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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Event Reported): DECEMBER 31, 1996
LXR BIOTECHNOLOGY INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
1-12968 68-0282856
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(Commission file number) (IRS employer identification no.)
1401 MARINA WAY SOUTH, RICHMOND, CALIFORNIA 94804
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(Address of principal executive offices) (Zip code)
(510) 412-9100
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(Registrant's telephone number, including area code)
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS.
LXR Biotechnology Inc. ("LXR" or the "Company") has closed private
placements of common stock totalling approximately $10.4 million at $2.00 per
share (the "Offerings"). The placements resulted in the issuance of 5,201,350
shares (the "Shares"). The Company also issued an additional 534,385 shares, and
warrants to purchase 458,858 shares at an exercise price of $2.20 per share (the
"Warrants"), for services rendered in connection with the Offerings.
Substantially all of the net proceeds of the Offerings will be used by LXR for
the research and development of its products and for general corporate purposes.
Prior to the Offerings, LXR had outstanding 16,006,940 shares of common
stock and options and warrants and other rights to purchase up to an additional
approximately 2,113,000 shares of common stock. The Offerings bring the total
number of shares of the Company's common stock outstanding to approximately 21.7
million and options, warrants and other rights to purchase shares of common
stock outstanding to approximately 2.6 million.
The Shares were offered and sold without registration under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance upon the
exemptions provided by Section 4(2) of the Securities Act and/or Rule 506 of
Regulation D promulgated by the Securities and Exchange Commission (the
"Commission") thereunder. The Shares were also offered and sold in reliance upon
exemptions from registration or qualification under certain state securities
laws.
LXR filed a registration statement on Form S-3 covering the resale of
the Shares and the common stock underlying the Warrants with the Securities and
Exchange Commission on January 17, 1997. The Company has agreed to use its best
efforts to cause such registration statement to become effective and to maintain
the effectiveness of such registration statement until the securities registered
therein may be sold under Rule 144, subject to certain exceptions.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
1.03 Sales Agency Agreement dated December 11,
1996 between the Company and Sunrise
Securities Corp.
4.04 Form of Share Purchase Warrant of the
Company
4.05 Form of Registration Rights Agreement dated
December 11, 1996
4.06 Form of Registration Rights Agreement dated
December 12, 1996
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
LXR BIOTECHNOLOGY INC.
Date: January 31, 1997 By /s/ L. David Tomei
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L. David Tomei, Chief Executive Officer
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EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
1.03 Sales Agency Agreement dated
December 11, 1996 between the Company
and Sunrise Securities Corp.
4.04 Form of Share Purchase Warrant of the
Company
4.05 Form of Registration Rights Agreement
dated December 11, 1996
4.06 Form of Registration Rights Agreement
dated December 12, 1996
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
LXR BIOTECHNOLOGY INC.
Date: January __, 1997 By:_________________________________________
L. David Tomei, Chief Executive Officer
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Exhibit 1.03
LXR BIOTECHNOLOGY INC.
A minimum of 2,750,000 and
a maximum of 7,500,000 shares of Common Stock
SALES AGENCY AGREEMENT
Sunrise Securities Corp.
135 East 57th Street
New York, New York 10022
December 11, 1996
Dear Sirs:
LXR Biotechnology Inc., a Delaware corporation (the "Company"),
proposes to offer for sale in a private offering in the United States (the
"Offering"), pursuant to Rule 506 of Regulation D ("Regulation D") under the
Securities Act of 1933, as amended (the "Act"), a minimum of 2,750,000 and a
maximum of 7,500,000 shares of Common Stock, par value $0.0001 per share (the
"Shares") (including "Affiliate Shares", as hereinafter defined, if any). This
is to confirm our agreement concerning your acting as our exclusive placement
agent (the "Placement Agent") in connection with the Offering.
The Company has prepared and has delivered to the Placement Agent
copies of a confidential private offering memorandum, dated October 30, 1996,
relating to, among other things, the Company, the Shares and the terms of the
sale of the Shares. Such confidential private offering memorandum, including all
exhibits thereto and all documents delivered therewith and incorporated by
reference therein, is referred to herein as the "Memorandum" unless such
confidential private offering memoranda or any such exhibits or documents shall
be supplemented or amended in accordance with this Agreement, in which event the
term "Memorandum" shall refer to such confidential private offering memorandum
and such exhibits and documents as so supplemented or amended from and after the
time of delivery to the Placement Agent of such supplement or amendment.
1. Appointment of Placement Agent.
On the basis of the representations and warranties contained herein,
and subject to the terms and conditions set forth herein, the Company hereby
appoints you as its Placement Agent and grants to you the exclusive right to
offer, as its agent, the Shares pursuant to the terms of this Agreement. On the
basis of such representations and warranties, and subject to such conditions,
you hereby accept such appointment and agree to use your best efforts to secure
subscriptions to purchase a minimum of 2,750,000 and a maximum of 7,500,000
Shares pursuant to the terms of this Agreement. The agency created hereby is not
terminable by the Company except upon termination of the Offering or upon
expiration of the Offering Period (as hereinafter defined) in accordance with
the terms of this Agreement.
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2. Terms of the Offering.
(a) A minimum of 2,750,000 and a maximum of 7,500,000 Shares shall
be offered for sale to prospective investors in this Offering ("Prospective
Investors") at a purchase price equal to $2.00 per Share (the "Purchase Price").
Officers, directors and employees of the Placement Agent may purchase Shares on
the same terms and conditions as other investors (the "Affiliate Shares"). The
Affiliate Shares shall be included in determining whether the minimum and
maximum number of Shares have been subscribed for, and all references herein to
subscriptions from Prospective Investors shall be deemed to include the
Affiliate Shares.
(b) The Offering shall commence on the date hereof and shall
expire at 5:00 P.M., New York time, on December 31, 1996. Such period, as the
same may be so extended, shall hereinafter be referred to as the "Offering
Period".
(c) Each Prospective Investor who desires to purchase Shares shall
be required to deliver to the Placement Agent one copy of a subscription
agreement in the form annexed to the Memorandum (a "Subscription Agreement"),
including the investor questionnaire, and payment in the amount necessary to
purchase the number of Shares such Prospective Investor desires to purchase. The
Placement Agent shall not have any obligation to independently verify the
accuracy or completeness of any information contained in any Subscription
Agreement or the authenticity, sufficiency or validity of any check or other
form of payment delivered by any Prospective Investor in payment for Shares.
(d) Pursuant to an Amended and Restated Escrow Agreement, dated as
of November 4, 1996 (the "Escrow Agreement"), the Placement Agent has
established a special account with the United States Trust Company of New York
(the "Escrow Agent") entitled "LXR Biotechnology Inc. - Escrow Account" (the
"Special Account"). The Placement Agent shall deliver each check received from a
Prospective Investor to the Escrow Agent for deposit in the Special Account and
shall deliver the executed copy of the Subscription Agreement received from such
Prospective Investor to the Company. The Company shall notify the Placement
Agent promptly of the acceptance or rejection of any subscription. The Company
shall not unreasonably reject any subscription.
(e) If subscriptions to purchase at least 2,750,000 Shares are not
received from Prospective Investors prior to the expiration of the Offering
Period and accepted by the Company, the Offering shall be canceled, all funds
received by the Escrow Agent on behalf of the Company shall be refunded in full
without interest, and this Agreement and the agency created hereby shall be
terminated without any further obligation on the part of either party, except as
provided in Section 10 hereof.
3. Closing.
(a) Subject to the conditions set forth in Section 8 hereof, if
subscriptions to purchase 2,750,000 Shares have been received prior to the
expiration of the Offering Period and accepted by the Company, the initial
closing under this Agreement (the "Closing") shall be held
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at the offices of Squadron, Ellenoff, Plesent & Sheinfeld, LLP ("SEP&S"), 551
Fifth Avenue, New York, New York, at 10:00 A.M., New York time, as soon as
practicable after the Placement Agent receives notice that subscriptions to
purchase at least 2,750,000 Shares (including Affiliate Shares) have been so
accepted or at such other place, time and/or date as the Company and the
Placement Agent shall agree upon. The Company shall provide the notice required
by the preceding sentence as promptly as practicable. The date upon which the
Closing is held shall hereinafter be referred to as the "Closing Date."
(b) Subject to the conditions set forth in Section 8 hereof, if,
subsequent to the date the subscriptions referred to in Section 3(a) hereof are
received and accepted and prior to the expiration of the Offering Period,
additional subscriptions to purchase Shares are received from Prospective
Investors, which subscriptions are accepted by the Company, one or more
additional closings under this Agreement (each, an "Additional Closing") shall
be held at the offices of SEP&S at 10:00 A.M., New York time, as soon as
practicable after the Placement Agent receives notice from the Company that
additional subscriptions for at least an additional 500,000 Shares (except with
respect to the final closing which can be for any amount of Shares) have been so
accepted, or at such other place, time or date as the Company and the Placement
Agent shall agree upon. The Company shall notify the Placement Agent as promptly
as practicable whether any additional subscriptions so received have been
accepted. The date upon which any Additional Closing is held shall hereinafter
be referred to as an "Additional Closing Date."
Notwithstanding anything contained here into the contrary, in no event
shall the Company accept subscriptions to purchase in excess of 7,500,000 Shares
(including Affiliate Shares).
(c) Promptly after the Closing Date, or an Additional Closing
Date, as the case may be, the Company shall deliver to the purchasers of Shares
certificates representing the Shares to which they are entitled.
4. Compensation.
(a) If subscriptions to purchase 2,750,000 Shares (including
Affiliate Shares) are received from Prospective Investors prior to the
expiration of the Offering Period and accepted by the Company, you shall be
entitled, as compensation for your services as Placement Agent under this
Agreement, to an amount equal to 8% of the gross proceeds received by the
Company from the sale of the Shares. Such compensation is payable by the Company
on the Closing Date, or an Additional Closing Date, as the case may be, with
respect to the Shares sold on such date and shall be paid in Shares of the
Company valued at $1.84 per share.
(b) If subscriptions to purchase at least 2,750,000 Shares
(including Affiliate Shares) have been received from Prospective Investors prior
to the expiration of the Offering Period and accepted by the Company, the
Company shall issue to you or your designees, in addition to the amount set
forth in Section 4(a) above, warrants (individually, a "Warrant" and
collectively, the "Warrants") to purchase a number of Shares of the Company
equal to 8% of the aggregate number of Shares issued in the Offering, including
shares issued to the Placement Agent
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pursuant to Sections 4(a) and 7(b). Each Warrant will entitle the holder thereof
for a five-year period commencing on the date of issuance to purchase one Common
Share of the Company at an exercise price equal to 110% of the Purchase Price
per share (the "Warrant Shares"). The Warrants shall be in the form attached
hereto as Exhibit I. The Company shall only be obligated to issue Shares or
Warrants pursuant to Sections 4(a) and/or (b) to accredited persons who make
appropriate investment representations, and to the extent that such is not
contrary to applicable securities law.
(c) Notwithstanding anything contained herein to the contrary, the
number of Shares upon which the commission provided for in Section 4(a) and the
Warrants described in Section 4(b) shall be based shall include Shares with
respect to which the Company unreasonably rejected subscriptions.
(d) If the Company terminates the Offering for any reason (other
than due to a breach by the Placement Agent or the inability of the Placement
Agent to consummate the Offering by December 31, 1996), prior to the end of the
Offering Period, and if within six months of such termination, the Company
consummates a sale of any of its securities other than in connection with an
acquisition of the Company, the Company shall pay the Placement Agent at the
time of the consummation of such transaction a fee equal to 10% of the gross
sales price of such securities and shall issue to the Placement Agent Warrants
to purchase a number of shares equal to 8% of the number of securities so sold
(including commission shares). The Warrants shall be in the form attached hereto
as Exhibit I.
5. Representations and Warranties.
(a) Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Placement Agent that:
(i) The Memorandum, at all times during the period from
the date hereof to and including the later of the Closing Date and the
expiration of the Offering Period, and the last Additional Closing Date (if
any), does not, and during such period will not, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, all in light of the
circumstances under which they were made. Each contract, agreement, instrument,
lease, license or other document described in the Memorandum has been accurately
described therein in all material respects.
(ii) No document provided by the Company to Prospective
Investors pursuant to Section 6(a)(vii) hereof, and no oral information provided
by the Company to Prospective Investors, will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading when taken together
with other information provided to the Investor. Contracts to which the Company
is a party provided by the Company to Prospective Investors shall not be deemed
to contain any untrue statement of a material fact or to omit to state any
material fact if the contract so provided is a true, correct and complete copy
of such contract, as amended or modified through the date it is so provided.
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(iii) The Company has not, directly or indirectly,
solicited any offer to buy or offered to sell any Shares or any other securities
of the Company during the twelve-month period ending on the date hereof except
as may be described in the Memorandum or which would not be integrated with the
sale of the Shares in a manner that would require the registration of the
Offering pursuant to the Act and has no present intention to solicit any offer
to buy or offer to sell any Shares or any other securities of the Company other
than pursuant to this Agreement, pursuant to an agreement with Ventec or
pursuant to a registered public offering of the Company's securities which may
be commenced after the completion of the Offering, except in connection with the
Boehringer Mannheim transaction.
(iv) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware, with
full power and authority, and all necessary consents, authorizations, approvals,
orders, licenses, certificates, and permits of and from, and declarations and
filings with (collectively, "Consents"), all federal, state, local, foreign, and
other governmental authorities and all courts and other tribunals, to own,
lease, license and use its properties and assets and to carry on its business in
the manner described in the Memorandum, except where the failure to have
obtained such Consents would not have a material adverse effect on the Company.
The Company is duly qualified to do business and is in good standing in every
jurisdiction in which its ownership, leasing, licensing or use of property and
assets or the conduct of its business makes such qualification necessary. The
Company does not have any subsidiaries other than Optical Analytic, Inc.
(v) The Company has, as of the date hereof, an authorized
and outstanding capitalization as set forth in the Memorandum. Each outstanding
Share of the Company is duly authorized, validly issued, fully paid and
nonassessable and has not been issued and is not owned or held in violation of
any preemptive rights set forth in the Company's Certificate of Incorporation or
By-laws, each as amended to date, or any agreement to which the Company is a
party. There is no commitment, plan or arrangement to issue, and no outstanding
option, warrant or other right calling for the issuance of, any Share of the
Company or any security or other instrument which by its terms is convertible
into, exercisable for or exchangeable for Shares of the Company, except as may
be described in the Memorandum. There is outstanding no security or other
instrument which by its terms is convertible into or exchangeable for any class
of Share of the Company, except as may be described in the Memorandum.
(vi) The financial statements of the Company included in
the Memorandum (by incorporation by reference or otherwise) fairly present the
financial position, the results of operations, cash flows and the other
information purported to be shown therein at the respective dates and for the
respective periods to which they apply. Such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, are correct and complete
and are in accordance with the books and records of the Company. There has at no
time been a material adverse change in the financial condition, results of
operations, business, properties, assets, liabilities or future prospects of the
Company from the latest information set forth in the Memorandum, except as may
be described in the Memorandum as having occurred.
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(vii) There is no litigation, arbitration, governmental or
other proceeding (formal or informal) or claim or investigation pending or, to
the knowledge of the Company, threatened with respect to the Company or any of
its operations, businesses, properties or assets, except as may be described in
the Memorandum or such as individually or in the aggregate do not now have and
will not in the future have a material adverse effect upon the operations,
business, properties or assets of the Company. The Company is not in violation
of, or in default with respect to, any law, rule, regulation, order, judgment or
decree, except as may be described in the Memorandum or such as in the aggregate
do not now have and will not in the future have a material adverse effect upon
the operations, business, properties, assets or future prospects of the Company.
(viii) Except as described in the Memorandum, any real
property and buildings held under lease by the Company are held by it under
valid, subsisting and enforceable leases with such exceptions as in the
aggregate are not material.
(ix) Neither the Company, nor, to the knowledge of the
Company, any other party, is in violation or breach of or in default with
respect to, complying with any material provision of any contract, agreement,
instrument, lease, license, arrangement or understanding which is material to
the Company, and each such contract, agreement, instrument, lease, license,
arrangement and understanding is in full force and effect and is the legal,
valid and binding obligation of the parties thereto enforceable as to them in
accordance with its terms (subject to applicable bankruptcy, insolvency and
other laws affecting the enforceability of creditors' rights generally and to
general equitable principles). Except as described in the Memorandum, the
Company enjoys peaceful and undisturbed possession under all real property
leases under which it is operating. The Company is not in violation or breach
of, or in default with respect to, any term of its Certificate of Incorporation
or its By-laws, each as amended to date.
(x) To the best of the Company's knowledge, there is no
right under any patent, patent application, trademark, trademark application,
trade name, service mark, copyright, franchise or other intangible property or
asset (all of the foregoing being herein called "Intangibles") necessary to the
business of the Company as presently conducted or as the Memorandum indicates it
contemplates conducting, except as may be so designated in the Memorandum and
which the Company has the right or license to use as necessary. To the Company's
knowledge, except as described in the Memorandum, the Company has not infringed
nor is it infringing with respect to Intangibles of others, and the Company has
not received notice of infringement with respect to asserted Intangibles of
others. Except as described in the Memorandum, to the knowledge of the Company,
there is no Intangible of others which has had or may in the future have a
materially adverse effect on the financial condition, results of operations,
business, properties, assets, liabilities or future prospects of the Company.
(xi) The Company has all requisite power and authority to
execute, deliver and perform this Agreement, the Warrants, the Subscription
Agreements, the Escrow Agreement and the Registration Rights Agreement made by
the Company for the benefit of purchasers of Shares (the "Registration Rights
Agreement") (collectively, the "Operative Agreements") and to consummate the
transactions contemplated by the Operative Agreements. All necessary
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corporate proceedings of the Company have been duly taken to authorize the
execution, delivery and performance by the Company of the Operative Agreements.
This Agreement and the Escrow Agreement have been duly authorized, executed, and
delivered by the Company, are the legal, valid and binding obligations of the
Company and are enforceable as to the Company in accordance with their terms
(subject to applicable bankruptcy, insolvency and other laws affecting the
enforceability of creditors' rights generally and to general equitable
principles). The Subscription Agreements and the Registration Rights Agreement
have been duly authorized by the Company and, when executed and delivered by the
Company, will be the legal, valid and binding obligations of the Company
enforceable against it in accordance with their respective terms (subject to
applicable bankruptcy, insolvency and other laws affecting the enforceability of
creditors' rights generally and to general equitable principles). No consent,
authorization, approval, order, license, certificate or permit of or from, or
registration, qualification, declaration or filing with, any federal, state,
local, foreign or other governmental authority or any court or other tribunal is
required by the Company for the execution, delivery or performance by the
Company of the Operative Agreements or the consummation of the transactions
contemplated by the Operative Agreements, except (A) the filing of a Notice of
Sales of Securities on Form D pursuant to Regulation D and (B) such consents,
authorizations, approvals, registrations and qualifications as may be required
under securities or "blue sky" laws in connection with the issuance, sale and
delivery of the Shares pursuant to this Agreement. No consent of any party to
any contract, agreement, instrument, lease, license, arrangement or
understanding to which the Company is a party or to which any of their
properties or assets are subject is required for the execution, delivery or
performance of the Operative Agreements or the consummation of the transactions
contemplated by the Operative Agreements, which has not been or will not be
obtained prior to the Closing or any Additional Closings and the execution,
delivery and performance of the Operative Agreements, and the consummation of
the transactions contemplated by the Operative Agreements, will not violate,
result in a breach of, conflict with or (with or without the giving of notice or
the passage of time or both) entitle any party to terminate or call a default
under any such contract, agreement, instrument, lease, license, arrangement or
understanding (except for any such violation, breach or conflict which has been
properly waived thereunder), violate or result in a breach of any term of the
Company's Certificate of Incorporation or By-laws, each as amended to date, or
violate, result in a breach of or conflict with any law, rule, regulation,
order, judgment or decree binding on the Company, or to which any of its
operations, businesses, properties or assets are subject.
(xii) The Shares, the Warrants and the Warrant Shares
conform to all statements relating thereto contained in the Memorandum. The
Shares, when issued and delivered to the subscribers therefor, pursuant to the
terms of this Agreement and the Subscription Agreements, and the Warrant Shares,
when issued and delivered pursuant to the terms of the Warrants, shall be duly
authorized, validly issued, fully paid and nonassessable and shall not have been
issued in violation of any preemptive rights set forth in the Company's
Certificate of Incorporation or By-laws, each as amended to date, or any
agreement to which the Company is a party.
(xiii) Subsequent to the dates as of which information is
given in the Memorandum, and except as may otherwise be properly described in
the Memorandum, the Company has not (A) issued any securities, or, except in the
ordinary course of business, incurred any liability or obligation, primary or
contingent, for borrowed money, (B) entered into
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any transaction not in the ordinary course of business or (C) declared or paid
any dividend on its Shares.
(xiv) Neither the Company nor, to the knowledge of the
Company, any of its affiliates has, directly or through any agent, sold, offered
for sale or solicited offers to buy, nor will any of the foregoing directly buy
(other than pursuant to the Offering) any security of the Company, as defined in
the Act, which is or will be integrated with the sale of the Shares in a manner
that would require the registration, pursuant to the Act, of the Offering.
(b) Representations and Warranties of the Placement Agent. The
Placement Agent hereby represents and warrants to, and agrees with, the Company
as follows:
(i) The Placement Agent will not offer or sell any Shares
to any investor which the Placement Agent did not have reasonable grounds to
believe and did not believe, was an "accredited investor".
(ii) The Placement Agent will not offer or sell any Shares
by means of any form of general solicitation or general advertising, including,
without limitation, the following:
(A) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar medium or
broadcast over television or radio; and
(B) any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising.
(iii) The Placement Agent is a member in good standing of
the National Association of Securities Dealers, Inc. or a registered
representative thereof.
(iv) The Placement Agent will not make any additional
representations, warranties or covenants to any Investor or prospective Investor
on behalf of or purporting to bind the Company.
6. Covenants.
(a) Covenants of the Company. The Company covenants to
the Placement Agent that it will:
(i) Notify you immediately, and confirm such
notice promptly in writing, (A) when any event shall have occurred during the
period commencing on the date hereof and ending on the later of the Closing Date
and the expiration of the Offering Period and the last Additional Closing Date
(if any) as a result of which the Memorandum would include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (B) of
the receipt of any notification with respect to the modification, rescission,
withdrawal or suspension of the qualification or registration of the Shares or
of an exemption from such registration or qualification in any jurisdiction. The
Company will use its best efforts to prevent the issuance
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of any such modification, rescission, withdrawal or suspension and, if any such
modification, rescission, withdrawal or suspension is issued and you so request,
to obtain the lifting thereof as promptly as possible.
(ii) Not supplement or amend the Memorandum unless you
shall have approved of such supplement or amendment in writing. If, at any time
during the period commencing on the date hereof and ending on the later of the
Closing Date and the expiration of the Offering Period or the last Additional
Closing Date (if any), any event shall have occurred as a result of which the
Memorandum contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or if, in the opinion of counsel to the
Company or counsel to the Placement Agent, it is necessary at any time to
supplement or amend the Memorandum to comply with the Act, Regulation D or any
applicable securities or "blue sky" laws, the Company will promptly prepare an
appropriate supplement or amendment (in form and substance satisfactory to you)
which will correct such statement or omission or which will effect such
compliance.
(iii) Deliver without charge to the Placement Agent such
number of copies of the Memorandum and any supplement or amendment thereto as
may reasonably be requested by the Placement Agent.
(iv) Not, during the Offering Period, directly or
indirectly, solicit any offer to buy from, or offer to sell to any person any
Shares except through the Placement Agent, through Ventec or in connection with
the Boehringer Mannheim transaction.
(v) Not, during the Offering Period, solicit any offer to
buy or offer to sell Shares by any form of general solicitation or advertising,
including, without limitation, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar medium or
broadcast over television or radio or any seminar or meeting whose attendees
have been invited by any general solicitation or advertising.
(vi) Use its best efforts to qualify or register the
Shares for offering and sale under, or establish an exemption from such
qualification or registration under, the securities or "blue sky" laws of such
jurisdictions as you may reasonably request. The Company will not consummate any
sale of Shares in any jurisdiction or in any manner in which such sale may not
be lawfully made. The Company will not be required to consent to any general
service of process or qualify to do business in any state.
(vii) At all times during the period commencing on the date
hereof and ending on the later of the Closing Date and the expiration of the
Offering Period and the last Additional Closing Date (if any), provide to each
Prospective Investor or his purchaser representative, if any, on request, such
information (in addition to that contained in the Memorandum) concerning the
Offering, the Company and any other relevant matters as it possesses or can
acquire without unreasonable effort or expense and extend to each Prospective
Investor or his purchaser representative, if any, the opportunity to ask
questions of, and receive answers from, the Company concerning the terms and
conditions of the Offering and the business of the Company and to obtain any
other additional information, to the extent it possesses the same or
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can acquire it without unreasonable effort or expense, as such Prospective
Investor or purchaser representative may consider necessary in making an
informed investment decision or in order to verify the accuracy of the
information furnished to such Prospective Investor or purchaser representative,
as the case may be, subject to appropriate confidentiality restrictions.
(viii) Before accepting any subscription to purchase Shares
from, or making any sale to, any Prospective Investor, have reasonable grounds
to believe and actually believe that (A) such Prospective Investor meets the
suitability requirements for investing in the Shares set forth in the Memorandum
and (B) such Prospective Investor is an accredited investor.
(ix) Notify you promptly of the acceptance or rejection of
any subscription. The Company shall not unreasonably reject any subscription for
Shares unless it pays the Placement Agent its compensation pursuant to Section 4
with respect thereto. Any subscription unreasonably rejected shall be deemed to
have been accepted for purposes of determining whether at least 2,750,000 Shares
(including Affiliate Shares) have been sold solely for the purpose of
determining whether the Placement Agent is entitled to its compensation pursuant
to Section 4 hereof and this subsection (ix).
(x) File five (5) copies of a Notice of Sales of
Securities on Form D with the Securities and Exchange Commission (the
"Commission") no later than 15 days after the first sale of the Shares. The
Company shall file promptly such amendments to such Notices on Form D as shall
become necessary and shall also comply with any filing requirement imposed by
the laws of any state or jurisdiction in which offers and sales are made. The
Company shall furnish you with copies of all such filings.
(xi) Place the following legend on all certificates
representing the Shares and the Warrants:
"The securities represented hereby have not been
registered under the Securities Act of 1933, as amended or any
state securities laws and neither the securities nor any
interest therein may be offered, sold, transferred, pledged or
otherwise disposed of except pursuant to an effective
registration statement under such act or such laws or an
exemption from registration under such act and such laws
which, in the opinion of counsel for the holder, which counsel
and opinion are reasonably satisfactory to counsel for this
corporation, is available."
(xii) Not, directly or indirectly, engage in any act or
activity which may jeopardize the status of the offering and sale of the Shares
as exempt transactions under the Act or under the securities or "blue sky" laws
of any jurisdiction in which the Offering may be made. Without limiting the
generality of the foregoing, and notwithstanding anything contained herein to
the contrary, the Company shall not, during the six (6) months following
completion of the Offering, (A) directly or indirectly, engage in any offering
of securities which, if integrated with the Offering in the manner prescribed by
Rule 502(a) of Regulation D and applicable releases of the Commission, may
jeopardize the status of the Offering and sale of the Shares as exempt
transactions under Regulation D or (B) engage in any offering of securities,
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<PAGE> 11
without the opinion of counsel reasonably satisfactory to the Placement Agent,
to the effect that such offering would not result in integration with this
Offering, or if integration would so result, that such integration would not
jeopardize the status of this Offering as an exempt transaction under Regulation
D.
(xiii) Apply the net proceeds from the sale of the Shares
for the purposes set forth under the caption "Use of Proceeds" in the Memorandum
in substantially the manner indicated thereunder.
(xiv) Not, during the period commencing on the date hereof
and ending on the later of the Closing Date and the expiration of the Offering
Period and the last Additional Closing Date (if any), issue any press release or
other communication or hold any press conference with respect to the Company,
its financial condition, results of operations, business, properties, assets or
liabilities or the Offering, without your prior written consent.
(xv) If at least 2,750,000 Shares are sold pursuant to
this Agreement, the Company agrees (i) not to offer, issue, sell, contract to
sell, grant any option for the sale of or otherwise dispose of, directly or
indirectly, any share (or any security or other instrument which by its term is
convertible into, exercisable for or exchangeable for shares) at a price per
share less than the Purchase Price, except for the Stock Plan Option Shares and
Shares issuable upon the exercise of warrants and options outstanding on the
date hereof which are described in the Memorandum for 12 months after the date
of the Closing, without your written consent, and (ii) not to offer any of its
securities under Regulation S promulgated under the Act for a period of 12
months after the date of the Closing, provided, however, that nothing herein
shall limit the Company's ability to grant options to employees, directors and
consultants in the ordinary course of business, and to issue shares on exercise
of such options and, provided further, however, that the Company may effect a
separate offering of up to $1,500,000 to be sold contemporaneously with the
Offering, solely to foreign investors in an offering complying with Regulation
D, at a price per share not less than the Purchase Price and upon additional
terms and conditions (including but not limited to those concerning investor
suitability, registration rights and restrictions on transfer, sale or
disposition of shares) no more favorable than those offered to Prospective
Investors pursuant to the Offering. It is acknowledged that to the extent shares
are sold in such foreign offering, the total number of shares issuable under
this Agreement shall be reduced by such amount. It is further acknowledged that
shares sold in the foreign offering shall not be counted toward the minimum of
2,750,000 shares for the Offering.
(xvi) For a period of five years after the date hereof,
furnish you, without charge, the following:
(A) within 90 days after the end of each fiscal
year, three (3) copies of financial statements certified by independent
certified public accountants, including a balance sheet, statement of income and
statement of cash flows of the Company and its then existing subsidiaries, with
supporting schedules, prepared in accordance with generally accepted accounting
principles, as at the end of such fiscal year and for the 12 months then ended,
which may be on a consolidated basis, and, within 45 days after the end of each
fiscal quarter, three (3) copies of unaudited interim financial statements, as
at the end of such quarter and for the three
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<PAGE> 12
(3) months then ended, copies of all of which financial statements shall also be
furnished to the purchasers in this Offering;
(B) as soon as practicable after they have been
sent to stockholders of the Company or filed with the Commission, three (3)
copies of each annual and interim financial and other report or communication
sent by the Company to its stockholders or filed with the Commission; and
(C) as soon as practicable, two copies of every
press release and every material news item and article in respect of the Company
or its affairs which was released by the Company.
(xvii) Not, for a period of one (1) year from the date
hereof, solicit any offer to buy from or offer to sell (except in an
underwritten public offering) to any person introduced to the Company by you in
connection with the Offering, who is not a stockholder of the Company at the
time of such solicitation, directly or indirectly, any securities of the Company
or of any other entity, or provide the name of any such person to any other
securities broker or dealer or selling agent, except as otherwise required by
law. In the event that the Company or any of its officers, directors or
affiliates, directly or indirectly, solicits offers to buy from or offers to
sell to any such person any such securities or provides the name of any such
person to any other securities broker or dealer or selling agent, and such
person purchases such securities or purchases securities from any such other
securities broker or dealer or selling agent within such one year period except
in connection with an underwritten public offering, the Company shall pay to the
Placement Agent an amount equal to 10% of the aggregate purchase price of the
securities so purchased by such person. Set forth on Schedule A hereto is a list
of persons and entities introduced to the Company by the Placement Agent.
(xviii) Comply in all respects with its obligations under the
Operative Agreements.
(xix) Not, prior to the completion of the Offering, bid
for, purchase, attempt to induce others to purchase, or sell, directly or
indirectly, any Shares or any other securities of the Company of the same class
and series as the Shares in violation of the provisions of Rule 10b-6 under the
Exchange Act.
(xx) For a period beginning on the date hereof and ending
on the earlier of (a) the date in which persons or entities purchasing Shares in
this Offering hold less than 30% of the Shares (or successor securities)
purchased by them or (b) seven years from the date hereof, notify the Placement
Agent of all Board of Directors meetings, at the time and in the manner in which
it informs the directors, and permit a representative of the Placement Agent to
attend and observe all such meetings; provided, however, that if in the
reasonable opinion of the Company's legal counsel, the presence of such
representative at a particular meeting or portion thereof would jeopardize
certain confidentiality privileges, such representative may be excluded from
such meetings or portions thereof, but only to the minimum extent required to
protect such confidentiality. The Company shall reimburse the Placement Agent
for the travel costs and
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<PAGE> 13
expenses incurred in sending a representative to Board of Directors meetings, in
amounts not to exceed $2,000 per meeting.
(xxi) To register the Shares purchased pursuant to the
Offering, including Shares issued to the Placement Agent pursuant to Sections
4(a) and 7(b), and the Warrant Shares in accordance with the terms and
conditions set forth in the Registration Rights Agreement.
(b) Covenants of the Placement Agent.
(i) The Placement Agent will not accept the subscription
of any person unless immediately before accepting such subscription the
Placement Agent has reasonable grounds to believe and does believe that (A) such
person is an accredited investor and (B) all representations made and
information furnished by such person in the Subscription Agreement and related
documents are true and correct in all material respects. The Placement Agent
agrees to notify the Company promptly if the Placement Agent shall, at any time
during the period after delivery of the documents furnished by such person to
the Company in connection with subscription for Shares and immediately before
the sale of Shares to such person, no longer reasonably believes one or more of
the foregoing matters with respect to such person.
(ii) The Placement Agent will not solicit purchasers of
Shares other than in the jurisdictions in which such solicitation may, upon the
advice of counsel, be made under applicable securities or "blue sky" laws and in
which the Placement Agent is qualified so to act.
(iii) The Placement Agent will not sell any Shares to any
investor unless a Memorandum is furnished to such investor within a reasonable
time prior thereto.
(iv) Upon notice from the Company that the Memorandum is
to be amended or supplemented (which the Company will promptly give upon
becoming aware of any untrue statement of a material fact required to be stated
in the Memorandum or omission to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading), the Placement Agent will immediately cease use of the
Memorandum until the Placement Agent has received such amendment or supplement
and thereafter will make use of the Memorandum only as so amended or
supplemented, and the Placement Agent will deliver a copy of such amendment or
supplement to each Prospective Investor to whom a copy of the Memorandum had
previously been delivered (and who had not returned such copy) and whose
subscription had not been rejected.
7. Payment of Expenses.
(a) The Company hereby agrees to pay all fees, charges and
expenses incident to the performance by the Placement Agent of its obligations
hereunder, including, without limitation, all fees, charges, and expenses in
connection with (i) the preparation, printing, reproduction, filing,
distribution and mailing of the Memorandum, the Operative Agreements and all
other documents relating to the offering, purchase, sale and delivery of the
Shares, and any supplements or amendments thereto, including the fees and
expenses of counsel to the Company, and the cost of all copies thereof, (ii) the
issuance, sale, transfer and delivery of the
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<PAGE> 14
Shares and the Warrants, including any transfer or other taxes payable thereon
and the fees of any Transfer Agent, Warrant Agent or Registrar, (iii) the
registration or qualification of the Shares or the securing of an exemption
therefrom under state or foreign "blue sky" or securities laws, including,
without limitation, filing fees payable in the jurisdictions in which such
registration or qualification or exemption therefrom is sought, the costs of
preparing preliminary, supplemental and final "Blue Sky Surveys" relating to the
offer and sale of the Shares and the fees and disbursements of counsel to the
Placement Agent in connection with such "blue sky" matters, (iv) the filing
fees, if any, payable to the Commission; and (v) the retention of the Escrow
Agent, including the fees and expenses of the Escrow Agent for serving as such
and the fees and expenses of its counsel, provided that the total amount of such
expenses shall not exceed the 2% cap described in paragraph (b) below.
(b) If subscriptions to purchase at least 2,750,000 Shares
(including the Affiliate Shares) are received prior to the expiration of the
Offering Period and accepted by the Company, the Company shall pay to the
Placement Agent a non-accountable expense allowance equal to 2% of the gross
proceeds. Such amounts (less amounts, if any, previously paid to you in respect
of such non-accountable expense allowance under Section 7(a) above or otherwise)
shall be paid by the Company in Shares of the Company valued at $1.84 per share.
8. Conditions of Placement Agent's Obligations. The obligations
of the Placement Agent pursuant to this Agreement shall be subject, in its
discretion, to the continuing accuracy of the representations and warranties of
the Company contained herein and in each certificate and document contemplated
under this Agreement to be delivered to the Placement Agent, as of the date
hereof and as of the Closing Date (and, if applicable, each Additional Closing
Date) to the performance by the Company of its obligations hereunder, and to the
following conditions:
(a) At the Closing and each Additional Closing, as the case may
be, the Placement Agent shall have received the favorable opinion of Fenwick &
West LLP, counsel for the Company, and Morrison and Foerster LLP, patent counsel
for the Company, respectively, each dated the date of delivery, addressed to the
Placement Agent, in substantially the forms of Exhibit II-1 and Exhibit II-2
hereto, respectively.
(b) On or prior to the Closing Date and each Additional Closing
Date, as the case may be, the Placement Agent shall have been furnished such
information, documents and certificates as it may reasonably require for the
purpose of enabling it to review the matters referred to in this Section 8 and
in order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties, covenants, agreements or conditions herein
contained, or as it may otherwise reasonably request.
(c) At the Closing, and each Additional Closing, as the case may
be, the Placement Agent shall have received a certificate of the chief executive
officer and of the chief financial officer of the Company, dated the Closing
Date or such Additional Closing Date, as the case may be, to the effect that, as
of the date of this Agreement and as of the Closing Date or such Additional
Closing Date, as the case may be, the representations and warranties of the
Company contained herein were and are accurate, and that as of the Closing Date
or such Additional
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<PAGE> 15
Closing Date, as the case may be, the obligations to be performed by the Company
hereunder on or prior thereto have been fully performed.
(d) All proceedings taken in connection with the issuance, sale
and delivery of the Shares shall be reasonably satisfactory in form and
substance to you and your counsel.
(e) There shall not have occurred, at any time prior to the
Closing or, if applicable, an Additional Closing, as the case may be, (i) any
domestic or international event, act or occurrence which has materially
disrupted, or in your reasonable opinion will in the immediate future materially
disrupt, the securities markets; (ii) a general suspension of, or a general
limitation on prices for, trading in securities on the New York Stock Exchange
or the American Stock Exchange or in the over-the-counter market; (iii) any
outbreak of major hostilities or other national or international calamity
affecting securities markets in the U.S.; (iv) any banking moratorium declared
by a state or federal authority; (v) any moratorium declared in foreign exchange
trading by major international banks or other persons; (vi) any material
interruption in the mail service or other means of communication within the
United States; (vii) any material adverse change in the business, properties,
assets, results of operations or financial condition of the Company; or (viii)
any change in the market for securities in general or in political, financial or
economic conditions which, in your reasonable business judgment, makes it
inadvisable to proceed with the offering, sale and delivery of the Shares.
Any certificate or other document signed by any officer of the Company
and delivered to you or to your counsel as required hereunder shall be deemed a
representation and warranty by the Company hereunder as to the statements made
therein. If any condition to your obligations hereunder has not been fulfilled
as and when required to be so fulfilled, you may terminate this Agreement or, if
you so elect, in writing waive any such conditions which have not been fulfilled
or extend the time for their fulfillment. In the event that you elect to
terminate this Agreement, you shall notify the Company of such election in
writing. Upon such termination, neither party shall have any further liability
or obligation to the other except as provided in Section 10 hereof.
9. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the
Placement Agent, its officers, directors, stockholders, employees, agents,
advisors, consultants and counsel, and each person, if any, who controls the
Placement Agent within the meaning of Section 15 of the Act or Section 20(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), against
any and all loss, liability, claim, damage and expense whatsoever (which shall
include, for all purposes of this Section 9, without limitation, attorneys' fees
and any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation) as and when incurred arising out of, based upon or in connection
with (i) any untrue statement or alleged untrue statement of a material fact
contained in (A) the Memorandum or in any document delivered or statement made
pursuant to Section 6(a)(vii), or (B) in any application or other document or
communication (in this Section 9 collectively called an "application") executed
by or on behalf of the Company or based upon written information
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<PAGE> 16
furnished by or on behalf of the Company filed in any jurisdiction in order to
register or qualify the Shares under the "blue sky" or securities laws thereof
or in order to secure an exemption from such registration or qualification or
filed with the Commission; or any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, all in light of the circumstances in which made, unless
such statement or omission was made in reliance upon and in conformity with
written information furnished to the Company as stated in Section 9(b) with
respect to the Placement Agent expressly for inclusion in the Memorandum or in
any application, as the case may be; or (ii) any breach of any representation,
warranty, covenant or agreement of the Company contained in this Agreement or
any Operative Agreement. The foregoing agreement to indemnify shall be in
addition to any liability the Company may otherwise have, including liabilities
arising under this Agreement.
If any action is brought against the Placement Agent or any of its
officers, directors, stockholders, employees, agents, advisors, consultants and
counsel, or any controlling persons of the Placement Agent (an "indemnified
party"), in respect of which indemnity may be sought against the Company
pursuant to the foregoing paragraph, such indemnified party or parties shall
promptly notify the Company (the "indemnifying party") in writing of the
institution of such action (but the failure so to notify shall not relieve the
indemnifying party from any liability it may have other than pursuant to this
Section 9(a) unless such failure materially prejudices the indemnifying party),
and the indemnifying party shall promptly assume the defense of such action,
including the employment of counsel (reasonably satisfactory to such indemnified
party or parties) and payment of expenses. Such indemnified party shall have the
right to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless the
employment of such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such action or the
indemnifying party shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties to have charge of the defense
of such action or such indemnified party or parties shall have reasonably
concluded that there may be one or more legal defenses available to it or them
or to other indemnified parties which are different from or additional to those
available to one or more of the indemnifying parties and it would be
inappropriate for the same counsel to represent both parties due to actual or
potential differing interests between them, in any of which events such fees and
expenses of up to one counsel shall be borne by the indemnifying party and the
indemnifying party shall not have the right to direct the defense of such action
on behalf of the indemnified party or parties. Anything in this paragraph to the
contrary notwithstanding, the indemnifying party shall not be liable for any
settlement of any such claim or action effected without its written consent. The
Company agrees promptly to notify the Placement Agent of the commencement of any
litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of the Shares, the Memorandum or any
application.
(b) The Placement Agent agrees to indemnify and hold harmless the
Company, its officers, directors, employees, agents and counsel, and each other
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the Placement Agent in Section 9(a), but only with
respect to statements or omissions, if any, made in the Memorandum
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<PAGE> 17
in reliance upon and in conformity with written information furnished to the
Company as stated in this Section 9(b) with respect to the Placement Agent
expressly for inclusion in the Memorandum. For all purposes of this Agreement,
information set forth in the Memorandum under the caption "Placement Agent's
Limited History," and information set forth in the first sentence of the last
paragraph under the caption "Litigation," constitute the only information
furnished in writing by the Placement Agent expressly for inclusion in the
Memorandum. If any action shall be brought against the Company or any other
person so indemnified based on the Memorandum and in respect of which indemnity
may be sought against the Placement Agent pursuant to this Section 9(b), the
Placement Agent shall have the rights and duties given to the indemnifying
party, and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
9(a). The foregoing agreement to indemnify shall be in addition to any liability
the Placement Agent may otherwise have, including liabilities arising under this
Agreement.
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 9(a) or
9(b) but it is found in a final judicial determination, not subject to further
appeal, that such indemnification may not be enforced in such case, even though
this Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the Act, the Exchange
Act, or otherwise, then the Company (including for this purpose any contribution
made by or on behalf of any officer, director, employee, agent or counsel of the
Company or any controlling person of the Company), on the one hand, and the
Placement Agent (including for this purpose any contribution by or on behalf of
an indemnified party), on the other hand, shall contribute to the losses,
liabilities, claims, damages and expenses whatsoever to which any of them may be
subject, in such proportions as are appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Placement Agent, on the other
hand; provided, however, that if applicable law does not permit such allocation,
then other relevant equitable considerations such as the relative fault of the
Company and the Placement Agent in connection with the facts which resulted in
such losses, liabilities, claims, damages and expenses shall also be considered.
The relative benefits received by the Company, on the one hand, and the
Placement Agent, on the other hand, shall be deemed to be in the same proportion
as (x) the total proceeds from the Offering (net of compensation payable to the
Placement Agent pursuant to Section 4 hereof but before deducting expenses)
received by the Company, and (y) the compensation received by the Placement
Agent pursuant to Section 4 hereof.
The relative fault, in the case of an untrue statement, alleged untrue
statement, omission or alleged omission, shall be determined by, among other
things, whether such statement, alleged statement, omission or alleged omission
relates to information supplied by the Company or by the Placement Agent and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement, alleged statement, omission or alleged
omission. The Company and the Placement Agent agree that it would be unjust and
inequitable if the respective obligations of the Company and the Placement Agent
for contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages and expenses or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section 9(c). In no case shall the Placement Agent be responsible for
a portion of the contribution obligation in excess of the compensation received
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<PAGE> 18
by it pursuant to Section 4 hereof. No person guilty of a fraudulent
misrepresentation (within the meaning of Section (f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 9(c), each person, if any, who
controls the Placement Agent within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each officer, director, stockholder,
employee, agent and counsel of the Placement Agent shall have the same rights to
contribution as the Placement Agent and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and each officer, director, employee, agent and counsel of the
Company shall have the same rights to contribution as the Company, subject in
each case to the provisions of this Section 9(c). Anything in this Section 9(c)
to the contrary notwithstanding, no party shall be liable for contribution with
respect to the settlement of any claim or action effected without its written
consent. This Section 9(c) is intended to supersede any right to contribution
under the Act, the Exchange Act or otherwise.
10. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants and
agreements at the Closing Date, and such representations, warranties, covenants
and agreements, including the indemnity and contribution agreements contained in
Section 9, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Placement Agent or any indemnified
person, or by or on behalf of the Company or any person or entity which is
entitled to be indemnified under Section 9(b), and shall survive termination of
this Agreement or the issuance, sale and delivery of the Shares. In addition,
notwithstanding any election hereunder or any termination of this Agreement, and
whether or not the terms of this Agreement are otherwise carried out, the
provisions of Sections 6(a)(xvii), 7, 9, 10 and 12 shall survive termination of
this Agreement and shall not be affected in any way by such election or
termination or failure to carry out the terms of this Agreement or any part
thereof.
11. Notices. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to the
Placement Agent, shall be mailed, delivered or telexed or telegraphed and
confirmed by letter, to its address set forth above, or if sent to the Company,
shall be mailed, delivered or telexed or telegraphed and confirmed by letter, to
LXR Biotechnology Inc., 1401 Marina Way South, Richmond, CA 94804. All notices
hereunder shall be effective upon receipt by the party to which it is addressed.
12. Assignment. This Agreement shall not be assigned by any party
hereto without the prior written consent of the other parties hereto.
13. Parties. This Agreement shall inure solely to the benefit of,
and shall be binding upon, the Placement Agent and the Company and the persons
and entities referred to in Section 9 who are entitled to indemnification or
contribution and their respective successors, legal representatives and assigns
(which shall not include any purchaser, as such, of Shares), and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provision herein
contained.
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14. Construction. This Agreement shall be construed in accordance
with the laws of the State of New York, without giving effect to conflict of
laws.
15. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
If the foregoing correctly sets forth the understanding between us,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among us.
Very truly yours,
LXR BIOTECHNOLOGY INC.
By:___________________________
Name:_________________________
Title:________________________
Accepted as of the date first above written.
New York, New York
SUNRISE SECURITIES CORP.
By:__________________________
Name:________________________
Title:_______________________
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<PAGE> 20
SCHEDULE A
Persons/Entities Introduced to
Company by Placement Agent
(none)
20
<PAGE> 1
Exhibit 4.04
Warrant No. ________
Warrant to Purchase __________ Shares
SHARE PURCHASE WARRANT
To Purchase Shares of Common Stock (par value $0.0001)
of
LXR Biotechnology Inc.
(Delaware corporation)
Expires __________ __, 2001
<PAGE> 2
Warrant No. ________
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE
TRANSFERRED EXCEPT IN A TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR WHICH IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THAT ACT.
VOID AFTER 5:00 P.M. NEW YORK TIME, ON __________ __, 2001
LXR Biotechnology Inc.
Warrant to Purchase Shares of Common Stock
__________ Shares
THIS CERTIFIES that, for good and valuable consideration received,
_______________________________ (the "Holder"), is entitled to subscribe for and
purchase from LXR Biotechnology Inc., a Delaware corporation (the "Company"),
upon the terms and conditions set forth herein, at any time or from time to time
until 5:00 P.M. New York City time on __________ __, 2001 (the "Expiration
Date"), all or any portion of __________ Shares of common stock of the Company,
par value $0.0001 per share, subject to adjustment as provided herein (the
"Warrant Shares"), at a price of $2.20 per share, subject to adjustment as
provided herein (the "Exercise Price"). This Warrant shall not be redeemable by
the Company. The term "Shares" as used herein shall mean the Company's Shares of
Common Stock, par value $0.0001 per share. This Warrant may be sold,
transferred, assigned or hypothecated at any time and the term the "Holder" as
used herein shall include any transferee to whom this Warrant has been
transferred.
1. Method of Exercise. This Warrant may be exercised at any time
prior to the Expiration Date, as to the whole or any lesser number of Warrant
Shares, by the surrender of this Warrant (with the election at the end hereof
duly executed) to the Company at its office at 1401 Marina Way South, Richmond,
CA 94804-3745 or at such other place as may be designated in writing by the
Company, together with a certified or bank cashier's check payable to the order
of the Company in an amount equal to the Exercise Price multiplied by the number
of Warrant Shares for which this Warrant is being exercised. In lieu of the
payment of the Exercise Price, the Holder shall have the right (but not the
obligation), during the Exercise Period, to require the Company to convert this
Warrant, in whole or in part, into the Warrant Shares as provided for in this
Section (the "Conversion Right"). Upon exercise of the Conversion Right, the
Company shall deliver to the Holder (without payment by the Holder of the
Exercise Price) that number of shares of Common Stock equal to (i) the number of
Warrant Shares issuable upon exercise of the portion of the Warrant being
converted, multiplied by (ii) the quotient obtained by dividing (x) the value of
the Warrant (on a per Warrant Share basis) at the time the Conversion Right is
exercised (determined by subtracting the Exercise Price from the Current Market
Price (as determined pursuant to Section 5(e) below), for the shares of Common
Stock issuable upon exercise of the Warrant immediately prior to the exercise of
the Conversion Right) by (y) the Current Market Price of one share of Common
Stock immediately
<PAGE> 3
prior to the exercise of the Conversion Right. The Conversion Rights provided
under this Section may be exercised in whole or in part and at any time and from
time to time while any Warrants remain outstanding. In order to exercise the
Conversion Right, the Holder shall surrender to the Company, at its offices,
this Warrant accompanied by the form of Subscription Agreement duly filled in
and signed and a duly completed Conversion Notice in the form attached hereto.
The presentation and surrender shall be deemed a waiver of the Holder's
obligation to pay all or any portion of the aggregate purchase price payable for
the Warrant Shares being issued upon such exercise of this Warrant. This Warrant
(or so much thereof as shall have been surrendered for conversion) shall be
deemed to have been converted immediately prior to the close of business on the
day of surrender of this Warrant for conversion in accordance with the foregoing
provisions. As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver to the Holder (i) a certificate or
certificates representing the largest number of whole Warrant Shares which the
Holder shall be entitled as a result of the conversion, and (ii) if such Warrant
is being converted in part only, a new Warrant exercisable for the number of
Warrant Shares equal to the unconverted portion of the Warrant. Upon any
exercise (which term, as used herein, shall include any exercise of the
Conversion Right) of this Warrant, in lieu of any fractional Warrant Shares to
which the Holder shall be entitled, the Company shall pay to the Holder cash in
accordance with the provisions of Section 5(d) hereof.
2. Issuance of Certificates. Upon each exercise of the Holder's
rights to purchase Warrant Shares, the Holder shall, as of the close of business
on such day, be deemed to be the holder of record of the Warrant Shares issuable
upon such exercise, notwithstanding that the transfer books of the Company shall
then be closed or certificates representing such Warrant Shares shall not then
have been actually delivered to the Holder. As soon as practicable after each
such exercise of this Warrant, the Company shall issue and deliver to the Holder
a certificate or certificates for the Warrant Shares issuable upon such
exercise, registered in the name of the Holder or its designee. If this Warrant
should be exercised in part only, upon surrender of this Warrant for
cancellation, the Company shall execute and deliver a new Warrant evidencing the
right of the Holder to purchase the balance of the Warrant Shares (or portions
thereof) subject to purchase hereunder.
3. Recording of Transfer. Any warrants issued upon the transfer
or exercise in part of this Warrant shall be numbered and shall be registered in
an Warrant Register as they are issued. The Company shall be entitled to treat
the registered holder of any Warrant on the Warrant Register as the owner in
fact thereof for all purposes and shall not be bound to recognize any equitable
or other claim to or interest in such Warrant on the part of any other person,
and shall not be liable for any registration or transfer of warrants which are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to bad
faith. This Warrant shall be transferable only on the books of the Company upon
delivery thereof duly endorsed by the Holder or by his or its duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. In all cases of transfer by an attorney,
executor, administrator, guardian or other legal representative, duly
authenticated evidence of his or its authority shall be produced. Upon any
registration of
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<PAGE> 4
transfer, the Company shall deliver a new warrant or warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
hereof, for another warrant, or other warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares (or portions thereof), upon surrender to the Company or its
duly authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause this Warrant to be transferred on its books to any person if
counsel to the Company reasonably requests a legal opinion that such transfer
does not violate the provisions of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations thereunder, unless such opinion is
delivered.
4. Reservation of Shares. The Company shall at all times reserve
and keep available out of its authorized and unissued Shares, solely for the
purpose of providing for the exercise of the warrants, such number of shares of
Shares as shall, from time to time, be sufficient therefor. The Company
covenants that all shares of Shares issuable upon exercise of this Warrant, upon
receipt by the Company of the full payment therefor, shall be validly issued,
fully paid, nonassessable and free of preemptive rights.
5. Exercise Price Adjustments. Subject to the provisions of this
Section 5, the Exercise Price in effect from time to time shall be subject to
adjustment, as follows:
(a) In case the Company shall at any time after the date
hereof (i) declare a dividend or make a distribution on the outstanding Shares
payable in shares of its capital stock or securities convertible into or
exchangeable for capital stock, (ii) subdivide the outstanding Shares, (iii)
combine the outstanding Shares into a smaller number of shares, or (iv) issue
any shares by reclassification of the Shares (other than a change in par value,
or from par value to no par value, or from no par value to par value), then, in
each case, the Exercise Price in effect, and the number of Shares issuable upon
exercise of the warrants outstanding, at the time of the record date for such
dividend or at the effective date of such subdivision, combination or
reclassification, shall be proportionately adjusted so that the holders of the
warrants after such time shall be entitled to receive upon exercise of the
warrant the aggregate number and kind of shares which, if such warrants had been
exercised immediately prior to such time, such holders would have owned upon
such exercise and immediately thereafter been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) In case the Company shall distribute to all holders
of Shares (including any such distribution made to the stockholders of the
Company in connection with a consolidation or merger in which the Company is the
surviving or continuing corporation) evidences of its indebtedness, cash, or
assets (other than distributions and dividends payable as contemplated by
Section 5(a) above), or rights, options, or warrants to subscribe for or
purchase Shares or securities convertible into or exchangeable for Shares, then,
in each case, the Exercise Price shall be adjusted by multiplying the Exercise
Price in effect immediately prior to the record date for the determination of
stockholders entitled to receive such distribution by a fraction, the numerator
of which shall be the Current Market Price (as determined pursuant to Section
5(e) hereof) per Share on such record date, less the fair market value (as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest
3
<PAGE> 5
error) of the portion of the evidences of indebtedness or assets so to be
distributed, or of such rights, options, or warrants or convertible or
exchangeable securities, or the amount of such cash, applicable to one share,
and the denominator of which shall be such Current Market Price per Share. Such
adjustment shall become effective at the close of business on such record date.
(c) Whenever there shall be an adjustment as provided in
this Section 5, the Company shall within 15 days thereafter cause written notice
thereof to be sent by registered mail, postage prepaid, to the Holder, at its
address as it shall appear in the Warrant Register, which notice shall be
accompanied by an officer's certificate setting forth the number of Warrant
Shares issuable hereunder and the exercise price thereof after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
(d) The Company shall not be required to issue fractions
of Shares or other shares of the Company upon the exercise of this Warrant. If
any fraction of a share would be issuable upon the exercise of this Warrant (or
specified portions thereof), the Company may issue a whole share in lieu of such
fraction or the Company may purchase such fraction for an amount in cash equal
to the same fraction of the Current Market Price of such Shares on the date of
exercise of this Warrant.
(e) The Current Market Price per Share on any date shall
be deemed to be the average of the daily closing prices for the five (5)
consecutive trading days immediately preceding the date in question. The closing
price for each day shall be the last reported sales price regular way or, in
case no such reported sale takes place on such day, the closing bid price
regular way, in either case on the principal national securities exchange on
which the Common Stock is listed or admitted to trading or, if the Common Stock
is not listed or admitted to trading on any national securities exchange, the
highest reported bid price for the Common Stock as furnished by the National
Association of Securities Dealers, Inc. through NASDAQ or a similar organization
if NASDAQ is no longer reporting such information. If on any such date the
Common Stock is not listed or admitted to trading on any national securities
exchange and is not quoted by NASDAQ or any similar organization, the fair value
of a share of Common Stock on such date, as determined in good faith by the
Board of Directors of the Company, whose determination shall be conclusive
absent manifest error, shall be used.
(f) No adjustment in the Exercise Price shall be required
if such adjustment is less than $0.05; provided, however, that any adjustments
which by reason of this Section 5 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 5 shall be made to the nearest cent or to the nearest
thousandth of a share, as the case may be.
(g) Upon each adjustment of the Exercise Price as a
result of the calculations made in this Section 5, the warrants shall thereafter
evidence the right to purchase, at the adjusted Exercise Price, that number of
Shares (calculated to the nearest hundredth) obtained by dividing (i) the
product obtained by multiplying the number of Shares purchasable upon exercise
of the warrants prior to adjustment of the number of Shares by the Exercise
Price in
4
<PAGE> 6
effect prior to adjustment of the Exercise Price by (ii) the Exercise Price in
effect after such adjustment of the Exercise Price.
6. (a) Consolidations and Mergers. In case of any
consolidation with or merger of the Company with or into another corporation
(other than a merger or consolidation in which the Company is the surviving or
continuing corporation and which does not result in any reclassification of the
outstanding Shares or the conversion of such outstanding Shares into shares of
other stock or other securities or property), or in case of any sale, lease or
conveyance to another corporation of the property and assets of any nature of
the Company as an entirety or substantially as an entirety (such actions being
hereinafter collectively referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise of this Warrant (in lieu of the number
of Shares theretofore deliverable) the kind and amount of shares of stock or
other securities, cash or other property which would otherwise have been
deliverable to a holder of the number of Shares upon the exercise of this
Warrant upon such Reorganization if this Warrant had been exercised in full
immediately prior to such Reorganization. In case of any Reorganization,
appropriate adjustment, as determined in good faith by the Board of Directors of
the Company, shall be made in the application of the provisions herein set forth
with respect to the rights and interests of the Holder so that the provisions
set forth herein shall thereafter be applicable, as nearly as possible, in
relation to any shares or other property thereafter deliverable upon exercise of
this Warrant. Any such adjustment shall be made by and set forth in a
supplemental agreement between the Company, or any successor thereto, and the
Holder and shall for all purposes hereof conclusively be deemed to be an
appropriate adjustment. The Company shall not effect any such Reorganization
unless upon or prior to the consummation thereof the successor corporation, or
if the Company shall be the surviving corporation in any such Reorganization and
is not the issuer of the shares of stock or other securities or property to be
delivered to holders of Shares outstanding at the effective time thereof, then
such issuer, shall assume by written instrument the obligation to deliver to the
Holder such shares of stock, securities, cash or other property as the Holder
shall be entitled to purchase in accordance with the foregoing provisions.
(b) In case of any reclassification or change of the
Shares issuable upon exercise of this Warrant (other than a change in par value
or from no par value to a specified par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of shares), or in case of any consolidation or merger of another
corporation into the Company in which the Company is the continuing corporation
and in which there is a reclassification or change (including a change to the
right to receive cash or other property) of the Shares (other than a change in
par value, or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), the Holder shall have the right thereafter to
receive upon exercise of this Warrant solely the kind and amount of shares of
stock and other securities, property, cash or any combination thereof receivable
upon such reclassification, change, consolidation or merger by a holder of the
number of Shares for which this Warrant might have been exercised immediately
prior to such reclassification, change, consolidation or merger. Thereafter,
appropriate provision shall be made for adjustments which shall be as nearly
equivalent as practicable to the adjustments in Section 5.
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<PAGE> 7
(c) The above provisions of this Section 6 shall
similarly apply to successive reclassifications and changes of Shares and to
successive consolidations, mergers, sales, leases, or conveyances.
7. Notice of Certain Events. In case at any time any of the
following occur:
(a) The Company shall take a record of the holders of its
Shares for the purpose of entitling them to receive a dividend or distribution
payable otherwise than in cash, or a cash dividend or distribution payable
otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) The Company shall offer to all the holders of its
Shares any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefor; or
(c) The Company shall take any action to effect any
reclassification or change of outstanding Shares or any consolidation, merger,
sale, lease or conveyance of property, described in Section 6; or
(d) The Company shall take any action to effect any
liquidation, dissolution or winding-up of the Company or a sale of all or
substantially all of its property, assets and business;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least
fifteen (15) days prior to (i) the date as of which the holders of record of
Shares to be entitled to receive any such dividend, distribution, rights,
warrants or other securities are to be determined, (ii) the date on which any
such offer to holders of Shares is made, or (iii) the date on which any such
reclassification, change of outstanding Shares, consolidation, merger, sale,
lease, conveyance of property, liquidation, dissolution or winding-up is
expected to become effective and the date as of which it is expected that
holders of record of Shares shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
change of outstanding shares, consolidation, merger, sale, lease, conveyance of
property, liquidation, dissolution or winding-up. Nothing herein shall allow a
Holder to delay or prevent any of the foregoing actions.
8. Registration Rights. (a) If, at any time during the five-year
period commencing on the date hereof the Company shall file a registration
statement (other than on Form S-4, Form S-8, or any successor form) with the
Securities and Exchange Commission (the "Commission") while any Warrants or
Warrant Shares are outstanding, the Company shall give all of the then holders
of any Warrants (the "Eligible Holders") at least 45 days' prior written notice
of the filing of such registration statement. If requested by any Eligible
Holder in writing within 30 days after receipt of any such notice, the Company
shall, at the Company's sole expense (other than the fees and disbursements of
counsel for the Eligible Holders and the
6
<PAGE> 8
underwriting discounts, if any, payable in respect of the Warrant Shares sold by
any Eligible Holder), register or qualify all or, at each Eligible Holder's
option, any portion of the Warrant Shares of any Eligible Holders who shall have
made such request, concurrently with the registration of such other securities,
all to the extent requisite to permit the public offering and sale of the
Warrant Shares through the facilities of all appropriate securities exchanges
and the over-the-counter market, and will use its best efforts through its
officers, directors, auditors, and counsel to cause such registration statement
to become effective as promptly as practicable. Notwithstanding the foregoing,
if the managing underwriter of any such offering shall advise the Company in
writing that, in its opinion, the distribution of all or a portion of the
Warrant Shares requested to be included in the registration concurrently with
the securities being registered by the Company would materially adversely affect
the distribution of such securities by the Company for its own account, then any
Eligible Holder who shall have requested registration of his or its Warrant
Shares shall delay the offering and sale of such securities (or the portions
thereof so designated by such managing underwriter) for such period, not to
exceed 90 days, as the managing underwriter shall request (the "Delay Period");
provided that if any securities of the Company are included in such registration
statement and are eligible for sale during the Delay Period for the account of
any person other than the Company, a pro rata portion of the securities which
were requested to be included and eligible for sale during the Delay Period
shall also be included in such registration statement and shall be eligible for
sale during the Delay Period.
(b) If, on any two occasions during the five-year period
commencing on the date hereof, the Company shall receive a written request from
Eligible Holders who in the aggregate own (or upon exercise of all Warrants then
outstanding would own) a majority of the total number of shares of Common Stock
then included (or upon such exercises would be included) in the Warrant Shares
(the "Majority Holders"), to register the sale of all or part of the Warrant
Shares, the Company shall, as promptly as practicable, prepare and file with the
Commission a registration statement sufficient to permit the public offering and
sale of the Warrant Shares (whether covered by such request from the Majority
Holders or by any other written request from any Eligible Holder received within
30 days after such Eligible Holder's receipt of the Company's notice, as
described in the last sentence of this Section 8(b)) through the facilities of
all appropriate securities exchanges and the over-the-counter market, and will
use its best efforts through its officers, directors, auditors, and counsel to
cause such registration statement to become effective as promptly as
practicable; provided, that the Company shall only be obligated to file one such
registration statement for which all expenses incurred in connection with such
registration (other than the fees and disbursements of counsel for the Eligible
Holders and underwriting discounts, if any, payable in respect of the Warrant
Shares sold by the Eligible Holders) shall be borne by the Company. Within three
business days after receiving any request contemplated by this Section 8(b), the
Company shall give written notice to all the other Eligible Holders, advising
each of them that the Company is proceeding with such registration and offering
to include therein all or any portion of any such other Eligible Holder's
Warrant Shares, provided that the Company receives a written request to do so
from such Eligible Holder within 30 days after receipt by him or it of the
Company's notice.
(c) Notwithstanding anything herein to the contrary, in
addition to the registration rights under Sections 8(a) and 8(b) above, the
Eligible Holder shall be entitled to the same registration rights and rights
included therein as the purchasers of securities of the
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<PAGE> 9
Company are entitled to pursuant to the Subscription Agreement, dated as of the
date hereof, among the purchasers described therein and the Company as to the
Warrant Shares.
(d) In the event of a registration pursuant to the
provisions of this Section 8, the Company shall use its best efforts to cause
the Warrant Shares so registered to be registered or qualified for sale under
the securities or blue sky laws of such jurisdictions as the Holder or such
holders may reasonably request; provided, however, that the Company shall not be
required to qualify to do business in any state by reason of this Section 8(d)
in which it is not otherwise required to qualify to do business or otherwise
subject itself to general service of process in any such state.
(e) The Company shall keep effective any registration or
qualification contemplated by this Section 8(a) or (b) and shall from time to
time amend or supplement each applicable registration statement, preliminary
prospectus, final prospectus, application, document and communication for such
period of time as shall be required to permit the Eligible Holders to complete
the offer and sale of the Warrant Shares covered thereby. The Company shall in
no event be required to keep any such registration or qualification in effect
for a period in excess of six months from the date on which the Eligible Holders
are first free to sell such Warrant Shares; provided, however, that, if the
Company is required to keep any such registration or qualification in effect
with respect to securities other than the Warrant Shares beyond such period, the
Company shall keep such registration or qualification in effect as it relates to
the Warrant Shares for so long as such registration or qualification remains or
is required to remain in effect in respect of such other securities.
(f) In the event of a registration pursuant to the
provisions of this Section 8, the Company shall furnish to each Eligible Holder
such number of copies of the registration statement and of each amendment and
supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement and
each supplement or amendment thereto (including each preliminary prospectus),
all of which shall conform to the requirements of the Act and the rules and
regulations thereunder, and such other documents, as any Eligible Holder may
reasonably request to facilitate the disposition of the Warrant Shares included
in such registration.
(g) In the event of a registration pursuant to the
provisions of this Section 8, the Company shall furnish each Eligible Holder of
any Warrant Shares so registered with an opinion of its counsel (reasonably
acceptable to the Eligible Holders) to the effect that (i) the registration
statement has become effective under the Act and no order suspending the
effectiveness of the registration statement, preventing or suspending the use of
the registration statement, any preliminary prospectus, any final prospectus or
any amendment or supplement thereto has been issued, nor has the Commission or
any securities or blue sky authority of any jurisdiction instituted or
threatened to institute any proceedings with respect to such an order, (ii) the
registration statement and each prospectus forming a part thereof (including
each preliminary prospectus), and any amendment or supplement thereto, complies
as to form with the Act and the rules and regulations thereunder, and (iii) such
counsel has no knowledge of any material misstatement or omission in such
registration statement or any prospectus, as amended or supplemented.
8
<PAGE> 10
(h) In the event of a registration pursuant to the
provision of this Section 8, the Company shall enter into a cross-indemnity
agreement and a contribution agreement, each in customary form, with each
underwriter, if any, and, if requested, enter into an underwriting agreement
containing conventional representations, warranties, allocation of expenses and
customary closing conditions, including, without limitation, opinions of counsel
and accountants' cold comfort letters, with any underwriter who acquires any
Warrant Shares.
(i) The Company agrees that until all the Warrant Shares
have been sold under a registration statement or pursuant to Rule 144 under the
Act, it shall, so long as it is so required by applicable law, timely file all
reports, statements and other materials required to be filed with the Commission
to permit holders of the Warrant Shares to sell such securities under Rule 144,
for a period of up to five years from the date hereof.
(j) Until such time as the Warrant Shares shall become
fully transferable under Rule 144 under the Act, the Company will not, without
the written consent of the Majority Holders, grant to any persons the right to
request the Company to register any securities of the Company, provided that the
Company may grant such registration rights to other persons so long as such
rights do not conflict with the rights of the Eligible Holders; provided,
however, that pro rata rights resulting from "underwriter cutbacks" shall be
deemed not to conflict with the rights of Eligible Holders.
(k) The Company may delay any requested registration
hereunder if the Company's Board of Directors determines in good faith that a
registration at such time would be materially detrimental to the Company
provided that any such delay shall not exceed 30 days and Company cannot provide
this notice more than twice in any 12 month period.
(l) The Company shall not be obligated to register any
shares that may be freely sold under Rule 144 or otherwise in a 91 day period,
nor to initiate a demand registration for less than $250,000 of Warrant Shares.
(m) Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless each Eligible Holder, its
officers, directors, partners, employees, agents and counsel, and each person,
if any, who controls any such person within the meaning of Section 15 of the Act
or Section 20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all loss, liability, charge, claim,
damage and expense whatsoever (which shall include, for all purposes of this
Section 8, without limitation, reasonable attorneys' fees and any and all
expense whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), as and when incurred,
arising out of, based upon, or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any registration
statement, preliminary prospectus or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, relating to
the sale of any of the Warrant Shares, or (B) in any application or other
document or communication (in this Section 8 collectively called an
"application") executed by or on behalf of the Company or based upon written
information furnished by or on behalf of the
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<PAGE> 11
Company filed in any jurisdiction in order to register or qualify any of the
Warrant Shares under the securities or blue sky laws thereof or filed with the
Commission or any securities exchange; or any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company with respect to such Eligible Holder by or on behalf of such person
expressly for inclusion in any registration statement, preliminary prospectus,
or final prospectus, or any amendment or supplement thereto, or in any
application, as the case may be, or (ii) any breach of any representation,
warranty, covenant or agreement of the Company contained in this Warrant. The
foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this Warrant.
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents or counsel, or any controlling
persons of such person (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of the
institution of such action (but the failure so to notify shall not relieve the
Company from any liability other than pursuant to this Section 8(m) and shall
not relieve the Company from any liability pursuant to this Section 8(m) except
to the extent the Company has been prejudiced in any material respect by such
failure) and the Company shall promptly assume the defense of such action,
including the employment of counsel (reasonably satisfactory to such indemnified
party or parties) and payment of expenses. Such indemnified party or parties
shall have the right to employ its or their own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless the employment of such counsel shall have
been authorized in writing by the Company in connection with the defense of such
action or the Company shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties to have charge of the defense
of such action or such indemnified party or parties shall have reasonably
concluded that there may be one or more legal defenses available to it or them
or to other indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses of one
counsel shall be borne by the Company, and the Company shall not have the right
to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this Section 8 to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent, which shall not be unreasonably withheld. The
Company shall not, without the prior written consent (which shall not be
unreasonably withheld) of each indemnified party that is not released as
described in this sentence, settle or compromise any action, or permit a default
or consent to the entry of judgment in or otherwise seek to terminate any
pending or threatened action, in respect of which indemnity may be sought
hereunder (whether or not any indemnified party is a party thereto), unless such
settlement, compromise, consent or termination includes an unconditional release
of each indemnified party from all liability in respect of such action. The
Company agrees promptly to notify the Eligible Holders of the commencement of
any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of any Warrant Shares or any preliminary
prospectus, prospectus, registration statement or amendment or supplement
thereto, or any application relating to any sale of any Warrant Shares.
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<PAGE> 12
(n) Each of the Holder and any Eligible Holder agrees to
indemnify and hold harmless the Company, each director of the Company, each
officer of the Company who shall have signed any registration statement covering
Warrant Shares held by the Holder and any Eligible Holder, each other person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, and its or their respective counsel, to the
same extent as the foregoing indemnity from the Company to the Holder in Section
8(m), but only with respect to statements or omissions, if any, made in any
registration statement or final prospectus, or any amendment or supplement
thereto, or in any application, in reliance upon and in conformity with written
information furnished to the Company with respect to the Holder by or on behalf
of the Holder or with respect to any Eligible Holder or by or on behalf of such
Eligible Holder expressly for inclusion in any such registration statement or
final prospectus, or any amendment or supplement thereto, or in any application,
as the case may be; provided, however, that the Holder and each Eligible Holder
shall be liable only for written information furnished to the Company by it or
on its own behalf for inclusion in a registration statement; and provided,
further, that no Eligible Holder shall be liable in an amount greater than the
net proceeds received by such Eligible Holder in connection with the applicable
registration. If any action shall be brought against the Company or any other
person so indemnified based on any such registration statement or final
prospectus, or any amendment or supplement thereto, or in any application, and
in respect of which indemnity may be sought against the Holder pursuant to this
Section 8(n), the Holder and each Eligible Holder, as the case may be, shall
have the rights and duties given to the Company, and the Company and each other
person so indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 8(m).
(o) To provide for just and equitable contribution, if
(i) an indemnified party makes a claim for indemnification pursuant to Section
8(m) or 8(n) (subject to the limitations thereof) but it is found in a final
judicial determination, not subject to further appeal, that such indemnification
may not be enforced in such case, even though this Agreement expressly provides
for indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act or otherwise, then the
Company (including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Eligible Holders of the Warrant
Shares included in such registration in the aggregate (including for this
purpose any contribution made by or on behalf of an indemnified party), as a
second entity, shall contribute to the losses, liabilities, claims, damages and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
such Eligible Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission or alleged
omission, shall be determined by, among other things, whether such statement,
alleged statement, omission or alleged omission relates to information supplied
by the Company or by such Eligible Holders, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, alleged statement, omission or alleged omission. The Company and the
Holder agree that it would be unjust and inequitable if the respective
obligations of the Company and the Eligible Holders for contribution were
determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages and expenses (even if the Holder and the other
indemnified parties
11
<PAGE> 13
were treated as one entity for such purpose) or by any other method of
allocation that does not reflect the equitable considerations referred to in
this Section 8(o). In no case shall any Eligible Holder be responsible for a
portion of the contribution obligation imposed on all Eligible Holders in excess
of its pro rata share based on the number of shares of Common Stock owned (or
which would be owned upon exercise of all Warrants) by it and included in such
registration as compared to the number of shares of Common Stock owned (or which
would be owned upon exercise of all Warrants) by all Eligible Holders and
included in such registration nor shall any Eligible Holder be responsible for
an amount greater than the net proceeds received by such Eligible Holder in
connection with the applicable registration. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this Section 8(o), each person, if any, who
controls any Eligible Holder within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each officer, director, partner, employee,
agent and counsel of each such Eligible Holder or control person shall have the
same rights to contribution as such Eligible Holder or control person and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, each officer of the Company who shall
have signed any such registration statement, each director of the Company and
its or their respective counsel shall have the same rights to contribution as
the Company, subject in each case to the provisions of this Section 8(o).
Anything in this Section 8(o) to the contrary notwithstanding, no party shall be
liable for contribution with respect to the settlement of any claim or action
effected without its written consent. This Section 8(o) is intended to supersede
any right to contribution under the Act, the Exchange Act or otherwise.
9. Taxes. The issuance of any shares or other securities upon the
exercise of this Warrant and the delivery of certificates or other instruments
representing such shares or other securities shall be made without charge to the
Holder for any tax or other charge in respect of such issuance. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of any certificate in a name
other than that of the Holder (except for any tax that is payable in respect of
any such transfer and any related exercise of this Warrant and that would be
payable pursuant to the first sentence of this Section 9 were such certificate
to be issued in the name of the Holder) and the Company shall not be required to
issue or deliver any such certificate unless and until the person or persons
requesting the issue thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax
has been paid.
10. Legend. Unless registered pursuant to the provisions of
Section 8 hereof, the certificate or certificates evidencing the Warrant Shares,
shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR STATE SECURITIES LAWS, BUT HAVE BEEN ISSUED
OR TRANSFERRED PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE ACT. NO
DISTRIBUTION,
12
<PAGE> 14
SALE, OFFER FOR SALE, TRANSFER, DELIVERY,
PLEDGE, OR OTHER DISPOSITION OF THESE
SECURITIES MAY BE EFFECTED EXCEPT IN COMPLIANCE
WITH THE ACT, ANY APPLICABLE STATE LAWS, AND
THE RULES AND REGULATIONS OF THE SECURITIES AND
EXCHANGE COMMISSION AND STATE AGENCIES
PROMULGATED THEREUNDER."
In addition, if, after the Warrant Shares are registered pursuant to Section
8(c) hereof, the Holder wishes to have the original legend removed, then, unless
the Warrant Shares are registered pursuant to the provisions of Section 8(a) and
(b) hereof, the certificate or certificates evidencing the Warrant Shares shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO
A REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. HOWEVER,
SUCH SHARES MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) A POST-EFFECTIVE AMENDMENT TO
SUCH REGISTRATION STATEMENT, UNLESS COUNSEL OF
COMPANY ADVISES IN WRITING THAT SUCH
POST-EFFECTIVE AMENDMENT IS NOT REQUIRED, IN
WHICH EVENT SUCH SHARES MAY BE OFFERED PURSUANT
TO THE ORIGINAL REGISTRATION STATEMENT PURSUANT
TO WHICH THESE SHARES HAVE BEEN REGISTERED,
(ii) A SEPARATE REGISTRATION STATEMENT UNDER
SUCH ACT, OR (iii) AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT."
11. Replacement of Warrants. Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of any Warrant (and
upon surrender of any Warrant if mutilated), and upon reimbursement of the
Company's reasonable incidental expenses and execution of a reasonable lost
security indemnification agreement, the Company shall execute and deliver to the
Holder thereof a new Warrant of like date, tenor and denomination.
12. No Rights as Stockholder. The Holder of any Warrant shall not
have, solely on account of such status, any rights of a stockholder of the
Company, either at law or in equity, or to any notice of meetings of
stockholders or of any other proceedings of the Company, except as provided in
this Warrant.
13
<PAGE> 15
13. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made when delivered, or mailed by registered or certified mail, return
receipt requested:
(a) If to the registered Holder of this Warrant, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth on the
first page of this Warrant or to such other address as the Company may designate
by notice to the Holder.
14. Successors. All the covenants, agreements, representations and
warranties contained in this Warrant shall bind the parties hereto and their
respective heirs, executors, administrators, distributees, successors and
assigns.
15. Headings. The Article and Section headings in this Warrant are
inserted for purposes of convenience only and shall have no substantive effect.
16. Governing Law. This Warrant shall be construed in accordance
with the laws of the State of New York applicable to contracts made and
performed within such State, without regard to principles of conflicts of law.
17. Modification of Agreement. This Warrant shall not otherwise be
modified, supplemented or amended in any respect unless such modification,
supplement or amendment is in writing and signed by the Company and the Holder
of this Warrant and Holders of any portion of the Warrant subsequently assigned
or transferred in accordance with the terms of this Warrant.
18. Consent to Jurisdiction. The Company and the Holder
irrevocably consent to the jurisdiction of the courts of the State of New York
and of any federal court located in such State in connection with any action or
proceeding arising out of or relating to this Warrant, any document or
instrument delivered pursuant to, in connection with or simultaneously with this
Warrant, or a breach of this Warrant or any such document or instrument. In any
such action or proceeding, the Company waives personal service of any summons,
complaint or other process and agrees that service thereof may be made in
accordance with Section 13 hereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the date set forth below.
Dated: _____________, 1996 LXR BIOTECHNOLOGY INC.
By:___________________________
Name:_________________________
Title:________________________
14
<PAGE> 16
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the attached Warrant.)
FOR VALUE RECEIVED, _______________________ hereby sells, assigns, and
transfers unto _________________, having an address at
___________________________ _______________________, the attached Warrant to the
extent of the right to purchase ____________ Shares of $0.0001 par value per
share, of LXR Biotechnology Inc. (the "Company"), together with all right,
title, and interest therein, and does hereby irrevocably constitute and appoint
_________________ as attorney to transfer such Warrant on the books of the
Company, with full power of substitution.
Dated: _______________, 199_
____________________________________
Print name of holder of Warrant
By:_________________________________
Name:_______________________________
Title:______________________________
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
15
<PAGE> 17
To:
CASH EXERCISE FORM
The undersigned hereby exercises its rights to purchase _________
Warrant Shares covered by the within Warrant and tenders payment herewith in the
amount of $_____________ in accordance with the terms thereof, and requests that
certificates for such securities be issued in the name of, and delivered to:
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated:__________________ Name:______________________________
(Print)
___________________________________
(Signature)
(Signature must conform to the name of the
Warrant Holder specified on the face
of the Warrant)
Address:___________________________
___________________________
___________________________
16
<PAGE> 18
To:
CASHLESS EXERCISE FORM
(To be executed upon conversion of the attached Warrant)
The undersigned hereby irrevocably elects to surrender its Warrant for
the number of Warrant Shares as shall be issuable pursuant to the cashless
exercvise provisions of Section 1 of the within Warrant, in respect of ________
Warrant Shares underlying the within Warrant, and requests that certificates for
such Warrant Shares be issued in the name of and delivered to:
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the shares exchangeable
or purchasable under the within Warrant, that a new Warrant for the balance of
the Warrant Shares covered by the within Warrant be registered in the name of,
and delivered to, the undersigned at the address stated below.
Dated:__________________ Name:______________________________
(Print)
___________________________________
(Signature)
Address:___________________________
___________________________
___________________________
17
<PAGE> 1
Exhibit 4.05
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made this 11th
day of December, 1996, by and between LXR Biotechnology Inc., a Delaware
corporation (the "Company"), and Sunrise Securities Corp. (the "Placement
Agent"), for the benefit of the Placement Agent and each Purchaser (individually
a "Purchaser" and collectively, the "Purchasers") entering into a Subscription
Agreement (the "Subscription Agreement") with the Company pursuant to the
Confidential Private Placement Memorandum dated October 30, 1996 (the
"Memorandum").
1. Securities Laws Representations and Covenants of Purchasers
and Placement Agent. This Agreement is made for the benefit of (a) the
Purchasers in reliance upon each Purchaser's representations to the Company
contained in the Subscription Agreement and (b) the Placement Agent, in reliance
upon the Placement Agent's representations to the Company contained in the Sales
Agency Agreement between the Company and the Placement Agent, dated of even date
herewith (the "Agency Agreement").
2. Registration Rights.
2.1 Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
(a) "Commission" shall mean the Securities and
Exchange Commission or any other federal agency at the time administering the
Securities Act.
(b) "Common Stock" shall mean the shares of the
Company's Common Stock, $0.0001 par value per share.
(c) "Form S-3" shall mean Form S-3 promulgated
by the Commission or any substantially similar form then in effect.
(d) "Holder" shall mean any holder of record of
Registrable Securities or any transferee or assignee of record of such
Registrable Securities.
(e) "Purchasers" shall mean collectively, the
Purchasers, their assignees and transferees, and individually, a Purchaser and
any transferee or assignee of such Purchaser.
(f) The terms "Register," "Registered" and
"Registration" refer to a registration effected by preparing and filing a
registration statement ("Registration Statement") in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
Registration Statement.
<PAGE> 2
(g) "Registrable Securities" shall mean,
collectively, (i) the Common Stock purchased by each Purchaser pursuant to a
Subscription Agreement, (ii) the Common Stock issued to the Placement Agent as
commissions under the Agency Agreement, and (iii) the Warrant Shares (as defined
in the Agency Agreement), in each case so long as the certificates representing
such Common Stock are required to bear the restrictive legend set forth in
Section B(10) of the Subscription Agreement or in Section 6(a)(xi) of the Agency
Agreement, as applicable.
(h) "Registration Expenses" shall mean all
expenses incurred by the Company in complying with Section 2, including without
limitation, all federal and state registration, qualification and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses and the expense of any special audits incident to or required
by any such Registration.
(i) "Restriction Termination Date" shall mean,
with respect to any Registrable Securities, the earliest of (i) the date that
such Registrable Securities shall have been Registered and sold or otherwise
disposed of in accordance with the intended method of distribution by the seller
or sellers thereof set forth in the registration statement covering such
Securities or transferred in compliance with Rule 144, (ii) the date that an
opinion of counsel to the Company containing reasonable assumptions shall have
been rendered to the effect that the legend referred to in Section B(10) of the
Subscription Agreement, or in Section 6(a)(xi) of the Agency Agreement, as
applicable, shall have been removed, and (iii) the date as of which the Company
shall have notified the Purchaser of such shares, or the Placement Agent, as
applicable, in writing that it has determined that such Registrable Securities
may be sold pursuant to paragraph (k) of Rule 144 (or any successor provision)
and, based upon such determination, such legend shall have been removed.
(j) "Rule 144" shall mean Rule 144 promulgated
by the Commission pursuant to the Securities Act.
(k) "Securities Act" shall mean the Securities
Act of 1933, as amended.
(l) "Shares" shall mean Common Stock.
(m) "Selling Expenses" shall mean all
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities pursuant to this Agreement.
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Subscription Agreement.
2.2 Registration. The Company covenants and agrees with
each of the Purchasers and the Placement Agent that the Company will prepare and
file with the Commission within 30 days of the final closing of the offering
contemplated by the Subscription Agreement a Registration Statement on Form S-3
covering the Registrable Securities, and use its reasonable best efforts to have
the Registration Statement declared effective as promptly as
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<PAGE> 3
practicable. Such Registration Statement also may include other shares of the
Company's Common Stock, in the Company's discretion, including, without
limitation, shares sold in the Foreign Offering (as defined in the Memorandum).
The Company shall not be required to file a Registration Statement under this
Section 2.2 unless it continues to be eligible to register Securities on Form
S-3; provided, that the Company shall use its best efforts to (i) file a
Registration Statement on Form S-3 as soon as practicable after the first date
that the Company becomes again eligible therefor and (ii) do such acts as are
necessary for the Company to be eligible to use Form S-3. The Company hereby
agrees timely to file all reports required under the Securities Exchange Act of
1934, as amended, for so long as there are Registrable Securities.
2.3 Blue Sky. The Company will use its best efforts to
Register and qualify the Registrable Securities covered by the Registration
Statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Purchasers and the Placement Agent for the
distribution of such securities; provided, however, that the Company shall not
be required to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
2.4 Expenses of Registration. All Registration Expenses
incurred in connection with the Registration pursuant to Section 2.2 shall be
borne by the Company. All Selling Expenses shall be borne by the persons who
sell the Shares generating said Selling Expenses.
2.5 Registration Procedures.
2.5.1 Advice By Company. The Company will keep
each Holder advised as to the initiation and completion of the Registration. At
its expense the Company will (a) use its best efforts to keep such Registration
effective until the earlier of three years from the final closing of the
offering contemplated by the Subscription Agreement, or the Restriction
Termination Date and (b) furnish promptly to each Holder such number of copies
of prospectuses (including preliminary prospectuses), and all amendments and
supplements thereto, in conformity with the requirements of the Securities Act,
and such other documents as any such Holder from time to time may reasonably
request.
2.5.2 Notice of Sale and Sale under the
Registration Statement. Any Holder intending to sell Shares under the
Registration Statement shall give at least three (3) business days' prior
written notice (a "Sale Notice") to the Company of any proposed sale of Shares
under the Registration Statement effective pursuant to this Section 2 (provided,
however, that such notice shall not be required during the 60-day period
immediately following the date on which the Registration Statement first becomes
effective) and shall not make such sale (i) unless such three (3) days lapse
without response from the Company, or (ii) in the event the Company responds by
stating that a prospectus supplement or post-effective amendment will be filed
pursuant to Section 2.5.3, until the Company has notified such Holder pursuant
to Section 2.5.3 that any such post-effective amendment has become effective or
prospectus supplement has been filed. A Sale Notice shall be effective for 30
days after it is given.
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<PAGE> 4
2.5.3 Amendments. The Company will prepare and
file with the Commission such amendments and prospectus supplements, including
post-effective amendments, to the Registration Statement as the Company
determines may be necessary or appropriate, and use its best efforts to have
such post-effective amendments declared effective as promptly as practicable;
cause the related prospectus to be supplemented by any prospectus supplement,
and as so supplemented, to be filed with the Commission; and notify the Holders
and the underwriter thereof, if any, promptly when a prospectus, any prospectus
supplement or post-effective amendment must be filed or has been filed
(including any filing in response to notice of any Holder under Section 2.5.2)
and, with respect to any post-effective amendment, when the same has become
effective.
2.5.4 Blackout Period. Notwithstanding any other
provision hereof, the Company may delay the Holders' ability to resell
Registrable Securities pursuant to the Registration Statement if the Company
delivers a certificate in writing to the Holders to the effect that a delay in
such sale is necessary because, in the good faith and reasonable judgment of the
Company's Board of Directors, a sale pursuant to the Registration Statement
would require the public disclosure of information that would have a significant
adverse effect on the Company, is likely to materially adversely affect the
Company, or could constitute a violation of the federal securities laws. In such
an event, the Company shall notify the Holders promptly after it is determined
that such circumstances no longer exist. The Company shall not be entitled to
delay the Holders' ability to resell Registrable Securities more than twice in
any 12-month period, and any individual period during which the Company may
delay the Holders' ability to resell Registrable Securities shall not exceed 30
days.
2.6 Information Furnished by Holder. It shall be a
condition precedent to the Company's obligations under this Agreement as to any
Holder that (i) such Holder furnish to the Company in writing such information
regarding such Holder and the distribution proposed by such Holder as the
Company may reasonably request; and (ii) such Holder, if a Purchaser, is not a
securities market professional, i.e., a market maker, specialist, ordinary
broker dealer, member of the National Association of Securities Dealers, Inc. or
a registered representative thereof, or an affiliate of any of the foregoing.
2.7 Indemnification.
2.7.1 Company's Indemnification of Holders. The
Company will indemnify each Holder, each of its officers, directors and
constituent partners, and each person controlling such Holder, with respect to
which Registration of Registrable Securities has been effected pursuant to this
Agreement, and each underwriter thereof, if any, and each of its officers,
directors, constituent partners, and each person who controls such underwriter,
against all claims, losses, damages or liabilities (or actions in respect
thereof) suffered or incurred by any of them, to the extent such claims, losses,
damages or liabilities arise out of or are based upon any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus or any
related Registration Statement incident to any such Registration, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to actions or
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<PAGE> 5
inaction required of the Company in connection with any such Registration; and
the Company will reimburse each such Holder, each such underwriter and each
person who controls any such Holder or underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action; provided, however, that the
indemnity contained in this Section 2.7.1 shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or action if settlement is
effected without the consent of the Company (which consent shall not
unreasonably be withheld); and provided, further, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based upon any untrue statement or
omission based upon written information furnished to the Company by such Holder,
underwriter, controlling person or other indemnified person and stated to be for
use in connection with the offering of securities of the Company.
Notwithstanding the above, the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue statement, alleged
untrue statement, omission or alleged omission made in a preliminary prospectus
on file with the Commission at the time the Registration Statement becomes
effective or a prospectus is filed with the Commission pursuant to Rule 424(b)
(the "Final Prospectus"), such indemnity agreement shall not inure to the
benefit of any underwriter or any Holder, if there is no underwriter, if a copy
of the Final Prospectus was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act.
2.7.2 Holder's Indemnification of Company. Each
Holder will indemnify the Company, each of its directors and officers, each
underwriter, if any, of the Company's Shares covered by a Registration
Statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act, and each other Holder, each of its officers,
directors, and constituent partners and each person controlling such other
Holder, against all claims, losses, damages and liabilities (or actions in
respect thereof) suffered or incurred by any of them and arising out of or based
upon any untrue statement (or alleged untrue statement) of a material fact
contained in such Registration Statement or related prospectus, or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by such Purchaser of any rule or regulation promulgated under the
Securities Act applicable to such Purchaser and relating to action or inaction
required of such Holder in connection with the Registration of Securities
pursuant to such Registration Statement; and will reimburse the Company, such
other Holders, such directors, officers, partners, persons, underwriters and
controlling persons for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such Registration Statement or prospectus in reliance upon
and in conformity with written information furnished to the Company by such
Holder and stated to be specifically for use in connection with the offering of
Securities of the Company; provided, however, that each Holder's liability under
this Section 2.7.2 shall not exceed such Holder's proceeds from the offering of
Shares made in connection with such Registration.
2.7.3 Indemnification Procedure. Promptly after
receipt by an indemnified party under this Section 2.7 of notice of the
commencement of any action which may give rise to a claim for indemnification
hereunder, such indemnified party will, if a claim in
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<PAGE> 6
respect thereof is to be made against an indemnifying party under this Section
2.7, notify the indemnifying party in writing of the commencement thereof and
generally summarize such action. The indemnifying party shall have the right to
participate in and to assume the defense of such claim, and shall be entitled to
select counsel for the defense of such claim with the approval of any parties
entitled to indemnification, which approval shall not be unreasonably withheld.
Notwithstanding the foregoing, the parties entitled to indemnification shall
have the right to employ separate counsel (reasonably satisfactory to the
indemnifying party) to participate in the defense thereof, but the fees and
expenses of such counsel shall be the expense of such indemnified parties unless
the named parties to such action or proceedings include both the indemnifying
party and the indemnified parties and the indemnifying party or such indemnified
parties shall have been advised by counsel that there are one or more legal
defenses available to the indemnified parties which are different from or
additional to those available to the indemnifying party (in which case, if the
indemnified parties notify the indemnifying party in writing that they elect to
employ separate counsel at the reasonable expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
or proceeding on behalf of the indemnified parties, it being understood,
however, that the indemnifying party shall not, in connection with any such
action or proceeding or separate or substantially similar or related action or
proceeding in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate counsel at any time for all indemnified parties, which counsel
shall be designated in writing by the Holders of a majority of the Shares).
2.7.4 Contribution. If the indemnification
provided for in this Section 2.7 from an indemnifying party is unavailable to an
indemnified party hereunder in respect to any losses, claims, damages,
liabilities or expenses referred to herein, then the indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in connection
with the statements or omissions which result in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such indemnifying party or
indemnified party and the parties' relative intent, knowledge, access to
information supplied by such indemnifying party or indemnified party and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with the investigating
or defending any action, suit, proceeding or claim.
2.8 No-Action Letter or Opinion of Counsel in Lieu of
Registration. Notwithstanding anything else in this Agreement, if the Company
shall have obtained from the Commission a "no-action" letter in which the
Commission has indicated that it will take no action if, without Registration
under the Securities Act, any Holder disposes of Registrable Securities covered
by any request for Registration made under this Section in the specific manner
in which such Holder proposes to dispose of the Registrable Securities included
in such request
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(such as including, without limitation, inclusion of such Registrable Securities
in an underwriting initiated by either the Company or the Holders), or if in the
opinion of counsel for the Company no Registration under the Securities Act is
required in connection with such disposition, such Registrable Securities shall
not be eligible for Registration under this Agreement; provided, however, that
any Registrable Securities not so disposed of shall be eligible for Registration
in accordance with the terms of this Agreement with respect to other proposed
dispositions to which this Section 2.8 does not apply. In addition, the
obligation of the Company to maintain the effectiveness of any Registration
Statement under this Section 2 shall be suspended with respect to any
Registrable Securities held by a Holder at any time following the Restriction
Termination Date with respect to such Registrable Securities.
3. Covenants of the Company. The Company agrees to:
(a) Notify the Holders at any time when a prospectus
relating to Registrable Securities covered by the Registration Statement is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
The Company shall promptly amend or supplement the Registration Statement to
correct any such untrue statement or omission.
(b) Notify the Holders of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible time.
(c) Make available for inspection by the Holders, and the
counsel, accountants or other agents retained by the Holders, all pertinent
financial and other records, corporate documents and properties of the Company,
and cause the Company's officers, directors and employees to supply all
information reasonably requested by the Holders in connection with the
Registration, subject to appropriate confidentiality obligations.
(d) If the Common Stock is then listed on a national
securities exchange, use its best efforts to cause the Registrable Securities to
be listed on such exchange. If the Common Stock is not then listed on a national
securities exchange, use its best efforts to facilitate the securities exchange,
use its best efforts to facilitate the reporting of the Shares on Nasdaq.
(e) Take all other reasonable actions necessary to
expedite and facilitate disposition by the Holders of the Registrable Securities
pursuant to the Registration Statement.
(f) Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the Commission that
may at any time permit the Holders to sell securities of the Company to the
public without registration, the Company agrees to:
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(i) for at least three years from the date
hereof, make and keep public information available, as those terms are
understood and defined in Rule 144;
(ii) for at least three years from the date
hereof, file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
and Exchange Act of 1934 (the "1934 Act"); and
(iii) furnish to each Holder, so long as such
Holder owns any Registrable Securities, forthwith upon written request (a) a
written statement by the Company whether it has complied with the reporting
requirements of Rule 144, the Securities Act and the 1934 Act (at any time after
it has become subject to such reporting requirements), (b) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company and (c) such other information as may be
reasonably requested in availing the Holders of any rule or regulation of the
Commission which permits the selling of any such securities without
registration.
4. Miscellaneous.
4.1 Notice. Notices required or permitted to be given
hereunder shall be in writing and shall be deemed to be sufficiently given when
personally delivered or sent by registered mail, return receipt requested, or by
nationally recognized express courier, addressed (i) if to the Company, at LXR
Biotechnology Inc., P. O. Box 9003, Pleasanton, California 94566, Attention:
Chief Executive Officer, (ii) if to a Purchaser, at the address set forth under
its questionnaire, and (iii) if to the Placement Agent, at Sunrise Securities
Corp., 135 E. 57th, 11th Floor, New York, New York 10022, or at such other
address as each such party furnishes by notice given in accordance with this
Section 4.1.
4.2 Amendment and Waiver. Any term of this Agreement may
be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and Holders
representing at least a majority of the Registrable Securities then outstanding.
Any amendment or waiver effected in accordance with this Section 4.2 will be
binding upon each Holder of Registrable Securities then outstanding, each future
Holder of such securities and the Company.
4.3 Governing Law; Severability. This Agreement shall be
enforced, governed and construed in all respects in accordance with the laws of
the State of New York, as such laws are applied by New York courts to agreements
entered into and to be performed in New York by and between residents of New
York. In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof which may prove invalid or unenforceable under any law shall
not affect the validity or enforceability of any other provision hereof.
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4.4 Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and may be amended only by a writing executed by the Company and the
holders of a majority in interest of the Registrable Securities.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 10
IN WITNESS WHEREOF, the Company and the Placement Agent, by their duly
authorized officers, have executed this Agreement on behalf of themselves, and
the Placement Agent has executed this Agreement on behalf of the Purchasers, as
of the date first written above.
COMPANY SUNRISE SECURITIES CORP., on behalf of
the Purchasers listed on Exhibit A
LXR BIOTECHNOLOGY INC. pursuant to a power of attorney
By: __________________________
By:___________________________
L. David Tomei, Ph.D., Its: __________________________
Chief Executive Officer
SUNRISE SECURITIES CORP., on behalf
of itself as Placement Agent
By: __________________________
Its: __________________________
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<PAGE> 11
EXHIBIT A
LIST OF PURCHASERS
<PAGE> 1
Exhibit 4.06
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made as of
this 12th day of December, 1996, by and among LXR Biotechnology Inc., a Delaware
corporation (the "Company"), Ventec, an investment company chartered in the
British Virgin Islands (the "Placement Agent"), and each purchaser (individually
a "Purchaser" and collectively, the "Purchasers") whose Subscription Agreement
(the "Subscription Agreement") with the Company is accepted for the purchase of
the Company's securities in the non-United States offering described in the
Confidential Private Placement Memorandum of the Company dated October 30, 1996
(the "Memorandum") as the "Foreign Offering."
1. Securities Laws Representations and Covenants of Purchasers
and Placement Agent. This Agreement is made for the benefit of (a) the
Purchasers in reliance upon each Purchaser's representations to the Company
contained in such Purchaser's Subscription Agreement and (b) the Placement
Agent, in reliance upon the Placement Agent's representations to the Company
contained in the Sales Agency Agreement between the Company and the Placement
Agent, dated of even date herewith (the "Agency Agreement").
2. Registration Rights.
2.1 Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
(a) "Commission" shall mean the Securities and
Exchange Commission or any other federal agency at the time administering the
Securities Act.
(b) "Common Stock" shall mean the shares of the
Company's Common Stock, $0.0001 par value per share.
(c) "Form S-3" shall mean Form S-3 promulgated
by the Commission or any substantially similar form then in effect.
(d) "Holder" shall mean any holder of record of
Registrable Securities or any transferee or assignee of record of such
Registrable Securities.
(e) "Purchasers" shall mean collectively, the
Purchasers, their assignees and transferees, and individually, a Purchaser and
any transferee or assignee of such Purchaser.
(f) The terms "Register," "Registered" and
"Registration" refer to a registration effected by preparing and filing a
registration statement ("Registration Statement") in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
Registration Statement.
<PAGE> 2
(g) "Registrable Securities" shall mean,
collectively, (i) the Common Stock purchased by each Purchaser pursuant to a
Subscription Agreement, (ii) the Common Stock issued to the Placement Agent as
commissions under the Agency Agreement, and (iii) the Warrant Shares (as defined
in the Agency Agreement), in each case so long as the certificates representing
such Common Stock are required to bear the restrictive legend set forth in
Section B(10) of the Subscription Agreement or in Section 6(a)(xi) of the Agency
Agreement, as applicable.
(h) "Registration Expenses" shall mean all
expenses incurred by the Company in complying with Section 2, including without
limitation, all federal and state registration, qualification and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses and the expense of any special audits incident to or required
by any such Registration.
(i) "Restriction Termination Date" shall mean,
with respect to any Registrable Securities, the earliest of (i) the date that
such Registrable Securities shall have been Registered and sold or otherwise
disposed of in accordance with the intended method of distribution by the seller
or sellers thereof set forth in the registration statement covering such
Securities or transferred in compliance with Rule 144, (ii) the date that an
opinion of counsel to the Company containing reasonable assumptions shall have
been rendered to the effect that the legend referred to in Section B(10) of the
Subscription Agreement, or in Section 6(a)(xi) of the Agency Agreement, as
applicable, shall have been removed, and (iii) the date as of which the Company
shall have notified the Purchaser of such shares, or the Placement Agent, as
applicable, in writing that it has determined that such Registrable Securities
may be sold pursuant to paragraph (k) of Rule 144 (or any successor provision)
and, based upon such determination, such legend shall have been removed.
(j) "Rule 144" shall mean Rule 144 promulgated
by the Commission pursuant to the Securities Act.
(k) "Securities Act" shall mean the Securities
Act of 1933, as amended.
(l) "Shares" shall mean Common Stock.
(m) "Selling Expenses" shall mean all
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities pursuant to this Agreement.
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Subscription Agreement.
2.2 Registration. The Company covenants and agrees with
each of the Purchasers and the Placement Agent that the Company will prepare and
file with the Commission, within 30 days of the final closing (the "Final
Closing") of the concurrent offering of the Company's securities through Sunrise
Securities Corp. ("Sunrise") described in the Memorandum (the "United States
Offering"), a Registration Statement on Form S-3 covering the
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<PAGE> 3
Registrable Securities, and use its reasonable best efforts to have the
Registration Statement declared effective as promptly as practicable. The Final
Closing is expected to occur on or before December 31, 1996. Such Registration
Statement also may include other shares of the Company's Common Stock, in the
Company's discretion, including, without limitation, shares sold to investors
in, or issued or issuable to Sunrise in connection with, the United States
Offering. The Company shall not be required to file a Registration Statement
under this Section 2.2 unless it continues to be eligible to register Securities
on Form S-3; provided, that the Company shall use its best efforts to (i) file a
Registration Statement on Form S-3 as soon as practicable after the first date
that the Company becomes again eligible therefor and (ii) do such acts as are
necessary for the Company to be eligible to use Form S-3. The Company hereby
agrees timely to file all reports required under the Securities Exchange Act of
1934, as amended, for so long as there are Registrable Securities.
2.3 Blue Sky. The Company will use its best efforts to
Register and qualify the Registrable Securities covered by the Registration
Statement under such other securities or Blue Sky laws of such United States
jurisdictions as shall be reasonably requested by the Purchasers and the
Placement Agent for the distribution of such securities; provided, however, that
the Company shall not be required to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions.
2.4 Expenses of Registration. All Registration Expenses
incurred in connection with the Registration pursuant to Section 2.2 shall be
borne by the Company. All Selling Expenses shall be borne by the persons who
sell the Shares generating said Selling Expenses.
2.5 Registration Procedures.
2.5.1 Advice By Company. The Company will keep
each Holder advised as to the initiation and completion of the Registration. At
its expense the Company will (a) use its best efforts to keep such Registration
effective until the earlier of three years from the Final Closing, or the
Restriction Termination Date and (b) furnish promptly to each Holder such number
of copies of prospectuses (including preliminary prospectuses), and all
amendments and supplements thereto, in conformity with the requirements of the
Securities Act, and such other documents as any such Holder from time to time
may reasonably request.
2.5.2 Notice of Sale and Sale under the
Registration Statement. Any Holder intending to sell Shares under the
Registration Statement shall give at least three (3) business days' prior
written notice (a "Sale Notice") to the Company of any proposed sale of Shares
under the Registration Statement effective pursuant to this Section 2 (provided,
however, that such notice shall not be required during the 60-day period
immediately following the date on which the Registration Statement first becomes
effective) and shall not make such sale (i) unless such three (3) days lapse
without response from the Company, or (ii) in the event the Company responds by
stating that a prospectus supplement or post-effective amendment will be filed
pursuant to Section 2.5.3, until the Company has notified such Holder pursuant
to Section 2.5.3 that any such post-effective amendment has become effective or
prospectus supplement has been filed. A Sale Notice shall be effective for 30
days after it is given.
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<PAGE> 4
2.5.3 Amendments. The Company will prepare and
file with the Commission such amendments and prospectus supplements, including
post-effective amendments, to the Registration Statement as the Company
determines may be necessary or appropriate, and use its best efforts to have
such post-effective amendments declared effective as promptly as practicable;
cause the related prospectus to be supplemented by any prospectus supplement,
and as so supplemented, to be filed with the Commission; and notify the Holders
and the underwriter thereof, if any, promptly when a prospectus, any prospectus
supplement or post-effective amendment must be filed or has been filed
(including any filing in response to notice of any Holder under Section 2.5.2)
and, with respect to any post-effective amendment, when the same has become
effective.
2.5.4 Blackout Period. Notwithstanding any other
provision hereof, the Company may delay the Holders' ability to resell
Registrable Securities pursuant to the Registration Statement if the Company
delivers a certificate in writing to the Holders to the effect that a delay in
such sale is necessary because, in the good faith and reasonable judgment of the
Company's Board of Directors, a sale pursuant to the Registration Statement
would require the public disclosure of information that would have a significant
adverse effect on the Company, is likely to materially adversely affect the
Company, or could constitute a violation of the federal securities laws. In such
an event, the Company shall notify the Holders promptly after it is determined
that such circumstances no longer exist. The Company shall not be entitled to
delay the Holders' ability to resell Registrable Securities more than twice in
any 12-month period, and any individual period during which the Company may
delay the Holders' ability to resell Registrable Securities shall not exceed 30
days.
2.6 Information Furnished by Holder. It shall be a
condition precedent to the Company's obligations under this Agreement as to any
Holder that (i) such Holder furnish to the Company in writing such information
regarding such Holder and the distribution proposed by such Holder as the
Company may reasonably request; and (ii) such Holder, if a Purchaser, is not a
securities market professional, i.e., a market maker, specialist, ordinary
broker dealer, member of the National Association of Securities Dealers, Inc. or
a registered representative thereof, or an affiliate of any of the foregoing.
2.7 Indemnification.
2.7.1 Company's Indemnification of Holders. The
Company will indemnify each Holder, each of its officers, directors and
constituent partners, and each person controlling such Holder, with respect to
which Registration of Registrable Securities has been effected pursuant to this
Agreement, and each underwriter thereof, if any, and each of its officers,
directors, constituent partners, and each person who controls such underwriter,
against all claims, losses, damages or liabilities (or actions in respect
thereof) suffered or incurred by any of them, to the extent such claims, losses,
damages or liabilities arise out of or are based upon any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus or any
related Registration Statement incident to any such Registration, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to actions or
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<PAGE> 5
inaction required of the Company in connection with any such Registration; and
the Company will reimburse each such Holder, each such underwriter and each
person who controls any such Holder or underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action; provided, however, that the
indemnity contained in this Section 2.7.1 shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or action if settlement is
effected without the consent of the Company (which consent shall not
unreasonably be withheld); and provided, further, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based upon any untrue statement or
omission based upon written information furnished to the Company by such Holder,
underwriter, controlling person or other indemnified person and stated to be for
use in connection with the offering of securities of the Company.
Notwithstanding the above, the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue statement, alleged
untrue statement, omission or alleged omission made in a preliminary prospectus
on file with the Commission at the time the Registration Statement becomes
effective or a prospectus is filed with the Commission pursuant to Rule 424(b)
(the "Final Prospectus"), such indemnity agreement shall not inure to the
benefit of any underwriter or any Holder, if there is no underwriter, if a copy
of the Final Prospectus was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act.
2.7.2 Holder's Indemnification of Company. Each
Holder will indemnify the Company, each of its directors and officers, each
underwriter, if any, of the Company's Shares covered by a Registration
Statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act, and each other Holder, each of its officers,
directors, and constituent partners and each person controlling such other
Holder, against all claims, losses, damages and liabilities (or actions in
respect thereof) suffered or incurred by any of them and arising out of or based
upon any untrue statement (or alleged untrue statement) of a material fact
contained in such Registration Statement or related prospectus, or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by such Purchaser of any rule or regulation promulgated under the
Securities Act applicable to such Purchaser and relating to action or inaction
required of such Holder in connection with the Registration of Securities
pursuant to such Registration Statement; and will reimburse the Company, such
other Holders, such directors, officers, partners, persons, underwriters and
controlling persons for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such Registration Statement or prospectus in reliance upon
and in conformity with written information furnished to the Company by such
Holder and stated to be specifically for use in connection with the offering of
Securities of the Company; provided, however, that each Holder's liability under
this Section 2.7.2 shall not exceed such Holder's proceeds from the offering of
Shares made in connection with such Registration.
2.7.3 Indemnification Procedure. Promptly after
receipt by an indemnified party under this Section 2.7 of notice of the
commencement of any action which may give rise to a claim for indemnification
hereunder, such indemnified party will, if a claim in
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<PAGE> 6
respect thereof is to be made against an indemnifying party under this Section
2.7, notify the indemnifying party in writing of the commencement thereof and
generally summarize such action. The indemnifying party shall have the right to
participate in and to assume the defense of such claim, and shall be entitled to
select counsel for the defense of such claim with the approval of any parties
entitled to indemnification, which approval shall not be unreasonably withheld.
Notwithstanding the foregoing, the parties entitled to indemnification shall
have the right to employ separate counsel (reasonably satisfactory to the
indemnifying party) to participate in the defense thereof, but the fees and
expenses of such counsel shall be the expense of such indemnified parties unless
the named parties to such action or proceedings include both the indemnifying
party and the indemnified parties and the indemnifying party or such indemnified
parties shall have been advised by counsel that there are one or more legal
defenses available to the indemnified parties which are different from or
additional to those available to the indemnifying party (in which case, if the
indemnified parties notify the indemnifying party in writing that they elect to
employ separate counsel at the reasonable expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
or proceeding on behalf of the indemnified parties, it being understood,
however, that the indemnifying party shall not, in connection with any such
action or proceeding or separate or substantially similar or related action or
proceeding in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate counsel at any time for all indemnified parties, which counsel
shall be designated in writing by the Holders of a majority of the Shares).
2.7.4 Contribution. If the indemnification
provided for in this Section 2.7 from an indemnifying party is unavailable to an
indemnified party hereunder in respect to any losses, claims, damages,
liabilities or expenses referred to herein, then the indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in connection
with the statements or omissions which result in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such indemnifying party or
indemnified party and the parties' relative intent, knowledge, access to
information supplied by such indemnifying party or indemnified party and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with the investigating
or defending any action, suit, proceeding or claim.
2.8 No-Action Letter or Opinion of Counsel in Lieu of
Registration. Notwithstanding anything else in this Agreement, if the Company
shall have obtained from the Commission a "no-action" letter in which the
Commission has indicated that it will take no action if, without Registration
under the Securities Act, any Holder disposes of Registrable Securities covered
by any request for Registration made under this Section in the specific manner
in which such Holder proposes to dispose of the Registrable Securities included
in such request
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<PAGE> 7
(such as including, without limitation, inclusion of such Registrable Securities
in an underwriting initiated by either the Company or the Holders), or if in the
opinion of counsel for the Company no Registration under the Securities Act is
required in connection with such disposition, such Registrable Securities shall
not be eligible for Registration under this Agreement; provided, however, that
any Registrable Securities not so disposed of shall be eligible for Registration
in accordance with the terms of this Agreement with respect to other proposed
dispositions to which this Section 2.8 does not apply. In addition, the
obligation of the Company to maintain the effectiveness of any Registration
Statement under this Section 2 shall be suspended with respect to any
Registrable Securities held by a Holder at any time following the Restriction
Termination Date with respect to such Registrable Securities.
3. Covenants of the Company. The Company agrees to:
(a) Notify the Holders at any time when a prospectus
relating to Registrable Securities covered by the Registration Statement is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
The Company shall promptly amend or supplement the Registration Statement to
correct any such untrue statement or omission.
(b) Notify the Holders of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
the initiation of any proceedings for that purpose. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible time.
(c) Make available for inspection by the Holders, and the
counsel, accountants or other agents retained by the Holders, all pertinent
financial and other records, corporate documents and properties of the Company,
and cause the Company's officers, directors and employees to supply all
information reasonably requested by the Holders in connection with the
Registration, subject to appropriate confidentiality obligations.
(d) If the Common Stock is then listed on a national
securities exchange, use its best efforts to cause the Registrable Securities to
be listed on such exchange. If the Common Stock is not then listed on a national
securities exchange, use its best efforts to facilitate the securities exchange,
use its best efforts to facilitate the reporting of the Shares on Nasdaq.
(e) Take all other reasonable actions necessary to
expedite and facilitate disposition by the Holders of the Registrable Securities
pursuant to the Registration Statement.
(f) Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Securities Act and any other rule or regulation of the Commission that
may at any time permit the Holders to sell securities of the Company to the
public without registration, the Company agrees to:
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(i) for at least three years from the date
hereof, make and keep public information available, as those terms are
understood and defined in Rule 144;
(ii) for at least three years from the date
hereof, file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
and Exchange Act of 1934 (the "1934 Act"); and
(iii) furnish to each Holder, so long as such
Holder owns any Registrable Securities, forthwith upon written request (a) a
written statement by the Company whether it has complied with the reporting
requirements of Rule 144, the Securities Act and the 1934 Act (at any time after
it has become subject to such reporting requirements), (b) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company and (c) such other information as may be
reasonably requested in availing the Holders of any rule or regulation of the
Commission which permits the selling of any such securities without
registration.
4. Miscellaneous.
4.1 Notice. Notices required or permitted to be given
hereunder shall be in writing and shall be deemed to be sufficiently given when
personally delivered or sent by registered mail, return receipt requested (for
United States addresses), or by internationally recognized express courier,
addressed (i) if to the Company, at LXR Biotechnology Inc., P. O. Box 9003,
Pleasanton, California 94566, Attention: Chief Executive Officer, (ii) if to a
Purchaser, at the address set forth in its questionnaire, and (iii) if to the
Placement Agent, at Ventec, Sir Walter Raleigh House, 48-50 The Eplanade, St.
Helier, Jersey JE48XY, Channel Islands, Attention: Michael Sampson, Director, or
at such other address as each such party furnishes by notice given in accordance
with this Section 4.1.
4.2 Amendment and Waiver. Any term of this Agreement may
be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and Holders
representing at least a majority of the Registrable Securities then outstanding.
Any amendment or waiver effected in accordance with this Section 4.2 will be
binding upon each Holder of Registrable Securities then outstanding, each future
Holder of such securities and the Company.
4.3 Governing Law; Severability. This Agreement shall be
enforced, governed and construed in all respects in accordance with the laws of
the State of California, as such laws are applied by California courts to
agreements entered into and to be performed in California by and between
residents of California. In the event that any provision of this Agreement is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.
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<PAGE> 9
4.4 Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and may be amended only by a writing executed by the Company and the
holders of a majority in interest of the Registrable Securities.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
COMPANY VENTEC
LXR BIOTECHNOLOGY INC.
By: __________________________
By: ___________________________ Title: __________________________
L. David Tomei, Ph.D.,
Chief Executive Officer
PURCHASER
___________________________________
(print name of purchaser)
By: __________________________
Title: __________________________
[SIGNATURE PAGE TO VENTEC REGISTRATION RIGHTS AGREEMENT]
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<PAGE> 11
EXHIBIT A
LIST OF PURCHASERS
