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EXHIBIT 10.67
PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 18th day of November, 1996,
by and between DepoTech Corporation (the "Company"), a corporation organized
under the laws of the State of California, with its principal offices at 00000
Xxxxxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000 and the purchaser whose name
and address is set forth on the signature page hereof (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company and the Purchaser agree as follows:
SECTION 1. Authorization of Sale of the Shares. Subject to
the terms and conditions of this Agreement, the Company has authorized the sale
of up to an aggregate of 1,500,000 shares of the common stock (the "Common
Stock"), no par value per share (the "Shares"), of the Company.
SECTION 2. Agreement to Sell and Purchase the Shares. On the
Closing Date (as defined in Section 3), the Company, subject to the terms of
this Agreement, will sell to the Purchaser the number of Shares indicated
below, and the Purchaser will buy from the Company such Shares, upon the terms
and conditions hereinafter set forth, the aggregate number of such Shares (at
the purchase price) shown below:
Number of Price Per
Shares to be Share In Aggregate
Purchased Dollars Price
------------ -------- ---------
1,500,000 $13.50 $20,250,000.00
The Company proposes to enter into this same form of purchase
agreement with certain other investors (the "Other Purchasers") and expects to
complete sales of the Shares to them. The Purchaser and the Other Purchasers
are hereinafter sometimes collectively referred to as the "Purchasers," and
this Agreement and the agreements executed by the Other Purchasers are
hereinafter sometimes collectively referred to as the "Agreements." The term
"Placement Agent" shall mean Vector Securities International, Inc.
SECTION 3. Delivery of the Shares at the Closing. The
completion of the purchase and sale of the Shares (the "Closing") shall occur
as soon as practicable following notification by the Securities and Exchange
Commission (the "Commission") to the Company of the Commission's willingness to
declare effective the registration statement to be filed by the Company
pursuant to Section 7.1 (the "Registration Statement") at a place and time (the
"Closing Date") to be agreed upon by the Company and the
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Placement Agent and of which the Purchasers will be notified by facsimile
transmission or otherwise.
At the Closing, the Company shall deliver to the Purchaser one
or more stock certificates registered in the name of the Purchaser, or in such
nominee name(s) as designated by the Purchaser, representing the number of
Shares set forth in Section 2 above. The name(s) in which the stock
certificates are to be registered are set forth in the Stock Certificate
Questionnaire attached hereto as part of Appendix I. The Company's obligation
to complete the purchase and sale of the Shares and deliver such stock
certificate(s) to the Purchaser at the Closing shall be subject to the
following conditions, any one or more of which may be waived by the Company:
(a) receipt by the Company of New York Clearing House funds in the full amount
of the purchase price for the Shares being purchased hereunder; (b) completion
of the purchases and sales under the Agreements with Other Purchasers; and (c)
the accuracy of the representations and warranties made by the Purchasers and
the fulfillment of those undertakings of the Purchasers to be fulfilled prior
to the Closing. The Purchaser's obligation to accept delivery of such stock
certificate(s) and to pay for the Shares evidenced thereby shall be subject to
the following conditions: (a) the Commission has notified the Company of the
Commission's willingness to declare the Registration Statement effective on or
prior to the 60th day after the date such Registration Statement was filed by
the Company; and (b) the accuracy in all material respects of the
representations and warranties made by the Company herein and the fulfillment
in all material respects of those undertakings of the Company to be fulfilled
prior to Closing. The Purchaser's obligations hereunder are expressly not
conditioned on the purchase by any or all of the Other Purchasers of the Shares
that they have agreed to purchase from the Company.
SECTION 4. Representations, Warranties and Covenants of the
Company. The Company hereby represents and warrants to, and covenants with, the
Purchaser as follows:
4.1. Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to conduct its business as currently conducted.
4.2. Authorized Capital Stock. Except as disclosed in or
contemplated by the Confidential Private Placement Memorandum dated November 1,
1996 prepared by the Company (the "Private Placement Memorandum"), the Company
has authorized and outstanding capital stock as set forth in the Private
Placement Memorandum; the issued and outstanding shares of the Company's Common
Stock have been duly authorized and validly issued, are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights
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to subscribe for or purchase securities, and conform to the description thereof
incorporated by reference in the proposed draft, dated November 1, 1996, of the
Registration Statement on Form S-3, attached as Exhibit C to the Private
Placement Memorandum. Except as disclosed in the Private Placement Memorandum,
or as contemplated by the Private Placement Memorandum, the Company does not
have outstanding any options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible securities or
obligations. The description of the Company's stock, stock bonus and other
stock plans or arrangements and the options or other rights granted and
exercised thereunder, incorporated by reference in the proposed draft, dated
November 1, 1996, of the Registration Statement on Form S-3 attached as Exhibit
C to the Private Placement Memorandum accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights.
4.3. Issuance, Sale and Delivery of the Shares. The Shares
to be sold by the Company have been duly authorized and, when issued, delivered
and paid for in the manner set forth in this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable, and will conform to
the description thereof incorporated by reference in the proposed draft, dated
November 1, 1996, of the Registration Statement on Form S-3 attached as Exhibit
C to the Private Placement Memorandum. No preemptive rights or other rights to
subscribe for or purchase exist with respect to the issuance and sale of the
Shares by the Company pursuant to this Agreement. No shareholder of the
Company has any right, which has not been waived or has not expired by reason
of lapse of time following notification of the Company's intent to file the
Registration Statement, to require the Company to register the sale of any
shares owned by such shareholder under the Securities Act of 1933, as amended,
(the "Securities Act") in the Registration Statement. No further approval or
authority of the shareholders or the Board of Directors of the Company will be
required for the issuance and sale of the Shares to be sold by the Company as
contemplated herein.
4.4. Due Execution, Delivery and Performance of the
Agreements. The Company has full legal right, power and authority to enter
into the Agreements and perform the transactions contemplated hereby. The
Agreements have been duly authorized, executed and delivered by the Company.
The making and performance of the Agreements by the Company and the
consummation of the transactions herein contemplated will not violate any
provision of the articles of incorporation or bylaws, or other organizational
documents, of the Company, and will not conflict with, result in the breach or
violation of, or constitute, either by itself or upon notice or the passage of
time or both, a default under any material agreement, mortgage,
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deed of trust, lease, franchise, license, indenture, permit or other instrument
to which the Company is a party or by which the Company or its properties may
be bound or affected, any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Company or any of its
properties. No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body is required
for the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement, except for compliance with the
Blue Sky laws applicable to the offering of the Shares. Upon their execution
and delivery, and the respective Purchasers, the Agreements will constitute
valid and binding obligations of the Company, enforceable in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of the Company in Section 7.3
hereof may be legally unenforceable.
4.5. Accountants. Ernst & Young LLP, who have expressed
their opinion with respect to the financial statements and schedules
incorporated by reference in the Registration Statement, are independent
accountants as required by the Securities Act and the rules and regulations
promulgated thereunder (the "Rules and Regulations").
4.6. No Defaults. Except as incorporated by reference in the
proposed draft, dated November 1, 1996, of the Registration Statement on Form
S-3, attached as Exhibit C to the Private Placement Memorandum, and except as
to defaults, violations and breaches which individually or in the aggregate
would not be material to the Company, the Company is not in violation or
default of any provision of its articles of incorporation or bylaws, or other
organizational documents, or is not in breach of or default with respect to any
provision of any agreement, judgment, decree, order, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which it is
a party or by which it or any of its properties are bound; and there does not
exist any state of fact which constitutes an event of default on the part of
the Company as defined in such documents or which, with notice or lapse of time
or both, would constitute such an event of default except such defaults which
individually or in the aggregate would not be material to the Company.
4.7. Contracts. The contracts so described in the Private
Placement Memorandum or incorporated by reference therein are in full force and
effect on the date hereof; and neither the Company, nor to the best of the
Company's knowledge, any other
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party is in breach of or default under any of such contracts except such breach
or default which individually or in the aggregate would not be material to the
Company.
4.8. No Actions. Except as disclosed in the Private
Placement Memorandum or incorporated by reference therein, there are no legal
or governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company is or may be a part or of
which property owned or leased by the Company is or may be the subject, or
related to environmental or discrimination matters, which actions, suits or
proceedings might, individually or in the aggregate, prevent or adversely
affect the transactions contemplated by this Agreement or result in a material
adverse change in the condition (financial or otherwise), properties, business,
results of operations or prospects of the Company, and no labor disturbance by
the employees of the Company exists or is imminent which might be expected to
affect adversely such condition, properties, business, results of operations or
prospects. The Company is not party nor subject to the provisions of any
material injunction, judgment, decree or order of any court, regulatory body
administrative agency or other governmental body.
4.9. Properties. The Company has good and marketable title
to all the properties and assets reflected as owned by it in the financial
statements included in the Private Placement Memorandum or incorporated by
reference therein, subject to no lien, mortgage, pledge, charge or encumbrance
of any kind except (i) those, if any, reflected in such financial statements,
or (ii) those which are not material in amount and do not adversely affect the
use made and promised to be made of such property by the Company. The Company
holds its leased properties under valid and binding leases, with such
exceptions as are not materially significant in relation to the business of the
Company. Except as disclosed in the Private Placement Memorandum or
incorporated by reference therein, the Company owns or leases all such
properties as are necessary to its operations as now conducted.
4.10. No Material Change. Since June 30, 1996 and except as
described in or specifically contemplated by the Private Placement Memorandum,
(i) the Company has not incurred any material liabilities or obligations,
indirect, or contingent, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of business
or which could reasonably be expected to result in a material reduction in the
future earnings of the Company; (ii) the Company has not sustained any material
loss or interference with its businesses or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance;
(iii) the Company has not paid or declared any dividends or other distributions
with respect to its capital stock and the Company is not in default in the
payment of principal or interest on any outstanding debt obligations; (iv)
there has not been any change in the capital stock of the Company
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(other than the sale of the Shares hereunder, or indebtedness material to the
Company (other than in the ordinary course of business); and (v) there has not
been any material adverse change in the condition (financial or otherwise),
business, properties, results of operations or prospects of the Company.
4.11. Intellectual Property. Except as disclosed in or
specifically contemplated by the Private Placement Memorandum, the Company
believes it has sufficient trademarks, trade names, patent rights, copyrights,
licenses, approvals and governmental authorizations to conduct its businesses
as now conducted; and the Company has no knowledge of any material infringement
by it of trademark, trade name rights, patent rights, copyrights, licenses,
trade secrets or other similar rights of others, and no claim has been made
against the Company regarding trademark, trade name, patent, copyright,
license, trade secrecy or other infringement which could have a material
adverse effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company.
4.12. Compliance. The Company has not been advised, and has
no reason to believe, that it is not conducting business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations; except where failure to be so
in compliance would not materially adversely affect the condition (financial or
otherwise), business, results of operations or prospects of the Company.
4.13. Taxes. The Company has filed all necessary federal,
state and foreign income and franchise tax returns and has paid or accrued all
taxes shown as due thereon, and the Company has no knowledge of tax deficiency
which has been or might be asserted or threatened against the Company which
could materially adversely affect the business condition (financial or
otherwise), results of operations or prospects of the Company.
4.14. Transfer Taxes. On the Closing Date, all stock
transfer or other taxes (other than income taxes) which are required to be paid
in connection with the sale and transfer of the Shares to be sold to the
Purchaser hereunder will be, or will have been, fully paid or provided for by
the Company and all laws imposing such taxes will be or will have been fully
complied with.
4.15. Investment Company. The Company is not required to
register as an "investment company" as such term is defined in the Investment
Company Act of 1940, as amended.
4.16. Offering Materials. The Company has not distributed
and will not distribute prior to the Closing Date any offering material in
connection with the offering and sale of the
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Shares other than the Private Placement Memorandum or any amendment or
Supplement thereto.
4.17. Insurance. Except as disclosed in the Private
Placement Memorandum, the Company maintains insurance of the types and in the
amounts generally deemed adequate for its business, including, but not limited
to, insurance covering all real and personal property owned or leased by the
Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect.
4.18. Additional Information. The Company represents and
warrants that the information contained in the following documents, which the
Placement Agent has furnished to the Purchaser, or will furnish prior to the
Closing, is or will be true and correct in all material respects as of their
respective filing dates:
(a) Annual Report on Form 10-K for the year ended
December 31, 1995;
(b) Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996;
(c) the Confidential Private Placement Memorandum dated
November 1, 1996 containing certain summary
information relating to the sale by the Company of
the Shares pursuant to the Agreements, including all
addenda and exhibits thereto (other than the
Appendices) (the "Private Placement Memorandum"); and
(d) the proposed form of Registration Statement on
Form S-3 (draft dated November 1, 1996)
(e) all other documents, if any, filed by the Company
with the Securities and Exchange Commission since
December 31, 1995 pursuant to Sections 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
4.19. Legal Opinion. Prior to the Closing, Xxxxxxx, Xxxxxxx
& Xxxxxxxx LLP, counsel to the Company, will deliver its legal opinion to the
Placement Agent reasonably satisfactory to the Placement Agent and counsel to
the Placement Agent. Such opinion shall also state that each of the Purchasers
may rely thereon as though it were addressed directly to such Purchaser.
4.20. Intellectual Property Opinion. Prior to the Closing,
Fish & Xxxxxxxxxx, P.C. patent counsel for the Company, will deliver its legal
opinion to the Placement Agent reasonably satisfactory to the Placement Agent
and counsel to the Placement Agent. Such opinion shall state that each of the
Purchasers may
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rely thereon as though it were addressed directly to such Purchaser.
4.21. Regulatory Opinion. Prior to the Closing, Xxxxx, Xxxxxx
& XxXxxxxx, P.C. special regulatory advisor for the Company will deliver its
legal opinion to the Placement Agent reasonably satisfactory to the Placement
Agent and counsel to the Placement Agent. Such opinion shall state that each
of the Purchasers may rely thereon as though it were addressed directly to such
Purchaser.
4.22. Certificate. A certificate of the Company executed by
the Chairman of the Board or President and the chief financial or accounting
officer of the Company, to be dated the Closing Date in form and substance
satisfactory to the Purchasers to the effect that the representations and
warranties of the Company set forth in this Section 4 are true and correct as
of the date of this Agreement and as of the Closing Date, and the Company has
complied with all the agreements and satisfied all the conditions on its part
to be performed or satisfied on or prior to such Closing Date.
SECTION 5. Representations, Warranties and Covenants of the
Purchaser. (a) The Purchaser represents and warrants to, and covenants with,
the Company that: (i) the Purchaser, taking into account the personnel and
resources it can practically bring to bear on the purchase of the Shares
contemplated hereby, is knowledgeable, sophisticated and experienced in making,
and is qualified to make, decisions with respect to investments in shares
presenting an investment decision like that involved in the purchase of the
Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares; (ii) the Purchaser is
acquiring the number of Shares set forth in Section 2 above in the ordinary
course of its business and for its own account for investment (as defined for
purposes of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976 and the
regulations thereunder) only and with no present intention of distributing any
of such Shares or any arrangement or understanding with any other persons
regarding the distribution of such Shares; (iii) the Purchaser will not,
directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Shares except in compliance with the Securities Act, the Rules
and Regulations and any applicable state securities or blue sky laws; (iv) the
Purchaser has completed or caused to be completed the Registration Statement
Questionnaire and the Stock Certificate Questionnaire, both attached hereto as
Appendix I, for use in preparation of the Registration Statement and the
answers thereto are true and correct to the best knowledge of the Purchaser as
of the date hereof and will be true and correct as of the effective date of the
Registration Statement; (v) the Purchaser has, in connection with its decision
to purchase the number of Shares set
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forth in Section 2 above, relied solely upon the Private Placement Memorandum
and the documents included therein and the representations and warranties of
the Company contained herein; and (vi) the Purchaser is an "accredited
investor" within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act.
(b) The Purchaser hereby covenants with the Company not to
make any sale of the Shares without effectively causing the prospectus delivery
requirement under the Securities Act to be satisfied, and the Purchaser
acknowledges and agrees that such Shares are not transferable on the books of
the Company unless the certificate submitted to the transfer agent evidencing
the Shares is accompanied by a separate officer's certificate: (i) in the form
of Appendix II hereto, (ii) executed by an officer of, or other authorized
person designated by, the Purchaser, and (iii) to the effect that (A) the
Shares have been sold in accordance with the Registration Statement, the
Securities Act and the Rules and Regulations and any applicable state
securities or blue sky laws and (B) the requirement of delivering a current
prospectus has been satisfied. The Purchaser acknowledges that there may
occasionally be times when the Company must suspend the use of the prospectus
forming a part of the Registration Statement until such time as an amendment to
the Registration Statement has been filed by the Company and declared effective
by the Commission, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. The Purchaser hereby
covenants that it will not sell any Shares pursuant to said prospectus during
the period commencing at the time at which the Company gives the Purchaser
notice of the suspension of the use of said prospectus and ending at the time
the Company gives the Purchaser notice that the Purchaser may thereafter effect
sales pursuant to said prospectus. The Purchaser further covenants to notify
the Company promptly of the sale of all of its Shares.
(c) The Purchaser further represents and warrants to, and
covenants with, the Company that (i) the Purchaser has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement, and (ii)
upon the execution and delivery of this Agreement, this Agreement shall
constitute a valid and binding obligation of the Purchaser enforceable in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of the Purchaser in Section 7.3
hereof may be legally unenforceable.
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SECTION 6. Survival of Representations, Warranties and
Agreements. Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agent, all covenants, agreements, representations
and warranties made by the Company, and the Purchaser herein and in the
certificates for the Shares delivered pursuant hereto shall survive the
execution of this Agreement, the delivery to the Purchaser of the Shares being
purchased and the payment therefor.
SECTION 7. Registration of the Shares; Compliance with the
Securities Act.
7.1. Registration Procedures and Expenses. The Company
shall:
(a) as soon as practicable, prepare and file with the
Commission the Registration Statement on Form S-3
relating to the sale of the Shares by the Purchaser
from time to time through the automated quotation
system of The Nasdaq Stock Market or the facilities
of any national securities exchange on which the
Company's common stock is then traded or in
privately-negotiated transactions;
(b) use its reasonable efforts, subject to receipt of
necessary information from the Purchasers, to cause
the Commission to notify the Company of the
Commission's willingness to declare the Registration
Statement effective within 60 days after the
Registration Statement is filed by the Company;
(c) prepare and file with the Commission such amendments
and supplements to the Registration Statement and the
prospectus used in connection therewith as may be
necessary to keep the Registration Statement
effective until the date on which the Shares may be
resold by the Purchasers without registration, by
reason of Rule 144(k) under the Securities Act or any
other rule of similar effect;
(d) furnish to the Purchaser with respect to the Shares
registered under the Registration Statement (and to
each underwriter, if any, of such Shares) such
reasonable number of copies of prospectuses and such
other documents as the Purchaser may reasonably
request, in order to facilitate the public sale or
other disposition of all or any of the Shares by the
Purchaser, provided, however, that the obligation of
the Company to deliver copies of prospectuses to the
Purchaser shall be subject to the receipt by the
Company of reasonable assurances from the Purchaser
that the
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Purchaser will comply with the applicable provisions
of the Securities Act and of such other securities or
blue sky laws as may be applicable in connection with
any use of such prospectuses;
(e) file documents required of the Company for normal
blue sky clearance in states specified in writing by
the Purchaser, provided, however, that the Company
shall not be required to qualify to do business or
consent to service of process in any jurisdiction in
which it is not now so qualified or has not so
consented; and
(f) bear all expenses in connection with the procedures
in paragraphs (a) through (e) of this Section 7.1 and
the registration of the Shares pursuant to the
Registration Statement, other than fees and expenses,
if any, of counsel or other advisers to the Purchaser
or the Other Purchasers or underwriting discounts,
brokerage fees and commissions incurred by the
Purchaser or the Other Purchasers, if any.
7.2. Transfer of Shares After Registration. The Purchaser
agrees that it will not effect any disposition of the Shares or its right to
purchase the Shares that would constitute a sale within the meaning of the
Securities Act or pursuant to any applicable state securities or blue sky laws
except as contemplated in the Registration Statement referred to in Section 7.1
and that it will promptly notify the Company of any changes in the information
set forth in the Registration Statement regarding the Purchaser or its Plan of
Distribution.
7.3. Indemnification. For the purpose of this Section 7.3:
(i) the term "Purchaser" shall include the Purchaser and
any affiliate of such Purchaser;
(ii) the term "Registration Statement" shall include any
final prospectus, exhibit, supplement or amendment
included in or relating to the Registration Statement
referred to in Section 7.1; and
(a) The Company agrees to indemnify and hold harmless each of
the Purchasers and each person, if any, who controls any Purchaser within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses, joint or several, to which such Purchasers or such controlling
person may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written
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consent of the Company), insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, including the
prospectus, financial statements and schedules, and all other documents filed
as a part thereof, as amended at the time of effectiveness of the Registration
Statement, including any information deemed to be a part thereof as of the time
of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule
434, of the rules and regulations of the Commission under the Securities Act
(the "Regulations"), or the prospectus, in the form first filed with the
Commission pursuant to Rule 424(b) of the Regulations, or filed as part of the
Registration Statement at the time of effectiveness if no Rule 424(b) filing is
required (the "Prospectus"), or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in any of them not misleading, or arise out of or are based in whole
or in part on any inaccuracy in the representations and warranties of the
Company contained in this Agreement, or any failure of the Company to perform
its obligations hereunder or under law, and will reimburse each Purchaser and
each such controlling person for any legal and other expenses as such expenses
are reasonably incurred by such Purchaser or such controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
the Company will 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
made in the Registration Statement, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company (i) by or on behalf of the Purchaser expressly for use
therein or (ii) the failure of such Purchaser to comply with the covenants and
agreements contained in Sections 5(b) or 7.2 hereof respecting sale of the
Shares, the inaccuracy of any representations made by such Purchaser herein or
any statement or omission in any Prospectus that is corrected in any subsequent
Prospectus that was delivered to the Purchaser prior to the pertinent sale or
sales by the Purchaser.
In addition to its other obligations under this paragraph (a),
the Company agrees that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission, or
any inaccuracy in the representations and warranties of the Company in this
Agreement or failure to perform its obligations in this Agreement, all as
described in this paragraph (a), it will reimburse each Purchase on a quarterly
basis for all reasonable legal or other expenses incurred in connection with
investigating
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or defending any such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Company's obligation, to reimburse each
Purchaser for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, each Purchaser shall promptly return it to the Company together with
interest, compounded daily, determined on the basis of the Prime Rate (or other
commercial lending rate for borrowers of the highest credit standing) announced
from time to time by Bank of America National Trust and Savings Association,
San Francisco, California (the "Prime Rate"). Any such interim reimbursement
payments which are not made to a Purchaser within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) Each Purchaser will severally indemnify and hold
harmless the Company, each of its directors, each of its officers who signed
the Registration Statement and each person, if any, who controls the Company
within the meaning of the Securities Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of
its officers who signed the Registration Statement or controlling person may
become subject, under the Securities Act, the Exchange Act, or any other
federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of such Purchaser) insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof as contemplated below)
arise out of or are based upon any failure to comply with the covenants and
agreements contained in Sections 5(b) or 7.2 hereof respecting the sale of the
Shares, the inaccuracy of any representation made by such Purchaser herein or
any untrue or alleged untrue statement of any material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any Purchaser
expressly for use therein, and will reimburse the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed the
Registration Statement or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim,
-13-
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damage, liability, expense or action. In addition to its other obligations
under this paragraph (b), each Purchaser severally agrees that, as an interim
measure during the pendency of any claim, action, investigation, inquiry or
other proceeding arising out of or based upon any failure to comply, statement
or omission, or any alleged failure to comply, statement or omission, described
in this paragraph (b) which relates to written information furnished to the
Company by or on behalf of any Purchaser, it will reimburse the Company (and,
to the extent applicable, each officer, director or controlling person) on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with the investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Purchaser's obligations to reimburse the Company (and, to the extent
applicable, each officer, director or controlling person) for such expenses and
the possibility that such payments might later be held to have been improper by
a court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Company (and, to
the extent applicable, each officer, director or controlling person) shall
promptly return it to such Purchaser together with interest, compounded daily,
determined on the basis of the Prime Rate. Any such interim reimbursement
payments which are not made to the Company within 30 days of a request for
reimbursement shall bear interest at the Prime Rate form the date of such
request. This indemnity agreement will be in addition to any liability which
such Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 7.3 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 7.3 notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
for contribution or otherwise than under the indemnity agreement contained in
this Section 7.3 or to the extent it is not prejudiced as a proximate result of
such failure. In case any such action is brought against any indemnified party
and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with all other indemnifying
parties similarly notified, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be a conflict between the positions of the indemnifying party
and the indemnified party in conducting the defense of any such action or that
there may be legal defenses available to it and/or other indemnified parties
which are different from or additional
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15
to those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of
such action and approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this Section 7.3 for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall have
employed such counsel in connection with the assumption of legal defenses in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall be not liable for the expenses of
more than one separate counsel, approved by such indemnifying party in the case
of paragraph (a), representing the indemnified parties who are parties to such
action) or (ii) the indemnified party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of action, in each
of which cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) If the indemnification provided for in this Section 7.3
is required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b), (c) or (d) of this Section 7.3 in respect to any losses, claims,
damages, liabilities or expenses referred to herein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of any losses, claims, damages, liabilities or
expenses referred to herein (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Purchaser from the
placement of Common Stock 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
the relative fault of the Company and the Purchaser in connection with the
statements or omissions or inaccuracies in the representations and warranties
in this Agreement which resulted in such losses, claims, damages, liabilities
or expenses, as well as any other relevant equitable considerations. The
respective relative benefits received by the Company on the one hand and each
Purchaser on the other shall be deemed to be in the same proportion as the
amount paid by such Purchaser to the Company pursuant to this Agreement for the
Shares purchased by such Purchaser that were sold pursuant to the Registration
Statement bears to the difference (the "Difference") between the amount such
Purchaser paid for the Shares that were sold pursuant to the Registration
Statement and the amount received by such Purchaser from such sale. The
relative fault of such Selling Shareholders and each Purchaser shall be
determined by reference to, among other things, whether the untrue or
-15-
16
alleged statement of a material fact or the omission or alleged omission to
state a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Company
or by such Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in paragraph (d) of this Section 7.3 any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth
in paragraph (d) of this Section 7.3 with respect to notice of commencement of
any action shall apply if a claim for contribution is to be made under this
paragraph (e); provided, however, that no additional notice shall be required
with respect to any action for which notice has been given under paragraph (d)
for purposes of indemnification. The Company and each Purchaser agree that it
would not be just and equitable if contribution pursuant to this Section 7.3
were determined solely by pro rata allocation (even if the Purchaser were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in this
paragraph. Notwithstanding the provisions of this Section 7.3 no Purchaser
shall be required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages that such Purchaser 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. The Purchasers' obligations to contribute pursuant to this
Section 7.3 are several and not joint.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in paragraphs (a)
and (b) of this Section 7.3, including the amounts of any requested
reimbursement payments and the method of determining such amounts, shall be
settled by arbitration conducted under the provisions of the Constitution and
Rules of the Board of Governors of The New York Stock Exchange, Inc. Any such
arbitration must be commenced by service of a written demand for arbitration or
written notice of intention to arbitrate, therein electing the arbitration
tribunal. In the event the party demanding arbitration does not make such
designation of any arbitration tribunal in such demand or notice, then the
party responding to said demand or notice is authorized to do so. Such an
arbitration would be limited to the operation of the interim reimbursement
provisions contained in paragraphs (a) and (b) of this Section 7.3 and would
not resolve the ultimate propriety or enforceability of the obligation to
reimburse expenses which is created by the provisions of such paragraphs (a)
and (b).
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7.4. Termination of Conditions and Obligations. The
conditions precedent imposed by Section 5 or this Section 7 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares upon the passage of thirty-six months from the effective
date of the Registration Statement or at such time as an opinion of counsel
satisfactory to the Company shall have been rendered to the effect that such
conditions are not necessary in order to comply with the Securities Act.
7.5. Information Available. So long as the Registration
Statement is effective covering the resale of Shares owned by the Purchaser,
the Company will furnish to the Purchaser:
(a) as soon as practicable after available (but in the
case of the Company's Annual Report to Shareholders,
within 120 days after the end of each fiscal year of
the Company), one copy of (i) its Annual Report to
Shareholders (which Annual Report shall contain
financial statements audited in accordance with
generally accepted accounting principles by a
national firm of certified public accountants), (ii)
if not included in substance in the Annual Report to
Shareholders, its Annual Report on Form 10-K, (iii)
if not included in substance in its Quarterly Reports
to Shareholders, its quarterly reports on Form 10-Q,
and (iv) a full copy of the particular Registration
Statement covering the Shares (the foregoing, in each
case, excluding exhibits); and
(b) upon the reasonable request of the Purchaser, a
reasonable number of copies of the prospectuses to
supply to any other party requiring such
prospectuses;
and the Company, upon the reasonable request of the Purchaser, will meet with
the Purchaser or a representative thereof at the Company's headquarters to
discuss all information relevant for disclosure in the Registration Statement
covering the Shares, subject to appropriate confidentiality limitations.
SECTION 8. Broker's Fee. The Purchaser acknowledges that the
Company intends to pay to the Placement Agent a fee in respect of the sale of
the Shares to the Purchaser. Each of the parties hereto hereby represents
that, on the basis of any actions and agreements by it, there are no other
brokers or finders entitled to compensation in connection with the sale of the
Shares to the Purchaser.
SECTION 9. Notices. All notices, requests, consents and
other communications hereunder shall be in writing, shall be mailed by
first-class registered or certified airmail, or nationally recognized overnight
express courier postage prepaid,
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and shall be deemed given when so mailed and shall be delivered as addressed as
follows:
(a) if to the Company, to:
DepoTech Corporation
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
with a copy so mailed to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
000 Xxxx "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, Esq.
or to such other person at such other place as the
Company shall designate to the Purchaser in
writing; and
(b) if to the Purchaser, at its address as set forth at
the end of this Agreement, or at such other address
or addresses as may have been furnished to the
Company in writing.
SECTION 10. Changes. This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by the Company and
the Purchaser.
SECTION 11. Headings. The headings of the various sections
of this Agreement have been inserted for convenience of reference only and
shall not be deemed to be part of this Agreement.
SECTION 12. Severability. In case any provision contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 13. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to the conflicts of law principles thereof and the federal law of the
United States of America.
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19
SECTION 14. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all
of which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
DepoTech Corporation
By_________________________________
Xxxxxx X. Xxxxxxxx
President and Chief Executive
Officer
Print or Type:
Name of Purchaser
(Individual or Institution):
---------------------------------
Name of Individual representing
Purchaser (if an Institution):
---------------------------------
Title of Individual representing
Purchaser (if an Institution):
---------------------------------
Signature by:
Individual Purchaser or Individual
representing Purchaser:
---------------------------------
Address:___________________________
Telephone:_________________________
Telecopier:________________________
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Maximum Number of
Shares Being
Name and Address Offered
---------------- -----------------
Abydos & Co. (1) ................................................... 670,000
Franklin Select Series - Small Capital Growth Fund (2) ............. 269,100
XX Xxxxxx Xxxxxx XX ................................................ 200,000
The Aries Trust (3) ................................................ 105,000
Franklin Valuemark Annuity Funds - Small Cap
Growth Fund (2) .................................................... 70,900
Aries Domestic Fund, L.P. (3) ...................................... 45,000
Xxxxxxxx X. XxXxxxxx ............................................... 30,000
WPG Life Sciences Funds, L.P. (4) .................................. 30,000
WPG Institutional Life Sciences Fund, L.P. (4) ..................... 20,000
Clarion Partners, LP ................................................ 16,000
0000 X. 0xx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Essex Special Growth Opportunities Fund LP (5) ...................... 12,000
Essex High Technology Fund, L.P. (5) ............................... 8,000
Bear Xxxxxxx Securities Corporation f.b.o. EAG
Enterprises LTD (6) ................................................ 5,000
Bear Xxxxxxx Securities Corporation f.b.o. Xxxxx
Capital International Ltd. (6) ..................................... 5,000
Clarion Offshore Fund, Ltd. ........................................ 4,000
c/o Citco Fund Services
Corporate Center
West Bay Road
Leeward One - 2nd Floor
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
British West Indies
Bear Xxxxxxx Securities Corporation f.b.o. Closefire Ltd. (6) ...... 2,000
Bear Xxxxxxx Securities Corporation f.b.o. Hapna
Foundation (6) ..................................................... 2,000
Bear Xxxxxxx Securities Corporation f.b.o. Xxxxxxx
Xxxxxxx (6) ........................................................ 2,000
Bear Xxxxxxx Securities Corporation f.b.o. Xxxxxxxx
Xxxxxxx (6) ........................................................ 2,000
Bear Xxxxxxx Securities Corporation f.b.o. Xxxxxxx
Xxxxxxx (6) ........................................................ 2,000
---------------
(1) The address for the above named entity is: 00 Xxxxxxxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000.
(2) The address for the above named entities is: 000 Xxxxxxxx Xxxxxx Xxxx.,
Xxx Xxxxx, Xxxxxxxxxx 00000.
(3) The address for the above named entities is: 000 0xx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000.
(4) The address for the above named entities is: c/x Xxxxx, Xxxx and Xxxxx,
LLC, 0 Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(5) The address for the above named entities is: 000 Xxxx Xxxxxx, 00xx Xxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000.
(6) The address for the above named individuals is Bear Xxxxxxx Securities
Corporation, Xxx Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000, Attn:
Xx. Xxxxxxx Xxxxxx, Specialist - Clearing 5th Floor.
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SUMMARY INSTRUCTION SHEET FOR PURCHASER
(to be read in conjunction with the entire
Purchase Agreement which follows)
A. Complete the following items on BOTH Purchase Agreements:
1. Page 20 - Signature:
(i) Name of Purchaser (Individual or Institution)
(ii) Name of Individual representing Purchaser (if an
Institution)
(iii) Title of Individual representing Purchaser (if an
Institution)
(iv) Signature of Individual Purchaser or Individual
representing Purchaser
2. Appendix I - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire.
Appendix I - Registration Statement Questionnaire:
Provide the information requested by the Registration
Statement Questionnaire.
3. Return BOTH properly completed and signed Purchase Agreements
including the properly completed Appendix I to:
Vector Securities International, Inc.
Xxxxx 000
0000 Xxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
B. Instructions regarding the transfer of funds for the purchase of
Shares will be sent by facsimile to the Purchaser by the Placement
Agent at a later date.
C. Upon the resale of the Shares by the Purchasers after the Registration
Statement covering the Shares is effective, as described in the
Purchase Agreement, the Purchaser:
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23
(i) must deliver a current prospectus of the Company to
the buyer (prospectuses must be obtained from the
Company at the Purchaser's request); and
(ii) must send a letter in the form of Appendix II
to the Company so that the Shares may be properly
transferred.
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24
Appendix I
(one of two)
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of the Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be registered in (this is the
name that will appear on your stock certificate(s)). You may use a
nominee name if appropriate:
_______________________
2. The relationship between the Purchaser of the Shares and the
Registered Holder listed in response to item 1 above:
3. The mailing address of the Registered Holder listed in
response to item 1 above:
______________________
______________________
______________________
______________________
4. The Social Security Number or Tax Identification Number of the
Registered Holder listed in response to item 1 above:
______________________
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Appendix I
(two of two)
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement,
please provide us with the following information:
1. Pursuant to the "Selling Shareholders" section of the
Registration Statement, please state your or your organization's name exactly
as it should appear in the Registration Statement:
2. Please provide the number of shares that you or your
organization will own immediately after Closing, including those Shares
purchased by you or your organization pursuant to this Purchase Agreement and
those shares purchased by you or your organization through other transactions:
3. Have you or your organization had any position, office or
other material relationship within the past three years with the Company or its
affiliates?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships
below:
________________________________________
________________________________________
________________________________________
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APPENDIX II
Attention:
PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE
The undersigned, [an officer of, or other person duly
authorized by] _______________________________________________
[fill in official name of individual or institution] hereby certifies
that he/she [said institution] is the Purchaser of the shares evidenced by
the attached certificate, and as such, sold such shares on __________________
[date]
in accordance with Registration Statement number _________________________
[fill in the number of or
__________________________________________, the Securities Act of 1933, as
otherwise identify Registration Statement]
amended, and any applicable state securities or blue sky laws and
the requirement of delivering a current prospectus by the
Company has been complied with in connection with such sale.
Print or Type:
Name of Purchaser
(Individual or
Institution): ______________________
Name of Individual
representing
Purchaser (if an
Institution) ______________________
Title of Individual
representing
Purchaser (if an
Institution): ______________________
Signature by:
Individual Purchaser
or Individual repre-
senting Purchaser: ______________________
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