EXHIBIT 99.3
STOCK PURCHASE AGREEMENT
by and between
SERAGEN, INC.
and
▇▇▇ ▇▇▇▇▇ AND COMPANY
________________________
April 1997
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PAGE
SERAGEN, INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made this 7th day of
April, 1997 by and between Seragen, Inc., a Delaware corporation (the
"Company"), and ▇▇▇ Lilly and Company, an Indiana corporation ("Lilly").
WHEREAS, the Company and Lilly are entering into an Amendment to Sales
and Distribution Agreement and Development Agreement (the "Amendment") of even
date herewith;
WHEREAS, the Company desires to issue and sell to Lilly and Lilly desires
to acquire 1,000,000 shares (the "Shares") of the Company's Common Stock, par
value $.01 per share ("Common Stock"); and
WHEREAS, the Company and Lilly desire to set forth certain matters to
which they have agreed relating to the Shares;
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement the parties agree as follows:
ARTICLE I -- ISSUANCE AND TERMS OF SHARES
SECTION 1.1 Authorization of Shares. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of the
Shares pursuant to this Agreement.
SECTION 1.2 Purchase and Sale of Shares. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of the Company and Lilly contained herein, Lilly agrees to purchase
the Shares from the Company and the Company agrees to sell the Shares to Lilly
on the Closing Date in consideration for Lilly's agreement to enter into the
Amendment with the Company.
SECTION 1.3 Resale Limitations. Lilly hereby agrees not to sell,
pledge, assign or otherwise transfer the Shares for a period of one year
following the date of issuance of the Shares, except with the prior consent of
the Company, which consent shall not be unreasonably withheld; provided that
Lilly shall have the right to transfer the Shares to its Affiliates (as
defined in the Sales and Distribution Agreement dated as of August 3, 1994
between Lilly and the Company) during such one-year period without the prior
consent of the Company and provided that those Affiliates agree in writing to
be bound by the restrictions on the sale, pledge, assignment and transfer of
the Shares set forth in this Section 1.3.
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ARTICLE II -- CLOSING
SECTION 2.1 Closing. Subject to the satisfaction of Articles V and
VI hereof, the closing hereunder (the "Closing") shall take place at a place
and time (the "Closing Date") mutually agreed by the Company and Lilly. At
the Closing, the Company shall deliver to Lilly one or more stock certificates
registered in the name of "▇▇▇ ▇▇▇▇▇ and Company," or in such name or names as
may be designated by Lilly at least five business days in advance of the
Closing Date, for the number of shares described in Section 1.2 hereof,
simulanteously with the execution and delivery by the parties of the
Amendment.
SECTION 2.2 Legend. The certificates representing the Shares shall
be subject to a legend restricting transfer under the Securities Act of 1933,
as amended (the "Securities Act"), such legend to be substantially as follows:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED BY ANY PERSON UNLESS (1) EITHER (A) A REGISTRATION STATEMENT WITH
RESPECT TO SUCH SECURITIES SHALL BE EFFECTIVE UNDER THE SECURITIES ACT OF 1933
("ACT"), OR (B) THE COMPANY SHALL HAVE REASONABLY REQUESTED AND RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT IS THEN AVAILABLE, AND (2) THERE SHALL HAVE BEEN COMPLIANCE
WITH ALL APPLICABLE STATE SECURITIES LAWS."
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Lilly that, as of the date
of this Agreement, except as otherwise described on Exhibit A hereto, the
following are true and correct in all material respects:
SECTION 3.1 Organization and Standing of the Company. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is duly qualified to transact business as a
foreign corporation and is in good standing in each jurisdiction in which the
conduct of its business or the ownership or leasing of properties requires
such qualification. The Company has the corporate power and authority (i) to
own and lease its property, (ii) to enter into, deliver, and perform its
obligations and undertakings under this Agreement, (iii) to issue the Shares,
and (iv) to conduct its business in each of the jurisdictions in which such
business is now conducted. The Company has furnished to Lilly true and
correct copies of its Certificate of Incorporation and By-laws, as currently
in effect.
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SECTION 3.2 Subsidiaries. Except as disclosed on Schedule 3.2
hereeto the Company has no subsidiaries and does not control, directly or
indirectly, any other corporation, association or business organization.
SECTION 3.3 Capitalization. The Company's entire authorized capital
stock consists of: 70,000,000 shares of Common Stock and 5,000,000 shares of
Preferred Stock, $.01 par value per share (the "Preferred Stock"). All of the
Company's outstanding shares of Common Stock and Preferred Stock, options and
warrants are listed on Schedule 3.3 hereto. As of January 31, 1997, the
Company had an aggregate of 1,832,281 shares of Common Stock available for
issuance under the Company's 1992 Long Term Incentive Plan and 1992
Non-Employee Director Non-Qualified Stock Option Plan (the "Stock Plans"). The
Common Stock and the Preferred Stock have the preferences, voting powers,
qualifications, and special or relative rights or privileges set forth in
Article IV of the Company's Certificate of Incorporation. All outstanding
shares of Common Stock have been validly issued, are fully paid and
non-assessable and have been issued in accordance with applicable federal and
state securities laws. In accordance with the Company's Certificate of
Incorporation, as amended, the Shares, when issued, will be validly
authorized, issued and outstanding, fully paid and non-assessable. Other than
as indicated on Schedule 3.3 hereto or in the SEC Reports (as hereinafter
defined), the Company does not have outstanding any option, warrant, agreement
or other commitment to issue or to acquire any shares of its capital stock, or
any securities or obligations convertible into or exchangeable for its capital
stock, and the Company has not given any person any right to acquire from the
Company or sell to the Company any shares of its capital stock. Except as
indicated in the SEC Reports, there is, and immediately upon consummation at
the Closing of the transactions contemplated hereby, there will be, no
agreement, restriction or encumbrance (such as a right of first refusal, right
of first offer, proxy, voting agreement, etc.) with respect to the sale or
voting of any shares of capital stock of the Company (whether outstanding or
issuable upon conversion or exercise of outstanding securities) to which the
Company is a party except as contemplated by any provisions of the Company's
Certificate of Incorporation or By-laws. Notwithstanding the foregoing, there
is no agreement, restriction or encumbrance (such as a right of first refusal,
right of first offer, proxy, voting agreement, etc.) in effect with respect to
the Shares or which will not have been waived prior to Closing.
SECTION 3.4 Validity of this Agreement. The execution, delivery and
performance by the Company of this Agreement, and the issue and sale of the
Shares have been duly authorized and approved by all necessary corporate
action. This Agreement has been duly executed and delivered and constitutes a
valid and binding obligation of the Company, enforceable in accordance with
its terms subject to laws of general application from time to time in effect
affecting creditors' rights and the exercise of judicial discretion in
accordance with general equitable principles. The execution, delivery and
performance of the Agreement and the issuance and sale of the Shares will not
conflict with, or result in any breach of any of the terms of, or constitute a
default under, the Certificate of Incorporation or By-laws of the Company, or
result in a material breach of any of the terms of, or constitute a material
default under any agreement, instrument, covenant or other restriction to
which the Company is a party or by which it or any of its properties or assets
is bound.
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SECTION 3.5 Accuracy of Reports and Information. The Company's
Common Stock is registered pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Except as described on
Schedule 3.5, all reports (the "SEC Reports") required to be filed by the
Company have been duly filed, were in compliance with the requirements of
their respective forms and were complete and correct in all material respects
as of the dates at which the information was furnished. Copies of all SEC
Reports filed by the Company during the period from March 1, 1993 to the date
of this Agreement have been furnished to Lilly. The Company will continue to
file all reports required to be filed under the Exchange Act. Except as
described on Schedule 3.5, the SEC Reports, do not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made therein, in the light of the circumstances under
which they were made, not misleading.
SECTION 3.6 Financial Statements. The audited financial statements
of the Company contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996, including the notes relating thereto, have been
prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods involved. Said financial
statements and related notes fairly present the financial position and the
results of operations and cash flow of the Company as of the respective dates
thereof and for the periods indicated, and disclose all material liabilities
of the Company as of the respective dates thereof. Since December 31, 1996
there has not been any change in the assets, properties, liabilities,
financial condition, operating results or business of the Company, except for
depletion of cash resources and changes in the ordinary course of business
which have not been, in the aggregate, materially adverse.
SECTION 3.7 Governmental Consent, etc. Except for filings, consents,
permits, approvals and authorizations which will be obtained by the Company
prior to Closing, no consent, approval or authorization of any governmental
authority is required under existing law or regulation in connection with the
execution and delivery of the Agreement or the offer, issue, sale or delivery
of the Shares pursuant to the Agreement or the consummation of any other
transactions contemplated thereby.
SECTION 3.8 Compliance with Other Agreements and Instruments. Except
as reflected in the SEC Reports, the Company is not in violation of any
provisions of its Certificate of Incorporation or By-laws, or, to the best of
the Company's knowledge, of any provision of any Federal or state judgment,
writ, decree, order, statute, rule or governmental regulation applicable to
the Company, which violation materially and adversely affects the business or
financial condition of the Company. The Company is not in material violation
or default of any agreement, instrument or contract to which it is a party or
by which it or its property is bound, which violation materially and adversely
affects the business or financial condition of the Company.
SECTION 3.9 Valid Issuance of Shares. When issued and delivered
against payment therefor in accordance with the terms of this Agreement, the
Shares shall be duly authorized and validly issued (including, without
limitation, issued in compliance with applicable federal and state securities
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laws), fully paid and non-assessable and not subject to any preemptive rights,
liens, claims or encumbrances, or other restriction on transfer, except as set
forth in this Agreement.
SECTION 3.10 Private Offering. Neither the Company nor, to the
Company's best knowledge, anyone acting on its behalf has offered any
securities of the Company for issuance or sale to, or solicited any offer to
acquire any of the same from, any person or entity so as to make the issuance
and sale of the Shares subject to the registration requirements of Section 5
of the Securities Act of 1933, as amended ("Securities Act").
SECTION 3.11 Registration Rights. Except as set forth in Exhibit A
and as provided in this Agreement, the Company is under no contractual
obligation to register (now or in the future, whether contingent or not) under
the Securities Act any of its presently outstanding securities or any of its
securities that may subsequently be issued.
SECTION 3.12 Full Disclosure. The Company believes it has provided
Lilly with all information that Lilly has requested for deciding whether to
purchase the Shares. Neither this Agreement nor any other statements or
certificates made or delivered in connection herewith contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made therein, in light of the circumstances under which
they were made, not misleading.
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇
▇▇▇▇▇ hereby acknowledges, represents, warrants and agrees as follows:
SECTION 4.1 Authority of Lilly; Validity of this Agreement. Lilly
has all requisite power and authority to enter into this Agreement and perform
its obligations hereunder. The execution, delivery and performance by Lilly
of this Agreement, and the purchase of the Shares have been duly authorized
and approved by all necessary corporate action. This Agreement has been duly
executed and delivered and constitutes a valid and binding obligation of
Lilly, enforceable in accordance with its terms, subject to laws of general
application from time to time in effect affecting creditors' rights and the
exercise of judicial discretion in accordance with general equitable
principles. The execution, delivery and performance of this Agreement and the
purchase of the Shares will not conflict with, or result in a material breach
of any of the terms of, or constitute a material default under, any charter,
by-law, agreement, instrument, covenant or other restriction to which Lilly is
a party or by which it or any of its properties or assets is bound.
SECTION 4.2 Investment Representations. Lilly hereby acknowledges,
represents, warrants and agrees as follows:
Lilly has reviewed the SEC Reports and the financial statements contained
therein. Lilly acknowledges that the Company has made available to Lilly all
documents and information that it has requested relating to the Company and
has provided answers to all of its questions concerning the Company and the
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Shares. In evaluating the suitability of the acquisition of the Shares
hereunder, Lilly has not relied upon any representations or other information
(whether oral or written) other than as set forth in the SEC Reports or as
contained herein.
Lilly is an "accredited investor" as defined in Rule 501(a)(3) of the
Securities Act.
Lilly understands that the offering of the Shares has not been registered
under the Securities Act or the securities laws of any state or other
jurisdiction and that such Shares must be held indefinitely unless an
exemption from registration is available. Lilly understands that the offering
and sale of the Shares is intended to be exempt from registration under the
Securities Act, by virtue of Section 4(2) and/or Section 4(6) of the
Securities Act and the provisions of Regulation D promulgated thereunder,
based, in part, upon the representations, warranties and agreements of Lilly
contained in this Agreement and the Company may rely on such representations,
warranties and agreements in connection therewith. Lilly will not transfer
the Shares in violation of the provisions of any applicable Federal or state
securities statute.
Lilly is acquiring the Shares for investment, and not with a view to the
resale or distribution thereof; it has no present intention of selling,
negotiating, or otherwise disposing of the Shares. Lilly's financial
condition and investments are such that it is in a financial position to hold
the Shares for an indefinite period of time and to bear the economic risk of,
and withstand a complete loss of, such Shares. In addition, by virtue of its
expertise, the advice available to it, and its previous investment experience,
Lilly has extensive knowledge and experience in financial and business
matters, investments, securities, and private placements and the capability to
evaluate the merits and risks of the transactions contemplated by this
Agreement.
ARTICLE V -- CONDITIONS TO LILLY'S OBLIGATIONS
The obligation of Lilly to purchase and pay for the Shares is subject to
the following:
SECTION 5.1 Representations and Warranties. The representations and
warranties of the Company made herein shall be true, correct and complete in
all material respects on and as of the Closing Date with the same force and
effect as if they had been made on and as of the Closing Date.
SECTION 5.2 Performance. All covenants, agreements and conditions
contained in this Agreement to be performed or complied with by the Company on
or prior to the Closing Date shall have been performed or complied with in all
material respects.
SECTION 5.3 Opinion of Company's Counsel. Lilly shall have received
an opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel for
the Company, substantially in the form of Exhibit B hereto.
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SECTION 5.4 Corporate Proceedings; Consents, Etc. All corporate and
other proceedings to be taken and all waivers and consents to be obtained in
connection with the transactions contemplated by this Agreement shall have
been taken or obtained and all documents incident thereto shall be reasonably
satisfactory in form and substance to Lilly and its counsel, each of whom
shall have received all such originals or certified or other copies of such
documents as each may reasonably request.
SECTION 5.5 No Order Pending. There shall not then be in effect any
order enjoining or restraining the transactions contemplated by this
Agreement.
SECTION 5.6 No Law Prohibiting or Restricting such Sale. There shall
not be in effect any law, rule or regulation prohibiting or restricting such
sale, or requiring any consent or approval of any person which shall not have
been obtained to issue the Shares (except as otherwise provided in this
Agreement).
SECTION 5.7 Officer's Certificate. The Company shall have delivered
to Lilly a certificate, dated the Closing Date and signed by the Chief
Executive Officer or the President of the Company, to the effect that each of
the conditions to be satisfied by the Company pursuant to this Article V on or
before the Closing Date has been duly satisfied.
ARTICLE VI -- CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligation of the Company to issue the Shares to Lilly is subject to
the following:
SECTION 6.1 Representations and Warranties. The representations and
warranties of Lilly made herein shall be true, correct and complete in all
material respects on and as of the Closing Date with the same force and effect
as if they had been made on and as of the Closing Date.
SECTION 6.2 Execution of Amendment. Lilly shall have executed and
delivered to the Company the Amendment.
SECTION 6.3 No Order Pending. There shall not then be in effect any
order enjoining or restraining the transactions contemplated by this
Agreement.
SECTION 6.4 No Law Prohibiting or Restricting such Sale. There shall
not be in effect any law, rule or regulation prohibiting or restricting such
sale, or requiring any consent or approval of any person which shall not have
been obtained to issue the Shares (except as otherwise provided in this
Agreement).
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ARTICLE VII -- POST CLOSING COVENANTS OF THE COMPANY
SECTION 7.1 Rule 144 Reporting and SEC Form S-3. With a view to
making available the benefits of certain rules and regulations of the
Commission which may at any time permit the sale of the Shares to the public
without registration or a registration on SEC Form S-3, the Company agrees to
use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act;
(c) So long as Lilly owns any Shares, to furnish to Lilly
forthwith upon request (i) a written statement by the Company as to whether it
complies with the reporting requirements of said Rule 144, the Securities Act
and the Exchange Act, or whether it qualifies as a registrant whose securities
may be resold pursuant to SEC Form S-3, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so
filed by the Company, and (iii) such other information as may be reasonably
requested in availing Lilly of any rule or regulation of the Commission which
would permit the selling of the Shares without registration.
SECTION 7.2 Private Offering. Neither the Company nor anyone acting
on its behalf will offer any securities of the Company for issuance or sale
to, or solicit any offer to acquire any of the same from, any person or entity
so as to make the issuance and sale of the Shares subject to the registration
requirements of Section 5 of the Securities Act.
SECTION 7.3 Registration Rights.
(a) Definitions. As used in this Section 7.3, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Transfer" shall mean any disposition of the Shares which would
constitute a sale thereof within themeaning of the Securities Act.
"Restricted Securities" shall mean (i) the Shares; and (ii) any
common stock or other security issued as a dividend or other distribution with
respect to the foregoing.
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(b) Amendments of Registration Rights. Without the written consent
of the holders of 51% of the total number of shares which would, at the time
of such calculation, constitute Restricted Securities, the Company shall not
amend this Section 7.3, or enter into any agreement with any holder or
prospective holder of any securities of the Company which would grant to such
holder or prospective holder rights superior to or in conflict with any rights
conferred upon Lilly under this Section.
(c) "Piggyback" Registrations. Commencing two years from the Closing
Date, if and whenever the Company proposes to register any of its equity
securities under the Securities Act for an offering to the general public for
cash, whether on its own behalf or on behalf of controlling shareholders of
the Company participating in a secondary distribution, it will give written
notice to all holders of Restricted Securities of its intention to do so and,
upon the written request of the holders of any Restricted Securities given
within thirty (30) days after the Company's giving of such notice (which
request shall state the intended method of disposition of the securities by
the prospective sellers), the Company will use its best efforts to cause the
Restricted Securities as to which registration shall have been so requested to
be included in the shares of securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent requisite to
permit the sale or other disposition (in accordance with the written request
of the holders) by the prospective seller or sellers of such Restricted
Securities. In the event that any registration pursuant to this Subsection
shall be, in whole or in part, a firm commitment underwritten offering of
securities of the Company, any request by such holders pursuant to this
Subsection to register Restricted Securities must specify that such shares are
to be included in the underwriting on the same terms and conditions as the
shares of securities, if any, otherwise being sold through underwriters under
such registration. In the event that no shares of securities are being sold
through underwriters under such registration, then any request by such holders
pursuant to this Subsection to register such Restricted Securities must
specify that such shares are to be included in the registration on terms and
conditions comparable to those normally applicable to offerings of common
stock in reasonably similar circumstances. Notwithstanding any other
provision of this Section, if the underwriter determines that marketing
factors require a limitation of the number of shares to be underwritten or
that it is otherwise advisable, the underwriter may exclude the Restricted
Securities from such registration, provided, however, except as otherwise
required by registration rights granted by the Company prior to the date
hereof, if any shares of Common Stock are to be included in such registration
for the account of any person other than the Company, then the number of
Restricted Securities to be inclued in such registration shall be determined
pro rata based upon the ratio of Restricted Securities requested to be
included in such registration to the total number of shares of Common Stock
(including Restricted Securities) requested to be included therein.
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(d) Registration Procedures. If and whenever the Company is required
by the provisions of this Section to include any of the Restricted Securities
in a registration under the Securities Act, Lilly will furnish in writing such
information as is reasonably requested by the Company for inclusion in the
registration statement relating to such offering and such other information
and documentation as the Company shall reasonably request, and the Company
will, as expeditiously as possible:
i. Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration to become and remain effective for such period as may be
necessary to permit the successful marketing of such securities but not
exceeding 120 days.
ii. Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of the
Securities Act and to keep such registration statement effective for that
period of time specified in paragraph 7.3(d)(i).
iii. Furnish to each selling shareholder such number of
prospectuses and preliminary prospectuses in conformity with the requirements
of the Securities Act, and such other documents as such seller may reasonably
request in order to facilitate the public sale or other disposition of the
Restricted Securities owned by such seller.
iv. If the Company is required by the underwriters, if any, of
the securities registered under this Section to deliver an opinion of counsel
to such underwriters in connection with such registration, and if requested by
any holders of Restricted Securities participating in such registration, use
its best efforts to furnish such opinion to such holders on the day of
delivery to the underwriters, addressed to such underwriters and to such
holders. Such opinion shall be in such form as is customary for similar
opinions delivered by such counsel.
v. If the Company is required by the underwriters, if any, of
the securities registered in a registration under this Section to deliver a
letter from the independent certified public accountants of the Company to
such underwriters in connection with such registration, and if requested by
any holders of Restricted Securities participating in such registration, use
its best efforts to furnish such letter to such holders on the day of delivery
to the underwriters, addressed to such underwriters and to such holders,
providing substantially that such accountants are independent certified public
accountants within the meaning of the Securities Act and that in the opinion
of such accountants, the financial statements and other financial data of the
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Company included in the registration statement and the prospectus, and any
amendment or supplement thereto, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act. Such
letter shall additionally cover such other financial matters (including
information as to the period ending not more than five business days prior to
the date of such letter) with respect to the registration in respect of which
such letter is being given as the holders of Restricted Securities requesting
such letter may reasonably request, and shall be in such form as is customary
for similar letters delivered by such certified independent public
accountants.
vi. Use its best efforts to register or qualify the Restricted
Securities covered by such registration statement under such other securities
or blue sky laws of such jurisdictions as each such selling shareholder shall
reasonably request and do any and all other acts and things which may be
necessary or desirable to enable such seller to consummate the public sale or
other disposition in such jurisdictions of the Restricted Securities owned by
such seller and covered by such registration statement.
(e) Registration and Selling Expenses. As used herein, "Registration
Expenses" shall mean all expenses incurred by the Company in complying with
Subsection 7.3(c), including, without limitation, all registration and filing
fees; printing expenses; fees and disbursements of counsel for the Company;
blue sky fees and expenses; and the expense of any special audits incident to
or required by any such registration (but excluding the compensation of
regular employees of the Company which shall be paid in any event by the
Company); and "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sales. The Company will pay all
Registration Expenses in connection with the registration pursuant to
Subsection 7.3(c). All Selling Expenses in connection with each registration
pursuant to Subsection 7.3(c) shall be borne by the Company and the selling
shareholders pro rata in proportion to the securities covered thereby being
sold by them.
(f) Standoff Agreement. Purchaser agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any Restricted Securities (other than
those included in the registration) without the prior written consent of the
Company or such underwriters, as the case may be, for such reasonable period
of time from the effective date of such registration as the underwriters may
specify, provided that all officers and directors of the Company and all
holders of greater than ten (10%) percent of the Common Stock enter into
similar agreements. Such agreement shall be in writing and in a form
satisfactory to the Company and such underwriter. The Company may impose
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stop-transfer instructions with respect to the shares subject to the foregoing
restrictions until the end of such period.
(g) Indemnification. In the event of a registration of any of the
Restricted Securities under the Securities Act pursuant to this Section, the
Company will indemnify and hold harmless the seller of such Restricted
Securities and each underwriter of such Restricted Securities and each other
person, if any, who controls such seller or underwriter within the meaning of
Section 15 of the Securities Act, against any and all losses, claims, damages
or liabilities, joint or several, to which such seller or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of any material
fact contained on the effective date thereof in any registration statement
under which such Restricted Securities are registered under the Securities
Act, any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, 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, and
the Company will reimburse such seller and each such underwriter and each such
controlling person for any legal or any other expenses reasonably incurred by
them in connection with their investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
said preliminary prospectus or said prospectus or said amendment or supplement
in reliance upon and in conformity with written information furnished to the
Company by such seller or underwriter specifically for use in the preparation
thereof; and provided, further, that if any losses, claims, damages or
liabiliies arise out of or are based upon an untrue statement, alleged untrue
statement, omission or alleged omission contained in any preliminary
prospectus which did not appear in the final prospectus, the Company shall not
have any liability with respect thereto to (i) the seller or any person who
controls such seller within the meaning of Section 15 of the Securities Act,
if the seller delivered a copy of the preliminary prospectus to the person
alleging such losses, claims, damages or liabilities and failed to deliver a
copy of the final prospectus, as amended or supplemented if it has been
amended or supplemented, to such person at or prior to the written
confirmation of the sale to such person or (ii) any underwriter or any person
who controls such underwriter within the meaning of Section 15 of the
Securities Act, if such underwriter delivered a copy of the preliminary
prospectus to the person alleging such losses, claims, damages or liabilities
and failed to deliver a copy of the final prospectus, as amended or
supplemented if it has been amended or supplemented to such person at or prior
to the written confirmation of the sale to such person.
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In the event of any registration of any of the Restricted Securities
under the Securities Act pursuant to this Section, each seller of such
Restricted Securities, severally and not jointly, will indemnify and hold
harmless the Company and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, each officer of the Company
who signs the registration statement, each director of the Company, each
underwriter and each person who controls any underwriter within the meaning of
Section 15 of the Securities Act, against any and all such losses, claims,
damages or liabilities referred to in the first paragraph of this Subsection,
if the statement, alleged statement, omission or alleged omission in respect
of which such loss, claim, damage or liability is asserted was made in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of such seller specifically for use in connection with
the preparation of such registration statement, preliminary prospectus,
prospectus, amendment or supplement; provided, however, that if any losses,
claims, damages or liabilities arise out of or are based upon any untrue
statement, alleged untrue statement, omission or alleged omission contained in
any preliminary prospectus which did not appear in the final prospectus, such
seller shall not have any such liability with respect thereto to the Company,
any person who controls the Company within the meaning of Section 15 of the
Securities Act, any officer of the Company who signed the registration
statement or any director of the Company, if the Company delivered a copy of
the preliminary prospectus to the person alleging such losses, claims, damages
or liabilities and failed to deliver a copy of the final prospectus, as
amended or supplemented if it has been amended or supplemented, to such person
at or prior to the written confirmation of the sale to such person.
(h) Promptly after receipt by any indemnified person of a notice of a
claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to Subsection 7.3(g), such
indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and such indemnifying person shall have been notified
thereof, such indemnifying person shall be entitled to participate therein,
and, to the extent that it shall wish, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified person. After notice from
the indemnifying person to such indemnified person of its election to assume
the defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof; provided, however,
that if there exists or shall exist a conflict of interest that would make it
inappropriate in the reasonable judgment of the indemnified person for the
same counsel to represent both the indemnified person and such indemnifying
person or any affiliate or associate thereof, the indemnified person shall be
entitled to retain its own counsel at the expense of such indemnifying person;
provided, further, however that if the Company is the indemnifying party, it
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shall not be required to pay the fees and expenses of more than one counsel
for all of the sellers.
(i) Termination Of Conditions And Obligations. Except for the
Company's indemnification obligation contained in Subsection 7.3(g), the
obligations and conditions precedent imposed by this Section shall cease and
terminate as to any of such Restricted Securities on the sooner of (i) the
date such securities shall have been effectively registered under the
Securities Act and sold or otherwise disposed of in accordance with the
intended method of disposition by the seller or sellers thereof set forth in
the registration statement covering such securities, (ii) such time as Lilly
has sold or transferred the Shares pursuant to Rules 144 or 144A of the Act,
or (iii) five years from the date hereof.
(j) Transfer Of Registration Rights. The rights conferred upon Lilly
under this Section may be assigned by Lilly to any one or more transferees of
Restricted Securities, provided that such transferee purchases fifty (50%)
percent or more of the Shares.
SECTION 7.4 Company Action. The Company shall not amend its
Certificate of Incorporation, as amended, or participate in any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action for the purpose of
avoiding or seeking to avoid the observance or performance of any of the
provisions of this Article, but will at all times in good faith assist in
carrying out all of its actions as may be reasonably necessary or appropriate
in order to protect the rights of the Purchaser.
ARTICLE VIII -- MISCELLANEOUS
SECTION 8.1 Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand,
(ii) made by telex, telecopy or facsimile transmission, (iii) sent by
overnight courier, or (iv) sent by registered mail, return receipt requested,
postage prepaid.
If to Lilly: ▇▇▇ ▇▇▇▇▇ and Company
Lilly ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax: 317/▇▇▇-▇▇▇▇
If to the Company: Seragen, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Fax: 508/▇▇▇-▇▇▇▇
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All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telex, telecopy or facsimile transmission, one day after the
time that receipt thereof has been acknowledged by electronic confirmation or
otherwise, (iii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, or (iv) if
sent by registered mail, on the 5th business day following the day such
mailing is made.
SECTION 8.2 Entire Agreement. This Agreement, including exhibits,
or other documents referred to herein, embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation,
warranty, covenant or agreement of any kind not expressly set forth in this
Agreement shall affect, or be used to interpret, change or restrict, the
express terms and provisions of this Agreement.
SECTION 8.3 Amendments. The terms and provisions of the Agreement
may be modified, amended or waived, or consent for the departure therefrom
granted, by written consent of the Company and Lilly. No such waiver or
consent shall be deemed to be or shall constitute a waiver or consent with
respect to any other terms or provisions of this Agreement, whether or not
similar. Each such waiver or consent shall be effective only in the specific
instance and for the purpose for which it was given, and shall not constitute
a continuing waiver or consent.
SECTION 8.4 Assignment. The rights and obligations under this
Agreement may not be assigned by either party hereto without the prior written
consent of the other party.
SECTION 8.5 Benefit. All statements, representations, warranties,
covenants and agreements in this Agreement shall be binding on the parties
hereto and shall inure to the benefit of the respective successors and
permitted assigns of each party hereto. Nothing in this Agreement shall be
construed to create any rights or obligations except among the parties hereto,
and no person or entity shall be regarded as a third-party beneficiary of this
Agreement.
SECTION 8.6 Governing Law. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
governed by the law of the Commonwealth of Massachusetts, without giving
effect to the conflict of law principles thereof.
SECTION 8.7 Severability. In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unreasonable or unenforceable in any
respect, then such provision shall be deemed limited to the extent that such
court deems it reasonable and enforceable, and as so limited shall remain in
full force and effect. In the event that such court shall deem any such
provision, or portion thereof, wholly unenforceable, the remaining provisions
of this Agreement shall be interpreted as if such provision were so excluded
and shall nevertheless remain in full force and effect.
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SECTION 8.8 Headings and Captions. The headings and captions of
the various subdivisions of this Agreement are for convenience of reference
only and shall in no way modify, or affect the meaning or construction of any
of the terms or provisions hereof.
SECTION 8.9 No Waiver of Rights, Powers and Remedies. No failure
or delay by a party hereto in exercising any right, power or remedy under this
Agreement, and no course of dealing between the parties hereto, shall operate
as a waiver of any such right, power or remedy of the party. No single or
partial exercise of any right, power or remedy under this Agreement by a party
hereto, nor any abandonment or discontinuance of steps to enforce any such
right, power or remedy, shall preclude such party from any other or further
exercise thereof or the exercise of any other right, power or remedy
hereunder. The election of any remedy by a party hereto shall not constitute
a waiver of the right of such party to pursue other available remedies. No
notice to or demand on a party not expressly required under this Agreement
shall entitle the party receiving such notice or demand to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the party giving such notice or demand to any other or
further action in any circumstances without such notice or demand.
SECTION 8.10 Expenses. Each of the parties shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
SECTION 8.11 Brokers. Each of the parties hereto represents and
warrants to the other that no broker, finder or financial consultant has acted
on its behalf in connection with this Agreement or the transactions
contemplated hereby in such a way as to create any liability on the other.
Each of the parties hereto agrees to indemnify and save the other harmless
from any claim or demand for commission or other compensation by any other
broker, finder, financial consultant or similar agent claiming to have been
employed by or on behalf of such party and to bear the cost of legal expenses
incurred in defending against any such claim.
SECTION 8.12 Publicity. No party shall issue any press releases or
otherwise make any public statement with respect to the transactions
contemplated by this Agreement without the prior written consent of the other
party, except as may be required by applicable law or regulation.
SECTION 8.13 Confidentiality. Lilly acknowledges and agrees that
any information or data it has acquired from the Company, which is clearly
designated in writing as confidential and is not otherwise properly in the
public domain, was received in confidence. Lilly agrees not to divulge,
communicate or disclose, except as may be required by law or for the
performance of this Agreement, or use to the detriment of the Company or for
the benefit of any other person or persons, or misuse in any way, any
confidential information of the Company.
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SECTION 8.14 Counterparts. This Agreement may be executed in one
or more counterparts, and by different parties hereto on separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase
Agreement this 7th day of April, 1997.
SERAGEN, INC.
By: /s/ Reed R. Prior
_______________________
Name: Reed R. Prior
Title: Chairman and CEO
▇▇▇ ▇▇▇▇▇ AND COMPANY
By: /s/ August ▇. ▇▇▇▇▇▇▇▇
________________________
Name: August ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
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LIST OF SCHEDULES AND EXHIBITS
Schedule 3.2 Subsidiaries
Schedule 3.3 Capitalization
Schedule 3.5 Exception to Accuracy of Reports and Information
Exhibit A Schedule of Exceptions
Exhibit B Form of Legal Opinion of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C.
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Schedule 3.2
Subsidiaries
Seragen Technologies, Inc., a Delaware corporation
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Schedule 3.3
Capitalization as of March 31, 1997
COMMON STOCK AUTHORIZED OUTSTANDING
Common Stock ( excludes 777
treasury shares) 70,000,000 18,048,881
OPTIONS AND WARRANTS
Employee and Director Stock Options 6,288,753
Common Stock Purchase Warrants 12,159,094
PREFERRED STOCK
Preferred Stock 5,000,000 31,202
Series A (May 1996) 4,000 2,402
Series B (July 1996) 23,800 23,800
Series C. (September 1996) 5,000 5,000
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Schedule 3.5
Exception to Accuracy of Reports and Information
Accounting Treatment - Series B
The Company converted $25.0 million of debt into Series B Preferred Stock in
July 1996. The Company also issued to the debt holders common stock warrants
which were valued at approximately $8.6 million. The Company is required to
reflect the value of these warrants as a dividend and to increase the net loss
per share by the amount of such dividend. In Seragen's Form 10-Q report for
the quarter ended September 30, 1996, the Company did not include the value of
the warrants in the determination of net loss per common share. Accordingly,
the Company is restating its Form 10-Q for the September 30, 1996 quarter to
restate its net loss per share to properly reflect the dividend reported upon
issuance of the warrants.
Lilly
Under its agreement with Lilly, the Company received $5.0 million in August
1994 as an advance against Lilly's future purchases of bulk product from the
Company. This payment was recorded as deferred revenue due to the
refundability of the amount received. In May 1996, the Company amended its
Sales and Distribution Agreement with Lilly. The amended agreement states
that the Company has no obligation to refund the $5.0 million advance should
no bulk purchases be made by Lilly. The Company is still required to provide
Lilly with material and pay them a 75% royalty on the purchase of such
material, up to $5.0 million. In the quarter ended June 30, 1996, Seragen
recorded the entire $5.0 million as revenue upon the amendment of the original
agreement. The Company has determined that it is necessary to provide a $1.2
million reserve for the expected cost of providing the bulk material after
paying a 75% royalty of up to $5.0 million. The Company has determined that
it is necessary to restate its quarter ended June 30, 1996 to provide this
reserve in the period in which the $5.0 million of revenue was recorded.
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Exhibit A
Schedule of Exceptions
With respect to Section 3.11, the Company has eight agreements
which contain registration rights. Exhibit A-1 to the Stock Purchase
Agreement (the "August 1994 Agreement") dated as of August 6, 1994
between Lilly and the Company is a copy of the principal terms of the
registration rights set forth in the Agreement and Plan of Corporate
Reorganization dated May 28, 1985. Exhibit A-2 to the August 1994
Agreement is a copy of the principal terms of the registration rights
set forth in the Purchase Agreement with certain stockholders executed
in connection with a private placement in July 1988. Exhibit A-3 to the
August 1994 Agreement is a copy of the principal terms of the
registration rights set forth in the Stock and Warrant Purchase
Agreement executed in connection with a private placement in February,
1994. Exhibit A-4 to the August 1994 Agreement is a copy of the
principal terms of the registration rights set forth in the Warrant to
Purchase 10,757 shares of Common Stock issued to MMC/GATX Partnership
No. I. The Company also has granted registration rights pursuant to the
following agreements: (a) Subscription and Registration Agreement dated
as of May 31, 1995 with respect to the shares of Common Stock underlying
warrants issued to guarantors of the Company's bank loans, (b)
Shareholders' Agreement dated as of November 22, 1995 with respect to
shares of Common Stock underlying warrants issued to investors in
Seragen Biopharmaceuticals Ltd., (c) Subscription and Registration
Agreement dated as of July 1, 1996 with respect to shares of Common
Stock underlying the Company's Series B Preferred Stock and related
warrants, and (d) Subscription Agreement dated as of September 30, 1996
with respect to shares of a Common Stock underlying the Company's Series
C Preferred Stock and related warrants.
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Exhibit B
Form of Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
▇▇▇ ▇▇▇▇▇ and Company
Lilly ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 5.3 of the
Stock Purchase Agreement, dated April__, 1997 (the "Agreement"), between
Seragen, Inc., a Delaware corporation (the "Company"), and ▇▇▇ ▇▇▇▇▇ and
Company, an Indiana corporation ("Lilly"), relating to the issuance and sale
by the Company of an aggregate of 1,000,000 shares of the Company's common
stock, $.01 par value ("Common Stock"). Capitalized terms used herein and not
otherwise defined have the same meanings as in the Agreement.
We have acted as counsel for the Company in connection with the
Agreement. In that connection, we have examined the following:
(i) a certificate of legal existence (long form) and good
standing relating to the Company issued by the Secretary of State of the
State of Delaware, dated April __, 1997;
(ii) a certificate of foreign qualification and good standing
relating to the Company issued by the Secretary of State of the Commonwealth
of Massachusetts, dated April __, 1997;
(iii) a copy, certified by the Secretary of State of the State
of Delaware, of the Restated Certificate of Incorporation of the Company, as
in effect on the date hereof;
(iv) the Restated By-Laws of the Company, as in effect on the
date hereof;
(v) such records of the corporate proceedings of the Company as
we have deemed material; and
(vi) such other certificates, records and documents as we deemed
necessary for the purposes of this opinion.
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Based upon the foregoing, we are of the opinion that:
(a) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its jurisdiction
of incorporation, is duly qualified to do business as a foreign corporation
and is in corporate good standing in all other jurisdictions where the
ownership or leasing of properties or conduct of its business requires such
qualification, except for jurisdictions in which the failure to so qualify
would not have a material adverse effect on the Company, and has all requisite
corporate power and authority to own its properties and conduct its business
as described in the SEC Reports;
(b) The certificates evidencing the Shares to be delivered
hereunder are in due and proper form under Delaware law, and when duly
countersigned by the Company's transfer agent and registrar, and delivered to
Lilly or upon its order against payment of the agreed consideration therefor
in accordance with the provisions of the Agreement, the Shares represented
thereby will be duly authorized and validly issued, fully paid and
nonassessable, and to our knowledge will not have been issued in violation of
or subject to any preemptive rights or other rights to subscribe for or
purchase securities of the Company;
(c) Except as disclosed in the Agreement, to our knowledge, there
is no outstanding option, warrant or other right calling for the issuance of,
and no commitment, plan or arrangement to issue, any shares of capital stock
of the Company or any securities convertible into or exchangeable for capital
stock of the Company;
(d) The Company has the requisite corporate power and authority
to enter into the Agreement and to sell and deliver the Shares to be sold by
it; the Agreement has been duly and validly authorized by all necessary
corporate action by the Company, has been duly and validly executed and
delivered by and on behalf of the Company, and is a valid and binding
agreement of the Company, enforceable in accordance with its terms, except as
enforceability may be limited by general equitable principles, bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other laws
affecting creditors' rights generally; and, to our knowledge, no approval,
authorization, order, consent, registration, filing, qualification, license or
permit of or with any court, regulatory, administrative or other governmental
body is required for the execution and delivery of the Agreement by the
Company or the consummation of the transactions contemplated thereby except
such as have been obtained;
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(e) The execution and performance of the Agreement and the
consummation of the transactions therein contemplated will not conflict with,
result in the breach of, or constitute, either by itself or upon notice or the
passage of time or both, a default under, any agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit or other instrument to
which the Company is known by us to be a party or by which the Company or any
of its property is known by us to be bound or affected which is material to
the Company, or violate any of the provisions of the charter or by-laws of the
Company, or, to our knowledge, violate any statute, judgment, decree, order,
rule or regulation, of any court or governmental body having jurisdiction over
the Company or any of its property.
(f) Based in part upon the representations and warranties of
Lilly as set forth in Article IV of the Agreement, the offer and sale of the
Shares pursuant to the terms of the Agreement are exempt from the registration
requirements of Section 5 of the Securities Act; and
(g) Based solely upon a review of regularly accepted unofficial
compilations of state securities laws and regulations and without obtaining
rulings of authorities administering such laws or opinions of other counsel,
no state qualification is required by Indiana state securities laws on the
part of the Company in connection with the offer and sale of the Shares
pursuant to the terms of the Agreement.
Our opinions above are limited to the federal law of the United States of
America, the laws of the Commonwealth of Massachusetts, the General
Corporation Law of the State of Delaware and, subject to the limitations
described in paragraph (g) above, the securities laws of the State of Indiana,
and we express no opinion with respect to the laws of any other jurisdiction.
No opinion is expressed herein with respect to the registration of the Shares,
or the qualification of the Shares for an exemption therefrom, under the
securities or Blue Sky laws of any other state or any foreign jurisdiction.
No opinion is given with respect to the accuracy or completeness of any
disclosures of the Company to you in connection with the issuance of the
Shares, or to compliance with the anti-fraud provisions of federal or state
securities laws in connection with such issuance.
This opinion is intended solely for your benefit in connection with the
transactions contemplated by the Agreement and may not be relied upon by you
for any other purpose; nor may it be communicated to, or reproduced, filed
publicly or relied upon by, any other person or entity for any purpose without
our express prior written consent.
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Very truly yours,
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
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