SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Innovir Laboratories, Inc.
(Name of Issuer)
Common Stock, par value $.013 per share
(Title of Class of Securities)
457 64Y 10 6
(CUSIP Number)
Paramount Capital Asset Management, Inc.
(f/k/a Aries Financial Services, Inc.)
c/o Lindsay A. Rosenwald, M.D.
375 Park Avenue
New York, NY 10152
(212) 832-4379
with a copy to:
David R. Walner, Esq.
Paramount Capital Asset Management, Inc.
(f/k/a Aries Financial Services, Inc.)
375 Park Avenue
New York, NY 10152
(212) 832-4340
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 30, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the
subject of this Statement because of Rule 13d-1(b)(3) or
(4), check the following:
Check the following box if a fee is being paid with this
Statement:_
SCHEDULE 13D
CUSIP NO. 457 64Y 10 6
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Paramount Capital Asset Management, Inc.
(f/k/a Aries Financial Services, Inc.)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) _
(b) _
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO (see Item 3 below)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
__
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
None
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 12,000,000
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING None
PERSON
WITH 10 SHARED DISPOSITIVE POWER
12,000,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,000,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* _
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
62.07%
14 TYPE OF REPORTING PERSON*
CO
SCHEDULE 13D
CUSIP NO. 457 64Y 10 6
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Aries Domestic Fund, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) _
(b) _
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO (see Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) _
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
None
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 3,600,000
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING None
PERSON
WITH 10 SHARED DISPOSITIVE POWER
3,600,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,600,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* _
13 18.62%
14 TYPE OF REPORTING PERSON*
PN
SCHEDULE 13D
CUSIP NO. 457 64Y 10 6
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Aries Trust
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) _
(b) _
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO (see Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) _
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
7 SOLE VOTING POWER
None
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 8,400,000
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING None
PERSON
WITH 10 SHARED DISPOSITIVE POWER
8,400,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,400,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* _
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
43.45%
14 TYPE OF REPORTING PERSON*
OO (see Item 2)
SCHEDULE 13B
CUSIP NO. 457 64Y 10 6
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Dr. Lindsay A. Rosenwald
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) _
(b) _
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO (see Item 3)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
__
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
None
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 12,000,000
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING None
PERSON
WITH 10 SHARED DISPOSITIVE POWER
12,000,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,000,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* _
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
62.07%
14 TYPE OF REPORTING PERSON*
IN
Item 1. Security and Issuer.
(a) Common Stock, $.013 par value ("Shares")
Innovir Laboratories, Inc. (the "Issuer")
510 E.73rd Street
New York, New York 10021
(212) 249-4703
Item 2. Identity and Background.
Names of Persons Filing:
(a) This statement is filed on behalf of Paramount Capital Asset
Management, Inc. (f/k/a Aries Financial Services, Inc.)
("Paramount"), Aries Domestic Fund, L.P. ("Aries Domestic"), The
Aries Trust ("Aries Trust") and Dr. Lindsay A. Rosenwald
(collectively, "Reporting Parties"). See attached Exhibit A which
is a copy of their agreement in writing to file this statement on
behalf of each of them.
(b) Paramount's, Aries Domestic's and Dr. Rosenwald's business address
is 375 Park Avenue, Suite 1501, New York, New York, 10152. The
business address for Aries Trust is c/o MeesPierson (Cayman)
Limited, P.O. Box 2003, British American Centre, Phase 3, Dr. Roy's
Drive, George Town, Grand Cayman.
(c) Dr. Rosenwald is an investment banker, venture capitalist and fund
manager and sole shareholder of Paramount,(1) a Subchapter S
corporation incorporated in Delaware. Paramount is the General
Partner of Aries Domestic,(2) a limited partnership incorporated in
Delaware. Paramount is the Investment Manager to Aries Trust,(3) a
Cayman Islands Trust.
(d) Dr. Rosenwald, Paramount, Aries Domestic and Aries Trust and their
respective officers, directors, general partners, investment
managers, or trustees have not, during the five years prior to the
date hereof, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
______________________
1 Please see attached Exhibit B indicating the executive
officers and directors of Paramount and providing
information called for by Items 2-6 of this statement as to
said officers and directors. Exhibit B is herein
incorporated by reference.
2 Please see attached Exhibit C indicating the general partner
of Aries Domestic and the general partner's executive
officers and directors and providing information called for
by Items 2-6 of this statement as to said general partners,
officers and directors. Exhibit C is herein incorporated by
reference.
3 Please see attached Exhibit D indicating the investment
manager of the Aries Trust and the investment manager's
executive officers and directors and providing information
called for by Items 2-6 of this statement as to said
investment manager and officers and directors. Exhibit D is
herein incorporated by reference.
(e) Dr. Rosenwald, Paramount, Aries Domestic and Aries Trust and their
respective officers, directors, general partners, investment
managers, or trustees have not been, during the five years prior to
the date hereof, parties to a civil proceeding of a judicial or
administrative body of competent jurisdiction, as a result of which
such person was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to, Federal or State securities laws or finding
any violation with respect to such laws.
(f) Dr. Rosenwald is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
Aries Domestic used its general funds to effect its initial
purchase of 1,200,000 shares of the Issuer, 1,200,000 Class C
Warrants and 600,000 Unit Purchase Options as defined in Item 4
below for an approximate purchase price of $600,000 from the Issuer,
and Aries Trust used its general funds to effect it initial purchase
of 2,800,000 shares of the Issuer, 2,800,000 Class C Warrants and
1,200,000 Unit Purchase Options for an approximate purchase price of
$1,400,000 from the Issuer.
Item 4. Purpose of Transaction.
The Reporting Parties acquired the shares of Common Stock and
warrants to purchase Common Stock (the Class C Warrants ) of the
Issuer described in Item 3 from the Issuer, pursuant to a Common
Stock and Warrant Purchase Agreement (the "Purchase Agreement")
dated August 30, 1996, a copy of which is attached as Exhibit E
and the terms of which are incorporated herein by reference, as an
investment in the Issuer. Amongst other things, the Purchase
Agreement entitles the Aries Trust and Aries Domestic to designate
two representative to sit on the Issuer's Board of Directors and
requires the consent of the Aries Trust and Aries Domestic for certain
extraordinary corporate transactions. Messrs. Michael S. Weiss and
Joseph E. Edelman were appointed to the Issuer's Board of Directors
as the Aries Trust and Aries Domestic Board designees. Also pursuant
to the Purchase Agreement, Dr. Rosenwald was named as an Observer of
the Board.
In addition to the Common Stock and Class C Warrants described above,
pursuant to the Purchase Agreement, Unit Purchase Options (indi-
vidually, the UPO )dated August 30, 1996 to purchase 1,000,000 shares
of Common Stock and 1,000,000 Class C Warrants were issued by the
Issuer for the benefit of Aries Trust and Aries Domestic. Copies of
the forms of the Warrant and the UPO are attached as Exhibits F and
G, respectively, hereto and are incorporated by reference herein.
Although the Reporting Parties have not formulated any definitive
plans, they have had preliminary discussions with the Issuer's
management and certain members of the Board concerning various
proposals, including the overall corporate and strategic focus of
the Company. Neither the Reporting Parties nor, to the Reporting
Parties knowledge, the management of the Issuer, have determined
whether such plans are feasible or whether the Company will in fact
pursue such alternatives and it is not clear that such alternatives
will be implemented. In addition the Reporting Parties, may from
time to time acquire, or dispose of, Common Stock and/or other
securities of the Issuer if and when they deems it appropriate.
The Reporting Parties may formulate other purposes, plans or
proposals relating to any of such securities of the Issuer to the
extent deemed advisable in light of market conditions, investment
policies and other factors.
Except as indicated in this Schedule 13D, the Reporting Parties
currently have no plans or proposals that relate to or would result
in any of the matters described in subparagraphs (a) through (j) of
Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) As of August 30, 1996, Dr. Rosenwald and Paramount, through
acquisition of the shares by the Aries Trust and Aries
Domestic, beneficially owned 12,000,000 shares or 62.07% of
the Issuer's securities and Aries Domestic and the Aries Trust
beneficially owned as follows:
Amount Owned
Aries Domestic 3,600,000 Shares
Aries Trust 8,400,000 Shares
(b) Dr. Rosenwald and Paramount share the power to vote or to
direct the vote, to dispose or to direct the disposition of
those shares owned by each of Aries Domestic and Aries Trust.
(c) As set forth in Item 4, the Aries Trust and Aries Domestic
purchased the 4,000,000 shares of the Issuer, 4,000,000 Class C
Warrants and 2,000,000 Unit Purchase Options from the Issuer on
August 30, 1996 pursuant to the Stock Purchase Agreement.
Other than as set forth herein the Reporting Parties have not
engaged in any transactions in the Common Stock of the Issuer.
(d) & (e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with respect to Securities of the Issuer
Paramount is the investment manager of the Aries Trust and the
General Partner of Aries Domestic and in such capacities has the
authority to make certain investment decisions on behalf of such
entities, including decisions relating to the securities of the
Issuer. In connection with its investment management duties,
Paramount receives certain management fees and performance
allocations from the Aries Trust and Aries Domestic. Dr. Rosenwald
is the sole shareholder of Paramount. Pursuant to its rights under
the Stock Purchase Agreement, the Aries Trust and Aries Domestic
appointed Messrs. Michael S. Weiss and Joseph Edelman to the
Issuer's Board of Director as their designated Board
representatives. In consideration for their services as Directors,
Messrs. Michael S. Weiss and Joseph Edelman each received from the
Issuer an automatic grant of options to purchase 30,000 shares of
Common Stock at the fair market value of the stock on the day of
the grant (which options shall vest ratably, at six month intervals,
over a three year period) pursuant to the Issuer s Non-Employee
Director Stock Option Plan. In addition, Messrs. Weiss and Edelman
will be entitled to receive all other compensation received by the
other Directors of the Issuer.
Except as indicated in this 13D and exhibits, there is no contract,
arrangement, understanding or relationship between the Reporting
Parties and any other person, with respect to any securities of the
Issuer.
Item 7. Material to be Filed as Exhibits:
Exhibit A - Copy of an Agreement between Dr. Rosenwald, Paramount, Aries
Domestic and Aries Trust to file this Statement on Schedule
13D on behalf of each of them.
Exhibit B - List of executive officers and directors of Paramount and
information called for by Items 2-6 of this statement relating
to said officers and directors.
Exhibit C - List of executive officers and directors of Aries Domestic and
information called for by Items 2-6 of this statement relating
to said officers and directors.
Exhibit D - List of executive officers and directors of Aries Trust and
information called for by Items 2-6 of this statement relating
to said officers and directors.
Exhibit E - Common Stock and Warrant Purchase Agreement dated as of August
30, 1996 by and among Innovir Laboratories, Inc., the Aries
Fund, a Cayman Island Trust and The Aries Domestic Fund, L.P.
Exhibit F - Form of Warrant by Innovir Laboratories, Inc. for the benefit
of the Aries Fund, a Cayman Island Trust and The Aries
Domestic Fund, L.P.
Exhibit G - Form of Unit Purchase Option Agreement by Innovir
Laboratories, Inc. for the benefit of the Aries Fund, a Cayman
Island Trust and The Aries Domestic Fund, L.P.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Paramount Capital Asset Management, Inc.
Dated: August 30, 1996
New York, NY By /s/ Dr. Lindsay Rosenwald
Dr. Lindsay Rosenwald
President
ARIES DOMESTIC FUND, L.P.
By Paramount Capital Asset Management, Inc.
General Partner
Dated: August 30, 1996
New York, NY By /s/ Dr. Lindsay Rosenwald
Dr. Lindsay Rosenwald
President
THE ARIES TRUST
By Paramount Capital Asset Management, Inc.
Investment Manager
Dated: August 30, 1996
New York, NY By /s/ Dr. Lindsay Rosenwald
Dr. Lindsay Rosenwald
President
Dated: August 30, 1996
New York, NY By /s/ Dr. Lindsay Rosenwald
Dr. Lindsay Rosenwald
EXHIBIT A
AGREEMENT
JOINT FILING OF SCHEDULE 13D
The undersigned hereby agrees to jointly prepare and file with
regulatory authorities a Schedule 13D and any future amendments thereto
reporting each of the undersigned's ownership of securities of Innovir
Laboratories, Inc. and hereby affirm that such Schedule 13D is being filed on
behalf of each of the undersigned.
Paramount Capital Asset Management, Inc.
Dated: August 30, 1996
New York, NY By /s/ Dr. Lindsay Rosenwald
Dr. Lindsay Rosenwald
President
ARIES DOMESTIC FUND, L.P.
By Paramount Capital Asset Management, Inc.
General Partner
Dated: August 30, 1996
New York, NY By /s/ Dr. Lindsay Rosenwald
Dr. Lindsay Rosenwald
President
THE ARIES TRUST
By Paramount Capital Asset Management, Inc.
Investment Manager
Dated: August 30, 1996
New York, NY By /s/ Dr. Lindsay Rosenwald
Dr. Lindsay Rosenwald
President
Dated: August 30, 1996
New York, NY By /s/ Dr. Lindsay Rosenwald
Dr. Lindsay Rosenwald
EXHIBIT B
The name and principal occupation or employment, which in each instance
is with Paramount Capital Asset Management, Inc. ("Paramount") located at 375
Park Avenue, Suite 1501, New York, New York, 10152, of each executive officer
and director of Paramount is as follows:
PRINCIPAL OCCUPATION
NAME OR EMPLOYMENT
Dr. Lindsay Rosenwald Chairman of the Board, President
Paramount Capital Asset Management,
Inc., Paramount Capital LLC and
Paramount Capital, Inc.
Peter Morgan Kash Director of Paramount Capital Asset
Management, Inc.
Senior Managing Director, Paramount
Capital, Inc.
Dr. Yuichi Iwaki Director of Paramount Capital Asset
Management, Inc.
Professor, University of Southern
California School of Medicine
Item 2.
During the five years prior to the date hereof, none of the above
persons (to the best of Paramount's knowledge) was convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction, as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or State securities
laws or finding any violation with respect to such laws.
Items 3-6.
Please refer to Items 3-6 herein reporting the beneficial ownership.
EXHIBIT C
The name and principal occupation or employment, which is located at 375
Park Avenue, Suite 1501, New York, New York, 10152, of the General Partner of
Aries Domestic is as follows:
PRINCIPAL OCCUPATION
NAME OR EMPLOYMENT
Paramount Capital Asset Management, Inc. General Partner; Investment Manager
Exhibit B is hereby incorporated by reference.
Item 2.
During the five years prior to the date hereof, the above person (to the
best of Aries Domestic's knowledge) has not been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction, as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or State securities
laws or finding any violation with respect to such laws.
Items 3-6.
Please refer to Items 3-6 herein reporting the beneficial ownership.
EXHIBIT D
The name and principal occupation or employment, which in each instance
is with The Aries Trust ("Aries Trust") located at 375 Park Avenue, Suite
1501, New York, New York, 10152, of each executive officer and director of
Aries Trust is as follows:
PRINCIPAL OCCUPATION
NAME OR EMPLOYMENT
Paramount Capital Asset Management, Inc. Investment Manager
MeesPierson (Cayman) Limited Trustee
Exhibit B is hereby incorporated by reference.
Item 2.
During the five years prior to the date hereof, neither of the above
persons (to the best of Aries Trust's knowledge) have been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction, as a result of which such person was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or State securities
laws or finding any violation with respect to such laws.
Items 3-6.
Please refer to Items 3-6 herein reporting the beneficial ownership.
[EXECUTION COPY]
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
PURCHASE AGREEMENT (this Agreement ) dated as of
August 30, 1996, by and among INNOVIR LABORATORIES, INC., a
Delaware corporation (the Company ), THE ARIES FUND, A CAYMAN
ISLAND TRUST (the Trust ), and THE ARIES DOMESTIC FUND, L.P.,
a Delaware limited partnership (the Partnership , and
collectively with the Trust, the Purchasers ).
The Company desires to issue and sell to Purchasers, and Purchasers
desire to purchase from the Company, 4,000,000 shares (the Shares ) of the
Common Stock, par value $.013 per share, of the Company (the Common
Stock ), and 4,000,000 Class C Warrants of the Company (the Warrants ), upon
and subject to the terms and conditions hereinafter set forth.
Accordingly, in consideration of the premises and the mutual
agreements contained herein, Purchasers and the Company hereby agree as
follows:
1. Purchase of Company Securities.
1.1. Purchase and Sale of the Shares and the Warrants. Subject to
the terms and conditions set forth herein, the Company hereby agrees to issue
and sell to Purchasers, and Purchasers hereby agree to purchase from the
Company, the Shares and the Warrants, at the Closing (as such term is defined
in Section 2.1 hereof). The aggregate purchase price for the Shares and the
Warrants sold pursuant to this Agreement (including any additional shares of
Common Stock issuable pursuant to Section 8.6) shall be $ 2,000,000 (the
Purchase Price ).
1.2. Unit Purchase Option. In addition, subject to the terms and
conditions set forth herein, in consideration of the purchase by Purchasers
of the Shares and Warrants pursuant to Section 1.1, at the Closing, the
Company will issue to Purchasers and/or their designees, an option (the
Purchase Option ) to purchase up to 2,000,000 units for an aggregate
purchase price of $1,000,000 consisting of an aggregate of 2,000,000 shares
(the Purchase Option Shares ) of Common Stock at $.50 per share subject to
adjustment, and 2,000,000 Class C Warrants of the Company (the Purchase
Option Warrants ). The terms and conditions of the Purchase Option shall be
in the form attached as Exhibit A hereto.
2. Closing.
2.1. Closing. The closing of the purchase and sale of the Shares,
the Warrants and the Purchase Option will take place at the offices of
Purchasers at 375 Park Avenue, Suite 1501, New York, New York. Such closing
(the Closing ) will take place at 10:00 A.M., local time, on August 30,
1996; provided that the Closing may take place at such other time, place or
later date as may be mutually agreed upon by the Company and Purchasers. The
date of the Closing is referred to herein as the Closing Date. At the
Closing, the Company will deliver to Purchasers certificates for the Shares,
the Warrants and the Purchase Option purchased as set forth in Section 1
hereof, against payment of the Purchase Price by Purchasers, by wire transfer
or check payable to the Company. The Shares and the Warrants (which shall be
in the form attached as Exhibit B hereto) shall be registered in Purchasers
name or the name of the nominee(s) of Purchasers in such denominations as
Purchasers shall request pursuant to instructions delivered to the Company
not less than two days prior to the Closing Date.
3. Conditions to the Obligations of Purchasers at the Closing.
The obligation of Purchasers to purchase and pay for the Shares, the Warrants
and the Purchase Option to be purchased by Purchasers at the Closing is
subject to the satisfaction on or prior to the Closing Date of the following
conditions, which may only be waived by written consent of Purchasers:
3.1. Opinion of Counsel to the Company. Purchasers shall have
received from Fulbright & Jaworski L.L.P., counsel for the Company, its
opinion dated the Closing Date substantially in the form of Exhibit C hereto.
3.2. Representations and Warranties. All of the representations
and warranties of the Company contained in this Agreement shall be true and
correct at and as of the Closing Date, except to the extent of changes caused
by the transactions contemplated hereby.
3.3. Performance of Covenants. All of the covenants and agreements
of the Company contained in this Agreement and required to be performed on or
prior to the Closing Date shall have been performed in a manner satisfactory
in all respects to Purchasers.
3.4. Legal Action. No injunction, order, investigation, claim,
action or proceeding before any court or governmental body shall be pending
or threatened wherein an unfavorable judgment, decree or order would
restrain, impair or prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement or cause any such transaction to be rescinded.
3.5. Consents. The Company shall have obtained in writing or made
all consents, waivers, approvals, orders, permits, licenses and
authorizations of, and registrations, declarations, notices to and filings
and applications with, any governmental authority or any other person or
entity (including, without limitation, securityholders and creditors of the
Company) required to be obtained or made in order to enable the Company to
observe and comply with all its obligations under this Agreement and to
consummate the transactions contemplated hereby.
3.6. Closing Documents. The Company shall have delivered to
Purchasers the following:
(a) a certificate executed by the President or Chief Executive
Officer of the Company dated the Closing Date stating that the conditions set
forth in Sections 3.2 through 3.5 have been satisfied;
(b) an incumbency certificate dated the Closing Date for the
officers of the Company executing this Agreement, the Shares, the Warrants
and the Purchase Option and any other documents or instruments delivered in
connection with this Agreement at the Closing;
(c) a certificate of the Secretary or Assistant Secretary of the
Company, dated the Closing Date, as to the continued and valid existence of
the Company, certifying the attached copy of the By-laws of the Company, the
authorization of the execution, delivery and performance of this Agreement,
and the resolutions adopted by the Board of Directors of the Company
authorizing the actions to be taken by the Company under this Agreement;
(d) a certificate of the Secretary of State of the State of
Delaware, dated a recent date, to the effect that the Company is in good
standing in the State of Delaware and that all annual reports, if any, have
been filed as required and that all taxes and fees have been paid in
connection therewith;
(e) a certified copy of the Certificate of Incorporation of the
Company as filed with the Secretary of State of the State of Delaware; and
(f) such certificates, other documents and instruments as
Purchasers and their counsel may reasonably request in connection with, and
to effect, the transactions contemplated by this Agreement.
3.7. Proceedings. All corporate and other proceedings taken or to
be taken in connection with the transactions contemplated hereby to be
consummated at the Closing and all documents incident thereto shall be
satisfactory in form and substance to Purchasers.
3.8. Due Diligence. Prior to the Closing Date, Purchasers and
their counsel shall have completed their due diligence and business review of
the Company, its business, assets, liabilities, corporate and legal status
and intellectual property, including patents, licenses and technical
processes, all of which shall be satisfactory in form and substance
satisfactory to Purchasers and their counsel in their sole discretion.
3.9. Closing Financial Statements; Absence of Changes. (a) The
Company shall have provided to Purchasers (i) the unaudited balance sheet of
the Company as of June 30, 1996, and the related unaudited statement of
operations for the three-month (and nine-month) periods then ended, as well
as the related unaudited statements of stockholders' equity (deficit) and
cash flows for the nine-month period then ended, accompanied by the
unqualified certification thereon of the Chief Financial Officer or Vice
President--Finance of the Company (together with any notes thereto, the "June
30 Financial Statements") and (ii) a "bring-down" certificate of the Chief
Executive Officer of the Company and the Chief Financial Officer or Vice
President--Finance of the Company with respect to the financial position of
the Company as of the Closing Date and as to results for the period from the
date of the June 30 Financial Statements to the Closing Date, in form and
substance satisfactory to Purchaser and its counsel.
(b) Except as set forth on the schedules hereto of the Company
delivered to Purchaser as of the date hereof, there shall have been no
material adverse change in the financial condition, operating results,
employee or customer relations or prospects of, or otherwise with respect to,
the Company from the date of the June 30 Financial Statements to the Closing
Date.
4. Conditions to the Obligations of the Company at the Closing.
The obligation of the Company to issue and sell the Shares, the Warrants and
the Purchase Option the Warrants to Purchasers at the Closing is subject to
the satisfaction on or prior to the Closing Date of the following conditions,
any of which may be waived by the Company:
4.1. Representations and Warranties. The representations and
warranties of Purchasers contained in this Agreement shall be true and
correct at and as of the Closing Date.
4.2. Legal Action. No injunction, order, investigation, claim,
action or proceeding before any court or governmental body shall be pending
or threatened wherein an unfavorable judgment, decree or order would
restrain, impair or prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement or cause any such transaction to be rescinded.
5. Representations and Warranties of the Company. The Company
hereby represents and warrants to Purchasers as follows:
5.1. Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power and authority, and
holds all licenses, permits and other required authorizations from
governmental authorities, necessary to conduct its business as it is now
being conducted or proposed to be conducted and to own or lease the
properties and assets it now owns or holds under lease (except that the
Company may in the future be required to obtain certain approvals of the U.S.
Food and Drug Administration in connection with its business as proposed to
be conducted). The Company is duly qualified or licensed and in good
standing as a foreign corporation in each jurisdiction wherein the character
of its properties or the nature of the activities conducted by it makes such
qualification or licensing necessary.
5.2. Charter Documents. The Company has heretofore delivered to
Purchasers true, correct and complete copies of the Company s Certificate of
Incorporation and By-Laws as in full force and effect on the date hereof.
5.3. Capitalization. As of the date hereof, the Company's
authorized capitalization consists of: 35,000,000 shares of Common Stock, of
which 7,331,883 shares are presently issued and outstanding; 15,000,000
shares of preferred stock, par value $.06 per share, of which 1,973,000
shares are designated as Class B Convertible Preferred Stock (297,000 of
which are issued and outstanding), and 120,000 of which are designated as
Class C Convertible Preferred Stock (80,000 of which are issued and
outstanding); and 9,333,708 shares of Common Stock are reserved for issuance
upon the conversion or exercise of presently outstanding convertible
securities, options, warrants or other rights to purchase Common Stock. All
outstanding securities of the Company are validly issued, fully paid and
nonassessable. No stockholder of the Company is entitled to any preemptive
rights with respect to the purchase or sale of any securities by the Company.
Except as has been set forth in Schedule 5.3 hereto, there are no outstanding
options, warrants or other rights, commitments or arrangements, written or
oral, to purchase or otherwise acquire any authorized but unissued shares of
capital stock of the Company or any security directly or indirectly
convertible into or exchangeable for any capital stock of the Company or
under which any such option, warrant or convertible security may be issued in
the future, and there are no voting trusts or agreements, stockholders'
agreements, pledge agreements, buy-sell, rights of first offer, negotiation
or refusal or proxies or similar arrangements relating to any securities of
the Company to which the Company is a party, and to the best knowledge of the
Company after due investigation there are no such trusts, agreement, rights,
proxies or similar arrangements as to which the Company is not a party).
Except as set forth on Schedule 5.3 and as contemplated herein, none of the
shares of capital stock of the Company is reserved for any purpose, and the
Company is neither subject to any obligation (contingent or otherwise), nor
has any option to repurchase or otherwise acquire or retire any shares of its
capital stock. Schedule 5.3 sets forth (i) the number of shares of Common
Stock authorized for issuance under the Company's 1993 Stock Option Plan and
the Company's Non-Employee Director Stock Option Plan; (ii) the number of
shares of Common Stock as to which options under such plan have been (A)
reserved for issuance and (B) exercised; and (iii) the exercise prices for
all outstanding options under such plan.
5.4 Due Authorization, Valid Issuance, Etc.. The Shares and the
Warrants have been duly authorized and, when issued in accordance with this
Agreement upon the Closing Date, will be validly issued, fully paid,
nonassessable shares of Common Stock and Warrants of the Company, and will be
free and clear of all liens imposed by or through the Company. The Purchase
Option has been duly authorized and, when issued in accordance with this
Agreement upon the Closing Date, will be validly issued and free and clear of
all liens imposed by or through the Company. The Common Stock issuable upon
the exercise of the Warrants and the Purchase Option have been duly
authorized and reserved, and upon the exercise of the Warrants and the
Purchase Option in accordance with the terms and conditions thereof and this
Agreement, will be validly issued, fully paid and nonassessable shares of
Common Stock and will be free and clear of all liens imposed by or through
the Company. The Purchase Option Warrants issuable upon exercise of the
Purchase Option have been duly authorized and reserved, and upon the exercise
of the Purchase Option in accordance with the terms and conditions thereof
and this Agreement, will be validly issued and free and clear of all claims
imposed by or through the Company. The issuance, sale and clear delivery of
the Shares, the Warrants and the Common Stock issuable upon the exercise of
the Warrants, as well as the Purchase Option Shares, the Purchase Option
Warrants and the shares of Common Stock issuable upon exercise of the
Purchase Option Warrants, will not be subject to any preemptive right of
stockholders of the Company or to any right of first refusal or other right
in favor of any person.
5.5. Subsidiaries. The Company has no wholly or partially
owned Subsidiaries (as defined in Section 9.10) and does not control,
directly or indirectly, any other corporation, business trust, firm,
partnership, association, joint venture, entity or organization. The Company
does not own any shares of stock, partnership interest, joint venture
interest or any other security, equity or interest in any other corporation
or other organization or entity.
5.6. Authorization; No Breach. The Company has the full corporate
power and authority to enter into this Agreement and to perform its
obligations hereunder, and the execution, delivery and performance of this
Agreement and all other transactions contemplated hereby have been duly
authorized by the Company, and this Agreement constitutes a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as the enforceability hereof may be limited by (a) bankruptcy,
insolvency, moratorium and similar laws affecting creditors rights generally
and (b) the availability of remedies under general equitable principles.
Except as set forth on Schedule 5.6 hereto, the execution and delivery by the
Company of this Agreement, the offering, sale and issuance of the Shares, the
Warrants and the Purchase Option pursuant to this Agreement, and the
performance and fulfillment of the Company of its obligations under this
Agreement, the Warrants and the Purchase Option, do not and will not (i)
conflict with or result in a breach of the terms, conditions or provisions
of, (ii) constitute a default under, or event which, with notice or lapse of
time or both, would constitute a breach of or default under, (iii) result in
the creation of any lien, security interest, adverse claim, charge or
encumbrance upon the capital stock or assets of the Company pursuant to, (iv)
give any third party the right to accelerate any obligation under or
terminate, (v) result in a violation of, (vi) result in the loss of any
license, certificate, legal privilege or legal right enjoyed or possessed by
the Company under, or (vii) require any authorization, consent, approval,
exemption or other action by or notice to any court or administrative or
governmental body pursuant to or require the consent of any other person
under, the Certificate of Incorporation or By-Laws of the Company or any law,
statute, rule or regulation to which the Company is subject or by which any
of its properties are bound, or any agreement, instrument, order, judgment or
decree to which the Company is subject or by which its properties are bound.
5.7. Financial Statements and SEC Documents. (a) Attached hereto
as Schedule 5.7 are (i) the audited financial statements of the Company for
the fiscal year ended September 30, 1995, including the balance sheet as at
the end of such fiscal year and the related statements of operations,
stockholders equity (deficit) and cash flows for such fiscal year, reported
on by Coopers & Lybrand L.L.P. and (ii) the June 30 Financial Statements (the
financial statements referred to in clauses (i) and (ii) are referred to
herein collectively as the "Financial Statements"). For purposes of this
Agreement, June 30, 1996, shall be hereinafter referred to as the Balance
Sheet Date. The Financial Statements have been prepared in accordance with
the books and records of the Company and generally accepted accounting
principles, applied consistently with the past practices of the Company
(except as otherwise noted in such Financial Statements), reflect all
liabilities and obligations of the Company, as of their respective dates, and
present fairly the financial position of the Company and the results of its
operations as of the time and for the periods indicated therein.
(b) The Company has made available to Purchasers a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by the Company with the Securities and Exchange
Commission since January 1, 1993 (as such documents have since the time of
their filing been amended, the SEC Documents ) which are all the documents
(other than preliminary material) that the Company was required to file with
the Securities and Exchange Commission since such date. As of their
respective dates, the SEC Documents complied in all respects with the
requirements of the Securities Act (as defined in Section 9.7) and/or the
Exchange Act (as defined in Section 9.8) as the case may be, and the rules
and regulations of the Securities and Exchange Commission thereunder
applicable to such SEC Documents and none of the SEC Documents contained any
untrue statement of a material fact or omitted to statement of material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Documents comply as
to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the Securities and Exchange
Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto or, in
the case of the unaudited statements, as permitted by Form 10-Q of the
Securities and Exchange Commission) and fairly present (subject, in the case
of the unaudited statements, to normal, recurring audit adjustments) the
financial position of the Company as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended.
5.8. No Material Adverse Changes. Except as set forth on Schedule
5.8 hereto, since the Balance Sheet Date there has not at any time been (a)
any material adverse change in the financial condition, operating results,
business prospects, employee relations or customer relations of the Company,
or (b) other adverse changes, which in the aggregate have been materially
adverse to the Company.
5.9. Absence of Certain Developments. Except as contemplated by
this Agreement, and except as set forth in Schedule 5.9 hereto, since the
Balance Sheet Date, the Company has not, nor will have prior to the Closing:
(a) issued any securities; (b) borrowed any amount or incurred or became
subject to any liabilities (absolute or contingent), other than liabilities
incurred in the ordinary course of business and liabilities under contracts
entered into in the ordinary course of business, none of which are or shall
be material and which are less than $10,000; (c) discharged or satisfied any
lien, adverse claim or encumbrance or paid any obligation or liability
(absolute or contingent), other than current liabilities paid in the ordinary
course of business; (d) declared or made any payment or distribution of cash
or other property to the stockholders of the Company with respect to the
Common Stock or purchased or redeemed any shares of Common Stock; (e)
mortgaged, pledged or subjected to any lien, adverse claim, charge or any
other encumbrance, any of its properties or assets, except for liens for
taxes not yet due and payable; (f) sold, assigned or transferred any of its
assets, tangible or intangible, except in the ordinary course of business and
in an amount less than $10,000, or disclosed any proprietary confidential
information to any person, firm or entity; (g) suffered any extraordinary
losses or waived any rights of material value; (h) made any capital
expenditures or commitments therefor; (i) entered into any other transaction
other than in the ordinary course of business in an amount less than $10,000
or entered into any material transaction, whether or not in the ordinary
course of business; (j) made any charitable contributions or pledges; (k)
suffered damages, destruction or casualty loss, whether or not covered by
insurance, affecting any of the properties or assets of the Company or any
other properties or assets of the Company which could have a material adverse
effect on the business or operations of the Company; (l) made any change in
the nature or operations of the business of the Company; or (m) resolved or
entered into any agreement or understanding with respect to any of the
foregoing.
5.10. Properties. The Company has good and marketable title to
all of the real property and good title to all of the personal property and
assets it purports to own, including those reflected as owned on the Company
Balance Sheet or acquired thereafter, and a good and valid leasehold interest
in all property indicated as leased on the Company Balance Sheet, whether
such property is real or personal, free and clear of all liens, adverse
claims, charges, encumbrances or restrictions of any nature whatsoever,
except (a) such as are reflected on the Company Balance Sheet or described in
Schedule 5.10 hereto and (b) for receivables and charges collected in the
ordinary course of business. Except as disclosed in Schedule 5.10 hereto, the
Company owns or leases all such properties as are necessary to its operations
as now conducted and as presently proposed to be conducted and all such
properties are, in all material respects, in good operating condition and
repair.
5.11. Taxes. Except as referred to in Schedule 5.11 hereto,
the Company has timely filed all federal, state, local and foreign tax
returns and reports required to be filed, and all taxes, fees, assessments
and governmental charges of any nature shown by such returns and reports to
be due and payable have been timely paid except for those amounts being
contested in good faith and for which appropriate amounts have been reserved
in accordance with generally accepted accounting principles and are reflected
on the Company Balance Sheet. There is no tax deficiency which has been, or,
to the knowledge of the Company might be, asserted against the Company which
would adversely affect the business or operations, or proposed business or
operations, of the Company. All such tax returns and reports were prepared
in accordance with the relevant rules and regulations of each taxing
authority having jurisdiction over the Company and are true and correct. The
Company has neither given nor been requested to give any waiver of any
statute of limitations relating to the payment of federal, state, local or
foreign taxes. The Company has not been, nor is it now being, audited by any
federal, state, local or foreign tax authorities. The Company has made all
required deposits for taxes applicable to the current tax year. The Company
is not, and has never been, a member of any affiliated group within the
meaning of Section 1504 of the Internal Revenue Code, as in effect from time
to time.
5.12. Litigation. Except as set forth on Schedule 5.12 hereto,
there are no actions, suits, proceedings, orders, investigations or claims
pending or threatened against or affecting the Company, at law or in equity
or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality; there are
no arbitration proceedings pending under collective bargaining agreements or
otherwise; and, to the knowledge of the Company, there is no basis for any of
the foregoing.
5.13. Compliance with Law. The Company has complied in all
respects with all applicable statutes and regulations of the United States
and of all states, municipalities and applicable agencies and foreign
jurisdictions or bodies in respect of the conduct of its business and
operations, and the failure, if any, by the Company to have fully complied
with any such statute or regulation does not and will not materially
adversely affect the business or operations of the Company. The Company
shall do all things necessary to preserve, renew and keep in full force and
effect and in good standing its corporate existence and authority necessary
to continue its business.
5.14. Trademarks and Patents. Schedule 5.14 annexed hereto
contains a true, complete and correct list of all trademarks, trade names,
patents and copyrights (and applications therefor) if any, heretofore or
presently owned or licensed or used or required to be used by the Company in
connection with its business; and, except as set forth on Schedule 5.14, each
such trademark, trade name, patent and copyright (and application therefor)
listed in Schedule 5.14 as being owned by the Company is not subject to any
license, royalty arrangement, option or dispute and is free and clear of all
liens. To the best knowledge of the Company, none of the trademarks, trade
names, patents or copyrights used by the Company in connection with its
business infringe any trademark, trade name, patent or copyright of others in
the United States or in any other country, in any way which adversely affects
or which in the future may adversely affect the business or operations of the
Company. Except as set forth in Schedule 5.14, no stockholder, officer or
director of the Company or any other person owns or has any interest in any
trademark, trade name, service mark, patent, copyright or application
therefor, or trade secret, licenses, invention, information or proprietary
right or process, if any, used by the Company in connection with its
business. The Company has no notice or knowledge of any objection or claim
being asserted by any person with respect to the ownership, validity
enforceability or use of any such trademarks, trade names, patents and
copyrights (and applications therefor) listed on Schedule 5.14 or challenging
or questioning the validity or effectiveness of any license relating thereto.
There are no unresolved conflicts with, or pending claims of, any other
person, whether in litigation or otherwise, involving the trademarks, trade
names, patents and copyrights (and applications therefor), and there are no
liens, encumbrances, adverse claims, or rights of any other person which
would prevent the Company form fulfilling its obligations under this
Agreement. To the best knowledge of the Company, the business of the
Company, as presently conducted and as proposed to be conducted under the
Business Plan, does not and will not cause the Company to violate any
trademark, trade name, patent, copyright, trade secret, license or
proprietary interest of any other person or entity, in any way which
adversely affects or which in the future may adversely affect the business or
operations of the Company. Except as disclosed in Schedule 5.14 hereto, the
Company possesses all proprietary technology necessary for the conduct of
business by the Company, both as presently conducted and as presently
proposed to be conducted.
5.15. Insurance. Schedule 5.15 annexed hereto contains a brief
description of each insurance policy maintained by the Company with respect
to its properties, assets and business; each such policy is in full force and
effect; and the Company is not in default with respect to its obligations
under any of such insurance policies. The insurance coverage of the Company
is in amounts not less than is customarily maintained by corporations engaged
in the same or similar business and similarly situated, including, without
limitation, insurance against loss, damage, fire, theft, public liability and
other risks. The activities and operations of the Company have been
conducted in a manner so as to conform to all applicable provisions of these
insurance policies and the Company has not taken or failed to take any action
which would cause any such insurance policy to lapse.
5.16. Agreements. Except as set forth in Schedule 5.16 hereto,
the Company is neither a party to nor bound by any agreement or commitment,
written or oral, which obligates the Company to make payments to any person,
or which obligates any person to make payments to the Company, in the case of
each such agreement in an amount exceeding $5,000, or in the aggregate in an
amount exceeding $10,000, or which is otherwise material to the conduct and
operation of the Company s business or proposed business or any of its
properties or assets, including, without limitation, all shareholder,
employment, non-competition and consulting agreements and employee benefit
plans and arrangements and collective bargaining agreements to which the
Company is a party or by which it is bound. All such agreements are legal,
valid and binding obligations of the Company, in full force and effect, and
enforceable in accordance with their respective terms, except as the
enforceability thereof may be limited by (a) bankruptcy, insolvency,
moratorium, and similar laws affecting creditors rights generally and (b)
the availability of remedies under general equitable principles. The Company
has performed all obligations required to be performed by it, and is not in
default, or in receipt of any claim, under any such agreement or commitment,
and the Company has no present expectation or intention of not fully
performing all of such obligations, nor does the Company have any knowledge
of any breach or anticipated breach by the other parties to any such
agreement or commitment. The Company is not a party to any contract,
agreement, instrument or understanding which materially adversely affects the
business, properties, operations, assets or condition (financial or
otherwise) of the Company. Purchasers has been furnished with a true and
correct copy of each written agreement referred to in Schedule 5.16, together
with all amendments, waivers or other changes thereto.
5.17. Undisclosed Liabilities. Except as set forth on Schedule
5.17 hereto, the Company has no obligation or liability (whether accrued,
absolute, contingent, unliquidated, or otherwise, whether or not known to the
Company, whether due or to become due) arising out of transactions entered
into at or prior to the Closing of this Agreement, or any action or inaction
at or prior to the Closing of this Agreement, or any state of facts existing
at or prior to the Closing of this Agreement, except (a) liabilities
reflected on the Company Balance Sheet; (b) liabilities in an amount less
than $10,000 incurred in the ordinary course of business since the Balance
Sheet Date (none of which is a liability for breach of contract, breach of
warranty, torts, infringements, claims or lawsuits); and (c) liabilities or
obligations disclosed in the schedules hereto.
5.18. Employees; Conflicting Agreements. (a) The Company shall
cause all members of management and all professional employees of and
consultants and advisors to the Company, including all employees and
consultants and advisors involved in its research and development, to be
subject to agreements with respect to (i) nondisclosure of confidential
information, (ii) assignment of patents, trademarks, copyrights and
proprietary rights to the Company and (iii) disclosure to the Company of
inventions.
(b) Except as set forth on Schedule 5.18, no stockholder,
director, officer or key employee of the Company is a party to or bound by
any agreement, contract or commitment, or subject to any restrictions in
connection with any previous or current employment of any such person, which
adversely affects, or which in the future may adversely affect, the business
or the proposed business of the Company or the rights of Purchasers under
this Agreement and in respect of its rights as a holder of the Shares, the
Warrants and the Purchase Option.
5.19. Disclosure. Neither this Agreement nor any of the
schedules, exhibits, written statements, documents or certificates prepared
or supplied by the Company with respect to the transactions contemplated
hereby contain any untrue statement of a material fact or omit a material
fact necessary to make the statements contained herein or therein not
misleading. Except as disclosed in Schedule 5.19 hereto, there exists no
fact or circumstance which, to the knowledge of the Company, materially
adversely affects, or which could reasonably be anticipated to have a
material adverse effect on, the existing or expected financial condition,
operating results, assets, customer relations, employee relations or business
prospects of the Company.
5.20. Compliance with the Securities Laws. Except as set forth
on Schedule 5.20 hereto, neither the Company nor anyone acting on its behalf
has directly or indirectly offered the Shares, the Warrants or the Purchase
Option or any part thereof or any similar security of the Company (or any
other securities convertible or exchangeable for the Shares, the Warrants or
the Purchase Option or any similar security), for sale to, or solicited any
offer to buy the same from, anyone other than Purchasers. All securities of
the Company heretofore sold and issued by it were sold and issued, and the
Shares, the Warrants and the Purchase Option were offered and will be sold
and issued, in compliance with all applicable federal and state securities
laws.
5.21. Brokers. No finder, broker, agent, financial person or
other intermediary has acted on behalf of the Company, except as set forth on
Item 1 of Schedule 5.17, in connection with the offering of the Shares, the
Warrants and the Purchase Option or the consummation of this Agreement or any
of the transactions contemplated hereby.
5.22. Transactions with Affiliates. Except as set forth in
Schedule 5.22, no director, officer, employee, consultant or agent of the
Company, or member of the family of any such person or any corporation,
partnership, trust or other entity in which any such person, or any member of
the family of any such person, has a substantial interest in or is an
officer, director, trustee, partner or holder of more than 5% of the
outstanding capital stock thereof, is a party to any transaction with the
Company, including any contract, agreement or other arrangement providing for
the employment of, furnishing of services by or requiring payments to any
such person or firm.
6. Representations and Warranties of Purchasers. Purchasers
hereby severally represent and warrant to the Company as follows:
6.1. Investment Intent. Each of the Purchasers are accredited
investors within the meaning of Regulation D under the Securities Act. Each
of the Purchasers has experience in making investments in development stage
biotechnology companies and is acquiring the Shares, the Warrants and the
Purchase Option for its own account and not with a present view to, or for
sale in connection with, any distribution thereof in violation of the
registration requirements of the Securities Act. Purchasers consent to the
placing of a legend on the certificates representing the Shares, the Warrants
and the Purchase Option to the effect that the shares of Common Stock
constituting the Shares or issuable upon exercise of the Warrants, and the
Purchase Option have not been registered under the Securities Act and may not
be transferred except in accordance with applicable securities laws or an
exception therefrom.
6.2. Authorization. Each of Purchasers has the power and authority
to execute and deliver this Agreement and to perform its obligations
hereunder, having obtained all required consents, if any.
6.3. Brokers. No finder, broker, agent, financial person or other
intermediary has acted on behalf of Purchasers in connection with the
offering of the Shares, the Warrants and the Purchase Option or the
consummation of this Agreement or any of the transactions contemplated
hereby.
7. Covenants of the Company. Unless the provisions hereof
expressly require otherwise, until such time as Purchasers and their
affiliates beneficially own less than one percent (1%) of the Common Stock
after giving effect to the conversion or exercise of all securities of the
Company beneficially owned by Purchasers and their affiliates, the Company
covenants and agrees with Purchasers as follows:
7.1. Books and Accounts. The Company will: (a) make and keep
books, records and accounts, which, in reasonable detail, accurately and
fairly reflect its transactions, including without limitation, dispositions
of its assets; and (b) devise and maintain a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management s general or specific
authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and in accordance with the Company s past practices or
any other criteria applicable to such statements, and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
7.2. Periodic Reports. (a) The Company will furnish to Purchasers
as soon as practicable, and in any event within 90 days after the end of each
fiscal year of the Company (commencing with the fiscal year ended September
30, 1996), an annual report of the Company, including a balance sheet as at
the end of such fiscal year and statement of operations, stockholders equity
(deficit) and cash flows for such fiscal year, together with the related
notes thereto, setting forth in each case in comparative form corresponding
figures for the preceding fiscal year, all of which will be correct and
complete and will present fairly the financial position of the Company and
the results of its operations and changes in its financial position as of the
time and for the period then ended. Such financial statements shall be
accompanied by an unqualified report (other than qualifications contingent
upon the Company's ability to obtain additional financing), in form and
substance reasonably satisfactory to Purchasers, of independent public
accountants reasonably satisfactory to Purchasers to the effect that such
financial statements have been prepared in accordance with the books and
records of the Company and generally accepted accounting principles applied
on a basis consistent with prior years (except as otherwise specified in such
report), and present fairly the financial position of the Company and the
results of its operations and changes in their financial position as of the
time and for the period then ended. The Company will use its best efforts to
conduct its business so that such report of the independent public
accountants will not contain any qualifications as to the scope of the audit,
the continuance of the Company, or with respect to the Company s compliance
with generally accepted accounting principles consistently applied, except
for changes in methods of accounting in which such accountants concur.
(b) The Company will furnish to Purchasers, as soon as practicable
and in any event within 45 days after the end of each of the first three
fiscal quarters of the Company during each fiscal year, a quarterly report of
the Company consisting of an unaudited balance sheet as at the end of such
quarter and an unaudited statement of operations, stockholders equity
(deficit) and cash flows for such quarter and the portion of the fiscal year
then ended, setting forth in each case in comparative form corresponding
figures for the preceding fiscal year. All such reports shall be certified
by the Chief Financial Officer or Vice President--Finance of the Company to
be correct and complete, to present fairly the financial position of the
Company and the consolidated results of its operations and changes in its
financial position as of the time and for the period then ended and to have
been prepared in accordance with generally accepted accounting principles.
(c) The Company shall furnish to Purchasers, within 30 days after
the end of each calendar month, an unaudited balance sheet of the Company as
of the end of such month and the related unaudited statement of operations,
stockholders equity (deficit) and cash flows for such month and for the
fiscal year to date, setting forth in each case comparative form the
corresponding figures for the budget for the current fiscal year, or such
other financial information as otherwise agreed to by the parties hereto.
All such statements shall be certified by the Chief Financial Officer or Vice
President--Finance of the Company to the effect that such statements fairly
present the financial condition of the Company as of the dates shown and the
results of its operations for the periods then ended and that such statements
have been prepared in conformity with generally accepted accounting
principles consistently applied except for normal, recurring, year-end audit
adjustments and the absence of footnotes.
(d) Commencing with the Company's fiscal year commencing October
1, 1996 the Company shall furnish to Purchasers, as soon as practicable and
in any event not less than 60 days prior to the end of each fiscal year of
the Company (except that with respect to the fiscal year commencing October
1, 1996, such delivery must be made by the Closing Date), (i) an annual
operating budget for the Company, for the succeeding fiscal year, containing
projections of profit and loss, cash flow and ending balance sheets for each
month of such fiscal year and (ii) a business plan for the Company as
specified in Section 7.19. The Company shall furnish to Purchasers within
five days after the date the Board of Directors has approved the annual
operating budget and business plan referred to above, which shall be no later
than 60 days after the beginning of each fiscal year, such operating budget
and business plan as approved by the Board of Directors. Promptly upon
preparation thereof, the Company shall furnish to Purchasers any other
operating budgets or business plans that the Company may prepare and any
revisions or modifications of such previously furnished budgets or business
plans.
(e) The annual statements and quarterly statements furnished
pursuant to Sections 7.02(a) and (b) shall include a narrative discussion
prepared by the Company describing the business operations of the Company
during the period covered by such statements. The monthly statements
furnished pursuant to Section 7.02(c) shall be accompanied by a statement
describing any material events, transactions or deviations from the Company s
Business Plan (as defined below) contemplated by Section 7.19 and containing
an explanation of the causes and circumstances thereof.
7.3. Certificates of Compliance. The Company covenants that
promptly after the occurrence of any default hereunder or any default under
or breach of any material agreement, or any other material adverse event or
circumstance affecting the Company, it will deliver to Purchasers an
Officers Certificate specifying in reasonable detail the nature and period
of existence thereof, and what actions the Company has taken and proposes to
take with respect thereto.
7.4. Other Reports and Inspection. (a) The Company will furnish
to Purchasers (a) as soon as practicable after issuance, copies of any
financial statements or reports prepared by the Company for, or otherwise
furnished to, its stockholders or the Securities and Exchange Commission and
(b) promptly, such other documents, reports and financial data as Purchasers
may reasonably request. In addition the Company will, upon reasonable prior
notice, make available to Purchasers or its representatives or designees (a)
all assets, properties and business records of the Company for inspection
and/or copying and (b) the directors, officers and employees of the Company
for interviews concerning the business, affairs and finances of the Company.
7.5. [Intentionally Omitted.]
7.6. Insurance. The Company will at all times maintain valid
policies of worker s compensation and such other insurance with respect to
its properties and business of the kinds and in amounts not less than is
customarily maintained by corporations engaged in the same or similar
business and similarly situated, including, without limitation, insurance
against fire, loss, damage, theft, public liability and other risks. The
activities and operations of the Company shall be conducted in a manner to as
to conform in all material respects to all applicable provisions of such
policies.
7.7. Use of Proceeds. After the Closing Date, the Company will use
the proceeds from the sale of the Shares, the Warrants and the Purchase
Option for the purposes set forth on Schedule 7.7.
7.8. Material Changes. The Company will promptly notify Purchasers
of any material adverse change in the business, properties, assets or
condition, financial or otherwise, of the Company, or any other material
adverse event or circumstance affecting the Company, and of any litigation or
governmental proceeding pending or, to the knowledge of the Company,
threatened against the Company or against any director or officer of the
Company.
7.9. Transactions with Affiliates. Except for the transactions
contemplated by this Agreement, the Company shall not (a) engage in any
transaction with, (b) make any loans to, nor (c) enter into any contract,
agreement or other arrangement (i) providing for (x) the employment of, (y)
the furnishing of services by, or (z) the rental of real or personal property
from, or (ii) otherwise requiring payments to, any officer, director or key
employee of the Company or any relative of such persons or any other
"affiliate" or "associate" of such persons (as such terms are defined in the
rules and regulations promulgated under the Securities Act), without the
prior written approval of Purchasers.
7.10. Corporate Existence, Licenses and Permits; Maintenance of
Properties; New Businesses. The Company will at all times conduct its
business in the ordinary course and cause to be done all things necessary to
maintain, preserve and renew its existence and will preserve and keep in
force and effect, all licenses, permits and authorizations necessary to the
conduct of its and their respective businesses. The Company will also
maintain and keep its properties in good repair, working order and condition,
and from time to time, to make all needful and proper repairs, renewals and
replacements, so that the business carried on in connection therewith may be
properly conducted at all times.
7.11. Other Material Obligations. The Company will comply
with, (a) all material obligations which it is subject to, or become subject
to, pursuant to any contract or agreement, whether oral or written, as such
obligations are required to be observed or performed, unless and to the
extent that the same are being contested in good faith and by appropriate
proceedings and the Company has set aside on their books adequate reserves
with respect thereto, and (b) all applicable laws, rules, and regulations of
all governmental authorities, the violation of which could have a material
adverse effect upon the business of the Company.
7.12. Amendment to the Certificate of Incorporation and the
By-Laws. The Company will perform and be in compliance with and observe all
of the provisions set forth in its Certificate of Incorporation and By-Laws
to the extent that the performance of such obligations is legally
permissible; provided that the fact that performance is not legally
permissible will not prevent such nonperformance from constituting an event
of default under this Agreement. The Company will not amend its Certificate
of Incorporation or By-Laws so as to adversely affect the rights of
Purchasers under this Agreement, the Certificate of Incorporation, the
By-Laws, the Warrants, the Purchase Option Warrants or the Purchase Option.
7.13. Merger; Sale of Assets. The Company will not become a
party to any merger, consolidation or reorganization, or sell, lease,
license, sublicense or otherwise dispose of any of its assets, other than
sales and leases of assets in the ordinary course of business, without the
prior approval of Purchasers.
7.14. Acquisition. The Company will not acquire any interest
in any business from any person, firm or entity (whether by a purchase of
assets, purchase of stock, merger or otherwise) without the prior approval of
Purchasers, except the acquisition of 1% or less of any class of outstanding
securities of a company whose securities are listed on a national securities
exchange or which has not fewer than 1,000 stockholders and except as
otherwise specifically permitted pursuant to the provisions of this
Agreement.
7.15. Dividends; Distributions; Repurchases of Common Stock;
Treasury Stock. The Company shall not declare or pay any dividends on, or
make any other distribution with respect to, its capital stock, whether now
or hereafter outstanding, other than dividends payable in shares of such
stock, or purchase, acquire, redeem or retire any shares of its capital
stock, without the consent of Purchasers, provided, however, the foregoing
shall not prohibit the Company from repurchasing any shares of its Common
Stock from any present or former officer, Director or employee of the
Company.
7.16. Consents and Waivers. (a) Except as set forth on
Schedule 7.16, the Company has obtained all consents and waivers needed to
enable it to perform all of its obligations under this Agreement and the
transactions contemplated hereby.
(b) Except as set forth on Schedule 7.16, the Company has obtained
from all holders of options, warrants and other securities of the Company
having any right of first refusal, offer, sale, negotiation or similar rights
or antidilution or other rights to have the terms (including, without
limitation, conversion or exercise prices or rates) of such instruments
adjusted by virtue of the purchase and sale of the Shares, the Warrants and
the Purchase Option or the other transactions contemplated by this Agreement,
the Warrants, or the Purchase Option a written waiver in form and substance
satisfactory to Purchasers and their counsel, provided that no such consent
shall be required solely with respect to the reverse-stock split contemplated
by Section 7.26.
7.17. Taxes and Liens. The Company will duly pay and discharge
when payable, all taxes, assessments and governmental charges imposed upon or
against the Company or its properties, or any part thereof or upon the income
or profits therefrom, in each case before the same become delinquent and
before penalties accrue thereon, as well as all claims for labor, materials
or supplies which if unpaid might by law become a lien upon any of its
property, unless and to the extent that the same are being contested in good
faith and by appropriate proceedings and the Company have set aside on their
books adequate reserves with respect thereto.
7.18. Restrictive Agreement. The Company covenants and agrees
that subsequent to the Closing, it will not be a party to any agreement or
instrument which by its terms would restrict the Company s performance of its
obligations pursuant to this Agreement, the Certificate of Incorporation, By-
laws, the Warrants, the Purchase Option Warrants and the Purchase Option.
7.19. Business Plan. Commencing with the Company s fiscal year
commencing October 1, 1996, the Company s Chief Financial Officer or Vice
President--Finance shall prepare or have prepared and submit to the Board of
Directors not less than 60 days prior to the beginning of each fiscal year of
the Company (except that in respect of the fiscal year commencing October 1,
1996, such date shall be the Closing Date), an updated business plan (the
Business Plan ) for such year which shall set forth the Company s product
development, marketing and servicing plans, capital expenditures and expense
budgets and shall encompass a statement of long range strategy over a five-
year period and short-range tactics over a two-year period. The Business
Plan shall specify quantitative and qualitative goals for the Company and
relate the attainment of those goals to the Company s strategic objectives.
7.20. Director and Observer. (a) For a period of five years
after the Closing Date, Purchasers shall be entitled to propose up to two
persons for nomination as voting Directors of the Company. If necessary, the
Directors of the Company will elect each such person to the Board of
Directors of the Company by creating a new position on the Board of Directors
promptly following such person s nomination by Purchasers and shall nominate
such person for election in connection with any stockholder vote for
Directors, and the Company will use its best efforts to ensure that the
stockholders of the Company agree to vote all their securities in favor of
such person s election. The Company agrees to vote all voting securities for
which the Company holds proxies, granting it voting discretion, or is
otherwise entitled to vote, in favor of, and to use its best efforts in all
respect to cause, the election of each such individual proposed by
Purchasers. In the event that a vacancy is created on the Board of Directors
at any time by the death, disability, resignation or removal (with or without
cause) of any such individual proposed and nominated by Purchasers, pursuant
to this Agreement, the Company will, and will use its best efforts to ensure
that the stockholders of the Company, vote all its voting securities to elect
each individual proposed by Purchasers and approved by the Company and
nominated for election by Purchasers to fill such vacancy and serve as a
voting Director.
(b) In addition to the rights set forth in Section 7.20(a), from
and after the Closing Date, until such time as Purchasers or their affiliates
shall not beneficially own any securities of the Company, Purchasers shall be
entitled to designate a nonvoting observer who shall be entitled to attend
all meetings of the Board of Directors and any of its committees and who
shall be provided (i) reasonable prior notice of all meetings of the Board of
Directors and any of its committees, (ii) reasonable prior notice of any
action that the Board of Directors or any of its committees may take by
written consent, (iii) promptly delivered copies of all minutes and other
records of action by, and all written information furnished to, the Board of
Directors or any of its committees and (iv) any other information requested
by such observer which a member of the Board of Directors would be entitled
to request to discharge his or her duties. Such Purchaser observer shall be
entitled to the same rights to reimbursement for the expense of attendance at
meeting as any outside Director.
(c) If Purchasers give notice to the Company that Purchaser
desires to remove a Director proposed by Purchaser pursuant to this
Agreement, the Company shall, and shall use its best effort to ensure that
the stockholders of the Company shall, vote all its voting securities in
favor of removing such Director if a vote of holders of such securities shall
be required to remove the Director, and the Company agrees to take any action
necessary to facilitate such removal.
(d) Each Director nominated by Purchasers shall be entitled to the
same type and an amount of compensation at least equal to the highest amount
payable to any other Director for serving in such capacity.
(e) Not later than three business days after the Closing Date, the
Company shall have (i) caused the appointment of the initial Directors
nominated by Purchasers, to its Board of Directors in accordance with the
provisions of this Section 7.20, which individuals shall be identified in
writing to the Company by such time, and (ii) taken such action as shall be
necessary to cause the Board of Directors to be composed of, and limited to,
five members, only one of whom shall be an executive officer, employee,
consultant, scientific advisor or otherwise an insider of the Company. The
Company will use its best efforts to ensure continuing compliance with the
terms of Section 7.20(e)(ii).
7.21. Board of Directors. (a) The Company shall promptly
reimburse each director or observer of the Company designated by Purchasers
who is not an employee of the Company for all of his reasonable expenses
incurred in attending each meeting of the Board of Directors of the Company
or any committee thereof.
(b) The Company shall at all times maintain provisions in its By-
laws and/or Certificate of Incorporation indemnifying all directors against
liability and absolving all directors from liability to the Company and its
stockholders to the maximum extent permitted under the laws of the State of
Delaware.
(c) The By-laws of the Company shall always contain provisions
consistent with the provisions of this Section 7.21 except to the extent this
Section 7.21 deals with the possible observer.
7.22. No Subsidiaries. The Company will not create or acquire
any entity that would be a Subsidiary (as defined in Section 9.10) without
Purchasers consent.
7.23. Publicity. (a) The Company shall not issue any press
release or make any other public announcement with respect to this Agreement
or the transactions contemplated hereby or utilizing the names of Purchasers
or their officers, directors, employees, agents or affiliates without
obtaining the prior approval of Purchasers (which approval will not be
unreasonably withheld or delayed), except as may be required by law or the
regulations of any securities exchange or the Nasdaq SmallCap Market.
(b) Unless otherwise required by law, the Company shall not
disclose the names, identity, addresses or any other information regarding
each of Purchasers and its nominees and/or designees; provided, however, each
of the names of Purchasers (but not its addresses) may be disclosed in the
Shelf Registration Statement.
(c) After the Closing Date, upon request of Purchasers, the Company
shall cause, at its sole expense, the immediate publication of a tombstone
advertisement in the Wall Street Journal (National Edition) announcing the
consummation of this Agreement and the transactions contemplated herein, the
exact form and substance of which shall be mutually agreed upon by the
Company and Purchasers.
7.24. Restriction on Securities. (a) Prior to the first
anniversary of the Closing Date, the Company shall not without prior written
consent of Purchasers, issue, offer or sell any of its equity or debt
securities (including, without limitation, any securities convertible into or
exercisable for such securities); provided that the Company may issue shares
of Common Stock pursuant to exercise of options under the Company s 1993
Stock Option Plan in accordance with the terms of such plan (it being agreed
that the issuance of any additional options under such plan may be effected
only with the prior written consent of Purchasers, which consent will not be
withheld unreasonably; provided, further, that the Company without the
consent of the Purchasers may issue options under the Company s Non-Employee
Director Stock Option Plan in accordance with the terms of such plan which
will not be amended without the consent of the Purchasers). During the 18-
months following the Closing Date, the Company shall not, without the prior
written consent of Purchasers, offer or sell any of its debt or equity
securities in reliance on Regulation S of the Securities Act. Except as set
forth on Schedule 7.24, during the 18-month period following the Closing
Date, the Company will not extend the expiration date or lower the exercise
price of any options (other than stock options issued pursuant to the
Company s stock option plans) or warrants ,or take any similar action with
respect to any convertible securities of the Company, without the prior
written consent of Purchasers.
(b) Prior to the Closing Date, the Company shall obtain the
written agreement of all executive officers and directors of the Company, to
lock-up all of the shares of Common Stock owned by each of them at any time
until 13 months following the Closing Date (except that with respect to one
director who has been identified by the Company to Purchasers, such lock-up
shall only be in effect for six months following the Closing Date), and to
agree not to directly or indirectly, issue, agree or offer to sell, grant an
option for the purchase or sale, assign, sell, contract to sell, sell short
or short against the box (as those terms are generally understood), pledge,
hypothecate, distribute or otherwise encumber or dispose of, any such shares
(including options, rights, warrants or other securities convertible into,
exchangeable, exercisable for or evidencing any right to purchase or
subscribe for shares of capital stock of the Company (whether or not
beneficially owned by the undersigned) or any beneficial interest therein of
any shares of the Common Stock, all in form and substance satisfactory to
Purchasers and their counsel.
7.25. [Intentionally Omitted.]
7.26. Reverse Stock Split. Upon five days prior written notice
from Purchasers, the Company shall use its best efforts to effect promptly a
two-to-one reverse stock split of its outstanding Common Stock, in form and
substance satisfactory to Purchasers and their counsel.
8. Registration of Common Stock.
8.1. Registration. Immediately following the Closing Date, and in
any event not later than 30 days after the Closing Date, the Company will
file a shelf registration statement (the "Shelf Registration Statement") with
respect to the resale of the Registrable Securities with the Securities and
Exchange Commission. The Company will use its best efforts to effect the
registrations, qualifications or compliances (including, without limitation,
the execution of any required undertaking to file post-effective amendments,
appropriate qualifications under applicable blue sky or other state
securities laws and appropriate compliance with applicable securities laws,
requirements or regulations) as may be reasonably requested and as would
permit or facilitate that sale and distribution of all Registrable Securities
until the distribution thereof is complete.
8.2. Registration Procedures. In connection with the registration
of any Registrable Securities under the Securities Act as provided in this
Section 8, the Company will use its best efforts, as expeditiously as
possible:
(a) Prepare and file with the Securities and Exchange Commission
the Shelf Registration Statement with respect to such Registrable Securities
and use its best efforts to cause such Shelf Registration Statement to become
effective;
(b) Prepare and file with the Securities and Exchange Commission
such amendments and supplements to such Shelf Registration Statement and the
prospectus used in connection therewith as may be necessary to keep such
Shelf Registration Statement effective until the disposition of all
securities in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such Shelf Registration Statement
shall be completed, and to comply with the provisions of the Securities Act
(to the extent applicable to the Company) with respect to such dispositions;
(c) Furnish to each seller of such Registrable Securities such
number of copies of such Shelf Registration Statement and of each such
amendment and supplement thereto (in each case including all exhibits), such
number of copies of the prospectus included in such Shelf Registration
Statement (including each preliminary prospectus), in conformity with the
requirements of the Securities Act, and such other documents, as such seller
may reasonably request, in order to facilitate the disposition of the
Registrable Securities owned by such seller;
(d) Use its best efforts to register or qualify such Registrable
Securities covered by such Shelf Registration Statement under such other
securities or blue sky laws of such jurisdictions as any seller reasonably
requests, and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller, except
that the Company will not for any such purpose be required to qualify
generally to do business as a foreign corporation in any jurisdiction wherein
it would not, but for the requirements of this Section 8.2(d) be obligated to
be qualified, to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;
(e) Provide a transfer agent and registrar for all such
Registrable Securities covered by such Shelf Registration Statement not later
than the effective date of such Shelf Registration Statement;
(f) Notify each seller of such Registrable Securities at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such Shelf Registration Statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such seller,
the Company will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue statement of a
material fact or omit to state any fact necessary to make the statements
therein not misleading;
(g) Cause all such Registrable Securities to be listed on each
securities exchange or automated over-the-counter trading system on which
similar securities issued by the Company are then listed;
(h) Enter into such customary agreements and take all such other
actions as reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities; and
(i) Make available for inspection by any seller of Registrable
Securities, all financial and other records, pertinent corporation documents
and properties of the Company, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any such
seller in connection with the Shelf Registration Statement pursuant to
Section 8.1.
8.3 Registration and Selling Expenses. (a) All expenses incurred
by the Company in connection with the Company s performance of or compliance
with this Section 8, including, without limitation (i) all registration and
filing fees (including all expenses incident to filing with the National
Association of Securities Dealers, Inc.), (ii) blue sky fees and expenses,
(iii) all necessary printing and duplicating expenses and (iv) all fees and
disbursements of counsel and accountants for the Company (including the
expenses of any audit of financial statements), retained by the Company (all
such expenses being herein called "Registration Expenses"), will be paid by
the Company except as otherwise expressly provided in this Section 8.3.
(b) The Company will, in any event, in connection with any
registration statement, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees
performing legal, accounting or other duties in connection therewith and
expenses of audits of year-end financial statements), the expense of
liability insurance and the expenses and fees for listing the securities to
be registered on one or more securities exchanges or automated over-the-
counter trading systems on which similar securities issued by the Company are
then listed.
(c) Nothing herein shall be construed to prevent any holder or
holders of Registrable Securities from retaining such counsel as they shall
choose, the expenses of which shall be borne by the Company.
8.4. Other Public Sales and Registrations. The Company agrees that
it will not, on its own behalf, file or cause to become effective any other
registration of any of its securities under the Securities Act or otherwise
effect a public sale or distribution of its securities (except pursuant to
registration on Form S-8 or any successor form relating to a special offering
to the employees or security holders of the Company) until at least 180 days
have elapsed after the effective date of the Shelf Registration Statement.
In addition, the Company agrees that it will use its best efforts to obtain
prior to the filing of the Shelf Registration Statement an agreement in form
and substance satisfactory to Purchasers and their counsel in their sole and
absolute discretion from each person that has the right to have the Company
file or cause to become effective any other registration of any of its
securities under the Securities Act or otherwise effect a public sale or
distribution of its securities (except pursuant to registration on Form S-8
or any successor form relating to a special offering to the employees or
security holders of the Company), pursuant to which each such person will
agree for the benefit of the Company and Purchasers to waive any and all such
rights until at least 180 days have elapsed after the effective date of the
Shelf Registration Statement.
8.5. Indemnification. (a) The Company hereby agrees to indemnify,
to the extent permitted by law, each holder of Registrable Securities, its
officers and directors, if any, and each person, if any, who controls such
holder within the meaning of the Securities Act, against all losses, claims,
damages, liabilities and expenses (under the Securities Act or common law or
otherwise) caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus (and as
amended or supplemented if the Company has furnished any amendments or
supplements thereto) or any preliminary prospectus, which registration
statement, prospectus or preliminary prospectus shall be prepared in
connection with the registration contemplated by this Section 8, or caused by
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,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by any untrue statement or alleged untrue statement contained in or by
any omission or alleged omission from information furnished to the Company by
such holder in connection with the registration contemplated by this Section
8, provided the Company will not be liable pursuant to this Section 8.5 if
such losses, claims, damages, liabilities or expenses have been caused by any
selling security holder s failure to deliver a copy of the registration
statement or prospectus, or any amendments or supplements thereto, after the
Company has furnished such holder with the number of copies required by
Section 8.2(c).
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder shall
furnish to the Company in writing such information as is reasonably requested
by the Company for use in any such registration statement or prospectus and
shall severally indemnify, to the extent permitted by law, the Company, its
directors and officers and each person, if any, who controls the Company
within the meaning of the Securities Act, against any losses, claims,
damages, liabilities and expenses resulting from any untrue statement or
alleged untrue statement of a material fact or any omission or alleged
omission of a material fact required to be stated in the registration
statement or prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein not misleading, but only to the
extent such losses, claims, damages, liabilities or expenses are caused by an
untrue statement or alleged untrue statement contained in or by an omission
or alleged omission from information so furnished by such holder in
connection with the registration contemplated by this Section 8. If the
offering pursuant to any such registration is made through underwriters, each
such holder agrees to enter into an underwriting agreement in customary form
with such underwriters and to indemnify such underwriters, their officers and
directors, if any, and each person who controls such underwriters within the
meaning of the Securities Act to the same extent as hereinabove provided with
respect to indemnification by such holder of the Company. Notwithstanding
the foregoing or any other provision of this Agreement, in no event shall a
holder of Registrable Securities be liable for any such losses, claims,
damages, liabilities or expenses in excess of the lesser of (a) the net
proceeds received by such holder in the offering or (b) $2,000,000.
(c) Promptly after receipt by an indemnified party under Section
8.5 (a) or (b) of notice of the commencement of any action or proceeding,
such indemnified party will, if a claim in respect thereof is made against
the indemnifying party under such Section, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have
to any indemnified party otherwise than under such Section. In case any such
action or proceeding is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and, to the extent that it
wishes, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel approved by such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under such Section for any legal or any
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof (other than reasonable costs of investigation)
unless incurred at the written request of the indemnifying party.
Notwithstanding the above, the indemnified party will have the right to
employ counsel of its own choice in any such action or proceeding if the
indemnified party has reasonably concluded that there may be defenses
available to it which are different from or additional to those of the
indemnifying party, or counsel to the indemnified party is of the opinion
that it would not be desirable for the same counsel to represent both the
indemnifying party and the indemnified party because such representation
might result in a conflict of interest (in either of which cases the
indemnifying party will not have the right to assume the defense of any such
action or proceeding on behalf of the indemnified party or parties and such
legal and other expenses will be borne by the indemnifying party). An
indemnifying party will not be liable to any indemnified party for any
settlement of any such action or proceeding effected without the consent of
such indemnifying party.
(d) If the indemnification provided for in Section 8.5(a) or (b)
is unavailable under applicable law to an indemnified party in respect of any
losses, claims, damages or liabilities referred to therein, then each
applicable 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 or liabilities in such
proportion as is appropriate to reflect the relative fault of the Company on
the one hand and of the holders of Registrable Securities on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
holders of Registrable Securities on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the Company or by the holders of Registrable
Securities and the parties relative intent, knowledge, access to information
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 and
liabilities referred to above shall be deemed to include, subject to the
limitations set forth in Section 8.5(c), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or
defending any action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.
(e) Promptly after receipt by the Company or any holder of
Securities of notice of the commencement of any action or proceeding, such
party will, if a claim for contribution in respect thereof is to be made
against another party (the "contributing party"), notify the contributing
party of the commencement thereof; but the omission so to notify the
contributing party will not relieve it from any liability which it may have
to any other party other than for contribution hereunder. In case any such
action, suit, or proceeding is brought against any party, and such party
notifies a contributing party of the commencement thereof, the contributing
party will be entitled to participate therein with the notifying party and
any other contributing party similarly notified.
8.6. Additional Common Stock Issuable Upon Delay of Registration.
(a) Except to the extent any delay is due to the failure of a holder to
reasonably cooperate in providing to the Company such information as shall be
reasonably requested by the Company in writing for use in the Shelf
Registration Statement, if the Shelf Registration Statement is not filed with
the Securities and Exchange Commission within 30 days following the Closing
Date (the "Outside Target Date"), the Company shall declare and pay for no
additional consideration to Purchasers 20,000 shares of Common Stock for each
day the Shelf Registration Statement is not filed with the Securities and
Exchange Commission following the occurrence of the Outside Target Date.
(b) If the Shelf Registration Statement is not declared effective
by the Securities and Exchange Commission within 60 days following the date
of its filing (the "Shelf Filing Date"), the Company shall declare and pay
for no additional consideration to Purchasers 20,000 shares of Common Stock
for each day the Shelf Registration Statement is not declared effective by
the Securities and Exchange Commission following the occurrence of the Shelf
Filing Date.
(c) All shares of Common Stock issuable pursuant to Section 8.6(a)
and (b) shall be duly authorized, fully paid and nonassessable shares of
Common Stock and shall be included in the Shelf Registration Statement
contemplated by Section 8.1. Such shares shall be registered in Purchasers
names or the name of the nominee(s) of Purchasers in such denominations as
Purchasers shall request pursuant to instructions delivered to the Company.
9. Certain Definitions. For the purposes of this Agreement the
following terms have the respective meanings set forth below:
9.1. "Affiliate" means any person, corporation, firm or entity
which directly or indirectly controls, is controlled by, or is under common
control with the indicated person, corporation, firm or entity.
9.2. "Common Stock" means the Company's Common Stock.
9.3. "Generally Accepted Accounting Principles" means generally
accepted accounting principles consistently applied.
9.4. "Officers' Certificate" means a certificate executed on behalf
of the Company by its President, Chairman of the Board, Chief Executive
Officer, Chief Financial Officer, Vice President--Finance, Secretary and/or
one of its other Vice- Presidents.
9.5. "Registrable Securities" means (i) the Common Stock purchased
pursuant to Section 1.1, (ii) the Common Stock issuable upon exercise of the
Warrants purchased pursuant to Section 1.1, (iii) the Common Stock issuable
upon exercise of the Purchase Option, (iv) the Common Stock issuable upon
exercise of the Warrants issuable upon exercise of the Purchase Option or (v)
any other shares of Common Stock now owned or hereafter acquired by
Purchasers. For purposes of this Agreement, any shares of Common Stock
issued pursuant to Section 8.6 shall be deemed to be Registrable Securities
and shall be included in the Shelf Registration Statement contemplated by
Section 8.1.
9.6. "Securities" means the Shares, the Warrants, the Option Shares
and the Option Warrants whether issued at the Closing or thereafter.
9.7. "Securities Act" means, as of any given time, the Securities
Act of 1933, as amended, or any similar federal law then in force.
9.8. "Securities Exchange Act" means, as of any given time, the
Securities Exchange Act of 1934, as amended, or any similar federal law then
in force.
9.9. "Securities and Exchange Commission" includes any governmental
body or agency succeeding to the functions thereof.
9.10. "Subsidiary" means any person, corporation, firm or
entity at least the majority of the equity securities (or equivalent
interest) of which are, at the time as of which any determination is being
made, owned of record or beneficially by the Company, directly or indirectly,
through any Subsidiary or otherwise.
10.1 Company Indemnities. (a) The Company agrees to indemnify,
defend and hold Purchasers and its officers, directors, partners, employees,
consultants and agents (the "Purchasers' Indemnitees") harmless from and
against any liability, obligation, claim, cost, loss, judgment, damage or
expense (including reasonable legal fees and expenses) (collectively,
"Liabilities") incurred or suffered by any of Purchasers' Indemnitees as a
result of or arising out of or in connection with the Company's breach of any
representation, warranty, covenant or agreement of the Company contained
herein.
11. Miscellaneous.
11.1. Survival of Representations, Warranties and Covenants.
Except as otherwise provided for in this Agreement all representations,
warranties, covenants and agreements contained in this Agreement, or in any
document, exhibit, schedule or certificate by any party delivered in
connection herewith shall survive the execution and delivery of this
Agreement and the Closing Date and the consummation of the transactions
contemplated hereby, regardless of any investigation made by Purchasers or on
their behalf; provided, however, that Sections 5.7-5.10, 5.12-5.21 shall
terminate five years after the Closing Date; provided further, however that
Section 5.11 shall terminate when all pertinent tax authorities may no longer
assert a claim due to the expiration of the applicable statute of limitations
therefor.
11.2. Expenses. The Company shall pay all its own expenses in
connection with this Agreement and the transactions contemplated herein. The
Company agrees to pay promptly and save Purchasers harmless against liability
for the payment all expenses incurred by the Company and Purchasers in
connection with the preparation and consummation of the Agreement and the
transactions contemplated herein, including but not limited to: all costs and
expenses under Section 8, including without limitation, the costs of
preparing, printing and filing with the Securities and Exchange Commission
the Shelf Registration Statement and amendments, post-effective amendments,
and supplements thereto; preparing, printing and delivering exhibits thereto
and copies of the preliminary, final and supplemental prospectuses;
preparing, printing and delivering all selling documents, including but not
limited to the subscription agreement, the warrant agreement and stock and
warrant certificates; legal fees and disbursements of Purchasers counsel
(which shall be paid within 15 days of submission of any statements therefor)
in connection with the preparation and consummation of this Agreement and the
transactions contemplated herein, including the legal fees and costs of
negotiating and drafting any transaction documents, due diligence and any
necessary regulatory filings (including, without limitation, the Shelf
Registration Statement, Forms 3, 4 and 5 and Schedule 13-D filings); the cost
of a total of two sets of bound closing volumes for Purchasers and their
counsel; and the cost of the tombstone advertisement in the Wall Street
Journal (National Edition) pursuant to Section 7.23(c). The provisions of
this Section shall survive any termination of this Agreement in all
instances, including without limitation, (i) if the transactions contemplated
by this Agreement have not been consummated or (ii) if the transactions have
been terminated by Purchasers for any reason, as provided in Section 2.2.
11.3. Amendments and Waivers. This Agreement and all exhibits
and schedules hereto set forth the entire agreement and understanding among
the parties as to the subject matter hereof and merges and supersedes all
prior discussions, agreements and understandings of any and every nature
among them. This Agreement may be amended only by mutual written agreement
of all the parties hereto, and the Company may take any action herein
prohibited or omit to take any action herein required to be performed by it,
and any breach of any covenant, agreement, warranty or representation may be
waived, only if the Company has obtained the written consent or waiver of
Purchasers. No course of dealing between or among any persons having any
interest in this Agreement will be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or obligations of any
person under or by reason of this Agreement.
11.4. Successors and Assigns. This Agreement may not be
assigned by the Company except with the prior written consent of Purchasers.
This Agreement shall be binding upon and inure to the benefit of the Company
and its permitted successors and assigns and Purchasers and their successors
and assigns. The provisions hereof which are for Purchasers benefit as
purchasers or holders of the Shares, the Warrants, the Purchase Option
Shares, the Purchase Option Warrants and the Purchase Option are also for the
benefit of, and enforceable by, any subsequent holder of such Shares,
Warrants, the Purchase Option Shares, Purchase Option Warrants or the
Purchase Option.
11.5. Notices. All notices, demands and other communications
to be given or delivered under or by reason of the provisions of this
Agreement shall be in writing and shall be deemed to have been given
personally or when mailed by certified or registered mail, return receipt
requested and postage prepaid, and addressed to the addresses of the
respective parties set forth below or to such changed addresses as such
parties may have fixed by notice; provided, however, that any notice of
change of address shall be effective only upon receipt:
If to the Company:
Innovir Laboratories, Inc.
510 E. 73rd Street, Second Floor
New York, New York 10021
Attention: Dr. Allan R. Goldberg
With a Copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103-3198
Attention: Merrill M. Kraines, Esq.
If to Purchasers:
Aries Financial Services, Inc.
375 Park Avenue, Suite 1501
New York, New York 10152
Attention: President
With a Copy to:
Roberts, Sheridan & Kotel,
A Professional Corporation
640 Fifth Avenue, 15th Floor
New York, New York 10019
Attention: Ira L. Kotel, Esq.
11.6. Governing Law. The validity, performance, construction
and effect of this Agreement shall be governed by the internal laws of the
State of New York without giving effect to such State s principles of
conflict of laws.
11.7. Counterparts. This Agreement may be executed in any
number of counterparts and, notwithstanding that any of the parties did not
execute the same counterpart, each of such counterparts shall, for all
purposes, be deemed an original, and all such counterparts shall constitute
one and the same instrument binding on all of the parties thereto.
11.8. Headings. The headings of the Sections hereof are
inserted as a matter of convenience and for reference only and in no way
define, limit or describe the scope of this Agreement or the meaning of any
provision hereof.
11.9. Severability. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be
illegal, invalid or otherwise unenforceable by a court of competent
jurisdiction, the remainder of this Agreement shall not be affected except to
the extent necessary to delete such illegal, invalid or unenforceable
provision unless the provision held invalid shall substantially impair the
benefit of the remaining portion of this Agreement.
11.10. Freedom of Action. (a) The Purchasers and their
affiliates shall not have any obligation to the Company not to (i) engage in
the same or similar activities or lines of business as the Company or develop
or market any products, services or technologies that does or may in the
future compete, directly or indirectly, with those of the Company, (ii)
invest or own any interest publicly or privately in, or develop a business
relationship with, any corporation, partnership or other person or entity
engaged in the same or similar activities or lines or business as, or
otherwise in competition with, the Company or (iii) do business with any
client, collaborator, licensor, consultant, vendor or customer of the
Company; provided, however, that should the Purchasers engage in (i), and
such engagement will in the Purchaser s sole determination materially affect
the Company's business, the Purchaser shall give notice to the Company of the
same within a reasonable time after engaging in said action; provided,
further, that the Company shall not have to provide notice if it engages in
(ii) or (iii). Each Purchaser and its officers, directors, employees or
former employees and affiliates shall not have any obligation, or be liable,
to the Company solely on account of the conduct described in the preceding
sentence. In the event that either of the Purchasers and any officer,
director, employee or former employee or affiliate thereof acquires knowledge
of a potential transaction, agreement, arrangement or other matter which may
be a corporate opportunity for both the Purchaser(s) and the Company, neither
of the Purchasers nor their officers, directors, employees or former
employees or affiliates shall have any duty to communicate or offer such
corporate opportunity to the Company and neither of the Purchasers nor their
officers, directors, employees or former employees or affiliates shall be
liable to the Company for breach of any fiduciary duty, as a stockholder or
otherwise, solely by reason of the fact that Purchasers or any of their
officers, directors, employees or former employees or affiliates pursue or
acquire such corporate opportunity for either of the Purchasers, direct such
corporate opportunity to another person or entity or communicate or fail to
communicate such corporate opportunity or entity to the Company. As used in
this Section, Purchaser and the Purchasers shall mean either and both of the
Purchasers and their affiliates (excluding the Company as an affiliate of the
Purchasers).
(b) The provisions of this Section 11.10 shall be enforceable to
the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
INNOVIR LABORATORIES, INC.
By: /s/ Dr. Allan Goldberg
Name: Dr. Allan Goldberg
Title: Chairman
THE ARIES FUND, A CAYMAN ISLAND TRUST
By: its Investment Manager, ARIES
FINANCIAL SERVICES, INC.
By: /s/ Lindsay A. Rosenwald, M.D.
Name: Lindsay A. Rosenwald, M.D.
Title: President
THE ARIES DOMESTIC FUND, L.P.
By: its General Partner, ARIES
FINANCIAL SERVICES, INC.
By: /s/ Lindsay A. Rosenwald, M.D.
Name: Lindsay A. Rosenwald, M.D.
Title: President
Exhibit F
[Form of]
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN EXEMPTION THEREFROM. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO
APPLICABLE STATE SECURITIES LAWS.
INNOVIR LABORATORIES, INC.
Class C Warrant for the Purchase of Shares of
Common Stock
No. C-[ ] Shares
FOR VALUE RECEIVED, INNOVIR LABORATORIES, INC., a Delaware
corporation (the "COMPANY"), hereby certifies that __________ or its
registered assigns (the "Holder") is entitled to purchase from the Company,
subject to the provisions of this Warrant (this Warrant ), at any time
commencing upon the date hereof (the "INITIAL EXERCISE DATE"), and prior to
5:00 P.M., New York City time, on August 30, 2006 (the "TERMINATION DATE"),
[_________] (____) fully paid and non-assessable shares of the Common Stock,
$.013 par value, of the Company ("Common Stock"), at an exercise price of
$.50 per share of Common Stock for an aggregate exercise price of $ ________
(the aggregate purchase price payable for the Warrant Shares hereunder is
hereinafter sometimes referred to as the "AGGREGATE EXERCISE PRICE"). The
number of shares of Common Stock to be received upon exercise of this Warrant
and the price to be paid for each share of Common Stock are subject to
possible adjustment from time to time as hereinafter set forth. The shares
of Common Stock or other securities or property deliverable upon such
exercise as adjusted from time to time is hereinafter sometimes referred to
as the "WARRANT SHARES," the exercise price of a share of Common Stock in
effect at any time and as adjusted from time to time is hereinafter sometimes
referred to as the "PER SHARE EXERCISE PRICE." The Per Share Exercise Price
is subject to adjustment as hereinafter provided; in the event of any such
adjustment, the number of Warrant Shares shall be adjusted by dividing the
Aggregate Exercise Price by the Per Share Exercise Price in effect
immediately after such adjustment. The Aggregate Exercise Price is not
subject to adjustment.
EXERCISE OF WARRANT.
This Warrant may be exercised in whole or in part, at any time
by the Holder commencing on the Initial Exercise Date and prior to the
Termination Date, by presentation and surrender of this Warrant (with the
subscription form at the end hereof duly executed) at the address set forth
in subsection 8(a) hereof, together with payment, by certified or official
bank check payable to the order of the Company, of the Aggregate Exercise
Price or the proportionate part thereof if exercised in part.
If this Warrant is exercised in part only, the Company shall,
upon presentation of this Warrant upon such exercise, execute and deliver
(along with the certificate for the Warrant Shares purchased) a new Warrant
evidencing the rights of the Holder hereof to purchase the balance of the
Warrant Shares purchasable hereunder upon the same terms and conditions as
herein set forth. Upon proper exercise of this Warrant, the Company promptly
shall deliver certificates for the Warrant Shares to the Holder duly legended
as authorized by the subscription form. No fractional shares or scrip
representing fractional shares shall be issued upon exercise of this Warrant;
provided that in lieu of such fractional shares or scrip the number of
Warrant Shares shall be adjusted up to the next whole number without payment
of any additional consideration.
RESERVATION OF WARRANT SHARES; FULLY PAID SHARES; TAXES. The
Company hereby represents that it has, and until expiration of this Warrant
agrees that it shall, reserve for issuance or delivery upon exercise of this
Warrant, such number of shares of the Common Stock as shall be required for
issuance and/or delivery upon exercise of this Warrant in full, and agrees
that all Warrant Shares so issued and/or delivered will be validly issued,
fully paid and non-assessable, and further agrees to pay all taxes and
charges that may be imposed upon such issuance and/or delivery.
PROTECTION AGAINST DILUTION.
In the event the Company shall, at any time or from time to
time after the date of issuance of this Warrant, issue or distribute to all
of the holders of its shares of Common Stock evidence of its indebtedness,
any other securities of the Company or any cash, property or other assets
(any such event being herein called a "SPECIAL DIVIDEND"), the Per Share
Exercise Price shall be adjusted by multiplying the Per Share Exercise Price
then in effect by a fraction, the numerator of which shall be the then
Current Market Price (as defined in paragraph 3(k) below) of the Common
Stock, less the Current Market Price of the Special Dividend issued or
distributed in respect of one share of Common Stock, and the denominator of
which shall be the Current Market Price of the Common Stock. Such adjustment
shall be made successively whenever such a record date is fixed. Such
adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date for the determination of
shareholders entitled to receive such distribution.
In case the Company shall hereafter (i) pay a dividend or make
a distribution on its capital stock in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of
shares or (iv) issue by reclassification of its Common Stock any shares of
capital stock of the Company, the Per Share Exercise Price shall be adjusted
to be equal to a fraction, the numerator of which shall be the Aggregate
Exercise Price and the denominator of which shall be the number of shares of
Common Stock or other capital stock of the Company issuable upon exercise of
this Warrant assuming this Warrant had been exercised immediately prior to
such action. An adjustment made pursuant to this subsection 3(b) shall
become effective immediately after the record date in the case of a dividend
or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or reclassification.
(i) Except as provided in subsections 3(a) and 3(b)(i), in the
event the Company shall hereafter issue or sell any Common Stock, any
securities convertible into Common Stock or any rights, options or warrants
to purchase Common Stock or securities convertible into Common Stock, in each
case for a price per share or entitling the holders thereof to purchase
Common Stock at a price per share (determined by dividing (i) the total
amount, if any, received or receivable by the Company in consideration of the
issuance or sale of such securities plus the consideration, if any, payable
to the Company upon exercise or conversion thereof (collectively, the "TOTAL
CONSIDERATION") by (ii) the number of additional shares of Common Stock
issued, sold or issuable upon exercise or conversion of such securities)
which is less than the then Current Market Price of the Common Stock (as
defined below) but not below the current Per Share Exercise Price (which
event is governed by subsection 3(c)(ii)), the Per Share Exercise Price shall
be adjusted as of the date of such issuance or sale by multiplying the Per
Share Exercise Price then in effect by a fraction, the numerator of which
shall be (x) the sum of (A) the number of shares of Common Stock outstanding
on the record date of such issuance or sale plus (B) the Total Consideration
divided by the Current Market Price of the Common Stock, and the denominator
of which shall be (y) the number of shares of Common Stock outstanding on the
record date of such issuance or sale plus the maximum number of additional
shares of Common Stock issued, sold or issuable upon exercise or conversion
of such securities.
(c)(ii) Except as provided in subsection 3(a) and 3(b)(i), in the
event the Company shall hereafter issue or sell any Common Stock, any
securities convertible into Common Stock or any rights, options or warrants
to purchase Common Stock or securities convertible into Common Stock, in each
case for a price per share or entitling the holders thereof to purchase
Common Stock at a price per share (the ISSUE PRICE ), (determined by
dividing (i) the total amount, if any, received or receivable by the Company
in consideration of the issuance or sale of such securities plus the Total
Consideration by (ii) the number of additional shares of Common Stock
issuable upon exercise or conversion of such securities) which is less than
the then current Per Share Exercise Price in effect on the record date of
such issuance, the Per Share Exercise Price shall be adjusted to equal the
Issue Price.
In the event of any capital reorganization or
reclassification, or any consolidation or merger to which the Company is a
party other than a merger or consolidation in which the Company is the
continuing corporation, or in case of any sale or conveyance to another
entity of the property of the Company as an entirety or substantially as an
entirety, or in the case of any statutory exchange of securities with another
corporation (including any exchange effected in connection with a merger of a
third corporation into the Company), the Holder of this Warrant shall have
the right thereafter to receive on the exercise of this Warrant the kind and
amount of securities, cash or other property which the Holder would have
owned or have been entitled to receive immediately after such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or
conveyance had this Warrant been exercised immediately prior to the effective
date of such reorganization, reclassification, consolidation, merger,
statutory exchange, sale or conveyance and in any such case, if necessary,
appropriate adjustment shall be made in the application of the provisions set
forth in this Section 3 with respect to the rights and interests thereafter
of the Holder of this Warrant to the end that the provisions set forth in
this Section 3 shall thereafter correspondingly be made applicable, as nearly
as may reasonably be, in relation to any shares of stock or other securities
or property thereafter deliverable on the exercise of this Warrant. The
above provisions of this subsection 3(e) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, statutory
exchanges, sales or conveyances. The issuer of any shares of stock or other
securities or property thereafter deliverable on the exercise of this Warrant
shall be responsible for all of the agreements and obligations of the Company
hereunder. Notice of any such reorganization, reclassification,
consolidation, merger, statutory exchange, sale or conveyance and of said
provisions so proposed to be made, shall be mailed to the Holders of the
Warrants not less than 30 days prior to such event. A sale of all or
substantially all of the assets of the Company for a consideration consisting
primarily of securities shall be deemed a consolidation or merger for the
foregoing purposes.
In case any event shall occur as to which the other provisions
of this Section 3 are not strictly applicable but as to which the failure to
make any adjustment would not fairly protect the purchase rights represented
by this Warrant in accordance with the essential intent and principles hereof
then, in each such case, the Holders of Warrants representing the right to
purchase a majority of the Warrant Shares subject to all outstanding Warrants
may appoint a firm of independent public accountants of recognized national
standing reasonably acceptable to the Company, which shall give their opinion
as to the adjustment, if any, on a basis consistent with the essential intent
and principles established herein, necessary to preserve the purchase rights
represented by the Warrants. Upon receipt of such opinion, the Company will
promptly mail a copy thereof to the Holder of this Warrant and shall make the
adjustments described therein. The fees and expenses of such independent
public accountants shall be borne by the Company.
(f) Whenever the Per Share Exercise Price payable upon exercise of
each Warrant is adjusted pursuant this Section 3, the number of shares of
Common Stock underlying a Warrant shall simultaneously be adjusted to equal
the number obtained by dividing the Aggregate Exercise Price by the adjusted
Per Share Exercise Price.
(g) No adjustment in the Per Share Exercise Price shall be
required unless such adjustment would require an increase or decrease of at
least $0.03 per share of Common Stock; provided, however, that any
adjustments which by reason of this subsection 3(f) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment; provided, further, however, that adjustments shall be required
and made in accordance with the provisions of this Section 3 (other than this
subsection 3(f)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the Holder of this Warrant
or Common Stock issuable upon the exercise hereof. All calculations under
this Section 3 shall be made to the nearest cent or to the nearest 1/100th of
a share, as the case may be. Anything in this Section 3 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Per Share Exercise Price, in addition to those required by this Section 3, as
it in its discretion shall deem to be advisable in order that any stock
dividend, subdivision of shares or distribution of rights to purchase stock
or securities convertible or exchangeable for stock hereafter made by the
Company to its stockholders shall not be taxable.
(h) Whenever the Per Share Exercise Price is adjusted as provided
in this Section 3 and upon any modification of the rights of a Holder of
Warrants in accordance with this Section 3, the Company shall promptly
obtain, at its expense, a certificate of a firm of independent public
accountants of recognized standing selected by the Board of Directors (who
may be the regular auditors of the Company) setting forth the Per Share
Exercise Price and the number of Warrant Shares after such adjustment or the
effect of such modification, a brief statement of the facts requiring such
adjustment or modification and the manner of computing the same and cause
copies of such certificate to be mailed to the Holders of the Warrants.
(i) If the Board of Directors of the Company shall declare any
dividend or other distribution with respect to the Common Stock, the Company
shall mail notice thereof to the Holders of the Warrants not less than
30 days prior to the record date fixed for determining stockholders entitled
to participate in such dividend or other distribution.
(j) If, as a result of an adjustment made pursuant to this Section
3, the Holder of any Warrant thereafter surrendered for exercise shall become
entitled to receive shares of two or more classes of capital stock or shares
of Common Stock and other capital stock of the Company, the Board of
Directors (whose determination shall be conclusive and shall be described in
a written notice to the Holder of any Warrant promptly after such adjustment)
shall determine the allocation of the adjusted Per Share Exercise Price
between or among shares or such classes of capital stock or shares of Common
Stock and other capital stock.
(k) For the purpose of any computation under Section 3 above, the
Current Market Price of any security at any date shall be deemed to be the
average of the daily closing prices for the five consecutive business days
immediately preceding such date. The closing price for each day shall be the
last sale price regular way or, in case no such reported sale takes place on
such day, the average of the last reported bid and asked prices regular way,
in either case on the principal national securities exchange, including the
Nasdaq National Market, on which such security is admitted to trading or
listed, or if not listed or admitted to trading on such exchange or market,
the average of the highest reported bid and lowest reported asked prices as
reported by Nasdaq, or other similar organization if Nasdaq is no longer
reporting such information, or if not so available by agreement of the
Company's Board of Directors, on the one part, and the Holders of Warrants
representing the right to purchase a majority of the Warrant Shares subject
to all outstanding Warrants, on the second part. If the Board of Directors
and such Holders fail to agree on the Current Market Price within 60 days of
the date of the action giving rise to any adjustment pursuant to this Section
3, such Holders shall be entitled to appoint a firm of independent public
accountants or appraisers of recognized national standing reasonably
acceptable to the Company, which shall give their opinion as to such Current
Market Price on a basis consistent with the essential intent and principles
established herein. Upon receipt of such opinion, the Company will promptly
mail a copy thereof to the Holder of this Warrant and shall make the
adjustments described therein. The fees and expenses of such independent
public accountants or appraisers shall be borne by the Company.
REGISTRATION UNDER SECURITIES ACT OF 1933. The Warrant Shares
will be registered on the Shelf Registration Statement (as defined in Article
8 of the Common Stock and Warrant Purchase Agreement (the Purchase
Agreement ) dated as of August 30, 1996, by and among the Company, The Aries
Fund, a Cayman Island Trust, and The Aries Domestic Fund, L.P., a Delaware
limited partnership) and the Holder of this Warrant shall have the
registration rights as provided in Article 8 of the Purchase Agreement. If
the Holder is not a party to the Purchase Agreement, by acceptance of this
Warrant the Holder agrees to comply with provisions of Article 8 of the
Purchase Agreement to the same extent as if it were a party thereto.
LIMITED TRANSFERABILITY. This Warrant may not be sold,
transferred, assigned or hypothecated by the Holder except in compliance with
the provisions of the Act and the applicable state securities "blue sky"
laws, and is so transferable only upon the books of the Company which it
shall cause to be maintained for such purpose. The Company may treat the
registered Holder of this Warrant as he or it appears on the Company's books
at any time as the Holder for all purposes. The Company shall permit any
Holder of a Warrant or his duly authorized attorney, upon written request
during ordinary business hours, to inspect and copy or make extracts from its
books showing the registered holders of Warrants. All Warrants issued upon
the transfer or assignment of this Warrant will be dated the same date as
this Warrant, and all rights of the holder thereof shall be identical to
those of the Holder.
LOSS, ETC., OF WARRANT. Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant,
and of indemnity reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of this Warrant, if mutilated,
the Company shall execute and deliver to the Holder a new Warrant of like
date, tenor and denomination.
STATUS OF HOLDER. This Warrant does not confer upon the
Holder any right to vote or to consent to or receive notice as a stockholder
of the Company, as such, in respect of any matters whatsoever, or any other
rights or liabilities as a stockholder, prior to the exercise hereof.
NOTICES. No notice or other communication under this Warrant
shall be effective unless, but any notice or other communication shall be
effective and shall be deemed to have been given if, the same is in writing
and is mailed by first-class mail, postage prepaid, addressed to:
the Company at 510 EAST 73RD STREET, SECOND FLOOR, NEW YORK,
NEW YORK 10021, ATTENTION: VICE PRESIDENT--FINANCE, or such other
address as the Company has designated in writing to the Holder, or
the Holder at the address indicated in the notice provisions
to the Purchase Agreement, or other such address as the Holder has
designated in writing to the Company.
9. Redemption. (a) The Warrants are not redeemable on or prior
to March 1, 1996. After March 1, 1996, the Warrants are subject to
redemption, in whole but not in part, by the Company at $.10 per share (the
Redemption Price ) for each share purchasable hereunder provided that the
closing bid price for the Common Stock as reported on NASDAQ, or on such
exchange on which the Common Stock is then traded, exceeds $2.25 (subject to
appropriate and equitable adjustment for stock splits and similar events) for
the 30 trading days ending three days prior to the date of notice of
redemption.
(b) The election of the Company to redeem the Warrants shall be
evidenced by a resolution of the board of directors of the Company, which
shall be delivered to the Holders together with the notice of redemption.
(c) At the sole cost and expense of the Company, the notice of
redemption shall be given by the Company to the Holders at each Holder s
address as required by Section 8(b) above, by the first class-mail, postage
prepaid, mailed not less than 60 days prior to the Redemption Date (as
defined below).
All the notices of redemption shall state in reasonable detail:
(1) the date fixed for redemption of the Warrants (the Redemption
Date );
(2) the Redemption Price;
(3) that on the Redemption Date, the Redemption Price will become
due and payable upon each Warrant;
(4) the Per Share Exercise Price, the date on which the right to
exercise the Warrants will terminate and the place or places where the
Warrants may be exercised; and
(5) the place or places where the Warrants are to be surrendered
for payment of the Redemption Price.
(d) On or before the Redemption Date, the Company shall deposit in
a segregated, trust account or at the Company s option, and reasonably
acceptable to the Holders, with a paying agent authorized by the Company to
pay the Redemption Price on behalf of the Company), an amount of money
sufficient to pay the Redemption Price of all the Warrants to be redeemed on
the Redemption Date other than any Warrants which have been exercised prior
to the date of deposit.
If any Warrant called for redemption is exercised on or prior to
the Redemption Date, any money deposited for payment shall be paid to the
Company upon written request stating the reasons therefor.
(e) Notice of redemption having been given as aforesaid, the
Warrants to be redeemed shall, on the Redemption Date, become due and payable
at the Redemption Price and at the place or places therein specified. Upon
surrender of each such Warrant for redemption in accordance with said notice,
such Warrant shall be paid by the Company at the Redemption Price.
If any Warrant called for redemption shall not be so paid upon
surrender therefor, the Redemption Price shall, until paid, bear interest
compounded daily from the Redemption Date at the maximum rate permitted by
applicable law not to exceed 18% per annum.
(f) The Holder may exercise this Warrant any time prior to the
Redemption Date.
10 HEADINGS. The headings of this Warrant have been inserted as
a matter of convenience and shall not affect the construction hereof.
11 APPLICABLE LAW. This Warrant shall be governed by and
construed in accordance with the law of the State of New York without giving
effect to principles of conflicts of law thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its Chief Executive Officer and its corporate seal to be hereunto
affixed and attested by its Secretary this August 30, 1996
INNOVIR LABORATORIES, INC.
By: ___________________________
Name: Dr. Allan Goldberg
Title: Chairman
ATTEST:
____________________
Secretary
[Corporate Seal]
SUBSCRIPTION
The undersigned, ____________________________, pursuant to the
provisions of the foregoing Warrant, hereby elects to exercise the within
Warrant to the extent of purchasing _____________________ shares of Common
Stock thereunder and hereby makes payment of $_______________ by certified or
official bank check in payment of the exercise price therefor.
Dated:_______________ Signature:_____________________________
Address:_______________________________
ASSIGNMENT
FOR VALUE RECEIVED _______________________________________ hereby
sells, assigns and transfers unto _____________________________________ the
foregoing Warrant and all rights evidenced thereby, and does irrevocably
constitute and appoint _____________________________, attorney, to transfer
said Warrant on the books of Innovir Laboratories, Inc.
Dated:_______________ Signature:_____________________________
Address:______________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED __________________________ hereby assigns and
transfers unto _________________________ the right to purchase __________
shares of the Common Stock, no par value per share, of Innovir Laboratories,
Inc. covered by the foregoing Warrant, and a proportionate part of said
Warrant and the rights evidenced thereby, and does irrevocably constitute and
appoint __________________________, attorney, to transfer that part of said
Warrant on the books of Innovir Laboratories, Inc.
Dated:_______________ Signature:___________________________
Address:_____________________________
EXHIBIT G
[FORM OF]
NO.
Innovir Laboratories, Inc.
Unit Purchase Option
Dated: August 30, 1996
Expiration Date: March 1, 1998
THIS PURCHASE OPTION CERTIFIES THAT _____________ and/or its
designees (the Holder ) is entitled to purchase from INNOVIR LABORATORIES,
INC., a Delaware corporation (hereinafter called the "Company"), at prices
and during the periods as hereinafter specified, up to 2,000,000 Units (the
"Units") of the Company at a purchase price of $.50 per Unit (the "Purchase
Price"), with each Unit consisting of (i) one share (each, a "Purchase
Option Share") of Common Stock, par value $.013 per share, of the Company
("Common Stock"), and (ii) one Class C Warrant (each, a "Purchase Option
Warrant") to purchase one share of Common Stock with an exercise price of
$.50 per share (as such price may be adjusted from and after the date hereof
pursuant to the terms of the Class C Warrants (as defined below) as if in
effect at all times from and after the date hereof regardless whether any
Class C Warrants or Purchase Option Warrants are outstanding, the "Warrant
Exercise Price"), both of which are exercisable for a period of 10 years from
the date of issuance.
This option to purchase Units (the "Purchase Option"), subject to
adjustment in accordance with Section 7 of this Agreement, is being issued
pursuant to Section 1.2 of the Common Stock and Warrant Purchase Agreement
dated as of August 30, 1996 (the "Purchase Agreement"), by and among the
Company, The Aries Fund, A Cayman Island Trust, and The Aries Domestic Fund,
L.P. (collectively, the "Purchasers"), in consideration of the receipt by the
Company of the Purchase Price (as defined in the Purchase Agreement).
Except as specifically otherwise provided herein: (i) the Purchase
Option Shares and the Purchase Option Warrants issued pursuant to this
Purchase Option shall bear the same terms and conditions as the Shares and
the Class C Warrants, respectively, issued pursuant to Section 1.1 of the
Purchase Agreement; (ii) the Purchase Option Warrants shall be further
governed by the terms of the Class C Warrants dated as of August 30, 1996,
executed in connection with the Purchase Agreement by the Company (the "Class
C Warrants") and (iii) the shares of Common Stock constituting the Purchase
Option Shares and the shares of Common Stock underlying the Purchase Option
Warrants (the "Purchase Option Warrant Shares") shall be registered pursuant
to the Article 8 of the Purchase Agreement. The Warrants issuable upon
exercise of this Purchase Option will be subject to redemption by the Company
pursuant to the Purchase Option Warrants at any time after this Purchase
Option has been exercised and the Purchase Option Warrants underlying the
Units are outstanding. Any such redemption shall be on the same terms and
conditions as the Class C Warrants.
1. The rights represented by this Purchase Option may be
exercised at any time in whole or in part, by (i) the presentation and
surrender of this Purchase Option (with the purchase form at the end hereof
duly executed) at the principal executive office of the Company (or such
other office or agency of the Company as it may designate by notice in
writing to the address of the Holder appearing on the books of the Company);
and (ii) payment to the Company of the Purchase Price for the number of Units
specified in the above-mentioned purchase form together with applicable stock
transfer taxes, if any. This Purchase Option shall be deemed to have been
exercised, in whole or in part to the extent specified, immediately prior to
the close of business on the date this Purchase Option is surrendered and
payment is made in accordance with the foregoing provisions of this
Section 1, and the person or persons in whose name or names the certificates
for shares of Purchase Option Shares and Purchase Option Warrants shall be
issuable upon such exercise shall become the Holder or Holders of record of
such Purchase Option Shares and Purchase Option Warrants at that time and
date. The certificates for the Purchase Option Shares and Purchase Option
Warrants so purchased, and, if this Purchase Option is exercised in part
only, a new Purchase Option with the same terms and conditions of this
Purchase Option evidencing the balance of the Units which a Holder hereof has
the right to purchase pursuant to this Purchase Option upon the same terms
and conditions as herein set forth, shall be executed and delivered to the
Holder as soon as practicable but not later than 5 days after this Purchase
Option shall have been so exercised. No fractional shares or scrip
representing fractional shares shall be issued upon exercise of this Purchase
Option; provided that in lieu of such fractional shares or scrip the number
of Purchase Option Shares and Purchase Option Warrant Shares shall be
adjusted up to the next whole number without payment of any additional
consideration.
The Company hereby represents that it has reserved, and until
expiration of this Purchase Option agrees that it shall reserve, for issuance
or delivery upon exercise of this Purchase Option, such number of Purchase
Option Shares and Purchase Option Warrant Shares as shall be required for
issuance and/or delivery upon exercise of this Purchase Option and the
underlying Purchase Option Warrants in full, and agrees that all Purchase
Option Shares and Purchase Option Warrant Shares so issued and/or delivered
will be validly issued, fully paid and non-assessable, and further agrees to
pay all taxes and charges that may be imposed upon such issuance and/or
delivery.
2. The Company may treat the registered Holder of this Purchase
Option as he or it appears on the Company's books at any time as the Holder
for all purposes. The Company shall permit any Holder of a Purchase Option
or its duly authorized attorney, upon written request during ordinary
business hours, to inspect its books showing the registered holders of
Purchase Options.
3. (a) The Holder represents, by accepting this Purchase Option,
that it understands that this Purchase Option and any securities obtainable
upon exercise of this Purchase Option have not been registered for sale under
Federal or state securities laws until and are being offered and sold to the
Holder pursuant to one or more exemptions from the registration requirements
of such securities laws. The Holder understands that it must bear the
economic risk of his investment in this Purchase Option and any securities
obtainable upon exercise of this Purchase Option for an indefinite period of
time, as this Purchase Option and such securities have not been registered
under Federal or state securities laws and therefore cannot be sold unless
subsequently registered under such laws (e.g., the registration referred to
in Section 5) unless an exemption from such registration is available.
(b) The Holder, by its acceptance of this Purchase Option,
represents to the Company that it is acquiring this Purchase Option and will
acquire any securities obtainable upon exercise of this Purchase Option for
its own account for investment and not with a view to, or for sale in
connection with, any distribution thereof in violation of the Securities Act
of 1933. The Holder agrees that this Purchase Option and any such securities
will not be sold or otherwise transferred unless a registration statement
with respect to such transfer is effective under the Act and any applicable
state securities laws or an exemption from such registration is available.
(c) This Purchase Option may be sold, transferred, assigned
or hypothecated to individuals and entities; which shall include, without
limitation, (i) any affiliate of, or any firm or corporation that succeeds to
all or substantially all of the business of the Holder, (ii) any of the
officers or employees of the Holder or of any such successor firm or any
affiliate thereof or (iii) in the case of an individual, pursuant to such
individual's last will and testament or the laws of descent and distribution,
and is so transferable only upon the books of the Company which it shall
cause to be maintained for such purpose. All Purchase Options issued upon
the transfer or assignment of this Purchase Option will be dated the same
date as this Purchase Option, and all rights of the holder thereof shall be
identical to those of the Holder.
4. This Purchase Option shall not entitle the Holder to any
voting rights or any other rights, or subject to the Holder to any
liabilities, as a stockholder of the Company.
5. (a) The Holder of this Warrant shall have the registration
rights provided in Article 8 of the Purchase Agreement. If the Holder is not
a party to the Purchase Agreement, by acceptance of this Purchase Option the
Holder agrees to comply with provisions of Article 8 of the Purchase
Agreement to the same extent as if it were a party thereto.
(b) Until all shares of Purchase Option Shares, Purchase
Option Warrants and the Purchase Option Warrant Shares underlying this
Purchase Option have been sold pursuant to a Registration Statement or
pursuant to Rule 144, the Company shall use its best efforts to file with the
Securities and Exchange Commission all current reports and any information as
may be necessary to enable the Holder to effect sales of its shares in
reliance upon Rule 144 as promulgated under the Act.
6. The Purchase Option Shares underlying this Purchase Option
shall not be redeemable by the Company and the anti-dilution provisions
contained in the Purchase Option Warrants shall continue in full force and
effect during the term of this Purchase Option regardless whether the
Class C Warrants or Purchase Option Warrants are outstanding.
7. The Purchase Price in effect at any time and the number and
kind of securities purchasable upon the exercise of each Unit issuable
pursuant to this Purchase Option shall be subject to adjustment from time to
time upon the happening of certain events as follows:
(a) In the event the Company shall, at any time or from time to
time after the date of issuance of this Purchase Option, issue or distribute
to all of the holders of its shares of Common Stock evidence of its
indebtedness, any other securities of the Company or any cash, property or
other assets (any such event being herein called a "Special Dividend"), the
Purchase Price shall be adjusted by multiplying the Purchase Price then in
effect by a fraction, the numerator of which shall be the then Current Market
Price (as defined in paragraph 7(k) below) of the Common Stock, less the
Current Market Price of said assets or evidences of indebtedness so
distributed or of such rights or warrants, and the denominator of which shall
be the total number of shares of Common Stock outstanding multiplied by such
Current Market Price of the Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed. Such adjustment shall be
made whenever any such distribution is made and shall become effective
immediately after the record date for the determination of shareholders
entitled to receive such distribution.
(b) In case the Company shall hereafter (i) pay a dividend or make
a distribution on its capital stock in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of
shares or (iv) issue by reclassification of its Common Stock any shares of
capital stock of the Company, the Purchase Price shall be adjusted to be
equal to a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such action, and the
denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such action. An adjustment made pursuant
to this subsection 7(b) shall become effective immediately after the record
date in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or reclassification.
(c)(i) Except as provided in subsection 7(a) and 7(b)(i), in the
event the Company shall hereafter issue or sell any Common Stock, any
securities convertible into Common Stock or any rights, options or warrants
to purchase Common Stock or securities convertible into Common Stock, in each
case for a price per share or entitling the holders thereof to purchase
Common Stock at a price per share (determined by dividing (i) the total
amount, if any, received or receivable by the Company in consideration of the
issuance or sale of such securities plus the consideration, if any, payable
to the Company upon exercise or conversion thereof (collectively, the "Total
Consideration") by (ii) the number of additional shares of Common Stock
issued, sold or issuable upon exercise or conversion of such securities)
which is less than the then Current Market Price of the Common Stock (as
defined below) but not below the current Purchase Price (which event is
governed by Section 7(c)(ii)), the Purchase Price shall be adjusted as of the
date of such issuance or sale by multiplying the Purchase Price then in
effect by a fraction, the numerator of which shall be (x) the sum of (A) the
number of shares of Common Stock outstanding on the record date of such
issuance or sale plus (B) the Total Consideration divided by the Current
Market Price of the Common Stock and the denominator of which shall be (y)
the number of shares of Common Stock outstanding on the record date of such
issuance or sale plus the maximum number of additional shares of Common Stock
issued, sold or issuable upon exercise or conversion of such securities.
(c)(ii) Except as provided in subsection 7(a) and 7(b)(i), in the
event the Company shall hereafter issue or sell any Common Stock, any
securities convertible into Common Stock or any rights, options or warrants
to purchase Common Stock or securities convertible into Common Stock, in each
case for a price per share or entitling the holders thereof to purchase
Common Stock at a price per share (the Issue Price ), (determined by
dividing (i) the total amount, if any, received or receivable by the Company
in consideration of the issuance or sale of such securities plus the Total
Consideration by (ii) the number of additional shares of Common Stock
issuable upon exercise or conversion of such securities) which is less than
the then current Purchase Price in effect on the record date of such
issuance, the Purchase Price shall be adjusted to equal the Issue Price.
(d) In the event of any capital reorganization or
reclassification, or any consolidation or merger to which the Company is a
party other than a merger or consolidation in which the Company is the
continuing corporation, or in case of any sale or conveyance to another
entity of the property of the Company as an entirety or substantially as an
entirety, or in the case of any statutory exchange of securities with another
corporation (including any exchange effected in connection with a merger of a
third corporation into the Company), the Holder of this Purchase Option shall
have the right thereafter to receive on the exercise of this Purchase Option
the kind and amount of securities, cash or other property which the Holder
would have owned or have been entitled to receive immediately after such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale or conveyance had this Purchase Option been exercised immediately prior
to the effective date of such reorganization, reclassification,
consolidation, merger, statutory exchange, sale or conveyance and in any such
case, if necessary, appropriate adjustment shall be made in the application
of the provisions set forth in this Section 7 with respect to the rights and
interests thereafter of the Holder of this Purchase Option to the end that
the provisions set forth in this Section 7 shall thereafter correspondingly
be made applicable, as nearly as may reasonably be, in relation to any shares
of stock or other securities or property thereafter deliverable on the
exercise of this Purchase Option. The above provisions of this subsection
7(d) shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, statutory exchanges, sales or conveyances. The
issuer of any shares of stock or other securities or property thereafter
deliverable on the exercise of this Purchase Option shall be responsible for
all of the agreements and obligations of the Company hereunder. Notice of
any such reorganization, reclassification, consolidation, merger, statutory
exchange, sale or conveyance and of said provisions so proposed to be made,
shall be mailed to the Holders of the Purchase Options not less than 30 days
prior to such event. A sale of all or substantially all of the assets of the
Company for a consideration consisting primarily of securities shall be
deemed a consolidation or merger for the foregoing purposes.
(e) In case any event shall occur as to which the other provisions
of this Section 7 are not strictly applicable but as to which the failure to
make any adjustment would not fairly protect the purchase rights represented
by this Purchase Option in accordance with the essential intent and
principles hereof then, in each such case, the Holders of Purchase Options
representing the right to purchase a majority of the Purchase Option Warrant
Shares subject to all outstanding Purchase Options may appoint a firm of
independent public accountants of recognized national standing reasonably
acceptable to the Company, which shall give their opinion as to the
adjustment, if any, on a basis consistent with the essential intent and
principles established herein, necessary to preserve the purchase rights
represented by the Purchase Options. Upon receipt of such opinion, the
Company will promptly mail a copy thereof to the Holder of this Purchase
Option and shall make the adjustments described therein. The fees and
expenses of such independent public accountants shall be borne by the
Company.
(f) Whenever the Purchase Price payable upon exercise of each
Purchase Option is adjusted pursuant this Section 7, (i) the number of shares
of Common Stock underlying each Unit issuable pursuant to this Purchase
Option shall simultaneously be adjusted to equal the number obtained by
multiplying the number of shares of Common Stock underlying each Unit
issuable pursuant to this Purchase Option immediately prior to such
adjustment by a fraction, the numerator of which is the Purchase Price in
effect immediately prior to such adjustment, and the denominator of which is
the Purchase Price, as adjusted; and (ii) the number of Purchase Option
Warrant Shares and the Warrant Exercise Price, in effect at anytime, shall be
adjusted, from time to time, in accordance with the terms of the Class C
Warrants as in effect at all times from and after the date hereof regardless
whether any Class C Warrants are outstanding.
(g) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least $0.03 per
share of Common Stock; provided, however, that any adjustments which by
reason of this subsection 7(g) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment; provided,
further, however, that adjustments shall be required and made in accordance
with the provisions of this Section 7 (other than this subsection 7(g)) not
later than such time as may be required in order to preserve the tax-free
nature of a distribution to the Holder of this Purchase Option or Common
Stock issuable upon the exercise hereof. All calculations under this Section
7 shall be made to the nearest cent or to the nearest 1/100th of a share, as
the case may be. Anything in this Section 7 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price,
in addition to those required by this Section 7, as it in its discretion
shall deem to be advisable in order that any stock dividend, subdivision of
shares or distribution of rights to purchase stock or securities convertible
or exchangeable for stock hereafter made by the Company to its stockholders
shall not be taxable.
(h) Whenever the Purchase Price is adjusted as provided in this
Section 7 and upon any modification of the rights of a Holder of Purchase
Options in accordance with this Section 7, the Company shall promptly obtain,
at its expense, a certificate of a firm of independent public accountants of
recognized standing selected by the Board of Directors (who may be the
regular auditors of the Company) setting forth the Purchase Price and the
number of Purchase Option Shares and Purchase Option Warrant Shares after
such adjustment or the effect of such modification, a brief statement of the
facts requiring such adjustment or modification and the manner of computing
the same and cause copies of such certificate to be mailed to the Holders of
the Purchase Options.
(i) If the Board of Directors of the Company shall declare any
dividend or other distribution with respect to the Common Stock, the Company
shall mail notice thereof to the Holders of the Purchase Options not less
than 30 days prior to the record date fixed for determining stockholders
entitled to participate in such dividend or other distribution.
(j) If, as a result of an adjustment made pursuant to this Section
7, the Holder of any Purchase Option thereafter surrendered for exercise
shall become entitled to receive shares of two or more classes of capital
stock or shares of Common Stock and other capital stock of the Company, the
Board of Directors (whose determination shall be conclusive and shall be
described in a written notice to the Holder of any Purchase Option promptly
after such adjustment) shall determine the allocation of the adjusted
Purchase Price between or among shares or such classes of capital stock or
shares of Common Stock and other capital stock.
(k) For the purpose of any computation under Section 7 above, the
Current Market Price of any security at any date shall be deemed to be the
average of the daily closing prices for the five consecutive business days
immediately preceding such date. The closing price for each day shall be the
last sale price regular way or, in case no such reported sale takes place on
such day, the average of the last reported bid and asked prices regular way,
in either case on the principal national securities exchange, including the
Nasdaq National Market, on which such security is admitted to trading or
listed, or if not listed or admitted to trading on such exchange or market,
the average of the highest reported bid and lowest reported asked prices as
reported by Nasdaq, or other similar organization if Nasdaq is no longer
reporting such information, or if not so available, by agreement of the
Company's Board of Directors, on the one part, and the Holders of Purchase
Options representing the right to purchase a majority of the Purchase Option
Warrant Shares subject to all outstanding Purchase Options, on the second
part. If the Board of Directors and such Holders fail to agree on the
Current Market Price within 60 days of the date of the action giving rise to
any adjustment pursuant to this Section 7, such Holders shall be entitled to
appoint a firm of independent public accountants or appraisers of recognized
national standing reasonably acceptable to the Company, which shall give
their opinion as to such Current Market Price on a basis consistent with the
essential intent and principles established herein. Upon receipt of such
opinion, the Company will promptly mail a copy thereof to the Holder of this
Purchase Option and shall make the adjustments described therein. The fees
and expenses of such independent public accountants or appraisers shall be
borne by the Company.
8. This Agreement shall be governed by and in accordance with the
laws of the State of New York, without giving effect to the principles of
conflicts of law thereof.
9. This Purchase Option shall be exercisable until March 1, 1998.
IN WITNESS WHEREOF, INNOVIR LABORATORIES, INC. has caused this
Purchase Option to be signed by its duly authorized officers under its
corporate seal, and this Purchase Option to be dated August 30, 1996.
INNOVIR LABORATORIES, INC.
By:____________________________
Name:
Title:
PURCHASE FORM
(To be signed only upon exercise of Purchase Option)
The undersigned, the holder of the foregoing Purchase Option,
hereby irrevocably elects to exercise the purchase rights represented by such
Purchase Option for, and to purchase thereunder, ________ Units of INNOVIR
LABORATORIES, INC., each Unit consisting of one share of Common Stock, $.013
par value per share, and one Warrant to purchase one share of Common Stock,
$.013 par value per share, and herewith makes payment of $_______ therefor,
and if such number of Units shall not be all the units evidenced by the
foregoing Purchase Option, that a new Purchase Option for the balance of such
Units be executed and delivered to, and registered in the name of, the holder
at the address stated below.
Dated: ______________, 19____. Instructions for Registration of
Purchase Option Shares and
Purchase Option Warrants
________________________________________
Print Name
________________________________________
Address
________________________________________
Signature
TRANSFER FORM
(To be signed only upon transfer of the Purchase Option)
For value received, the undersigned hereby sells, assigns, and
transfers unto _________________________ the right to purchase
_____________ Units represented by the foregoing Purchase Option, and
appoints _________________ attorney to transfer such rights on the books of
INNOVIR LABORATORIES, INC. with full power of substitution in the premises.
Dated: _______________, 19__
____________________________________
By: _____________________________________
________________________________________
Address
