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EXHIBIT 10.28
CERUS CORPORATION
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
JUNE 30, 1998
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TABLE OF CONTENTS
PAGE
1. AGREEMENT TO SELL AND PURCHASE..............................................1
1.1 Authorization of Shares............................................1
1.2 Sale and Purchase of the Shares....................................1
1.3 Sale Exclusively to Purchaser......................................1
2. CLOSING, DELIVERY AND PAYMENT...............................................1
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY...............................2
3.1 Organization, Good Standing and Qualification......................2
3.2 Authorization; Binding Obligations.................................2
3.3 Compliance With Other Instruments..................................2
3.4 Securities Exemption...............................................2
3.5 Subsidiaries.......................................................2
3.6 Valid Issuance of Shares...........................................2
3.7 Litigation, Etc....................................................3
3.8 Governmental Consents..............................................3
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.................................3
4.1 Requisite Power and Authority......................................3
4.2 Consents...........................................................3
4.3 Investment Representations.........................................3
5. LEGENDS.....................................................................4
6. CONDITIONS TO CLOSING.......................................................5
6.1 Conditions to Purchaser's Obligations at the Closing...............5
6.2 Conditions to Obligations of the Company...........................6
7. MISCELLANEOUS...............................................................6
7.1 Governing Law......................................................6
7.2 Survival...........................................................6
7.3 Successors and Assigns.............................................6
7.4 Registration Rights................................................7
7.5 Redemption of Shares...............................................7
7.6 Entire Agreement...................................................7
7.7 Separability.......................................................7
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.8 Amendment and Waiver...............................................7
7.9 Delays or Omissions................................................8
7.10 Notices............................................................8
7.11 Expenses...........................................................8
7.12 Attorneys' Fees....................................................8
7.13 Titles and Subtitles...............................................8
7.14 Counterparts.......................................................8
7.15 Broker's Fees......................................................8
7.16 Subsequent Consents, Permits and Waivers...........................9
ii.
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CERUS CORPORATION
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
entered into as of June 30, 1998, by and between CERUS CORPORATION, a Delaware
corporation (the "Company"), and ▇▇▇▇▇▇ HEALTHCARE CORPORATION, a Delaware
corporation ("Purchaser").
RECITALS
WHEREAS, Purchaser desires to purchase shares of the Company's Series A
Preferred Stock; and
WHEREAS, the Company desires to issue and sell shares of its Series A
Preferred Stock to Purchaser on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE.
1.1 AUTHORIZATION OF SHARES. The Company will authorize the sale and
issuance to Purchaser of Five Thousand (5,000) shares of its Series A Preferred
Stock (the "Shares") and will designate sufficient shares of Series A Preferred
Stock to cover the sale and issuance of the Shares to be purchased hereunder.
The Certificate of Designation of the Series A Preferred Stock will be in the
form attached as Exhibit A to this Agreement.
1.2 SALE AND PURCHASE OF THE SHARES. Subject to the terms and
conditions hereof, the Company hereby agrees to issue and sell to Purchaser and
Purchaser agrees to purchase from the Company, at the Closing, the Shares at a
purchase price per share of $1,000.00.
1.3 SALE EXCLUSIVELY TO PURCHASER. The Company will sell shares of
Series A Preferred Stock exclusively to Purchaser.
2. CLOSING, DELIVERY AND PAYMENT.
The closing of the sale and purchase of the Shares under this Agreement
(the "Closing") shall take place two business days after the satisfaction of the
conditions to closing set forth in Section 6 hereof at the offices of ▇▇▇▇▇▇
Godward LLP, One ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
The date of the Closing is referred to as the "Closing Date." At the Closing,
subject to the terms and conditions hereof, the Company will, or will instruct
the transfer agent to, deliver to Purchaser a certificate representing the
number of Shares to be purchased at the Closing against payment by or on behalf
of Purchaser of the purchase price therefor by cash, wire transfer, or by such
other means as shall be mutually agreeable to Purchaser and the Company.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to Purchaser as follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The Company has full power and authority to own
and operate its properties and assets, and to carry on its business as presently
conducted and as proposed to be conducted. The Company is duly qualified, is
authorized to do business and is in good standing as a foreign corporation in
all jurisdictions in which the nature of its activities and of its properties
(both owned and leased) makes such qualification necessary, except for those
jurisdictions, in the aggregate, in which failure to do so would not have a
material adverse effect on the Company or its business.
3.2 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, for the sale and
issuance of the Shares pursuant hereto (and the shares of Common Stock issuable
upon conversion of the Shares) and for the performance of the Company's
obligations hereunder, has been taken or will be taken prior to the Closing.
This Agreement, when executed and delivered, will be a valid and binding
obligation of the Company enforceable in accordance with its terms (i) except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights and
(ii) subject to general principles of equity that restrict the availability of
equitable remedies. The sale of the Shares is not and will not be subject to any
preemptive rights or rights of first refusal that have not been properly waived
or complied with.
3.3 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance of and compliance with this Agreement and the sale of the Shares
pursuant hereto will not result in (i) any violation, or be in conflict with or
constitute a default under any term, of its Certificate of Incorporation or
Bylaws, (ii) any material violation or default of any mortgage, indenture,
material contract or agreement, instrument, judgment, decree, order or any
statute, rule or regulation applicable to the Company or (iii) the creation of
any mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company.
3.4 SECURITIES EXEMPTION. Assuming the accuracy of the representations
and warranties of the Purchaser contained in Section 4.3 hereof, the offer, sale
and issuance of the Shares will be exempt from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and will have
been registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws.
3.5 SUBSIDIARIES. The Company does not presently own or control,
directly or indirectly, and has no stock or other interest as owner or principal
in, any other corporation or partnership, joint venture, association or other
business venture or entity.
3.6 VALID ISSUANCE OF SHARES. When issued in compliance with the
provisions of this Agreement and the Certificate of Incorporation, the Shares
will be validly issued, fully paid and
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nonassessable, and will be free 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 by such
laws at the time a transfer is proposed. The Common Stock issuable upon
conversion of the Shares has been duly and validly reserved and, when issued in
compliance with the provisions of this Agreement and the Certificate of
Incorporation, will be duly and validly issued, fully paid and nonassessable and
free of restrictions on transfer other than restrictions under applicable
federal and state securities laws.
3.7 LITIGATION, ETC. There is no action, suit, proceeding nor, to the
best of the Company's knowledge, any investigation pending or currently
threatened against the Company, that questions the validity of this Agreement or
the right of the Company to enter into this Agreement.
3.8 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state, local or provincial governmental authority on the part of the
Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for notices required or permitted to be
filed with certain state and federal securities commissions, which notices will
be filed by the Company on a timely basis.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to the Company as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement and to carry out the provisions of this Agreement. All action on
Purchaser's part required for the lawful execution and delivery of this
Agreement has been or will be effectively taken prior to the Closing. This
Agreement, when executed and delivered, will be a valid and binding obligation
of Purchaser, enforceable in accordance with its terms (i) except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights and (ii) subject
to general principles of equity that restrict the availability of equitable
remedies.
4.2 CONSENTS. All consents, approvals, orders, authorizations,
registrations, qualifications, designations, declarations or filings with any
governmental or banking authority on the part of Purchaser required in
connection with the consummation of the transactions contemplated in this
Agreement have been or shall have been obtained prior to and be effective as of
the Closing.
4.3 INVESTMENT REPRESENTATIONS. Purchaser understands that the Shares
have not been registered under the Securities Act. Purchaser also understands
that the Shares are being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon Purchaser's
representations contained in the Agreement. Purchaser hereby represents and
warrants as follows:
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(a) PURCHASER IS AN ACCREDITED INVESTOR. Purchaser represents
that Purchaser is an Accredited Investor within the meaning of Rule 501(a) of
Regulation D under the Securities Act.
(b) PURCHASER BEARS ECONOMIC RISK. Purchaser must bear the
economic risk of this investment indefinitely unless the Shares are registered
pursuant to the Securities Act, or an exemption from registration is available.
Purchaser understands that it has no registration rights with respect to the
Shares. Purchaser also understands that there is no assurance that any exemption
from registration under the Securities Act will be available and that, even if
available, such exemption may not allow Purchaser to transfer all or any portion
of the Shares under the circumstances, in the amounts or at the times Purchaser
might propose.
(c) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the
Shares for Purchaser's own account for investment only, and not with a view
towards their distribution within the meaning of the Securities Act.
(d) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents
that by reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Purchaser is not a corporation,
trust or partnership specifically formed for the purpose of consummating these
transactions.
(e) COMPANY INFORMATION. Purchaser has had an opportunity to
discuss the Company's business, management and financial affairs with directors,
officers and management of the Company and has had the opportunity to review the
Company's operations and facilities. Purchaser has also had the opportunity to
ask questions of and receive answers from, the Company and its management
regarding the terms and conditions of this investment.
5. LEGENDS.
Each certificate or other document evidencing any of the Shares or any
Common Stock issued upon conversion thereof shall be endorsed with the legends
in the form substantially as set forth in paragraphs (a) and (c) below, and each
certificate or other document evidencing the Shares, but not any such Common
Stock issued upon conversion of the Shares, shall be endorsed with the legend
substantially in the form set forth in paragraph (b) below, and Purchaser
covenants that, except to the extent such restrictions are waived by the
Company, Purchaser shall not transfer the Shares represented by any such
certificate without complying with restrictions on transfer described in the
legends endorsed on such certificate. Notwithstanding the foregoing, upon
registration of any Common Stock issued upon conversion of the Shares under the
Securities Act of 1933, the provisions of this Section shall no longer apply and
the Company shall promptly exchange the certificates representing such Common
Stock with unlegended certificates.
(a) The following legend under the Act:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "ACT"). THEY MAY NOT BE SOLD OR OFFERED FOR SALE
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OR OTHERWISE DISTRIBUTED UNLESS THE SECURITIES ARE
REGISTERED UNDER THE ACT OR AN EXEMPTION THEREFROM IS
AVAILABLE.
(b) The following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER AS PROVIDED IN
THE CERTIFICATE OF DESIGNATION OF SERIES A PREFERRED
STOCK OF CERUS CORPORATION, A COPY OF WHICH MAY BE
OBTAINED UPON WRITTEN REQUEST FROM THE SECRETARY OF
THE CORPORATION AT ITS PRINCIPAL OFFICE.
(c) Any legend imposed or required by applicable state
securities laws.
6. CONDITIONS TO CLOSING.
6.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT THE CLOSING. Purchaser's
obligation to purchase the Shares identified in Section 1.1 of the Agreement at
the Closing are subject to the satisfaction, at or prior to the Closing, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the Closing with
the same force and effect as if they had been made as of the Closing, and the
Company shall have performed and complied with all obligations and conditions
herein required to be performed or complied with by it on or prior to the
Closing.
(b) LEGAL INVESTMENT. At the time of the Closing, the sale and
issuance of the Shares shall be legally permitted by all laws and regulations to
which Purchaser and the Company are subject.
(c) CONSENTS, PERMITS AND WAIVERS. The Company shall have
obtained any and all authorizations, approvals, consents, permits and waivers
necessary or appropriate for consummation of the transactions contemplated by
this Agreement (except for such as may be properly obtained subsequent to the
Closing, and such items shall be effective on and as of the Closing).
(d) CERTIFICATE OF GOOD STANDING. The Company shall have
obtained a Certificate of Good Standing from the Delaware Secretary of State
dated as of a recent date prior to the Closing.
(e) OPINION LETTER. Purchaser shall have received from ▇▇▇▇▇▇
Godward LLP, counsel to the Company, an opinion letter addressed to it, dated
the date of the Closing, in substantially the form attached hereto as Exhibit B.
(f) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents and instruments
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incident to such transactions shall be reasonably satisfactory in form and
substance to counsel to Purchaser, and counsel to Purchaser shall have received
all such counterpart originals or certified or other copies of such documents as
they may reasonably request.
(g) COMPLIANCE CERTIFICATE. The Company shall have delivered
to Purchaser a Compliance Certificate, executed by the President and the Chief
Financial Officer of the Company, dated the Closing Date, to the effect that the
conditions specified in subparagraphs (a) through (f) of this Section 6.1 have
been satisfied.
(h) REGISTRATION RIGHTS. The Company shall have obtained the
Requisite Approval as set forth in Section 7.4 hereof.
6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation
to issue and sell the Shares at the Closing is subject to the satisfaction, on
or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by Purchaser in Section 4 hereof shall be true and correct
in all material respects at the date of the Closing, with the same force and
effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchaser shall have performed
and complied with all agreements and conditions herein required to be performed
or complied with by Purchaser on or before the Closing.
7. MISCELLANEOUS.
7.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of California.
7.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by Purchaser and the closing of
the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument, except as
expressly provided otherwise in such certificate or instrument. Section 1.3
hereof shall survive the Closing.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time; provided, however,
that prior to the receipt by the Company of adequate written notice of the
transfer of any Shares specifying the full name and address of the transferee,
the Company may deem and treat the person listed as the holder of such Shares in
its records as the absolute owner and holder of such Shares for all purposes,
the payment of any dividends or any redemption price.
6.
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7.4 REGISTRATION RIGHTS. Subject to the approval of the requisite
holders of "Registrable Securities" (the "Requisite Approval") under the Amended
and Restated Investors' Rights Agreement, dated as of April 1, 1996, between the
Company and the investors thereto (the "Rights Agreement"), the Common Stock
issuable upon conversion of the Shares shall be Registrable Securities as
defined in Section 1.3 of the Rights Agreement. Subject to the Requisite
Approval, by signing this Agreement, Purchaser agrees to be bound by the Rights
Agreement as a party thereto. Cerus will use its best efforts to obtain such
approval on or before July 15, 1998. Baxter, as a holder of Registrable
Securities, hereby consents to such action, and agrees to execute such other
instruments as shall be appropriate to evidence such approval.
7.5 REDEMPTION OF SHARES. If the Company elects to redeem the Shares,
as provided for in the Certificate of Designation of the Series A Preferred
Stock and indebtedness is then owing from Purchaser to the Company, the Company
and Purchaser will consider and discuss whether to permit the Company to pay all
or a portion of the redemption price through cancellation of indebtedness. If
the parties can not agree to such arrangement, the redemption price will be paid
in cash.
7.6 ENTIRE AGREEMENT. This Agreement, the Rights Agreement, and the
other documents delivered pursuant hereto and thereto constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and no party shall be liable or bound to any other in any manner
by any representations, warranties, covenants and agreements except as
specifically set forth herein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
7.7 SEPARABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, such provision shall, to the extent
practicable, be modified so as to make it valid, legal and enforceable and to
maintain as nearly as practicable the intent of the parties, and the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
7.8 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
written consent of the parties hereto.
(b) The obligations of the Company and the rights of the
holder of the Shares under this Agreement may be waived only with the written
consent of the parties hereto.
(c) Except to the extent provided in this Section 7.8, neither
this Agreement nor any provision hereof may be changed, waived, discharged or
terminated, except by a statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought.
(d) Any amendment or waiver effected in accordance with this
Section 7.8 shall be binding upon any future holder of some or all of the
Shares.
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7.9 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to Purchaser, upon any breach,
default or noncompliance of the Company under this Agreement or the Certificate
of Incorporation shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character on Purchaser's part of any breach, default or
noncompliance under this Agreement or the Certificate of Incorporation or any
waiver on Purchaser's part of any provisions or conditions of this Agreement
must be in writing and shall be effective only to the extent specifically set
forth in such writing. All remedies under this Agreement, the Certificate of
Incorporation or Bylaws, or otherwise afforded to Purchaser, shall be cumulative
and not alternative.
7.10 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
and received (a) upon personal delivery, (b) on the fifth day following mailing
sent by registered or certified mail, return receipt requested, postage prepaid,
(c) upon confirmed delivery by means of a nationally recognized overnight
courier service or (d) upon transmission of facsimile (with telephonic notice)
addressed: (i) if to Purchaser, at Purchaser's address as set forth on the
Company's records, or at such other address as Purchaser shall have furnished to
the Company in writing or (ii) if to the Company, at its address as set forth at
the end of this Agreement, or at such other address as the Company shall have
furnished to Purchaser in writing.
7.11 EXPENSES. The Company shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement, and Purchaser shall pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of this
Agreement.
7.12 ATTORNEYS' FEES. If legal action is brought to enforce or
interpret this Agreement, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and legal costs in connection therewith.
7.13 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of the Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
7.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
7.15 BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto is or will be entitled to any broker's or
finder's fee or any other commission directly or indirectly in connection with
the transactions contemplated herein. Each party hereto further agrees to
indemnify each other party for any claims, losses or expenses incurred by such
other party as a result of the representation in this Section 7.15 being untrue.
8.
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7.16 SUBSEQUENT CONSENTS, PERMITS AND WAIVERS. The Company shall obtain
promptly after the Closing all authorizations, approvals, consents, permits and
waivers that are necessary or applicable for consummation of the transactions
contemplated by this Agreement and that were not obtained prior to the Closing
because they may be properly obtained subsequent to the Closing.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.
COMPANY:
CERUS CORPORATION:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
PURCHASER:
▇▇▇▇▇▇ HEALTHCARE CORPORATION
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
By:_________________________________
(Signature)
Name:_______________________________
Its:________________________________
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EXHIBIT A
CERTIFICATE OF DESIGNATION OF SERIES A PREFERRED STOCK
1.
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EXHIBIT B
FORM OF OPINION
July ___, 1998
▇▇▇▇▇▇ Healthcare Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Cerus Corporation
Ladies and Gentlemen:
We have acted as counsel to Cerus Corporation, a Delaware corporation
(the "Company"), in connection with the issuance and sale to you of the Shares
(as defined in the Series A Preferred Stock Purchase Agreement between you and
the Company, dated as of June 30, 1998 (the "Purchase Agreement"), such issuance
and sale to take place pursuant to the terms and conditions of the Purchase
Agreement. We are rendering this opinion pursuant to Section 6.1(e) of the
Purchase Agreement. Except as otherwise defined herein, capitalized terms used
but not defined herein have the respective meanings given to them in the
Purchase Agreement.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Agreement by the various parties and originals or copies
certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where we render
an opinion "to the best of our knowledge" or concerning an item "known to us" or
our opinion otherwise refers to our knowledge, it is based solely upon (i) an
inquiry of attorneys within this firm who perform legal services for the
Company, (ii) receipt of a certificate executed by an officer of the Company
covering such matters, and (iii) such other investigation, if any, that we
specifically set forth herein.
In rendering this opinion, we have assumed the genuineness and
authenticity of all signatures on original documents; the authenticity of all
documents submitted to us as originals; the conformity to originals of all
documents submitted to us as copies; the accuracy, completeness and authenticity
of certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Purchase Agreement) where authorization, execution and
delivery are prerequisites to the effectiveness of such documents. We have also
assumed that all individuals executing and delivering documents in their
individual capacities had the legal capacity to so execute and deliver; that you
have received all documents you were to receive under the Purchase Agreement;
that the Purchase Agreement is an obligation binding upon you; that you have
filed any required California franchise or income tax returns and have paid any
required California franchise or income taxes; and that there are no extrinsic
agreements or understandings among the parties to the Purchase Agreement that
would modify or interpret the terms of the Purchase Agreement or the respective
rights or obligations of the parties thereunder.
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Our opinion is expressed only with respect to the federal laws of the
United States of America, the laws of the State of California and the General
Corporation Law of the State of Delaware. We express no opinion as to whether
the laws of any particular jurisdiction apply, and no opinion to the extent that
the laws of any jurisdiction other than those identified above are applicable to
the subject matter hereof. We are not rendering any opinion as to compliance
with any antifraud law, rule or regulation relating to securities, or to the
sale or issuance thereof.
With respect to the opinion in paragraph 3 hereof regarding issued and
outstanding capital stock of the Company, we have examined and have relied
solely on a certificate furnished by the Company's transfer agent, Norwest Bank
Minnesota, N.A., a copy of which has been made available to you. We have
undertaken no independent verification with respect thereto.
With regard to our opinion in paragraph 4 below with respect to
material defaults under any of the Material Agreements (as defined below), we
have relied solely upon (i) inquiries of officers of the Company, (ii) a list
supplied to us by the Company of material agreements to which the Company is a
party, or by which it is bound (the "Material Agreements"), and (iii) an
examination of the items on the aforementioned list; we have made no further
investigation.
On the basis of the foregoing, in reliance thereon and with the
foregoing qualifications, we are of the opinion that:
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Delaware. The
Company has the requisite corporate power to own its property and assets and to
conduct its business as it is currently being conducted.
2. The Purchase Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement with creditors, moratorium or other
similar laws affecting creditors' rights, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance.
3. The Company's authorized capital stock consists of (a) fifty million
(50,000,000) shares of Common Stock, of which ________________________________
(_________) are issued and outstanding, and (b) five million (5,000,000) shares
of Preferred Stock, of which five thousand (5,000) shares have been designated
Series A Preferred Stock, none of which (excluding the Shares to be issued at
Closing) are issued and outstanding. The outstanding shares of Common Stock have
been duly authorized, validly issued and are fully paid and nonassessable. The
rights, preferences and privileges of the Series A Preferred Stock are as stated
in the Certificate of Designation of Series A Preferred Stock. The Shares have
been duly and validly authorized, and upon issuance and delivery against payment
therefor in accordance with the Purchase Agreement will be validly issued,
outstanding, fully paid and nonassessable. The Shares of Common Stock issuable
upon conversion of the Shares have been duly authorized, and upon issuance and
delivery upon conversion thereof in accordance with the terms of the Shares,
will be validly issued, outstanding, fully paid and nonassessable.
2.
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4. The execution, delivery and performance of the Purchase Agreement by
the Company and the offer, issuance and sale of the Shares pursuant thereto (a)
do not constitute a material default under, and do not result in a lien or other
encumbrance on the property of the Company pursuant to, the provisions of any of
the Material Agreements, (b) do not violate any provision of the Company's
Certificate of Incorporation or Bylaws, and (c) do not violate or contravene any
governmental statute, rule or regulation applicable to the Company.
5. To the best of our knowledge, there is no action, suit, proceeding
or investigation pending or overtly threatened against the Company before any
domestic or foreign court or administrative agency that questions the validity
of the Purchase Agreement.
6. All consents, approvals, authorizations or orders of, and filings,
registrations and qualifications with any regulatory authority or governmental
body in the United States required for the consummation by the Company of the
offer, issuance and sale of the Shares contemplated by the Purchase Agreement
have been made or obtained.
This opinion is intended solely for your benefit and is not to be made
available to or be relied upon by any other person, firm, or entity without our
prior written consent.
Very truly yours,
▇▇▇▇▇▇ GODWARD LLP
By:___________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
3.
