EXHIBIT 10.10
CELL PATHWAYS, INC.
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(▇▇▇) ▇▇▇-▇▇▇▇
DATED AS OF MAY 23, 1997
New York Life Insurance Company
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Gentlemen:
Cell Pathways, Inc. (the "Company"), a Delaware Corporation, agrees with
you (the "Purchaser") as follows:
1. AUTHORIZATION AND SALE OF SHARES.
1.1 AUTHORIZATION OF SHARES. The Company before the Closing Date (as
defined in Section 2 below) has adopted and filed with the Secretary of State of
Delaware the Fifth Amended and Restated Certificate of Incorporation (the
"Amended and Restated Certificate") attached to the Company's Private Placement
Memorandum, dated December 1996, as Appendix D (the "Private Placement
Memorandum"), authorizing the issuance of up to 4,500,000 shares of Series F
Convertible Preferred Stock (the "Preferred Stock") with the rights, preferences
and privileges set forth therein, and will have authorized the issuance pursuant
to this Agreement and the Other Agreements (as hereafter defined) of not more
than said number of shares including shares issuable upon exercise of
outstanding warrants, of such Preferred Stock. The shares of Preferred Stock to
be sold hereunder and under the Other Agreements are sometimes referred to as
the "Shares."
1.2 ISSUANCE OF SHARES. Subject to the terms and conditions hereof, on
the Closing Date the Company will issue and sell to you, and you agree to
purchase from the Company, 675,676 Shares at the purchase price of $3.70 per
share for a total of $2,500,001.02.
1.3 OTHER AGREEMENTS. As of May 16, 1997 the Company had entered into
separate Subscription Agreements (the "Other Agreements" and, collectively with
this Agreement, the "Agreements") with other purchasers (the "Other Purchasers"
and, collectively with you, the "Purchasers") named on Schedule I to purchase an
aggregate of 1,751,870 Shares. The sale to you and the sale to the Other
Purchasers are to be separate and several sales.
1.4 USE OF PROCEEDS. The proceeds from the sale of the Shares will be
used for the purposes set forth in the Private Placement Memorandum attached
hereto as Exhibit A.
1.
2. CLOSING DATE; DELIVERY.
2.1 CLOSING DATE. The closing of the purchase and sale of the Shares
hereunder (the "Closing") shall be held at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m. on May 23, 1997 or at such other
time and place to which the Company and the Purchaser may agree (the "Closing
Date").
2.2 DELIVERY. The Company will deliver to the Purchaser at the Closing a
certificate representing the Shares to be purchased by the Purchaser from the
Company (which shall be issued in the Purchaser's name, in the amount of 675,676
Shares and shall be dated as of the date payment is made to the Company) against
payment of the purchase price therefor by certified or cashier's check or wire
transfer to the account of Cell Pathways, Inc., No. 7867646 with the Northern
Trust Company at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, using Bank
Routing Number ▇▇▇▇▇▇▇▇▇.
3. CONDITIONS OF CLOSING. Your obligation to purchase and pay for the Shares
on the Closing Date is subject to the satisfaction on or before the Closing Date
of the following conditions:
3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION. Prior to the
Closing Date the Company shall have duly adopted and filed the Amended and
Restated Certificate attached to the Private Placement Memorandum as Appendix D,
with the Secretary of State of the State of Delaware.
3.2 OPINION OF COMPANY COUNSEL. You shall have received from ▇▇▇▇▇▇▇ ▇.
▇▇▇▇, Esq., counsel for the Company, an opinion dated as of the Closing Date,
substantially in the form of Exhibit B hereto and as to such other matters as
you shall reasonably request.
3.3 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Company contained herein shall be true and correct on and as of the Closing
Date as if made on and as of the Closing Date, and you shall have received a
certificate, dated as of the Closing Date, signed by the President or the Chief
Financial Officer of the Company, to the foregoing effect.
3.4 COMPLIANCE WITH THIS AGREEMENT. The Company shall have performed and
complied with all agreements and conditions contained herein which are required
to be performed or complied with by the Company before or at the Closing, and
you shall have received a certificate, dated as of the Closing Date, signed by
the President or a Vice President of the Company, to the foregoing effect.
3.5 FEDERAL AND STATE SECURITIES LAWS. The Company shall have complied
with the requirements of all applicable federal and state securities laws in
connection with the offer and sale of the Shares.
2.
3.6 INFORMATION ACCESS AND CONFIDENTIALITY AGREEMENT. The Purchaser shall
have entered into a Confidentiality Agreement with the Company substantially in
the form of Exhibit C hereto.
3.7 CONSENTS AND WAIVERS. The Company shall have obtained any and all
consents and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement.
3.8 CONSUMMATION OF OTHER SALES OF SHARES. Prior to the sale and purchase
of Shares hereunder at the Closing, the Company shall have consummated the sale
and purchase of all of the Shares to be sold to the Other Purchasers referred to
in Section 1.3 pursuant to the Other Agreements referred to in Section 1.3.
3.9 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents incidental thereto shall be satisfactory in form, scope and substance
to you and your counsel, and you and your counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
such counsel may reasonably request.
3.10 STOCKHOLDERS' AGREEMENT. The Stockholders' Agreement, substantially
in the form of Appendix E to the Private Placement Memorandum, shall have been
executed and delivered by all persons listed as parties thereto in such exhibit.
3.11 PRIVATE PLACEMENT NUMBER. A Private Placement number issued by
Standard & Poor's CUSIP Service Bureau (in cooperating with the Securities
Valuation Office of the National Association of Insurance Commissioners) shall
have been obtained for the Shares.
4. COMPANY REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants as of the Closing as follows:
4.1 ORGANIZATION AND STANDING. The Company is duly organized and validly
existing under, and by virtue of, the laws of Delaware and is in good standing
under such laws. The Company has all requisite corporate power to carry on its
business as currently conducted, to own or lease its assets and to enter into
and carry out the provisions of this Agreement and the transactions contemplated
hereby. The Company is duly qualified to do business as a foreign corporation
in each jurisdiction where it is required to do so by the conduct of its
business or the nature of its assets. The Company has furnished the Purchaser
or its counsel with copies of its Articles of Incorporation, By-Laws and Amended
and Restated Certificate. Said copies are true, correct and complete and
contain all amendments through the date of this Agreement. The Company has no
subsidiaries.
4.2 CAPITALIZATION. As of the Closing Date, the authorized capital stock
of the Company is 30,061,250 shares consisting of 17,000,000 shares of Common
Stock, $.01 par value, of which 2,718,845 shares are issued and outstanding,
61,250 shares of non-convertible Redeemable Preferred Stock, $.01 par value, all
of which is issued and outstanding, and 13,000,000 shares of Preferred Stock,
10,800,715 of which have been designated as follows:
3.
872,400 shares of Series A Convertible Preferred Stock, all of which is issued
and outstanding, 848,100 shares of Series B Convertible Preferred Stock, all of
which is issued and outstanding, 700,000 shares of Series C Convertible
Preferred Stock, all of which is issued and outstanding, 675,350 shares of
Series D Convertible Preferred Stock, 616,807.5 shares of which are issued and
outstanding, 3,204,865 shares of Series E Convertible Preferred Stock, 2,969,704
shares of which are issued and outstanding and 4,500,000 shares of Series F
Convertible Preferred Stock, 1,751,870 shares of which are issued and
outstanding as of May 16, 1997. All such issued and outstanding shares have
been duly authorized and validly issued and are fully paid and nonassessable.
The rights, preferences and privileges of the Series F Convertible Preferred
Stock are set forth in the Amended and Restated Certificate, a copy of which is
attached to the Private Placement Memorandum as Appendix D. Pursuant to Article
FOURTH, Section E 5(j) of the Amended and Restated Certificate, the Company has
reserved sufficient shares of the Common Stock of the Company for issuance upon
conversion of all shares of convertible preferred stock of all series which are
either outstanding or subject to issuance upon the exercise of warrants. The
Company has also reserved sufficient shares of Common Stock for issuance upon
the exercise of any stock options issued pursuant to the Company's 1993 Stock
Option Plan. Except for options to purchase 476,000 shares of Common Stock
pursuant to the Company's stock option plan, and 235,161 shares of Series E
Convertible Preferred Stock and 123,137 shares of Series F Convertible Preferred
Stock issuable upon exercise of outstanding warrants, there are no securities
presently outstanding, other than the securities discussed above, which are
convertible into or exchangeable for shares of Common Stock of the Company, and,
except as discussed above, there are no other option, warrants, conversion
privileges or other rights presently outstanding to purchase any of the
authorized but unissued stock of the Company. All such outstanding shares of
capital stock were issued in compliance with all applicable federal and state
securities laws. The holders of record of the issued and outstanding shares of
capital stock as of May 16, 1997 are as set forth on Schedule II.
4.3 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and shareholders, necessary for the sale and issuance of the
Shares pursuant hereto (and of the shares of Common Stock issuable upon
conversion of the Shares) and the performance of the Company's obligations
hereunder has been taken or will be taken prior to the Closing, including,
without limitation, the adoption of the Amended and Restated Certificate, which
has been accepted for filing by the Secretary of State of the State of Delaware
and is in full force and effect on the date hereof. This Agreement is a legal,
valid and binding obligation of the Company enforceable in accordance with its
terms. The Shares and the Common Stock underlying the Shares are not subject to
any preemptive rights or rights of first refusal.
4.4 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser its
audited balance sheets, statements of operations, stockholders' equity and
Statements of cash flows for the years ended December 31, 1996, 1995 and 1994
(the "Financial Statements"). The Financial Statements are complete and correct
in all material respects and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated, except as may be described in the notes thereto. The
Financial Statements accurately set out and describe the financial condition of
the Company as of the dates and during the periods indicated therein. As of the
date of the Financial Statements, there were
4.
no liabilities or obligations of any nature, fixed or contingent, matured or
unmatured, which are not shown, provided for, or otherwise described in the
Financial Statements or the notes thereto.
4.5 CHANGES. Since December 31, 1996, there has not been:
(a) any change in the assets, liabilities, condition (financial or
otherwise), affairs, earnings, business, operations or prospects of the Company
from that reflected in the balance sheet as at December 31, 1996, referred to in
Section 4.4 above, except changes in the ordinary course of business which have
not been, either in any case or in the aggregate, materially adverse, and except
in respect of the offering of the Shares pursuant to the Private Placement
Memorandum;
(b) any change, except in the ordinary course of business, in the
contingent obligations of the Company by way of guaranty or any assurance of
performance or payment, endorsement, indemnity, warranty or otherwise;
(c) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties or business of the
Company;
(d) any waiver by the Company of a valuable right or of a material
debt owed to it;
(e) any loans made by the Company to their respective employees,
officers or directors other than advances of expenses made in the ordinary
course of business;
(f) any declaration or payment of any dividend or other distribution
of the assets of the Company or any direct or indirect redemption, purchase or
acquisition of any of the Company's securities;
(g) any labor organization activity or labor trouble;
(h) any material adverse or negative result, report or finding
relative to the technology developments of the Company, the clinical trials with
respect thereto or the expected market or demand therefor; or, to the Company's
knowledge, any breakthrough, innovation or achievement by any of its
competitors;
(i) to the best of the Company's knowledge, any other event or
condition of any character (except for events generally applicable to the health
care industry) which has materially and adversely affected the products,
technology, business, prospects, condition, affairs, operations, properties or
assets of the Company;
(j) any obligation or liability (whether fixed or contingent, matured
or unmatured) incurred or accrued by the Company other than obligations or
liabilities incurred in the ordinary course of business;
(k) any payment, discharge or satisfaction of any liability or
obligation (whether fixed or contingent, matured or unmatured), except in the
ordinary course of business;
5.
(l) any cancellation of any debts or any amendment, termination or
waiver of any rights of value of the Company except in the ordinary course of
business;
(m) any change in the accounting methods or accounting practices
followed by the Company or any change in depreciation or amortization policies
or rates theretofore adopted;
(n) any failure to operate the Company in the ordinary course of
business; or
(o) any agreement, whether in writing or otherwise, to take any of
the actions specified in the foregoing items.
4.6 TITLE TO PROPERTIES AND ASSETS. The Company has the full corporate
power to own or lease its assets and to carry on its businesses as presently
conducted. The Company has or will at Closing and thereafter have good and
valid title to its respective properties, leaseholds and assets, including the
properties, leaseholds and assets reflected in the balance sheet as at December
31, 1996 referred to in Section 4.4 above, except properties, leaseholds and
assets disposed of since such date at fair market value in the ordinary course
of business, and has or will at Closing and thereafter have good title to all
its leasehold estates, in each case subject to no mortgage, pledge, lien, lease,
encumbrance, charge, rights of first refusal or options to purchase, whether or
not relating to extensions of credit or the borrowing of money, other than as
disclosed in such balance sheet. There exists no condition which interferes
with the economic value or use of such properties and assets and all tangible
assets are in good working condition and repair (subject to ordinary wear and
tear).
4.7 TECHNOLOGY. The Company owns or has the right to use all technology
and other intellectual property presently deemed necessary for the conduct of
its business. Attached hereto as Schedule III is a list of technology and
intellectual property owned by the Company. The Company has not received any
notice of infringement of, or conflict with, asserted rights of others with
respect to any such technology and intellectual property that, individually or
in the aggregate, if the subject of an unfavorable decision, ruling, or finding,
would have a material adverse effect upon the business, operations, financial
condition, income prospects, or results of operations, present or prospective,
of the Company.
4.8 PROTECTION OF INTELLECTUAL PROPERTY. The Company has taken all
reasonable measures to protect and preserve the confidentiality of all trade
secret and other non-patented proprietary information of the Company including
the procurement of proprietary invention assignments and non-disclosure and non-
competition agreements from employees, consultants, subcontractors, customers
and other persons who have access to such information. To the best of its
knowledge, the procedures implemented by the Company are in conformity with the
practices of similarly situated companies in their respective industries.
4.9 MATERIAL CONTRACTS AND OBLIGATIONS. Attached hereto as Schedule IV is
a list of all oral or written agreements, contracts, leases, indebtedness,
liabilities and other obligations to which the Company is a party or by which it
is bound which are material to the conduct and operations of its business and
properties. Copies of such agreements, contracts, leases and documentation
evidencing such liabilities and other obligations have been inspected or made
6.
available for inspection by the Purchaser and/or its counsel. All of such
agreements, contracts and leases are valid, binding and in full force and effect
in all material respects.
4.10 LITIGATION. There are no product liability or other actions, suits,
claims, investigations or legal, administrative or arbitration proceedings
pending or, to the best of the Company's knowledge and belief, any basis
therefor or threat thereof, against or affecting the Company or any of its
assets, properties, condition (financial or otherwise), affairs, business,
operations or prospects, nor any which questions the validity of this Agreement
or any action taken or to be taken in connection herewith.
4.11 VALIDITY. The Shares to be sold and purchased pursuant to this
Agreement (and the shares of Common Stock issuable upon conversion of the
Shares), when issued, sold and delivered in accordance with the terms and for
the consideration expressed herein, shall be duly and validly issued, fully paid
and nonassessable, and will be free and clear of any liens or encumbrances;
provided, however, that the Shares may be subject to restrictions on transfer
under state and/or federal securities laws as set forth herein or as otherwise
required at the time a transfer is proposed.
4.12 GOVERNMENTAL CONSENTS; PRIVATE OFFERING. All consents, approvals,
orders, authorizations or registration, qualification, designation, declaration
or filing with any United States federal or state governmental authority on the
part of the Company required to be obtained by the time of the Closing in
connection with the consummation of the transactions contemplated herein shall
have been obtained prior to and be effective as of the Closing. Based in part
on the representations of the Purchaser set forth in Section 5.2 below and the
Other Purchasers set forth in the Other Agreements, the offer, sale and issuance
of the Shares in conformity with the terms of this Agreement are exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the "Securities Act"). Neither the Company nor anyone acting on its
behalf has offered or will offer the Shares or any similar securities or any
part thereof for sale to, or solicited any offers to acquire any of the same
from, or otherwise approach or negotiate or communicate in respect thereto with,
any person or persons so as thereby to bring the offering, issue or sale of the
Shares by the Company within the registration requirements of the Securities
Act. Each of the Purchasers identified in Schedule I is an "accredited
investor" as that term is defined in Regulation D promulgated under the
Securities Act.
4.13 COMPLIANCE WITH OTHER INSTRUMENTS; NONE BURDENSOME. The Company is
not in violation, breach or default of any term of its Amended and Restated
Certificate or By-Laws, or in any material respect of any term or provision of
any mortgage, indenture, contract, agreement or instrument to which it is a
party, or, to the best of its knowledge, of any provision of any state or
federal judgment, decree, order, statute, rule or regulation applicable to or
binding upon it or any of its assets or properties. The execution, delivery and
performance of and compliance with this Agreement, and the issuance of the
Shares pursuant hereto (and any shares of Common Stock issuable upon conversion
of the Shares), will not result (with or without the giving of notice or passage
of time, or both) in any such violation or be in conflict with or
constitute a default under any such term or provision or under any judgment,
order, writ, injunction or decree of any court arbitrator, grand jury or any
governmental agency, or result in
7.
the creation of any mortgage, pledge, lien, encumbrance or charge upon any of
the properties or assets of the Company pursuant to any such term or provision;
and there is no such term which materially adversely affects the business,
prospects, condition (financial or otherwise), affairs or operations of the
Company or any of its properties or assets. To the best of the Company's
knowledge, no employee of the Company is in violation of any term of any
employment contract, patent or other proprietary information disclosure or non-
competition agreement or any other contract or agreement relating to the right
of any such employee to be employed by the Company because of the nature of the
business conducted or proposed to be conducted by the Company or for any other
reason, and the continued employment by the Company of its present employees
will not result in any such violation.
4.14 DISCLOSURE. No representation or warranty by the Company in this
Agreement and nothing contained in the Private Placement Memorandum or any
statement or certificate furnished or to be furnished to the Purchaser pursuant
hereto or in connection with the transactions contemplated hereby contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. There is
no fact within the knowledge of the Company or of any of its officers (other
than facts generally applicable to the health care industry) that has not been
disclosed herein or in writing by them to each Purchaser that materially
adversely affects, or in the future in their reasonable opinion may, insofar as
they can now foresee, materially adversely affect the business, properties,
assets or condition, financial or otherwise, of the Company.
4.15 REGISTRATION RIGHTS. Except as contained in the Stockholders'
Agreement, a form of which is attached as Appendix E to the Private Placement
Memorandum, the Company is not under any obligation to register (as defined in
Section 1 of the Stockholders' Agreement) any of its presently outstanding
securities or any of its securities which may hereafter be issued or to permit
any person to participate in any such registration.
4.16 LOANS AND MATERIAL DEBTS. Except as set forth in the Financial
Statements or notes thereto, the Company does not owe any amount to any of its
shareholders, employees, officers or directors or the members of their families
for money loaned to the Company, nor does any person or organization owe a
material debt to the Company.
4.17 TAXES. The Company will file all necessary federal, state and
municipal property, income and franchise tax returns and have paid all taxes
shown as due thereon or otherwise owed by it to any taxing authority except
those contested in good faith and for which appropriate amounts have been
reserved in accordance with generally accepted accounting principles; and there
is no tax deficiency which has been, or to the best of the knowledge of the
Company might be, asserted against the Company which would materially affect the
business or operations of the Company. The Company has paid all federal and
state payroll and withholding taxes, including but not limited to FICA, FUTA,
state unemployment taxes and income taxes required to have been paid.
8.
4.18 EMPLOYEE RELATIONS. There is no collective bargaining or other union
agreement to which the Company is a party or by which it is bound, or which is
currently being negotiated. The Company neither sponsors, maintains nor
contributes to any pension, retirement, profit sharing, incentive compensation,
bonus or other employee benefit plan other than the 1993 Stock Option Plan, 1995
Stock Award Plan and a group insurance plan administered by the Principal Mutual
Life Insurance Company, including without limitation any employee benefit plan
covered by Title 4 of the Employee Retirement Income Security Act of 1974
("ERISA") or any "multi-employer plan" as defined in Section 4001(a)(3) of
ERISA. To the best knowledge of the Company, (i) no employee of the Company is
a party to or bound by any agreement, contract or commitment, or subject to any
restrictions, particularly but without limitation in connection with any
previous employment of any such person, which materially and adversely affects,
or in the future may (so far as the Company can reasonably foresee) materially
and adversely affect, the business or operations of the Company or the rights of
any such person to participate in the affairs of the Company and (ii) with the
exception of one clinical research associate and one lab technician who for
family reasons will probably not move to Pennsylvania when the Company
consolidates operations there later in 1997, no employee has any present
intention of terminating his employment with the Company, and the Company has no
present intention of terminating any such employment. Schedule V hereto sets
forth a list of all employment contracts between the Company and its employees.
4.19 INSURANCE. All of the properties, assets and operations of the
Company of a character usually insured by persons of established reputation
engaged in the same or similar businesses similarly situated are adequately
insured, by financially sound and reputable insurers, against loss, damage or
liability. There are no claims currently outstanding under the Company's
insurance policies.
4.20 TRANSACTIONS WITH AFFILIATES. The Company does not have, nor does it
have a current intent to incur, any obligation, directly or indirectly, to enter
into any transaction, including, without limitation, the purchase from, sale to
or exchange of property with, or the rendering of any service by or for, any
affiliate of the Company, except in the ordinary course of and pursuant to the
reasonable requirements of the Company's business and upon fair and reasonable
terms no less favorable to the Company than it would obtain in a comparable
arm's length transaction with a person other than any affiliate.
4.21 LEGAL INVESTMENT. On and as of the Closing Date, the purchase of and
payment for the Shares by the Purchaser shall not be prohibited by any
applicable law or government regulation including laws regulating investments by
insurance companies (without regard to any "leeway" or "basket" provisions
thereof).
4.22 SOLVENCY. The Company is, and upon giving effect to the issuance of
the Shares will be, a "solvent institution", as said term is used in Section
1405(c) of the New York Insurance Law, whose "obligations are not in default as
to principal or interest", as said terms are used in said Section 1405(c).
9.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
5.1 AUTHORIZATION. You hereby represent and warrant to the Company that
this Agreement, when executed and delivered by you, will constitute a valid and
legally binding obligation, enforceable as to you in accordance with its terms.
5.2 INVESTMENT REPRESENTATIONS. This Agreement is made with you upon the
understanding as a specific representation to the Company by you that:
(a) The Shares that you will purchase hereunder will be acquired for
your own account, not as a nominee or agent, and not with a view to or in
connection with the sale or distribution of any part thereof except in
compliance with the Securities Act; provided, however, that the disposition of
any of your property shall at all times be, and remain within, your discretion
and control.
(b) You represent and warrant that you are an "accredited investor"
as that term is defined in Regulation D promulgated under the Securities Act.
(c) You understand that the Securities you are acquiring are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances. In this connection, you represent that you
are familiar with SEC Rule 144, as presently in effect, and understand the
resale limitations imposed thereby and by the Securities Act.
6. COVENANTS OF THE COMPANY.
6.1 MAINTENANCE OF EXISTENCE. The Company agrees (a) to maintain and
cause each of its subsidiaries, if any, to maintain in full force and effect
their respective corporate existences, rights and franchises and all licenses
and other rights in or to use patents, processes, licenses, trademarks, trade
names or copyrights and to preserve all trade secrets owned or possessed by them
or of a proprietary nature unless reasonably deemed by the Company not to be
necessary to the conduct of its or such subsidiary's business and (b) maintain
and preserve, and not cause a material change in, the business or nature of
operations of the Company as conducted on the date of this Agreement unless
otherwise reasonably deemed to be in the best interests of the Company and its
stockholders.
6.2 PROMPT PAYMENT OF TAXES, ETC. The Company and each of its
subsidiaries, if any, will promptly pay and discharge, or cause to be paid and
discharged, when due and payable, all lawful taxes, assessments and governmental
charges or levies imposed upon the income, profits, property or business of the
Company or such subsidiary; provided, however, that any such tax, assessment,
charge or levy need not be paid if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Company or such
subsidiary shall have set aside on its books adequate reserves with respect
thereto, and provided, further, that the Company or such subsidiary will pay all
such taxes, assessments, charges or levies forthwith
10.
upon the commencement of proceedings to foreclose any lien which may have
attached as security therefor. The Company and each of its subsidiaries will
promptly pay or cause to be paid when due, or in conformance with customary
trade terms or otherwise in accordance with policies related thereto adopted by
the Company's or such subsidiary's Board of Directors, all other indebtedness
incident to operations of the Company or such subsidiary.
6.3 COMPLIANCE WITH LAWS. The Company and each of its subsidiaries, if
any, shall duly observe and conform to all valid requirements of governmental
authorities relating to the conduct of their respective businesses or to their
respective properties or assets.
6.4 TRANSACTIONS WITH AFFILIATES. The Company agrees that neither it nor
any of its subsidiaries, if any, shall, directly or indirectly, enter into any
transaction, including, without limitation, the purchase from, sell to or
exchange of property with, or the rendering of any service by or for, any
affiliate of the Company or any of its subsidiaries, except in the ordinary
course of and pursuant to the reasonable requirements of the Company's or such
subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such subsidiary than it would obtain in a comparable arm's length
transaction with a person other than an affiliate.
6.5 FURTHER ASSURANCES. The Company agrees that, at any time and from
time to time on and after any Closing Date, it will, upon the request of the
Purchaser and without further consideration, take any and all steps reasonably
necessary to comply with the terms of this Agreement or any other agreements
entered into with the Purchaser pursuant hereto, and will do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged or
delivered, all such further acts, transfers, conveyances, or assurances as may
be reasonably required in order fully to comply with this Agreement or such
other agreements.
6.6 REGISTRATION RIGHTS. The Company agrees that it will not grant
registration rights with respect to any of its securities upon terms more
favorable to the holders of such securities than those contained in Section 3 of
the Stockholders' Agreement, a form of which is attached to the Private
Placement Memorandum as Appendix E.
6.7 SECURITIES FILINGS. The Company agrees to make any filings required
by the Securities and Exchange Commission (including any filing required under
Regulation D promulgated under the Securities Act) and the comparable laws of
any state whose "Blue Sky" laws are implicated by sale of the Shares, and to do
so in a timely fashion.
6.8 TERMINATION. The provisions of this Section 6 shall terminate upon
the earliest to occur of (i) the sale of the Common Stock of the Company in a
firm commitment, underwritten public offering at a public offering price (prior
to deduction of underwriter's discounts and expenses) equal to or exceeding
$6.60 per share of Common Stock (as adjusted for any stock dividends,
combinations or splits with respect to such shares) and resulting in aggregate
proceeds to the Company and/or selling stockholders (prior to deduction of
underwriter's discounts and expenses and other expenses of the offering) of not
less than $10,000,000, or (ii) the written consent of the Purchaser.
11.
7. TRANSFER OF SHARES.
7.1 RESTRICTIVE LEGEND. Each certificate representing (i) Shares, (ii)
shares of Common Stock issuable upon conversions of the Shares or (iii) any
other securities issued in respect of the Shares upon any stock split, stock
dividend, recapitalization, merger or similar event (unless no longer required
in the opinion of Counsel for the Company) shall be stamped or otherwise
imprinted with a legend substantially in the following form:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THUS MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE."
(b) "THE SALE, TRANSFER OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN AN
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED AS OF DECEMBER 31, 1996, BY
AND AMONG THE COMPANY AND ITS STOCKHOLDERS, A COPY OF WHICH STOCKHOLDERS'
AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF THE COMPANY
AND WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST AND
WITHOUT CHARGE."
(c) "THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO
SO REQUESTS A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF COMPANY STOCK
OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS."
(d) Any legend required to be placed thereon by appropriate state
Blue Sky officials.
7.2 TRANSFER OR EXCHANGE OF CERTIFICATES. Subject to the terms of any
restrictive legends, the holder of any certificate, pursuant to Section 7.1, may
surrender such certificate at the principal office of the Company for transfer
or exchange. Within a reasonable time after notice to the Company from a
certificate holder of its intention to make such transfer or exchange and
without expense (other than transfer taxes, if any) to such holder, provided to
do so would not violate the Act, or any relevant Blue Sky law of a state, the
Company shall issue in exchange therefor another certificate representing the
same aggregate amount of Shares as the certificate so surrendered, containing
the same provisions and subject to the same terms and conditions as the
certificate so surrendered. Each certificate shall bear the name of such person
or persons or assigns as the owner of such surrendered certificate may
designate, and such transfer or exchange shall be made in such manner that no
gain or loss of Shares shall result therefrom.
12.
7.3 DISPOSITION. The Purchaser agrees that it shall in no event make any
disposition of all or any portion of the Shares which it is being issued unless
such disposition will be accomplished in compliance with the Securities Act.
7.4 TRANSFER. The Company shall not be required (i) to transfer on its
books any Shares which shall have been sold or transferred in violation of any
of the provisions set forth in this Agreement or (ii) to treat as owner of such
Shares or to accord the right to vote as such owner or to pay dividends to any
transferee to whom such Shares shall have been so transferred.
7.5 LOCK-UP. As also set forth in the Stockholders' Agreement attached to
the Private Placement Memorandum as Appendix E, the Purchaser hereby agrees that
for a period of up to a maximum of 180 days following the effective date of the
first registration statement of the Company covering Common Stock (or other
securities) to be sold on its behalf in an underwritten public offering, he
shall not, to the extent requested by the Company and any underwriter, sell or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any Common Stock of the Company held by him at any time during such
period except Common Stock included in such registration.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Common Stock held by the
Purchaser (and the shares or securities of every other person to the foregoing
restriction) until the end of such period.
8. MISCELLANEOUS.
8.1 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the laws of the State of New York.
8.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any party hereto and the
Closing of the transaction contemplated hereby.
8.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the parents, subsidiaries, successors, assigns, heirs, executors and
administrators of the parties hereto and their directors, officers and
employees.
8.4 ENTIRE AGREEMENT. This Agreement and the other documents and
agreements delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties hereto with regard to the
subjects hereof and thereof.
8.5 NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and sent (a) by telecopy if the sender on the same
day sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), or (b) by first class mail, or (c) by a recognized
overnight delivery service (with charges prepaid), addressed (1) if to a
Purchaser, at such Purchaser's address set forth on page one of this Agreement,
or at such other address as such Purchaser shall have furnished to the Company
in writing, or (2) if to the
13.
Company, at its office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-
▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, or at such other address as the
Company shall have furnished to the Purchaser in writing.
8.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to the Company or the Purchaser of any securities
issued or to be issued hereunder, upon any breach or default of any party hereto
under this Agreement, shall impair any such right, power or remedy of the
Company or the Purchaser nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of the Company or the Purchaser of any breach or default
under this Agreement or any waiver on the part of the Company or the Purchaser
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in writing. All
remedies, either under this Agreement, or by law or otherwise afforded to the
Company or the Purchaser, shall be cumulative and not alternative.
8.7 PLACEMENT AGENT'S FEES. The Company (i) represents and warrants that
it has retained no finder, broker or Placement Agent in connection with the
transactions contemplated by this Agreement; and (ii) hereby agrees to indemnify
and to hold the Purchaser harmless of and from any liability for commission or
compensation to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which the
Company, or any of its employees or representatives, are responsible.
8.8 TITLES AND SUBTITLES. The titles of the paragraphs and subparagraphs
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
8.9 COUNTERPARTS. This Agreement and any ancillary documents required or
made necessary by this Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.
8.10 SEVERABILITY. Should any provision of this Agreement be determined
to be illegal or unenforceable, such determination shall not affect the
remaining provisions of this Agreement.
8.11 EXPENSES OF FINANCING. The Company agrees, whether or not the
transactions hereby contemplated shall be consummated, to pay the fees and
expenses of your special counsel, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, in connection with the
preparation, execution and delivery of this Agreement and the transactions
contemplated hereby, and save you harmless against liability for the payment of,
all reasonable, accountable, pre-approved out-of-pocket expenses arising in
connection with this transaction, including all taxes other than income taxes
payable by you, in each case with interest and penalties, if any, in respect of
the execution and delivery of this Agreement, or execution, delivery or
acquisition of any Shares or Common Stock issued under or pursuant to this
Agreement, all stenographic and printing costs, and the fees and expenses
incurred by you in connection with any modifications, amendments, waivers or
consents with
14.
respect to this Agreement or the transactions contemplated hereby or in
enforcing any of your rights hereunder or under any agreement, security or
document contemplated hereby, including without limitation costs and expenses
incurred in any bankruptcy case. The obligations of the Company under this
Section 10.11 shall survive the transfer by you of any Shares or Common Stock
received upon conversion of Shares.
15.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
undersigned, whereupon this letter shall become a binding agreement between you
and the undersigned.
Very truly yours,
CELL PATHWAYS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
The foregoing Agreement is hereby accepted
as of the date first above written
NEW YORK LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Director
16.
