SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
July 8, 1998
-----------------------
Date of Report (Date of earliest event reported)
PALATIN TECHNOLOGIES, INC.
--------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
------------------
(State or other jurisdiction of incorporation)
0-22686 95-4078884
------------------------ -----------------------------------
(Commission File Number) (IRS Employer Identification Number)
214 Carnegie Center, Suite 100, Princeton, New Jersey 08540
------------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (609) 520-1911
Not Applicable
---------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS.
On July 8, 1998, Palatin Technologies, Inc. (the "Company") sold 363,636
shares of common stock, $.01 par value, of the Company (the "Common Stock") to
TheraTech, Inc. ("TheraTech") (Nasdaq: THRT), for an aggregate purchase price of
$2,000,000. The Common Stock was sold to TheraTech, an accredited investor,
pursuant to Rule 506 of Regulation D promulgated under the Securities Act of
1933, as amended (the "Securities Act"). The net proceeds will be used for
research and development of the dosage form of PT-14, the Company's peptide
hormone product for the treatment of sexual dysfunction. See the Stock Purchase
Agreement filed as Exhibit 99.1 to this Form 8-K.
The Company has agreed to file and use its best efforts to cause to be
declared effective not later than November 5, 1998, a registration statement
under the Securities Act, registering for resale the Common Stock issued to
TheraTech. See the Registration Rights Agreement filed as Exhibit 99.2 to this
Form 8-K.
The Company and TheraTech previously announced they had entered into an
agreement, including a license to certain patents owned by TheraTech, to
collaboratively develop an oral transmucosal delivery system for PT-14.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
c) Exhibits
99.1 Stock Purchase Agreement dated as of July 6, 1998,
between the Company and TheraTech, Inc.
99.2 Registration Rights Agreement dated as of July 8, 1998,
between the Company and TheraTech, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PALATIN TECHNOLOGIES, INC.
By /s/ Stephen T. Wills
---------------------------
Name: Stephen T. Wills
Title: Vice President and
Chief Financial Officer
Date: July 9, 1998
3
STOCK PURCHASE AGREEMENT, dated as of July 6, 1998 (this "Agreement"),
between Palatin Technologies, Inc., a Delaware corporation (the "Company"), and
TheraTech, Inc., a Delaware corporation (the "Purchaser").
WHEREAS, the Purchaser and the Company have entered into a License and
Development Agreement dated March 18, 1998 (the "License Agreement");
WHEREAS, the Purchaser and the Company have executed a Letter of Intent,
dated March 18, 1998, in connection with a proposed loan to the Company from the
Purchaser which loan would be convertible into shares of the Company's Series C
Convertible Preferred Stock (the "Loan Transaction");
WHEREAS, the parties to the Loan Transaction desire to void ab initio all
agreements and understandings relating thereto, other than the License
Agreement; and
WHEREAS, subject to the terms and conditions set forth herein, the Company
desires to issue and sell to the Purchaser and the Purchaser desires to acquire
shares of the Company's Common Stock, $.01 par value per share (the "Common
Stock").
IN CONSIDERATION of the mutual covenants and agreements set forth herein
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.1. CERTAIN DEFINITIONS. As used in this Agreement, unless the
context requires a different meaning, the following terms have the meanings
indicated in this Section 1.1:
"Affiliate" means, with respect to any Person, any Person that, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with") shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Agreement" shall have the meaning set forth in the recitals hereto.
<PAGE>
"Business Day" means any day except Saturday, Sunday and any day which
shall be a Federal legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other government actions
to close.
"Closing" shall have the meaning set forth in Section 2.1(b).
"Closing Date" shall have the meaning set forth in Section 2.1(b).
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value $.01 per share.
"Company" shall have the meaning set forth in the recitals hereto.
"Current Balance Sheet" means the unaudited balance sheet of the Company as
of March 31, 1998.
"Disclosure Materials" means, collectively, the SEC Documents, the Exhibits
and Schedules to this Agreement and the Registration Rights Agreement and all
other information furnished in writing by or on behalf of the Company to the
Purchaser or its representatives, respective agents and counsel in connection
with the transactions contemplated by this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Governmental Agency" means any federal, state, local, foreign or other
governmental agency, instrumentality, commission, authority, board or body and
the Nasdaq SmallCap Market.
"Intellectual Property Rights" shall have the meaning set forth in Section
3.1(o).
"Knowledge" or "Know" when used with respect to the Company means the
knowledge of the executive officers, senior management of the Company, or any
other management personnel that has had significant involvement in the business
and affairs of the Company.
"Legal Opinion" means the legal opinion letter of Rubin Baum Levin Constant
& Friedman, outside counsel to the Company, addressed to the Purchaser, dated
the Closing Date, substantially in the form attached hereto as Exhibit B.
"Liability" means any liability or obligation (whether absolute or
contingent, liquidated or unliquidated or due or to become due).
"License Agreement" shall have the meaning set forth in the recitals
hereto.
-2-
<PAGE>
"Lien" means, with respect to any asset, any mortgage, lien, pledge, right
of first refusal, charge, security interest or encumbrance of any kind in or on
such asset or the revenues or income thereon or therefrom.
"Loan Transaction" shall have the meaning set forth in the recitals hereto.
"Material Adverse Effect" shall have the meaning set forth in Section
3.1(a).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition).
"Purchaser" shall have the meaning set forth in the recitals hereto.
"Registration Rights Agreement" means the registration rights agreement,
dated the Closing Date, between the Company and the Purchaser, in the form of
Exhibit A, as the same may be amended, supplemented or otherwise modified in
accordance with its terms.
"Required Approvals" shall have the meaning set forth in Section 3.1(f).
"SEC Documents" shall have the meaning set forth in Section 3.1(k).
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Registration Statement" means a registration statement under
the Securities Act prepared by the Company and filed with the Commission in
accordance with the Registration Rights Agreement, covering the resale of the
Shares and naming the holder or holders of such Shares as "selling stockholders"
thereunder.
"Shares" means the shares of Common Stock to be purchased pursuant to this
Agreement.
"Transaction Documents" means, collectively, this Agreement and the
Registration Rights Agreement.
-3-
<PAGE>
ARTICLE II
PURCHASE OF SHARES
SECTION 2.1. PURCHASE OF SHARES; CLOSING
(a) Subject to the terms and conditions set forth in this Agreement, the
Company shall issue and sell to the Purchaser and the Purchaser shall purchase
363,636 Shares for an aggregate purchase price of $2,000,000.
(b) The closing of the purchase and sale of the Shares (the "Closing")
shall take place on such date as the parties shall agree at the offices of
Kirkland & Ellis, 153 East 53rd Street, 39th Floor, New York, New York 10022.
The date of the Closing is hereinafter referred to as the "Closing Date."
(c) At the Closing the Company shall (i) issue and deliver one or more
stock certificates representing the Shares to be acquired hereunder by the
Purchaser, duly registered in the name of the Purchaser, (ii) deliver or cause
to be delivered the Legal Opinion, (iii) deliver or cause to be delivered a
certificate executed by the Chief Executive Officer dated the Closing Date
stating that (a) all of the representations and warranties of the Company
contained in this Agreement are true and correct in all material respects at and
as of the Closing Date except to the extent of changes caused by the
transactions contemplated hereby, and (b) 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 have been performed in a manner reasonably satisfactory to
the Purchaser, (iv) deliver or cause to be delivered a certificate of the
Secretary or the Assistant Secretary of the Company, dated the Closing Date, as
to the continued and valid existence of the Company, certifying the By-laws of
the Company and the resolutions adopted by the Board of Directors of the Company
authorizing the actions to be taken by the Company under this Agreement, (v)
deliver or cause to be delivered a certificate of the Secretary 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, (vi) deliver or cause to be delivered a certified copy of the
Certificate of Incorporation of the Company as filed with the Secretary of State
of Delaware and any amendments thereto, and (vii) deliver or cause to be
delivered all other executed instruments, agreements and certificates as are
required to be delivered by or on their behalf at the Closing, including without
limitation, this Agreement and the Registration Rights Agreement. The Closing
shall be conditioned on the prior compliance with this paragraph and paragraph
(d) of this Section 2.1.
(d) At the Closing the Purchaser shall deliver or cause to be delivered to
the Company (i) immediately available funds equal to $2,000,000 in United States
dollars; and (ii) all other executed instruments, agreements and certificates as
are required to be delivered by or on their behalf at the Closing, including
without limitation, this Agreement and the Registration Rights Agreement.
-4-
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Purchaser as follows:
(a) ORGANIZATION AND QUALIFICATION. The Company has no subsidiaries other
than as set forth in Schedule 3.1(a) (collectively the "Subsidiaries"). The
Company and each of the Subsidiaries is a corporation, duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, with the requisite corporate power and authority to own and use
its properties and assets and to carry on its business as currently conducted.
The Company and each of the Subsidiaries is duly licensed or qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
in which the nature of the business conducted or property owned by it makes such
license or qualification necessary, except where the failure to be so licensed
or qualified or in good standing, as the case may be, could not, individually or
in the aggregate, (x) adversely affect the legality, validity or enforceability
of the Shares or any Transaction Documents or the transactions contemplated
thereby, (y) have a material adverse effect on the business, results of
operations, assets, prospects, or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole or (z) adversely impair the
Company's ability to perform fully on a timely basis its obligations under any
Transaction Documents (any of (x), (y) or (z), a "Material Adverse Effect").
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite corporate
power and authority to execute and deliver the Transaction Documents, to
consummate the transactions contemplated by the Transaction Documents and to
otherwise carry out its obligations thereunder. The execution and delivery of
each Transaction Document by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company. Each Transaction Document has been duly
executed by the Company and, when delivered in accordance with the terms hereof,
each Transaction Document shall constitute the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.
(c) CAPITALIZATION. The authorized, issued and outstanding capital stock of
the Company is as set forth in Schedule 3.1(c). Neither the issuance nor the
delivery of the Shares is subject to any preemptive or similar rights of any
stockholder of the Company or to any right of first refusal or other similar
right in favor of any Person which has not been waived. Except as specifically
disclosed in Schedule 3.1(c), there are no outstanding pledges, Liens, options,
warrants, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or, except as a result of the purchase and sale of the
Shares hereunder, securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of Common Stock or securities or rights convertible or exchangeable into
shares of Common Stock.
-5-
<PAGE>
(d) ISSUANCE OF SECURITIES. The Shares are duly authorized and, when issued
and delivered in accordance with the terms hereof, shall be validly issued,
fully paid and nonassessable, free and clear of all Liens.
(e) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of its Certificate of Incorporation, By-laws or other
charter documents (each as amended through the date hereof), (ii) subject to
obtaining the consents referred to in Section 3.1(f), conflict with, result in a
breach, or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument (evidencing a Company debt or otherwise) to which the
Company is a party or by which any property or asset of the Company is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state
securities laws and regulations), or by which any property or asset of the
Company is bound or affected; except in the case of each of clauses (ii) and
(iii), as could not, individually or in the aggregate, have or result in a
Material Adverse Effect. The business of the Company is not being conducted in
violation of any law, ordinance or regulation of any governmental authority,
except for violations which, individually and in the aggregate, could not have
or result in a Material Adverse Effect.
(f) CONSENTS AND APPROVALS. The Company is not required to obtain any
consent, waiver, authorization or order of, or make any filing or registration
with, any court or other federal, state, local, foreign or other governmental
authority or other Person in connection with the execution, delivery and
performance by the Company of the Transaction Documents and the transactions
contemplated thereby, other than (i) the filing of one or more Securities
Registration Statements with the Commission and the making of applicable
blue-sky filings under state securities laws with respect to the Shares and the
transactions contemplated hereby, each as contemplated hereby and by the
Registration Rights Agreement, (ii) the application for the listing of the
Shares on the Nasdaq SmallCap Market (and on each other national securities
exchange, market or trading facility on which the Common Stock is then listed),
and (iii) other than, in all other cases, where the failure to obtain such
consent, waiver, authorization or order, or to give or make such notice or
filing, could not, individually or in the aggregate, have or result in a
Material Adverse Effect (the "Required Approvals").
(g) LITIGATION; PROCEEDINGS. Except as specifically disclosed in the
Disclosure Materials, there is no claim, action, suit, notice of violation,
proceeding or investigation pending or, to the best knowledge of the Company,
threatened against or affecting the Company or any of its Subsidiaries or any of
their respective properties before or by any court, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) which if decided adversely to any such Person could (i) adversely
affect or challenge the legality, validity or enforceability of any Transaction
Document or the Shares or (ii) could, individually or in the aggregate, have or
result in a Material Adverse Effect.
-6-
<PAGE>
(h) NO DEFAULT OR VIOLATION. Neither the Company nor any of its
Subsidiaries (i) is in default under or in violation of (or has received notice
of a claim that it is in default under or that it is in violation of) any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound, (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is in violation of any statute, rule or regulation of any governmental
authority, except as could, individually or in the aggregate, have or result in
a Material Adverse Effect.
(i) PRIVATE OFFERING. Assuming the accuracy of the representations and
warranties of the Purchaser contained in Sections 3.2(b)-3.2(f), the offering,
issuance or sale of the Shares as contemplated hereunder are exempt from the
registration requirements of the Securities Act and state securities laws.
(j) CERTAIN FEES. No fees or commissions will be payable by the Company to
any broker, financial advisor or consultant, finder, investment banker or Person
performing a similar function, placement agent, or bank with respect to the
transactions contemplated hereby.
(k) SEC DOCUMENTS; DISCLOSURE. The Company has filed all reports required
to be filed by it under the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, since July 1, 1996 (the foregoing materials being collectively
referred to herein as the "SEC Documents") on a timely basis or has received a
valid extension of such time of filing and has filed any such SEC Documents
prior to the expiration of any such extension. As of their respective filing
dates, each SEC Document filed with the Commission complied in all material
respects with the requirements of the Securities Act and the Exchange Act and
the rules and regulations of the Commission promulgated thereunder, and none of
the SEC Documents, when filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. To the Company's knowledge, each final
registration statement filed with the Commission by the Company pursuant to the
Securities Act since July 1, 1996, as of the date such statement became
effective complied in all material respects with the requirements of the
Securities Act and did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. This Agreement together with the Schedules, Exhibits,
written statements and certificates supplied to the Purchaser by or on behalf of
the Company with respect to the transactions contemplated hereby does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained herein or therein, in the light of
the circumstances in which they were made, not misleading.
(l) FORM S-3 ELIGIBILITY. The Company is eligible to register the Shares
for resale with the Commission under Form S-3 promulgated under the Securities
Act.
(m) LISTING AND MAINTENANCE REQUIREMENTS COMPLIANCE. Since the date that
the listing of the Common Stock was initially approved for trading on the Nasdaq
SmallCap Market, the Company has not received notice (written or oral) from any
stock exchange, market or trading facility on which the Common Stock is or has
been listed (or on which it is or has been quoted) to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such exchange, market or trading facility. The Company is in compliance with all
such listing and maintenance requirements.
-7-
<PAGE>
(n) INVESTMENT COMPANY. The Company is not, and is not controlled by or
under common control with an Affiliate of, and "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(o) PATENTS AND TRADEMARKS. The Company has, or has rights to use, all
patents, patent applications, trademarks, trademark applications, service marks,
trade names, copyrights, licenses, trade secrets and other intellectual property
rights which are necessary for use in connection with its business or which the
failure to so have would have a Material Adverse Effect (collectively, the
"Intellectual Property Rights"). To the best knowledge of the Company, none of
the Intellectual Property Rights infringe on any rights of any other Person, and
the Company either owns or has duly licensed or otherwise acquired all necessary
rights with respect to the Intellectual Property Rights. The Company has not
received any notice from any third party of any claim of infringement by the
Company of any of the Intellectual Property Rights, and has no reason to believe
there is any basis for any such claim. To the best knowledge of the Company,
there is no existing infringement by another Person on any of the Intellectual
Property Rights.
(p) NO UNDISCLOSED LIABILITIES. To the Company's knowledge, neither the
Company nor any of its Subsidiaries has any liabilities except (i) as and to the
extent of the amounts reflected or reserved against on the Current Balance Sheet
(including footnotes thereto), (ii) liabilities and obligations incurred in the
ordinary course of business since the date thereof, and (iii) such other
liabilities that in the aggregate will not result in a Material Adverse Effect.
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby represents and warrants to the Company as follows:
(a) ORGANIZATION; AUTHORITY. The Purchaser is an entity organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents to which
it is a party and to carry out its obligations thereunder. The purchase of the
Shares by the Purchaser hereunder has been duly authorized by all necessary
action on the part of the Purchaser. Each of this Agreement and the Registration
Rights Agreement has been duly executed by the Purchaser and, when delivered by
the Purchaser in accordance with the terms hereof shall constitute the valid and
legally binding obligation of the Purchaser, enforceable against it in
accordance with its terms.
(b) INVESTMENT INTENT. The Purchaser is acquiring the Shares for its own
account for investment purposes only and not with a view to or for distributing
or reselling such Shares or any part thereof or interest therein, without
prejudice, however, to the Purchaser's right, subject to the provisions of this
Agreement and the Registration Rights Agreement, at all times to sell or
otherwise dispose of all or any part of such Shares pursuant to an effective
registration statement under the Securities Act and in compliance with
applicable state securities laws or under an exemption from such registration.
(c) PURCHASER STATUS. At the time the Purchaser was offered the Shares to
be acquired by it hereunder, it was, at the date hereof, it is, and at the
Closing Date, it will be, an "accredited investor" as defined in Rule 501(a)
under the Securities Act.
-8-
<PAGE>
(d) EXPERIENCE OF PURCHASER. The Purchaser has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Shares, and has so evaluated the merits and risks of such investment.
(e) ABILITY OF PURCHASER TO BEAR RISK OF INVESTMENT. The Purchaser
acknowledges that an investment in the Shares to be acquired by it hereunder is
speculative and involves a high degree of risk. The Purchaser is able to bear
the economic risk of an investment in the Shares and, at the present time, is
able to afford a complete loss of such investment.
(f) ACCESS TO INFORMATION. The Purchaser acknowledges receipt of the
Disclosure Materials and further acknowledges that it has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Shares, and the merits and risks of investing in the
Shares, (ii) access to information about the Company and the Company's financial
condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the opportunity to
obtain such additional information which the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed
investment decision with respect to the investment and to verify the accuracy
and completeness of the information contained in the Disclosure Materials.
(g) RELIANCE. The Purchaser understands and acknowledges that (i) the
Shares to be acquired by it hereunder are being offered and sold to it without
registration under the Securities Act in a private placement that is exempt from
the registration provisions of the Securities Act and (ii) the availability of
such exemption, depends in part on, and the Company will rely upon the accuracy
and truthfulness of, the foregoing representations and the Purchaser hereby
consents to such reliance.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
SECTION 4.1. TRANSFER RESTRICTIONS. (a) The Shares may only be disposed of
pursuant to (i) an effective registration statement under the Securities
Act,(ii) an available exemption from or in a transaction not subject to the
registration requirements of the Securities Act; or (iii) subject to the
conditions set forth herein, any other legally available means of transfer. In
connection with any transfer of any Shares other than pursuant to an effective
registration statement or to the Company, the Company may require the transferor
thereof to provide to the Company an opinion of counsel selected and paid for by
the transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act.
(b) The Purchaser agrees to the imprinting, so long as is required, of the
following legend on the certificates representing the Shares:
-9-
<PAGE>
THESE SHARES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS.
SECTION 4.2. USE OF PROCEEDS. The Company shall use all of the proceeds
from the sale of the Shares solely for the research and development of the
dosage form of PT-14 or other peptide, including, but not limited to,
metalopeptide, for sexual dysfunction in any and all drug delivery systems
whether existing now or in the future including OTM, pulmonary, transdermal,
controlled-release injections, and oral drug delivery systems.
SECTION 4.3. LISTING OF SHARES. The Company shall (a) not later than the
fifth Business Day following the Closing Date prepare and file with the Nasdaq
SmallCap Market (as well as any other national securities exchange, market or
trading facility on which the Common Stock is then listed) an additional shares
listing application covering the Shares, (b) take all steps necessary to cause
such Shares to be approved for listing on the Nasdaq SmallCap Market (as well as
on any other national securities exchange, market or trading facility on which
the Common Stock is then listed) as soon as possible thereafter, and (c) provide
to the Purchaser evidence of such listing, and the Company shall maintain the
listing of its Common Stock on such exchange or market.
SECTION 4.4. INTEGRATION. The Company shall not and shall use its best
efforts to ensure that no Affiliate of the Company shall sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Shares in a manner that would require the registration
under the Securities Act of the issue, offer or sale of the Shares to the
Purchaser.
SECTION 4.5. BREACHES. Each of the Company and the Purchaser shall give
prompt written notice to the other of any breach by it of any representation,
warranty or other agreement contained in any Transaction Document, as well as
any events or occurrences arising after the date hereof and prior to the Closing
Date, which would reasonably be likely to cause any representation or warranty
or other agreement of such party, as the case may be, contained in the
Transaction Documents to be incorrect or breached as of such Closing Date.
However, no disclosure by a party pursuant to this Section shall be deemed to
cure any breach of any representation, warranty or other agreement contained in
any Transaction Document.
-10-
<PAGE>
ARTICLE V
MISCELLANEOUS
SECTION 5.1. FEES AND EXPENSES. Each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Purchaser shall be
responsible for its own tax liability that may arise as a result of the
investment hereunder or the transactions contemplated by this Agreement.
SECTION 5.2. ENTIRE AGREEMENT; AMENDMENTS, EXHIBITS AND SCHEDULES. This
Agreement, together with the Exhibits and Schedules hereto contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, including, without limitation, any and all agreements and
understandings with respect to the Loan Transaction other than the License
Agreement. The Exhibits and Schedules to this Agreement are hereby incorporated
herein and made a part hereof for all purposes as if fully set forth herein.
SECTION 5.3. NOTICES. Any notice or other communication or delivery
required or permitted to be provided hereunder shall be in writing and shall be
deemed to have been received on the earliest of (i) the date of transmission, if
such notice or communication is delivered to the address or to the facsimile
telephone number (as the case may be) specified in this Section prior to 8:00
p.m. (Eastern Standard time) on a Business Day, (ii) the Business Day after the
date of transmission or hand delivery, if such notice or communication is
delivered to the address or the at the facsimile telephone number (as the case
may be) specified in this Section later than 8:00 p.m. (Eastern Standard time)
on any date and earlier than 11:59 p.m. (Eastern Standard time) on such date,
(iii) the Business Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications to the Purchaser and the Company shall be to the following
addresses:
TheraTech, Inc.
417 Wakara Way
Salt Lake City, UT 84108
Facsimile No.: (801) 583-0050
Attn: Dinesh C. Patel, Ph.D., President, Chairman and Chief
Executive Officer
With copies to Kirkland & Ellis & Co.
153 East 53rd Street, 39th Floor
New York, NY 10022
Facsimile No.: (212) 446-4900
Attn: Stephen P. Johnson
-11-
<PAGE>
Palatin Technologies, Inc.
214 Carnegie Center
Princeton, NJ 08540
Facsimile No.: (609) 452-0880
Attn: Edward J. Quilty, Chairman and Chief Executive Officer
With copies to: Rubin Baum Levin Constant & Friedman
30 Rockefeller Plaza
New York, NY 10112
Facsimile No.: (212) 698-7700
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
SECTION 5.4. AMENDMENTS; WAIVERS. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Purchaser, or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
SECTION 5.5. HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
SECTION 5.6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns, including any Persons to whom the Purchaser transfers Shares. The
assignment by a party of this Agreement or any rights hereunder shall not affect
the obligations of such party under this Agreement.
SECTION 5.7. NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and their respective successors and permitted
assigns and, other than with respect to permitted assignees under Section 5.6,
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.
SECTION 5.8. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York without regard to the principles of conflicts of law thereof.
-12-
<PAGE>
SECTION 5.9. WAIVER OF JURY TRIAL. The parties to this Agreement each
hereby waives to the fullest extent permitted by law, any right to trial by jury
of any claim, demand, action, or cause of action arising under this Agreement,
whether now existing or hereafter arising, and whether in contract, tort,
equity, or otherwise. Each of the parties to this Agreement hereby agrees and
consents that any claim, demand, action, or cause of action shall be decided by
court trial without a jury and that the parties to this Agreement may file an
original counterpart of a copy of this Agreement with any court as written
evidence of the consent of the parties hereto to the waiver of their right to
trial by jury.
SECTION 5.10. EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement, and shall become effective when counterparts have been signed by
each party and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
SECTION 5.11. PUBLICITY. The Company and the Purchaser shall consult with
each other in issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and neither the Purchaser
nor the Company shall issue any such press release or otherwise make any such
public statement without the prior written consent of the other, which consent
shall not be unreasonably withheld or delayed, except that no prior consent
shall be required if such disclosure is required by law or any Governmental
Agency, in which such case the disclosing party shall provide the other party
with prior notice of such public statement. The Purchaser shall not make any
public statement or issue any press release regarding the transactions
contemplated hereby without the prior written consent of the Company.
SECTION 5.12. SEVERABILITY. In case any one or more of the provisions of
this Agreement shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Agreement shall
not in any way be affected or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.
SECTION 5.13. REMEDIES CUMULATIVE. Except as otherwise provided herein, the
remedies provided herein shall be cumulative and shall not preclude the
assertion by any party hereto of any other rights or the seeking of any other
remedies against any other party hereto.
-13-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first indicated above.
The Company:
PALATIN TECHNOLOGIES, INC.
By: ________________________________
Name: Edward J. Quilty
Title: Chairman, President and
Chief Executive Officer
The Purchaser:
THERATECH, INC.
By: ________________________________
Name: Dinesh C. Patel, Ph.D.
Title: Chairman, President and
Chief Executive Officer
-14-
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of July 8, 1998, by and between Palatin Technologies, Inc., a Delaware
corporation (the "Company"), and TheraTech, Inc., a Delaware corporation (the
"Purchaser").
This Agreement is made pursuant to the Stock Purchase Agreement, dated
as of July 6, 1998, between the Company and the Purchaser (the "Purchase
Agreement"). In order to induce the Purchaser to enter into the Purchase
Agreement, the Company has agreed to provide for the benefit of the Purchaser,
and any subsequent holders of Registrable Securities (as defined below), the
registration rights set forth in this Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Common Stock: Collectively, the shares of common stock, par value $.01 per
share of the Company and any capital stock of the Company listed or issuable by
way of stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
Effective Date: The date that the Resale Registration Statement is declared
effective by the SEC.
Exchange Act: The Securities Exchange Act of 1934, as amended from time to
time.
Holder: Each beneficial holder from time to time of Registrable Securities.
Indemnified Holder: See Section 6(a).
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in any Registration Statement, as
supplemented by any prospectus supplement and as amended by all amendments,
including post-effective amendments and all material incorporated by reference
in such prospectus.
<PAGE>
Registrable Securities: The shares of Common Stock purchased pursuant to
the Purchase Agreement; provided, however, that a share of Common Stock ceases
to be a Registrable Security when it (i) has been effectively registered under
Section 5 of the Securities Act and disposed of in accordance with any
Registration Statement, (ii) has been distributed to the public pursuant to Rule
144 under the Securities Act ("Rule 144") (or any similar provisions then in
force) or (iii) is eligible for distribution to the public by the Holder
pursuant to Rule 144(k) (or any similar provisions then in force).
Registration Expenses: See Section 5.
Registration Statement: Any registration statement of the Company which, in
accordance with Section 3 hereof, covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such Registration Statement, including
post-effective amendments, and all exhibits and all material incorporated by
reference in such Registration Statement.
Resale Registration Statement: See Section 3.
Securities Act: The Securities Act of 1933, as amended from time to time.
SEC: The Securities and Exchange Commission.
2. SECURITIES SUBJECT TO THIS AGREEMENT
Each Holder from time to time of Registrable Securities shall be entitled
to the benefits of this Agreement. A Person is deemed to be a Holder of
Registrable Securities whenever such Person is the beneficial owner of
Registrable Securities. The Company is entitled to treat the record holder of
Registrable Securities as beneficial owner of Registrable Securities unless
otherwise notified by such holder.
3. RESALE REGISTRATION: TIMING OF FILING, EFFECTIVENESS AND PERIOD OF USABILITY
Subject to the provisions of Section 4 hereof, the Company shall file and
use its best efforts to cause to be declared effective not later than 120 days
from the date hereof, a "resale" Registration Statement (a "Resale
Registration") on any appropriate form pursuant to Rule 415 under the Securities
Act for all the Registrable Securities, which form shall be available for the
sale of the Registrable Securities in accordance with the untraded methods of
distribution thereof provided that any delay not attributable to acts or
omissions of the Company shall extend such 120 day period accordingly.
-2-
<PAGE>
The Company shall use its best efforts to keep the Registration Statement
continuously effective and usable for resale of Registrable Securities until the
earlier of: (i) the second anniversary of the Effective Date (the "Effectiveness
Period") or (ii) the date on which all the Registrable Securities covered by
such Registration Statement have been sold pursuant to such Registration
Statement or (iii) when all Registrable Securities otherwise have been sold
pursuant to Rule 144 or are freely tradeable in essentially the same manner as
contemplated in Section 4 below.
4. REGISTRATION PROCEDURES
In connection with the Company's obligation to file a Registration
Statement as provided in Section 3 hereof, the Company will as expeditiously as
possible:
(a) before filing a Registration Statement or Prospectus (including
each preliminary prospectus) or any amendments or supplements thereto,
furnish to the Holders of the Registrable Securities covered by such
Registration Statement and to counsel selected by such Holders a copy of
all such documents proposed to be filed, which documents will be subject to
the review of such Holders with respect to any information regarding such
Holders (provided that the Company may assume, for the purposes of the
foregoing that any Holder of Registrable Securities has no objection to any
information regarding such Holder of the Company if the Company has not
received notice from such Holder within three business days after delivery
of such documents to such Holder);
(b) prepare and file with the SEC a Registration Statement with
respect to the Registrable Securities and such amendments and
post-effective amendments to the Registration Statement, and such
supplements to the Prospectus, as may be required by the rules, regulations
or instructions applicable to the registration form utilized by the Company
or by the Securities Act or rules and regulations thereunder or otherwise
necessary to keep the Registration Statement effective for the applicable
Effectiveness Period and cause the Prospectus as so supplemented to be
filed pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement or supplement to
the Prospectus;
(c) notify Purchaser and the Holders of Registrable Securities
promptly, and confirm such advice in writing:
(1) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same
has become effective,
(2) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose, and,
-3-
<PAGE>
(3) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) furnish, without charge, to each Holder of Registrable Securities,
one conformed copy of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(f) deliver to Purchaser and each Holder of Registrable Securities
without charge, two copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto;
(g) use its reasonable efforts to cause the Registrable Securities
covered by the Registration Statement to be registered under such other
securities or blue sky laws with or approved by such governmental agencies
or authorities as may be necessary to enable the Holders thereof to
consummate the disposition of such Registrable Securities in such
jurisdictions as the Holders may reasonably specify in response to
inquiries to be made by the Company and do all other acts and things
reasonably necessary or advisable to enable the Holders to consummate the
disposition of such Registrable Securities in such jurisdictions, provided
that the Company will not be required to qualify generally to do business
in any jurisdiction where it is not then so qualified or to take any action
which would subject it to general service of process in any such
jurisdiction where it is not then so subject;
(h) if any event shall occur as a result of which it is necessary, in
the opinion of counsel for the Company, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of
the circumstances existing at the time it is delivered by a Holder, prepare
a supplement or post-effective amendment to the Registration Statement or
the related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
Holders of the Registrable Securities, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(i) if at any time an event of the kind described in Section 4(h)
shall occur, notify Purchaser and the Holders of Registrable Securities
that the use of the Prospectus must be discontinued;
-4-
<PAGE>
(j) on or prior to the date the Registration Statement is declared
effective by the SEC, cause all of the Registrable Securities to be listed
for trading on the national securities exchange or the Nasdaq SmallCap
Market on which the Company's shares of Common Stock are then listed; and
(k) maintain a transfer agent and registrar for all Registrable
Securities not later than the Effective Date.
Each Holder of Registrable Securities as to which any registration is being
effected agrees, as a condition to the registration obligations with respect to
such Holder provided herein, to furnish to the Company such information
regarding the distribution of such Registrable Securities as the Company may
reasonably from time to time request in writing.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of notice from the Company, such
Holder will forthwith discontinue disposition of Registrable Securities until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated hereby, or until it is advised in writing by the Company, that the
use of the Prospectus may be resumed, and has received copies of any additional
or supplemental filings which are incorporated by reference in the Prospectus,
and, if so directed by the Company, such Holder will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.
5. REGISTRATION EXPENSES
All expenses incident to the Company's performance of or compliance with
this Agreement, including without limitation:
(1) all registration, filing and listing fees;
(2) the Company's printing, messenger, telephone and delivery
expenses;
(3) fees and disbursements of counsel for the Company; and
(4) fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any special audit
necessary to satisfy the requirements of the Securities Act) and other
Persons retained by the Company.
(all such expenses being herein called registration expenses ) will be borne by
the Company, regardless of whether the Registration Statement becomes effective.
-5-
<PAGE>
The Company will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on a securities exchange or the Nasdaq SmallCap Market.
6. INDEMNIFICATION AND CONTRIBUTION
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Holder of Registrable Securities, its officers, directors,
employees and agents and each Person who controls such Holder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
(each such person being sometimes hereinafter referred to as an "Indemnified
Holder") from and against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and legal expenses) arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or Prospectus or in any amendment
or supplement thereto or in any preliminary prospectus, or arising out of or
based upon 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; provided, however, that the Company will not be liable in any such
case to the extent that any such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or alleged untrue
statement or omission or alleged omission thereof based upon information
furnished in writing to the Company by such Holder or its agent expressly for
use therein; provided further, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission in the Prospectus, if such untrue statement or
alleged untrue statement, omission or alleged omission was completely corrected
in an amendment or supplement to the Prospectus and if, having previously been
furnished by or on behalf of the Company with copies of the Prospectus as so
amended or supplemented. such Holder thereafter fails to deliver such Prospectus
as so amended or supplemented, prior to or concurrently with the sale of a
Registrable Security to the person asserting such loss, claim, damage, liability
or expense who purchased such Registrable Security which is the subject thereof
from such Holder. This indemnity will be in addition to any liability which the
Company may otherwise have.
-6-
<PAGE>
If any action or proceeding (including any governmental investigation or
inquiry) shall be brought or asserted against any Indemnified Holder in respect
of which indemnity may be sought from the Company, such Indemnified Holder shall
promptly notify the Company in writing (but the omission to so notify the
Company shall not relieve it of any liability that it may have against any
Indemnified Holder otherwise than under this subsection), and the Company shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Holder and the payment of all reasonable,
documented expenses. Indemnified Holders shall have the right, collectively, to
employ their own counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be the expense of the
Indemnified Holders unless the named parties to any such action or proceeding
(including any impleaded parties) include the Indemnified Holders and the
Company, and the Indemnified Holders shall have been advised by counsel that
there may be one or more legal defenses available to the Indemnified Holders
which are different from or additional to those available to the Company (in
which case, if the Indemnified Holders notify the Company in writing that they
elect to employ their own counsel at the expense of the Company, the Company
shall not have the right to assume the defense of such action or proceeding on
behalf of the Indemnified Holders, it being understood. however, that the
Company shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any time for the
Indemnified Holders which firm shall be designated in writing by the Indemnified
Holders representing at least a majority of the aggregate principal amount of
the outstanding Registrable Securities). Any such fees and expenses payable by
the Company shall be paid to the Indemnified Holders entitled thereto as
incurred by the Indemnified Holders. The Company shall not be liable for any
settlement of any such action or proceeding effected without its written
consent, but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the Company agrees
to indemnify and hold harmless the Indemnified Holders from and against any loss
or liability by reason of such settlement or judgment.
(b) Indemnification by Holder of Registrable Securities. Each Holder of
Registrable Securities agrees to indemnify and hold harmless the Company, its
respective directors and officers and each Person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from the
Company to such Holder, but only with respect to information relating to such
Holder furnished in writing by such Holder expressly for use in any Registration
Statement or Prospectus, or any amendment or supplement thereto, or any
preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its respective directors or officers or any such
controlling person, in respect of which indemnity may be sought against a Holder
of Registrable Securities, such Holder shall have the rights and duties given
the Company, and the Company or its respective directors or officers or such
controlling person shall have the rights and duties given to each holder by the
preceding paragraph. In no event shall the liability of any Holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
-7-
<PAGE>
(c) Contribution. If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under Section 6(a) or Section 6(b) hereof
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages, liabilities or expenses 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, liabilities or expenses, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company from the sale of the Preferred Shares to Purchaser pursuant to the
Purchase Agreement on the one hand and each Holder of Registrable Securities
from the offering of the Registrable Securities by such Holder, on the other
hand, or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and each Holder of Registrable Securities on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages, or liabilities, as well as the other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and each Holder of Registrable Securities on the other shall be deemed to be in
the same proportion as the aggregate amount paid by Purchaser to the Company
pursuant to the Purchase Agreement for the Registrable Securities purchased by
such Holder that were sold pursuant to the Registration Statement bears to the
difference (the "Difference") between the amount such Holder paid for the
Registrable Securities that were sold pursuant to the Registration Statement and
the amount received by such Holder from such sale. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the particular
Holder and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Company
and the Holders of Registrable Securities agree that it would not be just and
equitable if contributions pursuant to this subsection (c) were to be determined
by pro rata allocation or by any other method of allocation that does not take
account of the equitable consideration referred to in the first sentence of this
subsection (c). The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first sentence of this
subsection (c) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigation or defending
against any action or claim that is the subject of this subsection (c).
Notwithstanding the provisions of this subsection (c), each Holder of
Registrable Securities shall not be required to contribute any amount in excess
of the amount by which the Difference exceeds the amount of any damages that
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11 (f) of the
Securities Act), shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
-8-
<PAGE>
7. RULE 144 AND RULE 144A
With a view to making available to the Holders of Registrable Securities
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to, for so long as the Company is subject
to the reporting requirements of Section 13 or 15 of the Exchange Act, the
Company covenants that it will file the reports required to be filed by it under
the Securities Act and Section 13(a) or 15(d) of the Exchange Act and the rules
and regulations adopted by the SEC thereunder and make and keep current public
information available, within the meaning of Rule 144 or similar or analogous
rule promulgated under the Securities Act. If the Company is not subject to the
reporting requirements of Section 13 or 15 of the Exchange Act, the Company also
covenants that it will provide the information required pursuant to Rule
144A(d)(4) under the Securities Act upon the request of any Holder of
Registrable Securities which continue to be "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act and it will take such further
action as any holder of such Registrable Securities may reasonably request, all
to the extent required from time to time to enable such holder to sell its
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, so long as such provision does
not require the public filing of information relating to the Company which the
Company is not otherwise required to file, (b) Rule 144A under the Securities
Act, as such Rule may be amended from time to time, or (c) any similar rule or
regulation hereafter adopted by the SEC that does not require the public filing
of information relating to the Company. Upon the request of any Holder of
Registrable Securities, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements; and such other
reports and documents as such Holder may reasonably request in availing itself
of any rule or regulation of the SEC allowing it to sell any such securities
without registration.
8. MISCELLANEOUS
(a) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of Holders of a majority of
the Registrable Securities.
(b) Notices. All notices, requests, consents and other communications
hereunder shall be by telecopier, with a copy being mailed by a nationally
recognized overnight express courier, and shall be deemed given when receipt is
acknowledged by transmit confirmation report, and shall be delivered as
addressed as follows:
(1) if to the Purchaser, initially at its address set forth in the
Purchase Agreement and thereafter at such other addresses, notice of which
is given in accordance with the provisions of this Section 8(b);
(2) if to a Holder of Registrable Securities, at its address of record
as indicated on the books of the transfer agent and registrar for the
Registrable Securities; and
(3) if to the Company, initially at its address set forth in the
Purchase Agreement and thereafter at such other addresses, notice of which
is given in accordance with the provisions of this Section 8(b).
(c) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without limitation, subsequent Holders of Registrable Securities.
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
-9-
<PAGE>
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) GOVERNING LAW AND JURISDICTION. THIS AGREEMENT AND ITS EXECUTION,
VALIDITY AND INTERPRETATION SHALL BE GOVERNED IN ALL RESPECTS IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(g) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(h) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(i) Waiver of Jury Trial. The parties to this Agreement each hereby waives
to the fullest extent permitted by law, any right to trial by jury of any claim,
demand, action, or cause of action arising under this Agreement, whether now
existing or hereafter arising, and whether in contract, tort, equity, or
otherwise. Each of the parties to this Agreement hereby agrees and consents that
any claim, demand, action, or cause of action shall be decided by court trial
without a jury and that the parties to this Agreement may file an original
counterpart of a copy of this Agreement with any court as written evidence of
the consent of the parties hereto to the waiver of their right to trial by jury.
(j) No Inconsistent Agreements. The Company shall not enter into any
agreement which is inconsistent with or violates the rights granted to Holders
of Registrable Securities in this Agreement.
[REMAINDER OF THE PAGE LEFT BLANK INTENTIONALLY]
-10-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
PALATIN TECHNOLOGIES, INC.
By: _____________________________________
Edward J. Quilty
Chairman and Chief Executive Officer
THERATECH, INC.
By: _____________________________________
Dinesh C. Patel
President, Chairman and Chief
Executive Officer
-11-
