligations of
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this Section 11.8 shall be binding upon the Person who purchases such shares.
Except as set forth in the immediately preceding sentence, the standstill
obligations of this Section 11.09(d) shall not be binding upon any Person who
purchases shares of Common Stock from SKB or an Affiliate.
Section 11.9 Transfer by SKB of Shares of Common Stock.
(a) SKB may sell, assign or otherwise transfer shares of Common Stock
from time to time owned by it to Affiliates without restriction. Notwithstanding
the preceding sentence, neither SKB nor its Affiliates may sell, assign or
otherwise transfer shares of Common Stock except in accordance with the terms of
this Agreement.
(b) Except as otherwise provided in Section 11.9(c), SKB may sell,
assign or otherwise transfer shares of Common Stock from time to time owned by
it which have been registered with the Commission without restriction. Except as
otherwise provided in Section 11.9(c), SKB may sell, assign or otherwise
transfer shares of Common Stock from time to time owned by it which have not
been registered with the Commission without restriction other than the
requirements of Rule 144 promulgated under the Securities Act, as from time to
time in effect, including the volume limitations under Rule 144 irrespective of
whether Rule 144(k) applies.
(c) If at any time prior to the tenth anniversary of the Closing Date,
SKB proposes to sell five percent (5%) or more of the then outstanding shares of
Common Stock, SKB shall give written notice (the "Transfer Notice") to MicroCarb
specifying the number of shares of Common Stock that SKB desires to transfer
(the "Transfer Stock") and the price at which SKB is offering to sell the
Transfer Stock (the "Offering Price"). The Transfer Notice shall constitute an
offer to sell all, but not less than all, of the Transfer Stock to MicroCarb
(but not to any other Person) at the Offering Price with payment in immediately
available funds. MicroCarb shall have a period of thirty (30) calendar days to
accept SKB's offer to sell all, but not less than all, of the Transfer Stock and
an additional period of sixty (60) calendar days after the date that it accepts
SKB's offer contained in the Transfer Notice to complete the purchase of all,
but not less than all, of the Transfer Stock at the Offering Price. If MicroCarb
does not accept the offer contained in the Transfer Notice without modification
within the time period
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prescribed in the preceding sentence, declines the offer contained in the
Transfer Notice or accepts the offer contained in the Transfer Notice without
modification, but fails to complete the purchase of all of the Transfer Stock
within the time period specified in the preceding sentence, SKB may sell any or
all of the Transfer Stock at an offering price which is not less than the
Offering Price for a period of one (1) year from the date of the Transfer
Notice. If SKB has not sold the Transfer Stock within such one (1) year period
from the date of the Transfer Notice, SKB must comply with the provisions of
this Section 11.9(c) prior to consummating any sale of such Transfer Stock. If
SKB proposes to sell any of the Transfer Stock which constitutes five percent
(5%) or more of the then outstanding shares of Common Stock within such one (1)
year period for a price which is less than the Offering Price specified in the
Transfer Notice, SKB must comply with the provisions of this Section 11.9(c)
prior to consummating any sale of such Transfer Stock.
Section 11.10 Non-Solicitation of Employees. For a period commencing on the
Closing Date and ending two (2) years after the expiration of the Research and
Development, Research Support and License Agreement (the "Non-Solicitation
Period"), SKB and MicroCarb each agree that neither they nor their Affiliates
shall solicit, without the prior consent of the other party, for employment any
individual who is employed by such other party during the Non-Solicitation
Period so long as such individual is employed by the other party and for a
period of two (2) years thereafter.
Section 11.11 Use of the Purchase Price, First Purchase Option Consideration and
Second Purchase Option Consideration. MicroCarb covenants that it shall use its
best efforts to maintain and support its infrastructure and to meet its
contractual obligations to Vaccines and SmithKline. MicroCarb also covenants, to
the extent necessary and consistent with MicroCarb's fiduciary responsibilities,
to use the Purchase Price and, if paid by SKB, the First Purchase Option
Consideration and the Second Purchase Option Consideration, to maintain and
support its infrastructure and to meet its contractual obligations to Vaccines
and SmithKline. MicroCarb shall expend the Purchase Price in a manner consistent
with the information statement attached as Schedule 11.11.
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ARTICLE XII--MISCELLANEOUS
Section 12.1 Survival of Representations, Warranties and Agreements. All
representations and warranties relating to Vaccines and MicroCarb contained in
Articles V and VI, respectively, of this Agreement and in any certificate
executed and delivered by the Related Parties in connection with this Agreement,
shall survive the Closing Date and shall terminate and expire on June 30, 1996;
provided, however, that the representations and warranties contained in Section
6.8 shall survive the Closing Date and terminate and expire six (6) months after
the end of the relevant limitations period. All representations and warranties
of SKB contained in Article VII of this Agreement shall expire at the Closing.
All agreements of the parties contemplating performance after the Closing Date
shall survive the Closing Date for a period ending six (6) months after
expiration of the applicable statute of limitations for any claim relating
thereto.
Section 12.2 Concerning the Purchase Price. The parties acknowledge and agree
that the Purchase Price is not predicated or dependent upon the tax treatment of
the transactions described in Section 2.6. SKB has not made any representation
or warranty regarding the tax treatment of such transactions nor shall SKB have
any liability to MicroCarb, Vaccines or any other Person with respect to the tax
treatment of such transactions.
Section 12.3 Notices. All notices, requests, consents and other communications
hereunder shall be in writing and may be delivered personally (including by
courier or nationally recognized courier), by first class registered or
certified mail (return receipt requested), postage prepaid, or by facsimile
(with written confirmation of receipt) addressed to the following addresses or
facsimile numbers or to other such addresses or facsimile numbers as may be
furnished in writing by one party to the others:
(a) if to the Related Parties:
MicroCarb Inc.
300 Professional Drive
Gaithersburg, MD 20879, USA
Attention: Chief Executive Officer
Facsimile: (301) 590-1252
with a copy to:
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Covington & Burling
1201 Pennsylvania Avenue, N.W.
Washington, DC 20004-6000, USA
Attention: Barry E. Kabalkin, Esq.
Facsimile: (202) 778-5176
if to SKB:
SmithKline Beecham Biologicals Manufacturing s.a.
Rue de L'Institut 89
B-1330 Rixensart
Belgium
Attention: Senior Vice President, General Manager
Facsimile: 011-32-2-656-8026
and:
SmithKline Beecham Corporation
One Franklin Plaza
P.O. Box 7929
Philadelphia, PA 19101-7929, USA
Attention: Edward J. Buthusiem, Esq.
Facsimile: (215) 751-3935
with a copy to:
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037, USA
Attention: Neil Lefkowitz, Esq.
Facsimile: (202) 887-0689
Any such notice or communication shall be presumed to have been received (i) in
the case of personal delivery or facsimile transmission, on the date of such
delivery and (ii) in the case of nationally-recognized courier, on the business
day after the date sent.
Section 12.4 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Maryland, without regard to such
jurisdiction's conflicts of laws principles.
Section 12.5 Modification; Waiver. This Agreement shall not be altered or
otherwise amended except pursuant to an instrument in
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writing signed by SKB, Vaccines and MicroCarb. Any party may waive any
misrepresentation by any other party, or any breach of warranty by, or failure
to perform any covenant, obligation or agreement of, any other party, provided
that mere inaction or failure to exercise any right, remedy or option under this
Agreement, or delaying in exercising the same, will not operate as nor shall be
construed as a waiver, and no waiver will be effective unless set forth in
writing and only to the extent specifically stated therein.
Section 12.6 Entire Agreement. This Agreement, the Schedules and Exhibits hereto
and any other agreements or certificates delivered pursuant hereto constitute
the entire agreement of the parties hereto with respect to the matters
contemplated hereby and supersede all previous written or oral negotiations,
commitments, representations and agreements.
Section 12.7 Assignment; Successors and Assigns. This Agreement may not be
assigned by any party, without the prior written consent of the other parties;
provided, however, that SKB may assign this Agreement and any of its rights
hereunder to any of its Affiliates or to any corporation with which it may merge
or consolidate or sell all or substantially all of its assets without any prior
consent; and MicroCarb may assign this Agreement to any corporation with which
it may merge, consolidate or sell all or substantially all of its assets without
any prior consent. Vaccines shall not be permitted to assign or transfer any of
its respective rights and/or obligations retained pursuant to this Agreement
without SKB's prior consent. All covenants, representations, warranties and
agreements of the parties contained herein shall be binding upon and inure to
the benefit of their respective successors and permitted assigns.
Section 12.8 Public Announcements. No public announcement of the transactions
contemplated hereby prior to the Closing or of the terms hereof at any time
shall be made by any party without the prior written consent of the other
parties, not to be unreasonably withheld or delayed, except to the extent as may
be required by law in the opinion of counsel to SKB or counsel to MicroCarb.
Section 12.9 Expenses. SKB and the Related Parties shall each pay all costs and
expenses incurred by them or on their behalf in connection with the preparation
of this Agreement and the transactions contemplated hereby, including without
limitation, fees and expenses of its own attorneys, accountants and advisors.
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Section 12.10 Severability. The provisions of this Agreement are severable, and
in the event that any one or more provisions are deemed illegal or
unenforceable, the remaining provisions shall remain in full force and effect.
Section 12.11 No Third Party Beneficiary. This Agreement is intended and agreed
to be solely for the benefit of the parties hereto, and no third party shall
accrue any benefit, claim or right of any kind whatsoever pursuant to, under, by
or through this Agreement.
Section 12.12 Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association in effect at
the time such arbitration is instituted. The arbitration panel shall be composed
of three arbitrators, one of whom shall be chosen by MicroCarb, one of whom
shall be chosen by SKB, and one of whom shall be chosen by the two arbitrators
previously designated. If both or either of MicroCarb and/or SKB fails to choose
an arbitrator within fourteen (14) calendar days after receiving notice of
commencement of arbitration or if the two arbitrators fail to choose a third
arbitrator within fourteen (14) calendar days of their appointment, such
arbitrators shall be chosen by the American Arbitration Association. Unless the
parties to the arbitration shall otherwise agree to a different place of
arbitration, the place of arbitration shall be Washington, D.C. The arbitration
award shall be final and binding upon the parties thereto and may be entered in
any court having jurisdiction. Each party shall bear (i) its own expenses in
connection with such arbitration and (ii) one-half of the fees and expenses of
the American Arbitration Association and all arbitrators. No arbitration award
shall contain any provision which is inconsistent with the preceding sentence.
Section 12.13 Specific Performance. The parties hereto agree that it is
impossible to measure in money the damages that will accrue to any party hereto
by reason of another party's failure to perform its obligations hereunder, and
that such party's failure to perform will result in irreparable damages to the
other party in the event that this Agreement is not specifically enforceable.
Accordingly, in the event of any controversy concerning this Agreement, or any
right or obligation of any party hereunder, such right or obligation determined
as part of an arbitration award described in Section 12.12 shall be
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enforceable in a court of equity by specific performance. The rights granted in
this Section 12.13 shall be cumulative and not exclusive, and shall be in
addition to any and all other rights which the parties hereto may have
hereunder, at law or in equity. Each party hereto consents to the jurisdiction
of the federal courts of the State of Delaware in any suit, action or proceeding
brought pursuant to this Section 12.13, waives any objection it may have to the
laying of venue in any such suit, action or proceeding in any of such court, and
agrees that service of any court paper may be made in such manner as may be
provided under applicable laws or court rules governing service of process.
Section 12.14 Execution in Counterpart. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument.
[The balance of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement on May 6,
1996 effective as of March 1, 1996.
MicroCarb Human Vaccines Inc.
By: /s/ V.M. Esposito
-------------------------------------
Name: V.M. Esposito
Title: President
MicroCarb Inc.
By: /s/ V.M. Esposito
-------------------------------------
Name: V.M. Esposito
Title: President
SmithKline Beecham Biologicals
Manufacturing s.a.
By: /s/ Edward J. Buthusiem
-------------------------------------
Name: Edward J. Buthusiem
Title: Attorney-In-Fact
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EXHIBIT 2
EXCHANGE OPTION AGREEMENT
EXCHANGE OPTION AGREEMENT dated May 6, 1996, effective as of March 1,
1996 (the "Effective Date") between SmithKline Beecham Biologicals Manufacturing
s.a., a Belgian company ("SKB"), MicroCarb Inc., a Delaware corporation
("MicroCarb") and MicroCarb Human Vaccines Inc., a Delaware corporation
("Vaccines").
WITNESSETH:
WHEREAS, pursuant to a Stock Purchase Agreement (the "Purchase
Agreement") dated May 6, 1996 effective as of March 1, 1996 among SKB, MicroCarb
and Vaccines, SKB has (i) purchased 262.5 shares of the common stock, par value
$.01 per share of Vaccines (the "Vaccines Common Stock"), representing 26 1/4%
of the authorized shares of Vaccines Common Stock and (ii) the right to purchase
up to 175 additional shares of Vaccines Common Stock, representing an additional
17 1/2% of the authorized shares of Vaccines Common Stock;
WHEREAS, in order to induce SKB to enter into the Purchase Agreement
and the transactions contemplated by the Purchase Agreement, subject to the
terms and conditions herein, MicroCarb is hereby granting SKB and its successors
and permitted assigns the irrevocable option (the "Option"), exercisable in
whole or in part, to exchange up to a total of 350 shares of Vaccines Common
Stock, representing 35% of the authorized shares of Vaccines Common Stock, for a
total of 4,793,685 shares of the Common Stock of MicroCarb, par value $.01 per
share (the "Common Stock"); and
WHEREAS, in order to induce SKB to enter into the Purchase Agreement
and the transactions contemplated by the Purchase Agreement, MicroCarb is also
granting SKB and its successors and permitted assigns a warrant (the "Warrant")
of even date herewith to purchase certain shares of the Common Stock.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, agreements and undertakings set forth herein
<PAGE> 2
and in the Purchase Agreement and the Warrant, the parties hereto, intending to
be legally bound, agree as follows:
1. Defined Terms. Defined terms shall have the meanings ascribed to
them in the Purchase Agreement, unless expressly defined herein.
2. Grant of the Option. Subject to the limitations set forth in the
following sentence, MicroCarb hereby grants SKB and its successors and permitted
assigns (collectively the "Optionee") the Option to exchange, at the exchange
ratio per share set forth in Section 3, up to a total of 350 shares of Vaccines
Common Stock for up to a total of 4,793,685 shares of the Common Stock.
Notwithstanding the immediately preceding sentence, in the event that the
Optionee has previously exercised the Warrant or this Option and received shares
of the Common Stock pursuant to such exercise or previously purchased from third
parties (whether in the open market or in privately-negotiated transactions),
the number of shares of the Common Stock for which the Optionee may exchange
shares of Vaccines Common Stock shall be limited to that number of shares of the
Common Stock which together with all shares of the Common Stock (x) previously
received pursuant to the exercise of the Warrant or this Option by the Optionee
and (y) previously purchased from third parties (whether in the open market or
in privately-negotiated transactions) and held by the Optionee on the date of
any determination of the number of shares of the Common Stock for which the
Optionee may exchange shares of Vaccines Common Stock, is equal to 28% of the
total number of shares of the Common Stock from time to time issued and
outstanding during the term of the Option set forth in Section 4.
3. Exchange Ratio of Shares of Vaccines Common Stock for Shares of the
Common Stock. Subject to Section 2, the Optionee may exchange each share of
Vaccines Common Stock owned by it for 13,696.242 shares of the Common Stock.
4. Term of the Option. The Optionee may exchange its shares of Vaccines
Common Stock for shares of the Common Stock on any date after the date of this
Agreement through and including the date which is 7 years and 6 months after the
Effective Date, unless this period is reduced by the mutual agreement of the
parties.
5. Exercise of the Option. The Optionee may exercise the Option in
whole or in part by delivering to MicroCarb and Vaccines
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<PAGE> 3
a written notice in substantially the form of Exhibit A hereto which specifies
the number of shares of Vaccines Common Stock that the Optionee elects to
exchange for the number of shares of the Common Stock determined in accordance
with Sections 2 and 3; provided that, at least 50% of the number of shares of
Vaccines Common Stock that the Optionee may exchange for shares of the Common
Stock on the date of the exercise of the Option are exchanged for shares of the
Common Stock. MicroCarb will deliver to the Optionee by internationally
recognized air courier delivery a stock certificate representing the number of
shares of the Common Stock specified in such Optionee's written notice within 20
calendar days of MicroCarb's receipt of such written notice.
6. Character of Shares of the Common Stock Issuable Upon Exercise of
the Option. All shares of the Common Stock issuable upon exercise of the Option
shall, when issued, be duly authorized, validly issued, fully paid and
non-assessable.
7. Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, Etc. If at any time MicroCarb shall be a party to any
transaction (including without limitation a merger, consolidation, sale of all
or substantially all of MicroCarb's assets or a recapitalization of the Common
Stock) in which the previously outstanding shares of the Common Stock shall be
changed into or exchanged for different securities of MicroCarb or changed into
or exchanged for common stock or other securities of another corporation or
other property (including cash) or any combination of any of the foregoing (each
such transaction being hereinafter referred to as the "Transaction"), then, as a
condition to the consummation of the Transaction, lawful and adequate provisions
shall be made so that, upon the basis and the terms and in the manner provided
in this Section 7, the Optionee, upon the exercise of the Option at any time
after the consummation of the Transaction, shall be entitled to receive, in lieu
of the shares of the Common Stock issuable upon such exercise prior to such
consummation, at the election of the Optionee given by notice to MicroCarb on or
before the later of (x) the day on which the holders of the Common Stock approve
the Transaction, or (y) the thirtieth day following the date of delivery or
mailing to such Optionee of the last proxy statement relating to the vote on the
Transaction by the holders of the Common Stock the stock and other securities,
cash and property to which the Optionee would have been entitled upon the
consummation of the Transaction if the Optionee had exercised the Option
immediately prior to the date of
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<PAGE> 4
the consummation of the Transaction in respect of all shares of Vaccines Common
Stock then held by it which may be exchanged under this Agreement for shares of
the Common Stock.
Notwithstanding anything contained in this Agreement to the contrary,
MicroCarb shall not effect any Transaction unless prior to or simultaneously
with the consummation of such Transaction the survivor or successor corporation
(if other than MicroCarb) resulting from such Transaction shall assume by
written instrument executed and delivered to the Optionee, the obligation to
deliver to the Optionee such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the Optionee may be entitled to
receive, and containing the express assumption by such successor corporation of
the due and punctual performance and observance of every provision of this
Agreement to be performed and observed by MicroCarb and of all liabilities and
obligations of MicroCarb hereunder.
8. Certain Agreements of MicroCarb. MicroCarb covenants and agrees
that:
A. Will Reserve Shares. MicroCarb will authorize, reserve and set
apart and have available for issuance at all times, free from preemptive rights,
4,793,685 shares of the Common Stock which are deliverable upon the exercise of
the Option, and MicroCarb will have at all times such other rights or privileges
which are necessary to enable it at any time to fulfill all of its obligations
hereunder.
B. Will Avoid Certain Actions. MicroCarb will not, by amendment
of its certificate of incorporation or through any reorganization, transfer of
assets, consolidation, merger, issue or sale of securities or otherwise, avoid
or take any action which would have the effect of avoiding the observance or
performance of any of the terms to be observed or performed hereunder by
MicroCarb, but will at all times in good faith assist in carrying out all of the
provisions of this Agreement. Without limiting the generality of the foregoing,
MicroCarb will not knowingly take any action to revoke, call, redeem, cancel or
otherwise terminate the Option or the rights granted under this Agreement.
C. Will Secure Governmental Approvals. If any shares of the
Common Stock required to be reserved for the purposes of exercise of the Option
require registration with or approval of any governmental authority under any
federal law (other than the
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<PAGE> 5
Securities Act and corresponding state securities laws) or under any state law
before such shares of the Common Stock may be issued upon exercise of the
Option, MicroCarb will, at its expense, as expeditiously as possible use its
best efforts to cause such shares to be duly registered or approved, as the case
may be.
D. Will Pay Certain Taxes, Expenses and Fees. MicroCarb will pay
all issue or transfer taxes with respect to the issuance or transfer of shares
of the Common Stock to each Optionee in connection with each exercise of the
Option, as well as all fees and expenses incurred by MicroCarb in connection
with each such issuance or transfer. MicroCarb will pay all expenses incurred by
Vaccines in the performance by Vaccines of its obligations under Section 10 of
this Agreement.
E. Will Bind Successors. This Agreement will be binding upon any
corporation succeeding to MicroCarb by merger, consolidation or acquisition of
all or substantially all of MicroCarb's assets.
9. Notifications by MicroCarb. In case at any time:
(i) the Board of Directors of MicroCarb shall authorize
(whether definitively or subject to any conditions) any capital
reorganization, or reclassification of the capital stock of MicroCarb,
or consolidation or merger of MicroCarb with, or sale of all or
substantially all of its assets to, another Person;
(ii) the Board of Directors of MicroCarb shall authorize
(whether definitively or subject to any conditions) a voluntary
dissolution, liquidation or winding-up of MicroCarb; or
(iii) MicroCarb shall become subject to involuntary
dissolution, liquidation or winding-up;
then, in each of such cases, MicroCarb shall give notice to the Optionee of the
date on which such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up shall take place or be voted upon
by stockholders of MicroCarb, as the case may be. Such notice shall also specify
the date as of which the holders of record of shares of the Common Stock shall
be entitled to exchange their shares of the Common Stock or securities for other
property deliverable upon
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<PAGE> 6
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, as the case may be. Such notice shall be given not
less than 15 and not more than 90 days prior to the action in question and not
less than 15 days and not more than 90 days prior to the record date or the date
on which MicroCarb's transfer books are closed in respect thereto and such
notice shall state that the action in question or the record date is subject to
the effectiveness of a registration statement under the Securities Act, or to a
favorable vote of stockholders, if either is required.
10. Certificates for Shares. Each certificate for shares of Common
Stock issued pursuant to the exercise of the Option shall include the following
legend placed on the face thereof:
The sale, transfer, assignment or pledge of these shares is
restricted by the terms of a Stock Purchase Agreement dated May
6, 1996 effective as of March 1, 1996 among a number of parties,
including MicroCarb and SKB, a copy of which may be examined at
the offices of MicroCarb in Gaithersburg, Maryland. The shares of
Common Stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be sold, transferred, assigned, hypothecated or otherwise
disposed of unless (i) a registration statement under said Act
and all applicable laws of any other jurisdiction shall have
become effective with regard thereto or (ii) an exemption from
registration under said Act and all applicable laws of any other
jurisdiction is satisfied with respect to such transaction.
11. Certain Agreements of Vaccines. Vaccines hereby consents to the
grant of the Option and all other rights granted to SKB and it successors and
permitted assigns under this Agreement including without limitation the right to
exercise the Option. Vaccines agrees to take any and all actions which shall be
necessary or desirable to facilitate the exercise of such rights of SKB and its
successors and permitted assigns including without limitation taking actions
which shall be necessary or desirable to exchange shares of Vaccines Common
Stock for shares of the Common Stock.
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<PAGE> 7
12. Rights of a Stockholder. This Option shall not entitle the Optionee
to any voting rights or any other rights, or subject the Optionee to any
liabilities, if any, as a stockholder of MicroCarb.
13. Modification; Waivers. This Agreement may be modified or amended
only with the written consent of each party hereto. No party hereto shall be
released from its obligations hereunder without the written consent of the other
party. The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
by the party entitled to enforce such term, but any such waiver shall be
effective only if in a writing signed by the party against which such waiver is
to be asserted. Except as otherwise specifically provided herein, no delay on
the part of any party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party hereto of any right, power or privilege hereunder operate as a waiver
of any other right, power or privilege hereunder nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.
14. Entire Agreement. This Agreement, the Purchase Agreement, the
Warrant, the Stockholders Agreement and the Registration Rights Agreement
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all other prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof.
15. Severability. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid, the remainder of this Agreement or the application of such provision to
other Persons or circumstances, to the extent permitted by law, shall not be
affected thereby; provided, that the parties shall negotiate in good faith with
respect to an equitable modification of the provision or application thereof
held to be invalid.
16. Notices.
(A) Any notice or communication to any party hereto shall be duly
given if in writing and delivered in person, receipt
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requested, air courier guaranteeing two (2) day delivery, or by facsimile (with
written confirmation of receipt) to such other party's address or facsimile
number set forth below.
If to MicroCarb Inc. or
MicroCarb Human Vaccines Inc.:
300 Professional Drive
Gaithersburg, Maryland 20879
Attention: Chief Executive Officer
Facsimile: (301) 590-1252
If to SmithKline Beecham Biologicals
Manufacturing s.a.:
Rue de L'Institut 89
B-1330 Rixensart
Belgium
Attention: Senior Vice President, General
Manager
Facsimile: 011-32-2-656-8026
with a copy to:
SmithKline Beecham Corp.
One Franklin Plaza
P.O. Box 7929
Philadelphia, Pennsylvania 19101-7929
Attention: Edward J. Buthusiem, Esq.
Facsimile: (215) 751-3935
(B) All notices and communications will be deemed to have been
duly given: at the time delivered by hand, if personally delivered or facsimiled
(with written confirmation of receipt); and the next business day after timely
delivery to the courier, if sent by air courier guaranteeing two (2) day
delivery.
17. Successors and Assigns. This Agreement shall inure to the benefit
of and shall be binding upon MicroCarb, Vaccines and SKB and their respective
successors and permitted assigns. The Optionee may assign its rights under this
Agreement to any Person to whom SKB transfers (i) the Warrant, (ii) any shares
of the Common Stock issued upon the exercise of the Option and/or the
Warrant or (iii) any interest in the Warrant or shares of the Common Stock
issued upon exercise of the Option and/or the
8
<PAGE> 9
Warrant, without the necessity of obtaining any consent to such assignment,
provided that the Optionee is permitted to transfer its shares of the Common
Stock to such Person under the terms of the Purchase Agreement. The
Optionee shall exercise its rights described in the immediately preceding
sentence by delivering to MicroCarb and Vaccines an Assignment Form
in substantially the form of Exhibit B hereto. In the event that SKB assigns
only a part of its rights to exchange shares of Vaccines Common Stock
hereunder for shares of the Common Stock, then all references to SKB herein
(except in this sentence) shall also be deemed to refer to such other
Optionee or Optionees but, in such event SKB will have the sole right
to make decisions by and give notices for such other Optionee or Optionees;
provided, that if SKB no longer possesses any rights hereunder, then
all decisions and notices hereunder shall be made by the Optionees who hold the
right to exchange a majority of the shares of Vaccines Common Stock which are
then exchangeable under this Agreement for shares of the Common Stock and all
other Optionees shall be bound thereby.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which for all purposes shall be deemed to be an original
and all of which together shall constitute the same agreement.
19. Headings. The Section headings in this Agreement are for
convenience of reference only, and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.
20. Construction. This Agreement shall be governed, construed and
enforced in accordance with the laws of the State of Delaware, without regard to
its principles of conflict of laws.
21. No Inconsistent Agreements. Neither MicroCarb nor Vaccines has
previously, and will not hereafter, enter into any agreement with respect to its
securities which is inconsistent with the rights granted to SKB and its
successors and assigns under this Agreement.
22. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the Rules of the American Arbitration Association in effect at
the time such arbitration is instituted. The arbitration panel shall be composed
of three arbitrators, one of whom shall be chosen by
9
<PAGE> 10
MicroCarb, one of whom shall be chosen by SKB, and one of whom shall be chosen
by the two arbitrators previously designated. If both or either of MicroCarb
and/or SKB fails to choose an arbitrator within fourteen (14) calendar days
after receiving notice of commencement of arbitration or if the two arbitrators
fail to choose a third arbitrator within fourteen (14) calendar days of their
appointment, such arbitrators shall be chosen by the American Arbitration
Association. Unless the parties to the arbitration shall otherwise agree to a
different place of arbitration, the place of arbitration shall be Washington,
D.C. The arbitration award shall be final and binding upon the parties thereto
and may be entered in any court having jurisdiction. Each party shall bear (i)
its own expenses in connection with such arbitration and (ii) one-half of the
fees and expenses of the American Arbitration Association and all arbitrators.
No arbitration award shall contain any provision which is inconsistent with the
preceding sentence.
23. Specific Performance. The parties hereto agree that the shares of
Vaccines Common Stock cannot be purchased or sold in the open market and that,
for these reasons, among others, each Optionee will be irreparably damaged in
the event that this Agreement is not specifically enforceable. Accordingly, in
the event of any controversy concerning this Agreement, or any right or
obligation to exchange shares of Vaccines Common Stock for shares of the Common
Stock hereunder, such right or obligation determined as part of an arbitration
award described in Section 22 shall be enforceable in a court of equity by
specific performance. The rights granted in this Section 23 shall be cumulative
and not exclusive, and shall be in addition to any and all other rights which
the parties hereto may have hereunder, at law or in equity. SKB consents to the
jurisdiction of the federal courts of the State of Delaware in any suit, action
or proceeding brought pursuant to this Section 23, waives any objection it may
have to the laying of venue in any such suit, action or proceeding in any of
such court, and agrees that service of any court paper may be made in such
manner as may be provided under applicable laws or court rules governing service
of process.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on May 6, 1996 effective as of March 1, 1996 and delivered by their
respective duly authorized officers.
MICROCARB INC.
By: /s/ V.M. Esposito
-------------------------------------
Name: V.M. Esposito
Title: President
SMITHKLINE BEECHAM BIOLOGICALS
MANUFACTURING S.A.
By: /s/ Edward J. Buthusiem
-------------------------------------
Name: Edward J. Buthusiem
Title: Attorney-In-Fact
MICROCARB HUMAN VACCINES INC.
By: /s/ V.M. Esposito
-------------------------------------
Name: V.M. Esposito
Title: President
11
<PAGE> 1
EXHIBIT 3
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER THE LAWS OF ANY OTHER JURISDICTION. THIS WARRANT MAY NOT BE EXERCISED AND
NEITHER THIS WARRANT NOR ANY SECURITIES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS (i) A REGISTRATION STATEMENT UNDER SAID ACT AND ALL APPLICABLE LAWS OF
ANY OTHER JURISDICTION SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO OR (ii)
AN EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ALL APPLICABLE LAWS OF ANY
OTHER JURISDICTION IS SATISFIED WITH RESPECT TO SUCH TRANSACTION. ALL
CERTIFICATES FOR SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS
WARRANT WILL CONTAIN A LEGEND REFERENCING THE RESTRICTIONS IMPOSED ON THE
SHARES.
WARRANT
To Purchase Common Stock of
MICROCARB INC.
THIS WARRANT CERTIFIES THAT, for value received, the registered holder
hereof, SmithKline Beecham Biologicals Manufacturing s.a., a Belgian company,
whose address is Rue de L'Institut 89, B-1330 Rixensart, Belgium, or its
successors and permitted assigns, is entitled, subject to the terms and
conditions set forth herein, to purchase from MICROCARB INC., a corporation
organized and existing under the laws of Delaware, the number of shares of the
Common Stock of MicroCarb Inc., $.01 par value per share, as constituted on the
date of this Warrant, which is determined as specified in Section 4D at the
Basic Purchase Price (as hereinafter defined) in lawful money of the United
States of America. The Basic Purchase Price therefor is subject to adjustment as
hereinafter provided in Section 5.
Section 1. Definitions. For all purposes of this Warrant, the
following terms shall have the meanings indicated:
"Basic Purchase Price" shall mean the price of U.S. $0.37 per share of
the Common Stock, at which price the registered
<PAGE> 2
holder hereof may exercise this Warrant prior to any adjustments being made as
provided in Section 5.
"Business Day" shall mean any day except a Saturday, a Sunday, or a
legal holiday in the City of New York (other than a legal holiday on which the
New York Stock Exchange is open for trading on a regular basis).
"Common Stock" shall mean and include MicroCarb's authorized common
stock, $.01 par value per share, as constituted on the date of this Warrant, and
shall also include any class of the capital stock of MicroCarb hereafter
authorized which shall neither (i) be limited to a fixed sum or a percentage of
par value in respect of the rights of the holders thereof to receive dividends
and to participate in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding-up of MicroCarb, nor (ii) be
subject at any time to redemption by MicroCarb.
"Convertible Securities" shall mean any stock or securities convertible
into or exchangeable for shares of the Common Stock.
"Exchange Option Agreement" shall mean that certain exchange option
agreement of even date herewith between MicroCarb, Vaccines and SKB.
"Exercise Fraction" means the fraction (calculated to the nearest three
decimal places) obtained by dividing (i) the number of shares of Vaccines Common
Stock that SKB (and/or its successors and permitted assigns) has exchanged for,
or has provided irrevocable written notice to MicroCarb of the exercise of its
option to exchange for, shares of Common Stock pursuant to the Exchange Option
Agreement and (ii) 350.
"Exercise Ratio" shall mean .389, which is the ratio of the number of
shares of the Common Stock issuable upon exercise of this Warrant to the number
of shares of the Common Stock issued upon the exercise of the Index Options and
Index Warrants.
"Further Triggering Event" shall mean the purchase by SKB and/or its
successors and permitted assigns of shares of Vaccines Common Stock for One
Million Dollars ($1,000,000) pursuant to the exercise of the Second Purchase
Option referred to in Section 11.2 of the Stock Purchase Agreement.
Notwithstanding the
2
<PAGE> 3
immediately preceding sentence, such purchase of shares of Vaccines Common Stock
shall not constitute a Further Triggering Event if SBB has previously delivered
written notice to MicroCarb pursuant to Section 2.09 of the Research and
Development, Research Support and License Agreement that SBB will not pay the
amount to be paid pursuant to Section 2.08 of the Research and Development,
Research Support and License Agreement for Year 4 (as defined in the Research
and Development, Research Support and License Agreement).
"Index Option" shall mean each option to purchase shares of the Common
Stock listed on Exhibit A-1 hereto and each option issued in replacement,
substitution or in exchange therefor.
"Index Share Pool" shall mean the aggregate number of shares of Common
Stock issued at any time pursuant to the exercise of Index Options and Index
Warrants.
"Index Warrant" shall mean each warrant to purchase shares of the
Common Stock listed on Exhibit A-2 hereto and each warrant issued in
replacement, substitution thereof or in exchange therefor.
"MicroCarb" shall mean MicroCarb Inc., a Delaware corporation, together
with any corporation which shall succeed to or assume the obligations of
MicroCarb Inc. hereunder.
"Purchase Price" shall mean as of any date, the Basic Purchase Price,
as the same has been adjusted from time to time pursuant to the provisions of
Section 5.
"Research and Development, Research Support and License Agreement"
shall mean that certain research and development, research support and
license agreement of even date herewith between Vaccines, MicroCarb and SBB.
"SBB" shall mean SmithKline Beecham Corporation, a Pennsylvania
corporation.
"SKB" shall mean SmithKline Beecham Biologicals Manufacturing s.a., a
Belgian company.
"Securities Act" shall mean the Securities Act of 1933, and any similar
or successor federal statute, and the rules and
3
<PAGE> 4
regulations of the Securities and Exchange Commission thereunder, all as the
same shall be in effect at the time.
"Triggering Event" shall mean the purchase by SKB and/or its successors
and permitted assigns of shares of Vaccines Common Stock for One Million Dollars
($1,000,000) pursuant to the exercise of the First Purchase Option referred to
in Section 11.2 of the Stock Purchase Agreement. Notwithstanding the immediately
preceding sentence, such purchase of shares of Vaccines Common Stock shall not
constitute a Triggering Event if SBB has previously delivered written notice to
MicroCarb pursuant to Section 2.09 of the Research and Development, Research
Support and License Agreement that SBB will not pay the amount to be paid
pursuant to Section 2.08 of the Research and Development, Research Support and
License Agreement for Year 3 (as defined in the Research and Development,
Research Support and License Agreement).
"Stock Purchase Agreement" shall mean that certain stock purchase
agreement of even date herewith between MicroCarb, Vaccines and SKB.
"Vaccines" shall mean MicroCarb Human Vaccines Inc., a Delaware
corporation.
"Vaccines Common Stock" shall mean and include Vaccines' authorized
common stock, $.01 par value per share, as constituted on the date of this
Warrant.
"Warrant Shares" shall mean all shares of the Common Stock purchased or
purchasable by the registered holders of this Warrant upon the exercise thereof
pursuant to Section 4 thereof.
All terms used in this Warrant which are not defined in this Section 1
have the meanings respectively set forth therefor elsewhere in this Warrant.
Section 2. Ownership of this Warrant. MicroCarb may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof,
notwithstanding any notations of ownership or writing hereon made by anyone
other than MicroCarb, for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration or transfer
as provided in Section 3. MicroCarb shall maintain, at its office or agency at
300 Professional
4
<PAGE> 5
Drive, Gaithersburg, Maryland 20879 (or at such other office or agency of
MicroCarb as MicroCarb shall designate from time to time by notice to the
registered holder of this Warrant), a register for the Warrants, in which
MicroCarb shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
Section 3. Exchange, Transfer and Replacement. This Warrant is
exchangeable, upon the surrender hereof by the registered holder to MicroCarb at
its office or agency provided for in Section 2, for new Warrants of like tenor,
representing in the aggregate the right to purchase the number of shares of the
Common Stock purchasable hereunder, each of such new Warrants to represent the
right to purchase a percentage of the number of shares of the Common Stock (with
the aggregate percentages in all such new Warrants not to exceed one hundred
(100%) percent) as shall be designated by said registered holder at the time of
such surrender. This Warrant and all rights hereunder are transferable, to the
extent permitted by Section 18, without the necessity of obtaining any consent
to such transfer, in whole or in part, only upon the register provided for in
Section 2, by the registered holder hereof in person or by duly authorized
attorney, and a new Warrant shall be made and delivered by MicroCarb, of the
same tenor as this Warrant but registered in the name of the transferee, upon
surrender of this Warrant with the Assignment Form attached hereto duly
completed, at said office or agency of MicroCarb. Upon receipt by MicroCarb at
its office or agency provided for in Section 2 of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and upon indemnity or security reasonable satisfactory to MicroCarb in the case
of loss, theft or destruction, and upon surrender of this Warrant, in the case
of mutilation, MicroCarb will make and deliver a new Warrant of like tenor in
replacement of this Warrant. This Warrant shall be promptly cancelled by
MicroCarb upon the surrender hereof in connection with any exchange, transfer or
replacement. Except as otherwise provided in the following sentence, MicroCarb
shall pay expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section 3. Any taxes or
other governmental charges shall be borne by the party on which such taxes or
charges are imposed by law.
5
<PAGE> 6
Section 4. Exercise of this Warrant.
A. Procedure for Exercise. In order to exercise this Warrant in whole
or in part, the registered holder hereof shall complete the Subscription Form
attached hereto and deliver this Warrant to MicroCarb, together with cash in an
amount equal to the aggregate Purchase Price of the shares of the Common Stock
then being purchased, at its office or agency provided for in Section 2. The
exercise of this Warrant shall be deemed to have been effected and the Purchase
Price and the number of shares of the Common Stock issuable in connection with
such exercise shall be determined as of the close of business on the Business
Day prior to the date on which such completed Subscription Form and payment in
full of the aggregate Purchase Price shall have been delivered at such office or
agency. Upon receipt of such Form and payment in full of the aggregate Purchase
Price, MicroCarb shall, as promptly as practicable, and in any event within 20
days thereafter, execute or cause to be executed and deliver to said registered
holder by an internationally recognized air courier a certificate or
certificates representing the aggregate number of shares of the Common Stock
specified in such Form, provided that if the number of shares of the Common
Stock specified in the Form exceeds the number of shares of the Common Stock
that the holder of this Warrant is entitled to exercise, MicroCarb shall execute
and deliver to such holder a certificate representing the maximum number of
shares of the Common Stock that the holder of this Warrant is entitled to
exercise. Each stock certificate so delivered shall be in such authorized
denomination as may be requested by the registered holder hereof and shall be
registered in the name of said registered holder or such other name as shall be
designated by said registered holder, and the person in whose name any such
stock certificate shall be issued upon such exercise shall be deemed to have
become the holder of record of the shares represented thereby as of the time
when the exercise of this Warrant with respect to such shares shall be deemed to
have been effected. If this Warrant shall have been exercised only in part,
MicroCarb shall, at its expense at the time of delivery of said stock
certificate or certificates, deliver to such holder a new Warrant of like tenor
evidencing the rights of such holder to purchase the remaining shares of the
Common Stock covered by this Warrant. MicroCarb shall pay all expenses incurred
by it in connection with the preparation, execution and delivery of stock
certificates pursuant to this Section 4.
6
<PAGE> 7
B. Acknowledgment of Continuing Obligation. MicroCarb will, at the time
of the exercise of this Warrant, in whole or in part, upon request of the
registered holder hereof but at the expense of MicroCarb, acknowledge in writing
its continuing obligation to said holder in respect of any rights to which said
holder shall continue to be entitled after such exercise in accordance with this
Warrant.
C. Character of Warrant Shares. All shares of the Common Stock issuable
upon the exercise of this Warrant shall, when issued, be duly authorized,
validly issued, fully paid and non-assessable.
D. Condition for Exercise; Number of Shares Subject to Exercise;
Limitations on Exercise. This Warrant cannot be exercised until such time as an
Index Option or Index Warrant is exercised and the conditions to the application
of at least one of the scenarios set forth below are satisfied. Thereafter,
subject to the expiration of the exercise rights evidenced by this Warrant in
accordance with the provisions of Section 4E, this Warrant shall be exercisable,
in whole or in part, to purchase, in the aggregate, the number of shares of
Common Stock equal to the product obtained by multiplying (i) the applicable
Exchange Ratio, (ii) the number of shares of Common Stock comprising the Index
Share Pool and (iii) the applicable Exercise Percentage. If the conditions to
the application of more than one of the scenarios are satisfied, the scenario
that produces the greatest number of shares of Common Stock shall apply.
7
<PAGE> 8
<TABLE>
<CAPTION>
Exchange Exercise
Ratio Percentage
-------- ----------
<S> <C> <C>
Without regard to whether or not .292 Exercise
a Triggering Event or a Further Fraction
Triggering Event has occurred, if
SKB (and/or its successors and
permitted assigns) has exchanged,
or has provided an irrevocable
written notice to MicroCarb of
the exercise of its option to
exchange, Vaccines Common Stock
for Common Stock pursuant to the
Exchange Option Agreement.
Without regard to whether or not .389 Exercise
a Triggering Event or a Further Fraction
Triggering Event has occurred, if
(i) SKB (and/or its successors
and permitted assigns) has
exchanged, or has provided an
irrevocable written notice to
MicroCarb of the exercise of its
option to exchange, Vaccines
Common Stock pursuant to the
Exchange Option Agreement and
(ii) SBB has become committed to
Year 3 funding as contemplated by
Section 2.08 pursuant to Section
2.09 of the Research and
Development, Research Support and
License Agreement.
If either a Triggering Event or a .389 50%
Further Triggering Event has
occurred.
If both a Triggering Event and a .389 100%
Further Triggering Event have
occurred.
</TABLE>
E. Time for Exercise. Subject to the provisions of Section 4D, this
Warrant may be exercised as to shares of the
8
<PAGE> 9
Common Stock issued upon exercise of each Index Option and each Index Warrant on
or before any date which is thirty (30) Business Days after the later to occur
of (i) the date that the underlying Index Option or Index Warrant would have
expired had it not been exercised or (ii) the date that the registered holder of
this Warrant receives written notice from MicroCarb of the exercise of such
Index Option or Index Warrant. This Warrant shall expire as to shares of the
Common Stock issued upon exercise of each Index Option and each Index Warrant on
the day which immediately follows the later to occur of the dates specified in
clauses (i) and (ii) of the immediately preceding sentence.
F. Certificates for Shares. Each certificate for shares of Common Stock
issued pursuant to the exercise of this Warrant shall include the following
legend placed on the face thereof:
The sale, transfer, assignment or pledge of these shares is restricted
by the terms of a Stock Purchase Agreement dated May 6, 1996 effective
as of March 1, 1996 among a number of parties, including MicroCarb and
SKB, a copy of which may be examined at the offices of MicroCarb in
Gaithersburg, Maryland. The shares of Common Stock represented by this
certificate have not been registered under the Securities Act of 1933,
as amended, and may not be sold, transferred, assigned, hypothecated or
otherwise disposed of unless (i) a registration statement under said
Act and all applicable laws of any other jurisdiction shall have become
effective with regard thereto or (ii) an exemption from registration
under said Act and such applicable laws of any other jurisdiction is
satisfied with respect to such transaction.
Section 5. Adjustment of Purchase Price Provisions.
A. Adjustment of Purchase Price. The Purchase Price shall be subject to
adjustment from time to time as hereinafter in this Section 5 provided.
B. Purchase Price Adjustment Formulas. If and whenever after March 1,
1996, MicroCarb shall (i) declare a dividend or other distribution upon any
capital stock of MicroCarb which is payable in shares of the Common Stock or
Convertible Securities,
9
<PAGE> 10
(ii) declare a dividend or any other distribution upon the Common Stock payable
otherwise than out of the current earnings, retained earnings or earned surplus
or (iii) subdivide or combine the shares of the Common Stock, then in each such
case the Purchase Price shall be forthwith changed as provided in Section 5C, 5D
and 5E, respectively.
C. Stock Dividends. In case at any time MicroCarb shall declare a
dividend or any other distribution upon any capital stock of MicroCarb which is
payable in shares of the Common Stock or Convertible Securities, then the
Purchase Price shall be reduced effective immediately following the record date
for such distribution to the quotient obtained by dividing (1) the product of
(x) the number of shares of the Common Stock outstanding and deemed (in
accordance with the last sentence of this Section 5C) to be outstanding
immediately prior thereto, multiplied by (y) the then effective Purchase Price,
by (2) the total number of shares of the Common Stock outstanding and deemed (in
accordance with this Section 5C) to be outstanding immediately thereafter (but
in no event shall the Purchase Price be reduced to less than the par value per
share of the Common Stock). All shares of the Common Stock and all Convertible
Securities issuable in payment of any dividend or other distribution upon the
capital stock of MicroCarb shall be deemed to have been issued or sold without
consideration. The number of shares of the Common Stock deemed to be outstanding
shall be the total maximum number of shares of the Common Stock issuable upon
(i) the exercise of all outstanding rights or options to subscribe for or to
purchase shares of the Common Stock and (ii) the conversion or exchange of (A)
all outstanding Convertible Securities and (B) all Convertible Securities
issuable upon the exercise of rights or options to subscribe for or purchase
Convertible Securities.
D. Extraordinary Dividends and Distributions. In case at any time
MicroCarb shall declare a dividend or any other distribution upon the Common
Stock payable otherwise than out of current earnings, retained earnings or
earned surplus and otherwise than in shares of the Common Stock or Convertible
Securities, the Purchase Price shall be reduced by an amount equal, in the case
of a dividend or distribution in cash, to the amount thereof payable per share
of the Common Stock or, in the case of any other dividend or distribution, to
the fair value thereof per share of the Common Stock at the time such dividend
or distribution was declared, as determined by the Board of Directors of
MicroCarb (but in no event shall the Purchase Price
10
<PAGE> 11
be reduced to less than the par value per share of the Common Stock). For the
purposes of the foregoing, a dividend or distribution other than in cash shall
be considered payable out of earnings, retained earnings or earned surplus only
to the extent that such current earnings, retained earnings or earned surplus
are charged an amount equal to the fair value of such dividend or distribution
at the time of the declaration thereof, as determined by the Board of Directors
of MicroCarb. Such reductions shall take effect immediately following the date
on which a record is taken for the purposes of such dividend or distribution,
or, if a record is not taken, the date as of which the holders of record of the
Common Stock entitled to such dividend or distribution are to be determined.
E. Stock Splits and Reverse Splits. In case at any time MicroCarb shall
subdivide its outstanding shares of the Common Stock into a greater number of
shares, the Purchase Price in effect immediately prior to such subdivision shall
be proportionately reduced (but in no event shall the Purchase Price be reduced
to less than the par value per share of the Common Stock), and conversely, in
case at any time MicroCarb shall combine the outstanding shares of the Common
Stock into a smaller number of shares, the Purchase Price in effect immediately
prior to such combination shall be proportionately increased.
F. Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, Etc. If at any time MicroCarb shall be a party to any
transaction (including without limitation a merger, consolidation, sale of all
or substantially all of MicroCarb's assets or a recapitalization of the Common
Stock) in which the previously outstanding shares of the Common Stock shall be
changed into or exchanged for different securities of MicroCarb or changed into
or exchanged for common stock or other securities of another corporation or
other property (including cash) or any combination of any of the foregoing (each
such transaction being hereinafter referred to as the "Transaction"), then, as a
condition to the consummation of the Transaction, lawful and adequate provisions
shall be made so that, upon the basis and the terms and in the manner provided
in this Section 5F, each registered holder of this Warrant, upon the exercise of
this Warrant to the extent exercisable pursuant to Section 4D at any time after
the consummation of the Transaction, shall be entitled to receive, in lieu of
the shares of the Common Stock issuable upon such exercise prior to such
consummation, at the election of such holder given by notice to MicroCarb on or
before the later
11
<PAGE> 12
of (x) the day on which the holders of the Common Stock approve the Transaction,
or (y) the thirtieth day following the date of delivery or mailing to such
holder of the last proxy statement relating to the vote on the Transaction by
the holders of the Common Stock, the stock and other securities, cash and
property to which such registered holder would have been entitled upon the
consummation of the Transaction if such holder had exercised this Warrant
immediately prior to the date of the consummation of the Transaction.
Notwithstanding anything contained in this Warrant to the contrary, MicroCarb
shall not effect any Transaction unless prior to or simultaneously with the
consummation of such Transaction the survivor or successor corporation (if other
than MicroCarb) resulting from such Transaction shall assume by written
instrument executed and delivered to each registered holder of this Warrant, the
obligation to deliver to such registered holder of this Warrant such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such registered holder of this Warrant may be entitled to receive, and
containing the express assumption by such successor corporation of the due and
punctual performance and observance of every provision of this Warrant to be
performed and observed by MicroCarb and of all liabilities and obligations of
MicroCarb hereunder.
G. Statement Regarding Adjustments. Upon each adjustment of the
Purchase Price, and in the event of any change in the rights of the holder of
this Warrant by reason of other events herein set forth, then and in each such
case, MicroCarb will promptly obtain an opinion of a firm of independent
certified public accountants of recognized national standing (who may be the
regular auditors of MicroCarb) selected by MicroCarb's chief financial officer,
stating the adjusted Purchase Price, or specifying the other shares of stock,
securities or assets and the amount thereof receivable as a result of such
change in rights, and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. MicroCarb will
promptly mail a copy of such accountants' opinion to the registered holder of
this Warrant.
Section 6. Certain Agreements of MicroCarb. MicroCarb covenants and
agrees that:
A. Will Reserve Shares. MicroCarb will authorize, reserve and set apart
and have available for issuance at all times, free from preemptive rights, that
number of the shares of
12
<PAGE> 13
the Common Stock which are deliverable upon the exercise of this Warrant, and
MicroCarb will have at all times such other rights or privileges which are
necessary to enable it at any time to fulfill all of its obligations hereunder.
B. Will Avoid Certain Actions. MicroCarb will not, by amendment of its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, issue or sale of securities or otherwise, avoid or take
any action which would have the effect of avoiding the observance or performance
of any of the terms to be observed or performed hereunder by MicroCarb, and will
at all times in good faith assist in carrying out all of the provisions of this
Warrant. Without limiting the generality of the foregoing, MicroCarb will not
take any action to revoke, call, redeem, cancel or otherwise terminate this
Warrant or the rights granted under this Warrant.
C. Will Secure Governmental Approvals. If any shares of the Common
Stock required to be reserved for the purposes of exercise of this Warrant
require registration with or approval of any governmental authority under any
federal law (other than the Securities Act and corresponding state securities
laws) or under any state law before such shares of the Common Stock may be
issued upon exercise of this Warrant, MicroCarb will, at its expense, as
expeditiously as possible use its best efforts to cause such shares to be duly
registered or approved, as the case may be.
D. Will Pay Certain Taxes and Fees. MicroCarb will pay all issue or
transfer taxes with respect to the issuance or transfer of shares of the Common
Stock to the registered holder of this Warrant in connection with each exercise
of this Warrant, as well as all fees and expenses incurred by MicroCarb in
connection with each such issuance or transfer.
E. Will Bind Successors. This Warrant will be binding upon any
corporation succeeding to MicroCarb by merger, consolidation or acquisition of
all or substantially all of MicroCarb's assets.
Section 7. Notifications by MicroCarb. In case at any time:
(i) MicroCarb shall declare upon the Common Stock any dividend or
other distribution (except out of current
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<PAGE> 14
earnings, retained earnings or earned surplus) to the holders of the
Common Stock;
(ii) MicroCarb shall make an offer for subscription pro rata to
the holders of the Common Stock of any additional shares of stock of
any class or other rights;
(iii) the Board of Directors of MicroCarb shall authorize (whether
definitively or subject to any conditions) any capital reorganization,
or reclassification of the capital stock of MicroCarb, or consolidation
or merger of MicroCarb with, or sale of all or substantially all of its
assets to, another Person;
(iv) the Board of Directors of MicroCarb shall authorize (whether
definitively or subject to any conditions) a voluntary dissolution,
liquidation or winding-up of MicroCarb; or
(v) MicroCarb shall become subject to involuntary dissolution,
liquidation or winding-up;
then, in each of such cases, MicroCarb shall give notice to the registered
holder of this Warrant of the date on which (a) the books of MicroCarb shall
close or a record shall be taken for such dividend, distribution or subscription
rights, or (b) such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up shall take place or be voted upon
by stockholders of MicroCarb, as the case may be. Such notice shall also specify
the date as of which the holders of record of shares of the Common Stock shall
participate in such dividend, distribution or subscription rights, or shall be
entitled to exchange their shares of the Common Stock or securities for other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up, as the case may be. Such
notice shall be given not less than 15 and not more than 90 days prior to the
action in question and not less than 15 days and not more than 90 days prior to
the record date or the date on which MicroCarb's transfer books are closed in
respect thereto and such notice shall state that the action in question or the
record date is subject to the effectiveness of a registration statement under
the Securities Act, or to a favorable vote of stockholders, if either is
required.
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<PAGE> 15
MicroCarb shall also give each registered holder of this Warrant
written notice of each (i) exercise of each Index Option and each Index Warrant
and (ii) replacement, substitution, amendment, exchange, sale, assignment or
other transfer of any Index Option or Index Warrant:
(a) on June 30 and December 31 of each year in which this Warrant
may be exercised with respect to any Index Option or any Index
Warrant; and
(b) on such other date which is thirty (30) days after the date
that any one or more of the foregoing events has occurred with
respect to Index Options or Index Warrants which may be
exercised for more than four hundred thousand (400,000) shares
of the Common Stock.
Section 8. Rights of a Stockholder. This Warrant shall not entitle any
holder of this Warrant to any voting rights or any other rights, or subject any
holder of this Warrant to any liabilities, if any, as a stockholder of
MicroCarb.
Section 9. Modification; Waivers. This Warrant may be modified or
amended only with the written consent of the registered holder. MicroCarb shall
not be released from its obligations hereunder without the written consent of
the registered holder. The observance of any term of this Warrant may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by MicroCarb or the registered holder, as the case may be, but
any such waiver shall be effective only if in a writing signed by the entity
against which such waiver is to be asserted. Except as otherwise specifically
provided herein, no delay on the part of either entity in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of either entity of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege hereunder nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
Section 10. Entire Agreement. This Warrant, the Stock Purchase
Agreement, the Exchange Option Agreement, the Research and Development, Research
Support and License Agreement, that
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<PAGE> 16
certain registration rights agreement of even date herewith between SKB and
MicroCarb and that certain stockholders agreement (the "Stockholders Agreement")
of even date herewith between SKB and MicroCarb represent the entire
understanding and agreement between the parties thereto with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties thereto with respect
to the subject matter hereof and thereof.
Section 11. Severability. If any provision of this Warrant, or the
application of such provision under any circumstance, shall be held invalid, the
remainder of this Agreement or the application of such provision under any other
circumstance to the extent permitted by law shall not be affected thereby;
provided, that MicroCarb and the registered holder shall negotiate in good faith
with respect to an equitable modification of the provision or application
thereof held to be invalid.
Section 12. Notices.
(A) Any notice or communication shall be duly given if in writing and
delivered in person, receipt requested, or air courier guaranteeing two (2) day
delivery or by facsimile (with written confirmation of receipt), to such other
party's address or facsimile number set forth below.
If to MicroCarb Inc.:
300 Professional Drive
Gaithersburg, Maryland 20879
Attention: Chief Executive Officer
Facsimile: (301) 590-1252
If to SmithKline Beecham Biologicals
Manufacturing s.a.:
Rue de L'Institut 89
B-1330 Rixensart
Belgium
Attention: Senior Vice President, General
Manager
Facsimile: 011-32-2-656-8026
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<PAGE> 17
with a copy to:
SmithKline Beecham Corp.
One Franklin Plaza
P.O. Box 7929
Philadelphia, Pennsylvania 19101-7929
Attention: Edward J. Buthusiem, Esq.
Facsimile: (215) 751-3935
(B) All notices and communications will be deemed to have been duly
given: at the time delivered by hand, if personally delivered or facsimiled
(with written confirmation of receipt); and the next business day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery.
Section 13. Headings. The Section headings in this Warrant are for
convenience of reference only, and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof.
Section 14. Construction. This Warrant shall be governed, construed and
enforced in accordance with the laws of the State of Delaware, without regard to
its principles of conflict of laws.
Section 15. No Inconsistent Agreements. MicroCarb has not previously,
and will not hereafter, enter into any agreement with respect to its securities
which is inconsistent with the rights granted to SKB and its successors and
permitted assigns under this Warrant.
Section 16. Arbitration. Any controversy or claim arising out of or
relating to this Warrant, or the breach thereof, shall be settled by arbitration
in accordance with the Rules of the American Arbitration Association in effect
at the time such arbitration is instituted. The arbitration panel shall be
composed of three arbitrators, one of whom shall be chosen by MicroCarb, one of
whom shall be chosen by the registered holder, and one of whom shall be chosen
by the two arbitrators previously designated. If both or either of MicroCarb
and/or the registered holder fails to choose an arbitrator within fourteen (14)
calendar days after receiving notice of commencement of arbitration or if the
two arbitrators fail to choose a third arbitrator within fourteen (14) calendar
days of their appointment, such arbitrators shall be chosen by the American
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<PAGE> 18
Arbitration Association. Unless the parties to the arbitration shall otherwise
agree to a different place of arbitration, the place of arbitration shall be
Washington, D.C. The arbitration award shall be final and binding upon the
parties thereto and may be entered in any court having jurisdiction. MicroCarb
and the registered holder shall each bear (i) its own expenses in connection
with such arbitration and (ii) one-half of the fees and expenses of the American
Arbitration Association and arbitrator. No arbitration award shall contain any
provision which is inconsistent with the preceding sentence.
Section 17. Specific Performance. MicroCarb agrees that this Warrant
cannot be purchased or sold in the open market and that, for these reasons,
among others, each registered holder of this Warrant will be irreparably damaged
in the event that this Warrant is not specifically enforceable. Accordingly, in
the event of any controversy concerning this Warrant, or any right or obligation
hereunder, such right or obligation determined as part of an arbitration award
described in Section 16 shall be enforceable in a court of equity by specific
performance. The rights granted in this Section 17 shall be cumulative and not
exclusive, and shall be in addition to any and all other rights which the
registered holder of this Warrant may have hereunder, at law or in equity. The
registered holder consents to the jurisdiction of the federal courts of the
State of Delaware in any suit, action or proceeding brought pursuant to this
Section 17, waives any objection it may have to the laying of venue in any such
suit, action or proceeding in any of such court, and agrees that service of any
court paper may be made in such manner as may be provided under applicable laws
or court rules governing service or process.
Section 18. Transfer and Assignment. The registered holder of this
Warrant may transfer and assign this Warrant and its rights hereunder without
the necessity of obtaining any consent to such transfer or assignment, provided
that the registered holder is permitted to transfer or assign its shares of the
Common Stock under the terms of the Stock Purchase Agreement.
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<PAGE> 19
IN WITNESS WHEREOF, MicroCarb Inc. has caused this Warrant to be
executed and delivered by its duly authorized officer under its corporate seal,
attested by its duly authorized officer and to be dated May 6, 1996 and
effective as of March 1, 1996.
MICROCARB INC.
By: /s/ V.M. Esposito
-------------------------------------
Name: V.M. Esposito
Title: President
[Corporate Seal]
Attest:
/s/ Gregory C. Zakarian
- ----------------------------------
Name: Gregory C. Zakarian
Title: Secretary
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<PAGE> 20
SUBSCRIPTION FORM
To be Executed by the Registered Holder
Desiring to Exercise the Within Warrant of
MICROCARB INC.
The undersigned registered holder hereby exercises the right to
purchase shares of the Common Stock covered by the within Warrant,
according to the conditions thereof, and herewith makes payment in full of the
Purchase Price of such shares, U.S. $ .
-------------------------------
Name of Registered Holder
-------------------------------
Signature
-------------------------------
Title
Address
------------------------
------------------------
Dated:
---------------------
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<PAGE> 21
ASSIGNMENT FORM
To Be Executed by the Registered Holder
Desiring to Transfer the Within Warrant of
MICROCARB INC.
FOR VALUE RECEIVED, the undersigned registered holder hereby sells,
assigns and transfer unto the right to purchase
shares of the Common Stock covered by the within Warrant,
and does hereby irrevocably constitute and appoint
Attorney to transfer the said Warrant on the books of MicroCarb (as defined in
said Warrant), with full power of substitution. The undersigned represents and
warrants to MicroCarb that this assignment is consistent with Section 18 of the
Warrant.
-------------------------------
Name of Registered Holder
-------------------------------
Signature
-------------------------------
Title
Address
------------------------
------------------------
Dated:
----------------------
In the presence of
- -----------------------------
NOTICE:
The signature to the foregoing Assignment Form must correspond to the
name as written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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