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EXHIBIT 10.6
NOTE PURCHASE AND WARRANT AGREEMENT
NOTE PURCHASE AND WARRANT AGREEMENT dated as of April 14, 1997 by and
between IOMED, INC., a Utah corporation (the "Company"), and Elan International
Services, Ltd., a Bermuda corporation ("EIS"), and ELAN INTERNATIONAL
MANAGEMENT, LTD., a Bermuda corporation ("EIM").
RECITAL:
The parties hereto and Elan Corporation, plc, a public limited company
existing under the laws of Ireland and the parent corporation of EIS and EIM
("Elan"), have executed a binding letter agreement dated March 31, 1997 (the
"Letter Agreement"), in connection with which, subject to the terms and
conditions thereof, EIM agreed to provide certain loans to the Company and the
Company agreed to issue a certain warrant to EIS, the parties intending that
this Agreement constitute the Note Purchase Agreement referred to therein.
A G R E E M E N T:
The parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF NOTES AND WARRANT AND CONVERSION
1.1 Initial Securities; Etc. On the terms and subject to the conditions
set forth in this Agreement, on the date hereof, the Company agrees to sell to
EIM, and EIM agrees to purchase from the Company, (x) the promissory note in
the form attached hereto as Exhibit A (the "A Note") in the original principal
amount of $10 million and (y) the promissory note in the form attached hereto
as Exhibit B (the "B Note"; together with the A Note, the "Notes") in the
original principal amount of $5 million.
The Company shall issue to EIS on the date hereof a warrant in the form
attached hereto as Exhibit C (the "Warrant"; together with the Notes, the
"Initial Securities") to acquire up to 500,000 shares (as adjusted as provided
in the Warrant) of the Company's common stock, par value $.001 per share (the
"Common Stock").
EIS has undertaken to subscribe for shares of Common Stock, and the
Warrant is exercisable for shares of Common Stock (such Common Stock, the
"Conversion Shares"; together with the Initial Securities, the "Securities"),
as provided herein. In connection with the transactions described above, the
Company and EIS are entering into a Registration Rights Agreement in the form
attached hereto as Exhibit D (the "Registration Rights Agreement"; together
with this Agreement, the Notes, the Warrant and the License Agreements (to be
entered into by certain affiliates of EIM with the Company on the date hereof,
the "Closing Agreements").
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1.2 Purchase Price. The purchase price for the Notes shall be $15 million
(the "Purchase Price"). Such amount shall be payable by EIM by wire transfer
to an account or accounts designated in writing by the Company on the date
hereof
1.3 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on the date hereof at the offices of
counsel to EIS and EIM in New York City, or at such other place as the parties
may agree. At the Closing:
(x) the Company shall deliver to EIM and EIS, as applicable: (i) original
executed counterparts of the Initial Securities and the Closing Agreements,
(ii) a signed copy of the legal opinion referred to in the Letter Agreement,
(iii) a signed form UCC-1 in customary form, together with a fully signed
counterpart of this Agreement in form for filing with the U.S. Patent and
Trademark Office to secure the B Note as provided herein, and (iv) such other
documents and instruments that EIS and EIM may reasonably request and that
shall be customary for similar closings;
(y) the Company shall deliver to Elan and Drug Delivery Systems Inc., a
New York corporation original executed counterparts of each of the License
Agreements; and
(z) EIM shall (I) pay the Purchase Price and (II) deliver to the Company
(i) original executed counterparts of the Initial Securities and Closing
Agreements to which it (or Elan, EIS and/or DDS) is a party, (ii) such other
documents and instruments that the Company may reasonably request and that
shall be customary for similar closings.
In addition, (x) by signing this Agreement, the Company on the one hand,
and EIS and EIM on the other hand, confirm that the conditions to closing set
forth in Sections 4(a) and 4(b), as applicable, of the Letter Agreement have
been satisfied and (y) each of the parties shall hereafter take such additional
actions as shall be necessary or appropriate to implement the transactions
contemplated hereby.
Each of the parties shall, if required, mutually and reasonably cooperate
with each other in connection with the filing of all documents and instruments
necessary or appropriate in connection with a pre-closing notification of the
Federal Trade Commission (the "FTC") and the Department of Justice (the "DOJ")
pursuant to the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of 1976, as
amended ("HSIV). Each of the parties shall use their respective commercially
reasonable efforts to promptly comply with all formal or informal requests for
additional information by the FTC or DOJ in respect of such filing. It shall
be a condition precedent to the acquisition of any voting securities by EIS or
its affiliates that the parties shall have complied with applicable law
relating thereto, including the consummation of all necessary filings under
HSR, and that all applicable waiting periods shall have expired.
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1.4 Repayment of the Notes ELC. (a) The A Note. Notwithstanding the
provisions of the A Note, the A Note shall be repaid in full in cash, at the
earlier of (x) the date of the Company's initial public offering (the "IPU') of
equity securities under the Securities Act of 1933 (the "Securities Act') and
(y) two years from the date hereof (the date of such repayment, the "Repayment
Date"). Such repayment shall occur solely as follows: On the Repayment Date,
the Company shall repay the A Note and accrued interest thereon (which shall
not be subject to withholding taxes) to EIM and EIS shall purchase shares of
Common Stock from the Company, as follows:
(I) Conversion &LM. If the IPO occurs on or prior to the date which is
two years after the date hereof and the price to the public in the EPO (as set
forth on the cover page of the prospectus forming a part of the registration
statement) (the "Price to the Public") is $2.50 per share or greater (subject
to the Anti-dilution Adjustments (as defined herein)), EIS shall purchase for $
1 0 million (plus accrued interest from the date hereof) 4 million Conversion
Shares in connection with the EPO. If the Price to the Public in such IPO is
less than $2.50 per share (subject to the Anti-dilution Adjustments), EIS shall
purchase in connection with the IPO, for a purchase price equal to the
outstanding principal amount of the A Note and accrued and unpaid interest
thereon, a number of shares of Common Stock equal to the quotient of (x) the
aggregate outstanding principal amount of the A Note plus accrued and unpaid
interest thereon and (y) such Price to the Public. Such purchase and issuance
of Conversion Shares and payment to EIM shall occur simultaneously with the
closing of the [PO and after receipt of the interest payment as set forth
above.
The Conversion Shares referred to above shall not be registered, but shall
constitute Registrable Securities under the Registration Rights Agreement.
(II) Conversion After Two Years. In the event that the EPO shall not have
occurred on or prior to the date which is two years after the date hereof, then
the Repayment Date shall be the date which is two years after the date hereof,
and on such date (x) the Company shall repay in full the A Note and accrued
interest thereon and (y) thereafter EIS shall purchase from the Company for a
cash amount equal to the outstanding principal amount of the A Note and accrued
and unpaid interest thereon, a number of Conversion Shares equal to (A) such
outstanding principal amount of the A Note and accrued and unpaid interest
thereon (B) divided by the greater of (x) $2.50 per share (subject to the
Anti-dilution Adjustments) and (y) an amount equal to 80% of the price per
share (on an as-converted basis) of the most recent bona fide Institutional
Financing (as defined below) which shall have occurred prior to such two-year
anniversary. Institutional Financing means a debt, equity or combined
financing (including a financing coupled with or in the form of a property
(including intellectual property), transfer or license) with an unaffiliated
third party which is a venture capital or similar organization, an underwriter,
financial advisor, broker/dealer or person or entity acting in a similar
capacity or an industry or "strategic" investor, joint venturer, licensee or
similar person.
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Upon any repayment of the A Note described in clause (I) or (II) above,
the Company shall immediately issue and deliver to EIS a certificate in respect
of the applicable number of Conversion Shares (which shall bear an appropriate
restrictive legend) and EIM shall deliver to the Company the original
counterpart of the A Note'.
(b) The B Note. In the event that at any time that all or any portion of
the B Note or accrued and unpaid interest thereon (the "B Outstanding Amount)
shall be outstanding the Company completes its IPO, then (x) upon consummation
of the IPO the Company shall pay to EEIM the B Outstanding Amount (and accrued
and unpaid interest thereon (which will not be subject to withholding taxes) at
the rate set forth in the B Note from and after the date of the IPO until paid
in full) in full cancellation and satisfaction of the B Note, and (y)
thereafter, EIS shall purchase from the Company for cash in such IPO a n of
fully registered shares which shall upon issuance be admitted for trading or
listed privileges on the then principal exchange or listing authority on which
the Common Stock is traded) equal to the quotient of (1) the B Outstanding
Amount and (II) the Price to the Public in such IPO. In any such event, EIS
shall deliver to the Company the original counterpart of the B Note.
1.5 Certain Provisions Relating to the Notes. (a) During such time that
either or both of the Notes is outstanding, the Company shall not incur or
permit to exist any indebtedness of the Company or any of its subsidiaries
without the consent of EIM; provided, that the foregoing restrictions shall not
apply to indebtedness reflected on the Financial Statements (as defined below),
arising from trade accounts payable in the ordinary course of business which
are not more than 90 days past due or from a bank or other institutional lender
or lenders solely for working capital purposes, to purchase items of equipment
(provided that the principal amount of such indebtedness does not exceed the
fair market value of such equipment at the time of purchase) and capitalized
lease obligations, each of which may be senior to or pari passu with the Notes
(other than collateral in respect of the B Note, as provided herein), in each
case, in a maximum aggregate outstanding principal amount not in excess of the
amount that can prudently be financed solely by such working capital, or
equipment capitalized lease obligations, each as determined under U.S.
generally accepted accounting principles, as reasonably and in good faith
determined by such lender or lenders. In the event that the Company is
permitted to incur any indebtedness as described above, EEIM shall, if
requested by the Company, execute and deliver an Agreement, in form and
substance reasonably satisfactory to EIM and the Company, to evidence the fact
that such indebtedness may be senior to or pari passu with the Notes.
(b) The B Note (including accrued and unpaid interest thereon) shall be
secured by all of the Elan Iontophoretic Intellectual Property and the DDS
Iontophoretic Patent Rights (as defined in the License Agreement) and the
proceeds thereof, on a first priority perfected security interest, which the
parties agree is hereby created. In connection therewith, (x) upon the request
of EIS or EIM the Company shall cause to be filed, within 10 days of the date
hereof, with the Secretary of State of the State of Utah a Form UCC I in
customary form and a counterpart of this Agreement with the United States
Patent and Trademark Office, and (y) the holder of the B Note shall be entitled
to all of the rights and remedies of a secured creditor under
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applicable law, including the Uniform Commercial Code of the States of Utah and
New York, including the right to foreclose, take possession of and sell or use,
such Iontophoretic Intellectual Property; provided, that if any event giving
rise to the exercise of such rights and remedies shall have occurred, the
holder of the B Note shall not exercise such foreclosure or similar rights for
a period of six months from the occurrence of such event, during which period
each of the Company and such holder shall use commercially reasonable good
faith efforts to enter into appropriate arrangements to repay the B Outstanding
Amount in a reasonable and expeditious manner.
1.6 Certain Provisions Relating to New Stock. Notwithstanding the other
provisions of this Section I or the Warrant in the event that, at any time,
EIS's and its affiliates' aggregate ownership of securities representing
outstanding, voting equity securities of the Company (on an as converted basis)
may exceed 19.9% of the aggregate outstanding shares of Common Stock, EIS may
elect in its sole discretion, that in lieu of receiving Conversion Shares in
connection with any repayment of the Notes or purchasing Common Stock in
connection with the IPO or exercise of the Warrant it shall receive all of the
shares of a new series of Convertible Preferred Stock or second series of
Common Stock (collectively, the "New Stock') to be created by the Company, to
the extent of the excess of such ownership percentage over 19.9%. In such even4
the Common Stock issuable in ' connection with the repayment of the Note(s)
and/or Warrant (or portion thereof) elected by EIS shall be converted into such
New Stock. The New Stock, if issued, shall be in form and substance reasonably
satisfactory to EIS and shall (i) rank pari passu with the Common Stock, (ii)
have the benefit of the same registration rights as are granted to EIS as set
forth in the Registration Rights Agreement and other rights as holders of the
Common Stock, including rights to receive dividends and distributions and upon
liquidation, (iii) be convertible into shares of Common Stock, initially on a
share for share basis, subject to the Anti-dilution Adjustments, and (iv) be
nonvoting, except to the extent required by applicable law.
1.7 Anti-dilution Adjustments. The number of Conversion Shares issuable
to a Holder upon conversion of the A Note and the New Stock shall be subject to
the following anti-dilution adjustments (the "Anti-dilution Adjustments"):
(a) Reclassification, Merger, Etc. In case of (i) any reclassification,
reorganization, change or conversion of securities of the class issuable upon
conversion of the A Note or the New Stock (other than a change in par value, or
from par value to no par value), or (ii) any consolidation of the Company with
or into another corporation (other than a merger or consolidation with another
corporation in which the Company is the acquiring and the surviving corporation
and which does not result in any reclassification or change of outstanding
securities issuable upon conversion of the A Note or the New Stock), or (iii)
any sale of all or substantially all of the assets of the Company, then the
Company, or such successor or purchasing corporation, as the case may be, shall
daily execute and deliver to the holder(s) of the A Note and the New Stock a
new certificate or supplement thereto (in form and substance reasonably
satisfactory to such holder(s)), so that such holder(s) shall have the right to
receive, for no additional
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consideration, and in lieu of the shares of Conversion Shares theretofore
issuable upon such conversion(s), the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification,
reorganization, change, conversion, merger or consolidation by a holder of the
number of shares of Conversion Shares into which the A Note and/or New Stock
are then convertible. Such new or supplemental certificate(s) shall provide
for adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 1.7. The provisions of this Section
1.7(a) shall similarly attach to successive reclassifications, reorganizations,
changes, mergers, consolidations and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time
during which the A Note or New Stock is outstanding shall subdivide or combine
its Common Stock, (i) in the case of a subdivision, the conversion prices of
such securities shall be proportionately decreased and the number of Conversion
Shares purchasable hereunder shall be proportionately increased, and (ii) in
the case of a combination, the conversion prices of such securities shall be
proportionately increased and the number of Conversion Shares purchasable
hereunder shall be proportionately decreased.
(c) Stock Dividends; Etc. If the Company at any time while the A Note or
New Stock is outstanding shall (i) pay a dividend with respect to Common Stock
payable in Common Stock (or rights, options, warrants or similar instruments in
respect thereof (collectively, "Options")), or (ii) make any other distribution
with respect to Common Stock (except any distribution specifically provided for
in Sections 1.7(a) and (b) above), the conversion prices applicable to such
securities shall be adjusted by multiplying such conversion prices in effect
immediately prior to such date of determination of the holders of securities
entitled to receive such distribution, by a fraction (A) the numerator, of
which shall be the total number of shares of Common Stock outstanding
immediately prior to such dividend or distribution, and (B) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution, as if all of such Options had
been exercised and the Company received the consideration payable in respect
thereof. Upon each adjustment in the conversion prices pursuant to this
Section 1.7(c), the number of Conversion Shares issuable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by multiplying
the number of Conversion Shares issuable immediately prior to such adjustment
by a fraction, the numerator of which shall be the conversion price immediately
prior to such adjustment and the denominator of which shall be the conversion
price immediately thereafter.
(d) Repurchases or Redemptions of Common Stock or Options. If the Company
at any time while the A Note and/or New Stock is outstanding shall repurchase
or redeem any outstanding shares of Common Stock or any Options, at a price
which is greater than the then current conversion price(s), such conversion
price(s) shall thereupon be adjusted by multiplying the conversion price(s) in
effect at the time of such repurchase by a fraction (i) the numerator of which
shall be the conversion price(s) in effect immediately prior to such repurchase
or redemption and (ii) the denominator of which shall be the fair market value
of the consideration paid for the shares of Common Stock and/or Options at the
time of purchase. Upon each
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adjustment in conversion prices pursuant to this Section 1.7(d), the number of
Conversion Shares issuable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Conversion Shares
purchasable immediately prior to such adjustment in the conversion price(s) by
a fraction, the numerator of which shall be the applicable conversion price
immediately prior to such adjustment and the denominator of which shall be the
applicable conversion price immediately thereafter. Notwithstanding the
foregoing, this Section 1.7(d) will not apply to redemptions of the Company's
Series C Preferred Stock made pursuant to existing Agreement.
(e) No Impairment. The Company will not, by amendment of its charter or
bylaws or through any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company, but will at
all times in good faith assist in the carrying out of all the provisions of
this Section 1'.7 and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holders of this A Note and
New Stock against impairment.
(f) Notice of Adjustments. Whenever the conversion prices above or the
number of Conversion Shares purchasable hereunder shall be adjusted pursuant to
this Section 1.7, the Company shall prepare a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment the method by which such adjustment was calculated. Such
certificate shall be signed by its chief financial officer and shall be
delivered to the holders of the A Note and New Stock.
(g) Fractional Shares. No fractional Conversion Shares will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor based on the fair market value
of the Conversion Shares on the date of exercise as reasonably determined in
good faith by the Company's Board of Directors.
1.8 Certain Securities Laws Matters. Unless registered in the EPO or
another registered public offering, the certificates representing the
Securities shall bear appropriate and customary restrictive legends relating to
the restrictions on transfer applicable thereto.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to EIS and EIMI as follows:
2.1 Organization; etc. The Company is a corporation duly organized,
validly existing and is good standing under the laws of the State of Utah and
is qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business or financial condition of the Company. The
Company is not in default of its charter or bylaws, any applicable laws or
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regulations or any contract or Agreement binding upon or affecting it or its
properties or assets and the execution, delivery and performance of this
Agreement and the transactions contemplated hereby will not result in any such
violation.
2.2 Authorization. The Company has full corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly authorized, executed and
delivered by the Company, and constitutes the valid and binding obligation of
the Company, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights and by general equitable principles.
2.3 Valid Issuance. The Securities have been duly and validly authorized
and, when issued, shall be fully paid and nonassessable and free from any and
all pre-emptive or similar rights, and any other options, warrants or rights.
2.4 No Violation. The execution, delivery and performance by the Company
of this Agreement and each of the other transaction documents, the issuance,
sale and delivery of the Securities and compliance with the provisions hereof
by the Company, will not (a) violate any provision of applicable law, statute,
rule or regulation applicable to the Company or any ruling, writ, injunction,
order, judgment or decree of any court arbitrator, administrative agency or
other governmental body applicable to the Company or any of its properties or
assets, or (b) conflict with or breach any of the terms, conditions or
provisions of, or constitute (with notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under,
or result in the creation of, any Encumbrance (as defined below) upon any of
the properties or assets of the Company under the Certificate of Incorporation,
as amended, or bylaws of the Company or any material contract to which the
Company is a party, except where such violation, conflict or breach would not,
individually or in the aggregate, have a material adverse effect on the
Company. As used herein, "Encumbrance" shall mean any liens, charges,
encumbrances, equities, claims, options proxies, pledges security interests, or
other similar rights of any nature, except for such conflicts, breaches or
defaults which would not, individually or in the aggregate, have a material
adverse effect on the Company.
2.5 Capitalization. (a) As of the date hereof, the authorized, issued and
outstanding capital stock of the Company consists solely of 15,040,455 shares
of Common Stock and 172,800 shares of Series C Preferred Stock. As of the date
hereof, options to purchase 1,585,493 shares of Common Stock, and warrants to
purchase 295,000 shares of Common Stock, are outstanding. Except for (a) the
options and warrants described above, and (b) an obligation to issue additional
shares of Common Stock (4,628 shares as of the date hereof) to Laboratories
Xxxxxxxx, S.C.A. ("Xxxxxxxx") pursuant to the adjustment provisions of the
Agreement between the Company and Xxxxxxxx, dated February 20, 1996 (the
"Xxxxxxxx Agreement"), the Company does not have outstanding any rights (except
pre-emptive or other) or options to subscribe for or purchase, or any warrants
or other agreement providing for or requiring the issuance by the
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Company of, any capital stock or securities convertible into or exchangeable
for its capital stock.
(b) Schedule 2.5(b) hereto sets forth an accurate and complete list of all
holders of any equity interest in the Company (including Options,, with their
corresponding equity ownership interests; no other person or entity holds any
equity interest in the Company or any Option in respect thereof
(c) Except as set forth on Schedule 2.5(c) the Company does not own any
capital stock of, or other securities issued by, any other person or entity, or
interest in any joint venture or similar arrangement.
(d) Except for the filing of any notice subsequent to tire Closing which
may be required under applicable federal or state securities law (which, if
required, shall be filed on a timely basis as, may so be required), no permit
Authorization, consent or approval of or by, or any notification of or filing
with, any Person (governmental or private) is required in connection with the
execution, delivery or performance of this Agreement by the Company. There is
no approval of the Company's stockholders required under applicable laws,
regulations or stock exchange or listing authority rules or regulations in
connection with the execution and delivery of the Closing Agreements or the
consummation of the transactions contemplated herein, including the issuance of
the Securities.
2.6 Litigation. The Company is not a party, nor has it been threatened in
writing to be made a party, to any charge, complaint action, suit proceeding,
hearing or investigation of or in any court of quasi-judicial or administrative
agency of any federal, state local or foreign jurisdiction or before any
arbitrator, which could result in any material adverse change in the assets,
liabilities, business, financial condition, operations, results of operations
or future prospects of the Company.
2.7 Reports and Financial Statements, etc. (a) EIS has heretofore been
furnished with complete and correct copies of the unaudited consolidated
balance sheet of the Company as of December 31, 1996 and of the unaudited
consolidated statements of income and operations and cash flow for the six
month period then ended (collectively, the Financial Statements") set forth on
Schedule 2.7(a).
(b) Each of the Financial Statements was prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
prior periods, subject to normal yearend adjustments (which are not material)
and is accurate and complete in all material respects. Each of the balance
sheets included in such financial statements fairly presents the financial
condition of the Company as of the close of business on the date thereof, and
each of the statements of income included in such Financial Statements fairly
presents the results of operations of the Company for the fiscal period then
ended.
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(c) The Company owns all of its material properties and assets, including
all Intellectual Property as summarized on Schedule 2.7(c).
(d) Other than as set forth in the Financial Statements, the Company has
no outstanding liabilities or obligations, contingent or otherwise, dm those
incurred in the normal course of business, which have or may have a materially
adverse effect on the financial condition of the Company.
2.8 Material Adverse Change. There has been no material adverse change in
the business condition (financial or otherwise) of the Company since December
31, 1996.
2.9 Material Contracts. All of the Company's material contracts and
agreements are listed on Schedule 2.9 (the "Material Contracts"). There is no
default or violation thereunder by any party thereto, and the consummation of
the Closing Agreements and transactions contemplated hereby will not cause the
Company or any party to a Material Contract to be in default or violation
thereof.
2.10 Disclosure. This Agreement and the other Closing Agreements do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements contained herein and therein not
misleading. The Company is not aware of any material contingency, event or
circumstance relating to its business or prospects, which could have a material
adverse effect thereon, in order for the disclosure herein relating to the
Company not to be misleading in any material respect.
2.11 Brokers or Finders. The Company has not retained any investment
banker, broker or finder in connection with the transactions contemplated by
this Agreement and the other Closing Agreements. The Company agrees to
indemnify and hold EIS and EIM harmless against any liability, settlement or
expense arising out of, or in connection with, any such claim.
ARTICLE 3
REPRESENTATIONS AND WARRANTEES OF EIS AND EIM
EIS and EIM hereby represent and warrant to the Company as follows:
3.1 Organization and Authority. (a) Each of EIM and EIS is a Bermuda
corporation and has full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly authorized, executed and delivered by each
of EIS and EIM, and constitutes the valid and binding obligation of each,
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights and by general equitable principles.
(b) Each of EIS and EEIM has full corporate authority to execute and
deliver this
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Agreement and the Closing Agreements and to consummate the transactions
contemplated hereby and thereby; this Agreement has been duly executed and
delivered by each of EIS and EIM and constitutes the legal and valid
obligations of each and is enforceable against each in accordance with its
terms, and the execution, delivery and performance of this Agreement and the
transactions contemplated hereby will not violate or result in a default under
or creation of a lien or encumbrance under EIS's or EIM's memorandum and
articles of association or other organic documents, any material agreement or
instrument binding upon or affecting it or its properties or assets or any
applicable laws, rules, regulations or orders affecting it or its properties or
assets.
(c) Neither EIS nor EIM is now in material default of its charter or
bylaws or similar organic documents, any applicable material laws or
regulations or any contract or agreement binding upon or affecting them or
their properties or assets and the execution delivery and performance of this
Agreement and the transactions contemplated hereby will not result in such
violation.
3.2 Investment Intent; Etc. EIM and EIS are each acquiring the
Securities, for its own account and not with a present view to, or in
connection with, any distribution. Both understand that the Securities have
not been registered under the Securities Act, by reason of a specific exemption
from the registration requirements of the Act which depends upon, among other
things, the bona fide nature of the investment intent as expressed herein, and
that, accordingly, they may be required to hold such Securities for an
indefinite period.
3.3 Disclosure. No representation or warranty by EIS or EEIM contained in
this Agreement contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements contained herein not
misleading in light of the circumstances under which they were made.
3.4 Reliance, Neither EIS nor EIM has relied on any representations,
warranties, covenants or information in making its investment decision in
regard to the Securities, except for those provided by the Company and set
forth in this Agreement or the Closing Agreements.
ARTICLE 4
COVENANTS OF THE COMPANY
The Company hereby covenants that:
4.1 Board Seat. Until such time as EIS and its affiliates collectively
own securities representing less than 10% of the Common Stock or equivalents,
on an as converted and fully diluted basis (i.e., assuming conversion of the
Notes and exercise of the Warrant, but excluding conversion or exercise of all
options) the Company shall use its best efforts to cause EIS to designate one
member of the Company's Board of Directors.
11
|160339.1||
12
4.2 [INTENTIONALLY OMITTED]
4.3 Financial Statements. For so long as the covenants contained in
Section 4.1 are in effect, the Company shall deliver to EIMI:
(a) as soon as available and in any event within 90 days after the end of
each fiscal year of the Company, beginning with the fiscal year ending June 30,
1997, audited financial statements of the Company for such year, accompanied by
a report thereon of independent public accountants of recognized national
standing, which report shall state that such financial statements fairly
present the financial condition and results of operations of the Company as at
the end of, and for, such fiscal year, and
(b) as soon as available and in any event within 45 days after the end of
each fiscal quarter of the Company (other dm the last fiscal quarter in each
fiscal year) unaudited financial statements of the Company for such fiscal
quarter accompanied, in each case, by a certificate of the chief financial
officer of the Company, which certificate shall state that such financial
statements fairly present the financial position and results of operations of
the Company in accordance with generally accepted accounting principles,
subject to changes resulting from yearend audit adjustments.
4.4 Operating Covenants. From the date hereof, and until the B Note is
repaid in full, without the prior written consent of EIM, the Company shall
not:
(a) dispose of any material asset or business, including any intellectual
property rights;
(b) make pay or declare any dividend or distribution to any equity holder
(in such capacity) or redeem any of its capital stock; except that the Company
shall be permitted to redeem shares of its Series C Preferred Stock pursuant to
previously existing contractual arrangements;
(c) consummate any joint venture, equity investment in an unaffiliated
entity or similar transaction; or
(d) vary its business plan or practices, in any material respect, from
past practices.
4.5 Post-Closing. From the date hereof, and until the B Note is repaid in
full, the Company agrees to do or cause to be done such further acts and
things, and deliver or cause to be delivered to EIM such additional
assignments, agreements, powers and instruments as EIM may reasonably require
or deem advisable to carry into effect the purposes of this Agreement and the
Closing Agreements, or better to assure and confirm unto EIN4 and EIS their
rights powers and remedies hereunder and thereunder.
12
|160339.1||
13
4.6 Indemnification, (a) In addition to all rights and remedies available
to the parties hereunder at law or in equity, the Company shall indemnify EIS,
EEIM and their respective affiliates, stockholders, directors, officers,
employees, agents, representatives, successors and permitted assigns
(collectively, the "Elan Indemnified Persons") and save and hold each of them
harmless against and pay on behalf of or reimburse each Elan Indemnified Person
as and when incurred for any loss, liability, demand, claim, action, cause of
action, cost, damage, deficiency, tax, penalty, fine or expense, whether or not
arising out of any claims by or on behalf of the Company or any third party,
including interest, penalties, reasonable attorney's fees, and expenses and all
amounts paid in investigation defense or settlement of any of the foregoing
(collectively, "Losses') which any such Elan Indemnified Person may suffer,
sustain or become subject to, as a result of, in connection with, relating to
or incidental to, or by virtue of.
(i) any misrepresentation or breach of warranty on the part of the Company
under Article 2 of this Agreement; or
(ii) any nonfulfillment or breach of any covenant or agreement on the part
of the Company under this Agreement.
(b) The maximum recovery of an Elan Indemnified Person under this Section
4.6 shall not exceed $1 5,000,000. An Elan Indemnified Person shall not assert
a claim unless the Losses, when aggregated with all previous Losses hereunder,
equal or exceed $50,000, but at such time that such indemnified Person is
permitted to assert a claim, such claim shall include all Losses covered by
this Section 4.6.
(c) In addition to all rights and remedies available to the parties
hereunder at law or in equity, EIS and EIM shall indemnify the Company and its
respective affiliates, stockholders, directors, officers, Employees, agents,
representatives, successors and permitted assigns (collectively, the "Company
Indemnified Persons") and save and hold each of them harmless against and pay
on behalf of or reimburse each Company Indemnified Person as and when incurred
for any Losses which any Company Indemnified Person may suffer, sustain or
become subject to, as a result of, in connection with, relating to, incidental
to or by virtue of
(i) any misrepresentation or breach of warranty on the part of EIS and/or
EIM under Article 3 of this Agreement; or
(ii) any nonfulfillment or breach of any covenant or agreement on the part
of EIS and/or EIM under this Agreement; or
(iii) any taxes, or related obligations, for which the Company may be
liable as a result of this Agreement or the transactions contemplated hereby.
In the event that EIS or EIN4 reorganizes its assets or business such that
all or a substantial portion of its assets are transferred to another entity
which is affiliated with them,
13
|160339.1||
14
such entity shall be liable for EIS's or EIM's indemnification obligations
hereunder.
(d) The maximum recovery of a Company Indemnified Person under this
Section 4.6 shall not exceed $1,500,000. A Company Indemnified Person shall
not assert a claim unless the Losses, when aggregated with all previous Losses
hereunder, equal or exceed $50,000, but at such time that such Company
Indemnified Person is permitted to assert a claim, such claim shall include all
Losses covered by this Section 4.6.
(e) Notwithstanding the foregoing, and subject to the following sentence,
upon judicial determination which is final and no longer appealable, that the
act or omission giving rise to either indemnification set forth above resulted
primarily out of or was based primarily upon an Elan Indemnified Person's or a
Company Indemnified Person's (each, as applicable, an "I.P.") gross negligence,
fraud, or willful misconduct by an I.P. (unless such action was based on that
I.P.'s reliance in good faith upon any representation, warranty or promise made
by a counter-party to this Agreement (a "Counter-Party") herein), the
Counter-Party shall not be responsible for any Losses sought to be indemnified
in connection therewith, and that Counter-Party shall be entitled to recover
from such I.P. all amounts previously paid in full or partial satisfaction of
such indemnity, together with all its costs and expenses reasonably incurred in
effecting such recovery, if any. In no event shall a failure by the Company to
withhold taxes and pay such amounts to the appropriate taxing authority
constitute gross negligence, fraud or willful misconduct by the Company.
(f) All indemnification rights hereunder shall survive the execution and
delivery of this Agreement and the consummation of the transactions
contemplated herein to the extent provided above. All indemnification rights
hereunder shall terminate 27 months after the Closing, except for claims made
in writing prior to such time.
(g) If for any reason the indemnity provided for in this Section 4.6 is
unavailable to an I.P. or is insufficient to hold such I.P. harmless from all
such Losses arising with respect to the transactions contemplated herein, then
the Counter-Party and the I.P. shall each contribute to the amount paid or
payable by such Loss in such proportion as is appropriate to reflect the
relative benefits received by the Counter-Party and the I.P. as well as any
relevant equitable considerations. The indemnity, contribution and expense
reimbursement obligations that any Counter-Party has under this Section 4.6
shall be in addition to any liability that the respective Counter-Party may
otherwise have. The Company, EIM and EIS further agree that the
indemnification and reimbursement commitments set forth in this Agreement shall
apply whether or not the they are formal parties to any such lawsuits, claims
or other proceedings.
ARTICLE 5
MISCELLANEOUS
5.1 Notices. Any notice or other communication required or permitted
hereunder must be in writing, and shall be delivered personally, by facsimile
or by certified,
14
|160339.1||
15
registered, or express mail, postage prepaid and return receipt requested.
Such notice shall be deemed given when so delivered personally or when sent by
confirmed facsimile transmission on a business day to the party in question or,
if mailed, three business days after the date of deposit into the United States
mail, as follows:
(a) if to the Company:
IOMED, Inc.
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: President
Fax No. (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx & Xxxxxxx
000 Xxxxx Xxxx Xxxxxx Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Fax No. (000) 000-0000
(b) if to EIS or EIM, to:
Elan, International Services, Ltd.,
000 Xx. Xxxxx Xxxxx
Xxxxxx Xxxxxx XXX0 Xxxxxxx
Xxxxxxxxx: President
Fax No.
or
Elan International Management, Ltd.
000 Xx. Xxxxx Xxxxx
Xxxxxx Xxxxxx XXX0 Xxxxxxx
Attention: President
Fax No.
with a copy to:
Xxxxx Xxxxxxxxxxxx Xxxxxxxxxxx XxXxxxxxx & Xxxx, LLC
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx Xxxxxxx
Fax No. (000) 000-0000
15
|160339.1||
16
5.2 Governing Law. This Agreement shall be governed by the laws of the
State of New York, without giving effect to the choice of law provisions
thereof.
5.3 Public Disclosure. Each of EIM, EIS and the Company agrees that,
neither party will make any public disclosure of this Agreement or any of the
transactions or agreements contemplated hereby without the consent of the other
after appropriate notice has been given thereto, except to the extent as
required by applicable law or judicial or administrative process; provided
however, that either party shall have the right to make such disclosure to
potential financing sources and governmental regulatory agencies, including the
Securities and Exchange Commission.
5.4 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
5.5 Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
5.6 Exchanges; Lost, Stolen or Mutilated Certificates. Upon surrender by
EIM or EIS to the Company of a certificate representing any Securities acquired
by EIM or EIS hereunder, as applicable, the Company at its expense will issue
in exchange therefor and deliver to EIM or EIS as applicable, a new certificate
or certificates representing such Securities, in such denomination or
denominations, aggregating the number of shares of Common Stock underlying such
Securities represented by the certificate so surrendered, as may be requested
by EIM or EIS. Upon receipt of evidence satisfactory to the Company of the
loss, theft, destruction or mutilation of any certificate representing any
Security acquired hereunder and in the case of any loss or theft or
destruction, upon delivery of an indemnity agreement reasonably satisfactory to
the Company or in the case of any mutilation upon surrender of the certificate,
the Company, at its expense, will issue and deliver to EIM or EIS a new
certificate representing such Securities.
5.7 Expenses. Each party shall bear and be responsible for its own costs
and expenses incurred in connection with this Agreement and the other Closing
Agreements and the transactions contemplated herein and thereby.
5.8 Restrictions on Transfer. Neither EIM, EIS, Elan nor the Company
shall transfer or assign their respective rights or interests acquired under
this Agreement, the Notes or the Closing Agreements (other than to any of their
respective affiliates (as defined in the regulations promulgated under the
Securities Exchange Act of 1934)); provided that (a) EIM shall have the right to
transfer or assign an amount up to 50% of its interest in the A Note without the
prior consent of the Company, and an amount greater than 50% of its interest in
the A Note with the consent of the Company, which will not be unreasonably
withheld, so long as, in the case of any such assignment or transfer, the
assignee or transferee is not a competitor in any material respect with the
Company on the date of such proposed transfer, and EIM shall act as
16
|160339.1||
17
agent for the assignee for giving and/or receiving notices or waivers relating
to the A Note, (b) EIS shall be permitted to transfer or assign its rights as
described in the Registration Rights Agreement, and (c) the transferee has
agreed in writing in form reasonably satisfactory to the Company to be bound by
the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
IOMED, Inc.
By:
Name: Xxx X. Xxxxxxxxxxx
Title:
Elan International Services, Ltd.
By:
Name: Xxxxx Xxxxxx
Title: President
Elan International Management, Ltd.
By:
Name: Xxxxx Xxxxxx
Title: Vice President
17
|160339.1||
18
SCHEDULE 2.5(b)
RECORD HOLDERS OF EQUITY INTERESTS
- Common Stockholders 2.5(b)(i)
- Series C Preferred Stockholders 2.5(b)(ii)
- Stock Options Outstanding 2.5(b)(iii)
- Warrant to purchase 215,000 shares of Common Stock granted in favor of the
Alliance of Children's Hospitals, Inc., dated as of December 1, 1996.
- Warrant to Purchase 10,000 shares of Common Stock granted in favor of Silicon
Valley Bank dated as of June 25, 1992.
- Obligation to Laboratories Xxxxxxxx S.C.A. ("Xxxxxxxx") pursuant to the
adjustment provisions of the agreement between the IOMED and Xxxxxxxx, dated
February 20, 1996. (4,628 shares of Common Stock as of the date hereof.)
19
EXHIBIT 2.5(b)(i)
20
IOMED / JMW / MOTION CONTROL COMMON SHAREHOLDERS
@ April 11, 1997
DATE SHARES CERTIFICATE NUMBER OF
NAME ISSUED NUMBER SHARES
---- ------ ------ ------
XxXxxx, Xxxxxxxx X. 05/05/95 122(I) 2,500
Xxxxxxxxx, Xxxxxx Xxx 06/19/90 3(I) 1,992
Xxxxxx, X. Xxxxxx 08/04/87 10 35,000
Xxxxxx, X. Xxxxxx 05/31/94 106(I) 19,462
Xxxxxxx, Xxxxxxx X. 09/09/92 55(I) 1,826
Xxxxxx, Xxxxxxxx X. 11/20/95 134(I) 2,332
Xxxxxx, Xxxxxxxx X. 06/26/96 144(I) 581
Xxxxxx, Xxxxxxxx X. 02/14/97 163(I) 664
Xxxxxx, Xxxxx X. 12/15/92 73(I) 166
Xxxx, Xxxxxx X. 08/04/87 11 250
Xxxx, Xxxxx X. 08/04/87 12 250
Xxxx, Xxxx X. 08/04/87 13 250
Xxxx, Xxxxxxx & Xxxxx 08/04/87 14 4,000
Xxxxxxx, Xxxxxxx 08/09/94 108(I) 3,000
Xxxxxxx, Xxxx X. 08/09/94 107(I) 3,000
Xxxxxxxx, Xxxx X. 09/06/90 6(I) 256
Xxxxxxx, Xxxxxxx X. 09/03/96 146(I) 3,333
Xxxxxxx, Xxxx X. 09/03/96 148(I) 3,334
Xxxxxx, Xxxxx X. 06/16/95 124(I) 9,132
Xxxxxxxxxxx, Xxxxxxx 01/18/93 74(I) 16
Bund, Ian R.N. 07/15/92 47(I) 2,650
Bund, Ian R.N. 10/19/95 132(I) 7,952
Bund, Ian R.N. 10/18/96 158(I) 2,650
Xxxx, Xxxxx 08/04/87 16 5,000
Xxxxxxx, Xxxxx 08/04/87 17 5,000
Xxxxxx, Xxxx T and Xxxx, Xxxx M & Xxxx X. 12/12/91 22(I) 10,000
Xxxxxx, Xxxx T and Xxxx, Xxxx M & Xxxx X. 03/02/92 28(I) 3,500
Xxxxxx, Xxxx X. 06/06/96 142(I) 1,000
Xxxxxx, Xxxx X. 06/06/96 143(I) 25,160
Xxxxxxxx, Xxxxxx X. 10/04/91 17(I) 10,000
Xxxxxxxx, Xxxxxx X. 12/13/94 114(I) 5,000
Xxxxxxxx, Xxxxxx X. 06/06/96 140(I) 162,000
Child Health Investment Corporation 12/12/96 162(I) 178,571
CIT Group/Venture Capital, Inc. 03/11/93 90(I) 500,000
CIT Group/Venture Capital, Inc. 04/27/94 101(I) 500,000
Xxxxxxxx, Xxxx X. 10/14/92 67(I) 20,000
Xxxxx, Xxxxxxx Xxxx Xxxxxxx 08/04/87 54 380
Xxxxx, Xxxxxxx Xxxx Xxxxxxx 05/14/93 95(I) 3,000
Dane, Xxxxx X. 08/04/87 20 10,000
Dane, Xxxxxxx 08/04/87 21 10,000
Xxxxxx, Xxx 12/11/96 161(I) 1,825
Xxxxxxxx, Xxxxxx X. 04/04/92 36(I) 1,500
Page 1
21
IOMED / JMW / MOTION CONTROL COMMON SHAREHOLDERS
@ April 11, 1997
DATE SHARES CERTIFICATE NUMBER OF
NAME ISSUED NUMBER SHARES
---- ------ ------ ------
Xxxxxxxx, Xxxxx X., Xx. 04/04/92 37(I) 1,500
Xxxx, Xxxxxx X. 11/20/95 135(I) 10,000
Xxxxxxxx, Xxxxx 08/04/87 22 10,000
Xxxxxxx, Xxxxx, Trustee of the
Xxxxx Xxxxxxx Trust 03/19/92 32(I) 2,500
Xxxxxxx, Xxxx Xxxxxxxx, Trustee of the
Xxxx Xxxxxxxx Xxxxxxx Trust 03/19/92 30(I) 5,000
Xxxxxxx, Xxxx Xxxxxxxx, Trustee of the
Xxxx Xxxxxxxx Xxxxxxx Trust 12/15/92 71(I) 900
Xxxxxxx, Xxxxx Xxxx, Trustee of the
Xxxxx Xxxx Xxxxxxx Trust 03/19/92 31(I) 2,500
Xxxxxxx, Xxxxxx X. 12/25/92 70(I) 1,000
Xxxxxx, Xxx - Revocable Trust 05/24/88 98 5,000
Xxx, Xxxx X. 02/10/95 120(I) 9,630
Xxxxxxxx, Xxxxxxx X. 07/25/89 1(I) 500
Xxxxx, Xxxxxxx Xxxxx 01/11/94 99(I) 1,750
Xxxxxxxxx, Xxxxxx 08/04/87 24 13,500
Xxxxxxxxx, Xxxxxxx 11/28/77 68(M) 10,000
Xxxxxxx, Xxxxxx 08/04/87 25 500
Hanover, Xxxxx X. 08/04/87 26 50,000
Xxxxxx, X. Xxxxxx 08/04/87 27 10,000
Xxxxxx, Xxxxx 12/13/94 115(I) 1,100
Xxxxxxxxxx, Xxxxxx X. 01/17/96 136(I) 2,120
Xxxxxxxxxx, Xxxxxx X. 11/07/96 160(I) 530
Xxxxxx, Xxxx 08/04/87 28 5,000
Xxxx, Xxxxx X. 12/15/92 72(I) 1,503
Xxxxxx Trust (The) 10/13/77 59(M) 10,000
Xxxxxxxx, Xxxxx Xxxxx 06/06/96 141(I) 500
Xxxx, Xxxxxxx X. 01/29/93 75(I) 5,175
Hone, Xxxxxxx X. 08/04/87 29 2,000
Xxxxxxx, Xxxxx X. 08/04/87 30 5,625
Xxxxxxx, Xx 08/04/87 32 15,000
Xxxxxxxx, Xxxxxxxxx 08/04/87 33 5,000
Xxxxxxxx, Xxxxx 08/04/87 34 5,000
Xxxxxxxx, Xxxxxxx X. 08/04/87 4 13,864
Xxxxxxxx, Xxxxxxx X. 05/15/91 7(I) 908,000
Xxxxxxxx, Xxxxxxx X. 01/26/87 2 346,136
Xxxxxx, Xxxx 02/25/88 91 2,000
Janata, Jiri 08/04/87 35 10,000
Xxxxxx, Xxxxxx 08/04/87 36 5,300
Xxxxxxx, Xxxx Family Protection Trust 09/12/91 15(I) 1,000
Xxxxxxx, X. Xxxx 08/04/87 38 45,000
Page 2
22
IOMED/JMW/MOTION CONTROL COMMON SHAREHOLDERS
@ APRIL 11, 1997
DATE SHARES CERTIFICATE NUMBER OF
NAME ISSUED NUMBER SHARES
---- ------ ------ ------
Xxxxxxx, Xxxx 08/04/87 39 8,000
Xxxxxxxxxx, Xxxxxx 05/14/93 91(I) 544
Xxx, Xxxxxx 09/03/96 147(I) 3,333
Xxxx, Xxxxx X. 12/21/77 72(M) 2,500
Xxxx, Xxxxx 12/21/77 74(M) 2,500
Xxxx, Xxxxx X. 12/21/77 73(M) 2,500
Xxxx, Xxxxxx X. 12/21/77 75(M) 2,500
Xxxxxxx, Xxxx X. 08/04/87 40 44,000
Xxxxxxx, Xxxx X. 08/04/87 41 31,000
Xxxxxx, Xxxxxx X. 08/04/87 42 5,000
Klebingot, Xxxxxx X. 08/04/87 43 10,000
Klebingot, Xxxxxx X. 11/01/95 133(I) 3,000
Klebingot, Xxxxxx X. 06/16/95 123(I) 31,000
Klebingot, Xxxxxx X. 01/24/96 138(I) 4,583
Xxxxxx, Xxxxx 08/04/87 44 40,000
Xxxxx, Xxxxxxxxx & Xxxxx Xxxx 08/04/87 45 5,000
Kolff, The Xxxxx X. Family Living Trust 08/04/87 46 15,000
Xxxxx, Xxxxxx X. Children and
Grandchildren Limited Partnership 02/23/89 100 84,000
Xxxxxxxxxx, Xxxxx X. 07/26/96 145(I) 1,000
Xxxxxx, Xxxxxx 08/04/87 48 250
Laboratoires Xxxxxxxx, S.C.A. 02/29/96 139(I) 1,621,622
Xxxxxxx, Xxxxxx Jo 08/04/87 52 380
Xxxxxxx, Xxxxxx 05/14/93 92(I) 3,000
Xxxxxxx, Xxxxxx 04/16/80 ? 120(M) 6,430
Laveson, Xxxxx Xxxxx 08/04/87 53 380
Xxxxxxx, Xxxxx 05/14/93 94(I) 3,000
Xxxxxxx, Xxxxxxx X. 08/04/87 51 6,430
Xxxxxxx, Xxxxxxx X. 05/14/93 93(I) 1,000
Xxxxxxx, Xxxxxx X. 01/25/95 118(I) 7,500
Xxxxxxx, Xxxxxx X. 02/14/97 167(I) 3,333
Xxxxx, Xxxxxxx 10/31/94 112(I) 3,000
Xxxxx, Xxxxxxx 01/25/95 119(I) 5,000
Xxxxxxxxx, Xxxx Jo 10/05/89 2(I) 80
Xxxxx, Xxxxxxx X. 04/27/88 97 50,000
MBW Venture Partners 05/15/91 13(I) 61,599
MBW Venture Partners 07/15/92 48(I) 270,408
MBW Venture Partners 09/04/92 58(I) 259,372
MBW Venture Partners 02/18/93 80(I) 199,106
MBW Venture Partners 02/19/93 84(I) 48,125
MBW Venture Partners 02/19/93 85(I) 144,375
MBW Venture Partners 04/24/94 105(I) 192,500
Page 3
23
IOMED/JMW/MOTION CONTROL COMMON SHAREHOLDERS
@ APRIL 11, 1997
DATE SHARES CERTIFICATE NUMBER OF
NAME ISSUED NUMBER SHARES
---- ------ ------ ------
MBW Venture Partners 10/19/95 126(I) 811,225
MBW Venture Partners 09/27/96 155(I) 270,409
Xxxxxx, Xxxxx Xx 06/26/92 43(I) 5,000
Xxxxxx, Xxxxxxxxx X. 06/03/92 41 30,000
Xxxxxx, Xxxxxxxx Xxxxxx 06/03/92 39 15,000
Xxxxxx, Xxxx Lindsay 06/03/92 40 15,000
Xxxxxx, W. Xxxxxx 08/04/87 8 341,136
Xxxxxx, W. Xxxxxx 06/03/92 42 93,864
Xxxx, Xxxxxxx X. 08/04/87 57 10,000
Michigan Investment Fund, L.P. 05/15/91 12(I) 18,400
Michigan Investment Fund, L.P. 07/15/92 49(I) 80,771
Michigan Investment Fund, L.P. 09/04/92 59(I) 77,475
Michigan Investment Fund, L.P. 02/18/93 81(I) 59,474
Michigan Investment Fund, L.P. 02/19/93 86(I) 14,375
Michigan Investment Fund, L.P. 02/19/93 87(I) 43,125
Michigan Investment Fund, L.P. 04/27/94 104(I) 57,500
Michigan Investment Fund, L.P. 10/19/95 127(I) 242,314
Michigan Investment Fund, L.P. 09/27/96 156(I) 80,772
Xxxxxx, Xxxxx Xxx or Xxxxxxxx X.
Xxxxxx, Trustees of the Xxxxx Xxx
Xxxxxx Family Trust dtd 9/17/92 09/23/92 60(I) 5,000
Xxxxxx, W. Xxx 02/14/97 166(I) 3,333
Xxxxxxxxx, Xxxxxx 08/04/87 59 5,000
Xxxxx, Xxxxx X. 08/04/87 60 5,000
Xxxxxx, Xxxxxxx 08/04/87 61 15,000
Xxxxxx, Xxxxxxx 02/25/88 94 10,000
Xxxxxx, Xxxxxxx X. 08/04/87 62 15,000
Xxxxxx, Xxxxxxx X. 02/25/88 96 10,000
Newtek Ventures 05/15/91 10(I) 79,999
Newtek Ventures 07/15/92 44(I) 357,805
Newtek Ventures 09/04/92 56(I) 340,867
Newtek Ventures 02/18/93 79(I) 258,579
Newtek Ventures 02/19/93 82(I) 62,500
Newtek Ventures 02/19/93 83(I) 187,500
Newtek Ventures 04/27/94 103(I) 250,000
Newtek Ventures 10/19/95 129(I) 1,073,418
Newtek Ventures 09/20/96 150(I) 357,805
Xxxx, Xxxxx X. 09/23/92 61(I) 80,000
Xxxx, Xxxxx X. 09/23/92 63(I) 70,000
Xxxx, Xxxxxxx X. 09/23/92 62(I) 45,000
Xxxx, Xxxxxxx X. 09/23/92 64(I) 166,532
Xxxx, Xxxxxxx X. 09/23/92 65(I) 303,468
Page 4
24
IOMED/JMW/MOTION CONTROL COMMON SHAREHOLDERS
@ APRIL 11, 1997
DATE SHARES CERTIFICATE NUMBER OF
NAME ISSUED NUMBER SHARES
---- ------ ------ ------
Xxxxxxxx, Xxxxxx 08/04/87 63 75,000
Xxxxxxxx, Xxxxxx 09/06/94 109(I) 10,000
Xxxxxxxx, Xxxxx X. 06/04/93 96(I) 5,648
Prince, Yeates and Xxxxxxxxxx 08/04/87 64 2,700
Xxxxxxxxx-Xxxxxx, Xxxxx 06/23/93 97(I) 8,818
Xxxxxxx, Xxxxxx X. 08/04/87 66 5,000
Richards, Victor, M.D. 08/04/87 67 5,000
Riches, Ross 08/04/87 68 9,000
Rossi, Cino A. 08/04/87 69 20,000
Sabodski, Xxxxx X. 10/19/95 125(I) 10,000
Xxxxx, Xxxxxxx X. 03/09/93 76(I) 1,250
Xxxxx, Xxxxxxx X., M.D. 08/04/87 70 8,000
Xxxxx, Xxxxxx X. 08/04/87 71 60,000
Xxxxx, Xxxx 08/04/87 72 10,000
Xxxxxxxxx, Xxxx X. & Xxxx X. 10/15/91 18(I) 155,843
Xxxxxxxxx, Xxxx X. 03/09/93 77(I) 5,000
Xxxxxxxxx, Xxxx X. & Xxxx X. 10/15/91 19(I) 5,000
Xxxxxxxxx, Xxxxxx X. & Xxxx X. 10/15/91 21(I) 5,000
Xxxxxx, Xxxxxx X. 08/04/87 73 10,000
Xxxxxxx, Xxxxxxxx 08/04/87 74 2,500
Xxxxxxx, Xxxxx 08/04/87 76 10,000
Xxxxxxx, Xxxxx X. 08/04/87 77 5,000
Xxxxx, Xxxxxxxx 04/24/92 38(I) 96
University of Utah Research
Foundation 08/04/87 78 5,000
Utah Ventures 05/15/91 11(I) 80,002
Utah Ventures 07/15/92 46(I) 79,512
Utah Ventures 09/04/92 57(I) 340,867
Utah Ventures 02/18/93 78(I) 258,579
Utah Ventures 10/19/95 131(I) 238,538
Utah Ventures 10/11/96 157(I) 79,512
Vadex-Panama, S.A. 02/19/93 88(I) 325,000
Vadex-Panama, S.A. 02/19/93 89(I) 175,000
Vadex-Panama, S.A. 04/27/94 102(I) 500,000
Xxx Xxxx, Xxx 10/14/92 68(I) 2,000
Van Ry, J.J. 08/04/87 79 10,000
Xxxxxx, Xxxxx X. 12/15/93 98(I) 8,964
Wedbush, Noble, Cook, Inc. 08/04/87 80 2,500
Xxxxxxxx, Xxxxx X. & Xxxx X.
Xxxxxxxx, Trustees of the Xxxxxxxx
Family Trust 07/15/92 45(I) 2,650
Xxxxxxxx, Xxxxx X. & Xxxx H
Page 5
25
IOMED/JMW/MOTION CONTROL COMMON SHAREHOLDERS
@ APRIL 11, 1997
DATE SHARES CERTIFICATE NUMBER OF
NAME ISSUED NUMBER SHARES
---- ------ ------ ------
Xxxxxxxx, Trustees of the Xxxxxxxx
Family Trust 09/27/96 154(I) 10,602
Xxxxxxxxxxx, Xxx Money Purchase
Pension Plan 02/15/92 27(I) 25,000
Xxxxxxxxxxx, Xxx Money Purchase
Pension Plan 03/19/92 33(I) 65,998
Xxxxxxxxxxx, Xxx Money Purchase
Pension Plan 09/27/96 153(I) 3,975
Xxxxxxxxxx, Xxxxx X. 09/05/96 149(I) 23,000
Xxxxxxx, Xxxxxxx X. 10/01/92 66(I) 5,000
Xxxxxxx, Xxxxxxx X. 10/14/92 69(I) 3,000
Xxxxxxx, Xxxxxx 08/04/87 81 10,000
Xxxxx, Xxxxxx X. 08/04/87 9 96,000
Xxxxxxxxxx, Xxxx 08/04/87 82 4,000
Xxxxxxxxxx, Xxxx 02/14/97 164(I) 2,000
Xxxxxxxxxx, Xxxx 01/16/95 116(I) 5,000
Xxxxx, Xxxxx X. 04/04/92 35(I) 2,000
Xxxxxx, Xxxxx 10/29/96 159(I) 2,000
Xxxxxx, Xxxxx 02/14/97 165(I) 3,334
Xxxxx Xxxxxx R., Trustee of the
XXXXXX X. XXXXX FAMILY TRUST
dated the 21st of February 1995 03/13/95 121(I) 4,406
Xxxxx, Xxxx Xxxxxxx 08/04/87 84 7,500
----------
Total Outstanding 15,040,455
I = IOMED
M = Motion Control
TREASURY (COMMON):
Xxxxx, Xxxxxxx X. (5/88) 97 50,000
----------
Total 15,090,455
==========
Page 6
26
EXHIBIT 2.5(b)(ii)
27
PREFERRED SHAREHOLDERS
AS OF APRIL 11, 1997
CERTIFICATE NUMBER OF
NAME NUMBER SHARES SERIES
---------------------------------- ------------ ---------- ------
Cordis Corporation 1 (JMW) 172,800 Series C
00000 XX 00xx Xxxxxx
Xxxxx Xxxxx, XX 00000-0000
TOTAL PREFERRED SHARES 172,800
28
EXHIBIT 2.5(b)(iii)
29
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30
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31
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32
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33
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34
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35
SCHEDULE 2.5(c)
RECORD HOLDERS OF EQUITY INTERESTS
* 800,000 shares of Common Stock of Dermion, Inc.
36
SCHEDULE 2.7(a)
IOMED, Inc.
INTEROFFICE MEMO
To: Xxx Xxxxxxxxxxx Xxx Xxxxxx Xxx Xxxxxxxxx
From: Xxxxxx X. Xxxxxxx
Date: January 27, 1997
cc: Xxxx Xxxxxxxx, Xxxxx Xxxxxxx,
Subject: YTD-DECEMBER 1996 OPERATING RESULTS
Attached are the consolidated financial statements of Iomed, Inc. for the period
ending December 31, 1996. These statements are comprised of the following:
* Consolidated Income Statements - Actual vs. Budget and Prior Year for
both the current month and year-to-date period ended December 31, 1996.
* Consolidated Balance Sheet for the period ended December 31, 1996 vs.
June 30, 1996.
* Consolidated Statement of Cash Flows for the month and year-to-date
periods ended December 31, 1996.
Should you have any questions regarding the information contained within these
unaudited financial statements, please do not hesitate to give me a call.
Regards,
/s/ X. X. Xxxxxxx
37
IOMED, INC.
CONSOLIDATED INCOME STATEMENTS
ACTUAL v BUDGET and PRIOR YEAR
Period Ending December 31, 1996
(In Thousands)
CURRENT MONTH YEAR-TO-DATE
ACTUAL BUDGET PRIOR YEAR ACTUAL BUDGET PRIOR YEAR
SALES REVENUE;
****
Total Sales Revenue 809 876 569 5,607 5,722 5,455
COST OF SALES:
****
Total Cost of Sales 353 362 293 2,171 2,229 2,200
OPERATING EXPENSES;
Research and Development 161 151 83 848 986 637
Administration 127 118 228 715 725 865
Sales and Marketing Expense:
****
Total Operating Expenses 495 504 455 2,627 2,916 2,421
OPERATING INCOME (39) 10 (179) 809 577 834
OTHER (INCOME) EXPENSE:
Minority Interest in Subsidiary (2) -- -- 38 -- --
Interest (Income), net (6) (12) (97) (90) (75) (152)
Income Taxes 22 14 -- 22 14 --
---- ---- ---- ------ ------ ------
NET INCOME (LOSS) $(53) $ 8 $(82) $839 $ 638 $ 986
==== ==== ==== ====== ====== ======
38
IOMED, INC.
CONSOLIDATED BALANCE SHEET
As of
DEC 31, JUNE 30,
1996 1996
------- --------
(In Thousands)
ASSETS
CASH & EQUIVALENTS 5,039 4,507
ACCOUNTS RECEIVABLE 911 1,054
INVENTORY 1,385 1,162
PREPAID ASSETS -- 5
------ ------
TOTAL CURRENT ASSETS 7,335 6,728
EQUIPMENT & FURNITURE, NET 395 477
OTHER ASSETS, NET 33 46
------ ------
7,763 7,251
====== ======
LIABILITIES & EQUITY
NOTES PAYABLE -- --
TRADE ACCOUNTS PAYABLE 306 118
ACCRUED LIABILITIES 236 952
CURRENT PORTION OF L/T OBLIGATIONS 203 111
------ ------
TOTAL CURRENT LIABILITIES 745 1,181
CAPITAL LEASE OBLIGATIONS -- --
NOTES PAYABLE -- 3
MINORITY INTEREST IN SUBSIDIARY 913 875
SUBORDINATED DEBT -- --
REDEEMABLE PREFERRED STOCK 720 1,200
COMMON STOCK 15 14
ADDITIONAL PAID IN CAPITAL 12,031 11,478
ACCUMULATED DEFICIT (6,661) (7,500)
------ ------
TOTAL SHAREHOLDER'S EQUITY 5,385 3,992
------ ------
7,763 7,251
====== ======
39
IOMED, INC.
STATEMENT OF CASH FLOW
For the Period Ended December 31, 1996
Dec. 31, Dec. 31,
MONTH Y-T-D
-------- --------
(In Thousands)
CASH FLOW FROM OPERATING ACTIVITIES
NET INCOME (LOSS) $ (53) $ 839
DEPRECIATION 27 169
AMORTIZATION -- --
(INC) DEC IN CURRENT ASSETS 27 (73)
INC (DEC) IN CURRENT LIABILITIES (177) (531)
------ ------
NET CASH USED IN OPERATIONS (176) 404
CASH FLOW FROM INVESTING ACTIVITIES
PURCHASES OF EQUIPMENT (16) (87)
------ ------
NET CASH INVESTED (16) (87)
CASH FLOW FROM FINANCING ACTIVITIES
PROCEEDS FROM TERM LOAN 255 255
REPAYMENT OF SILICON VALLEY LINE (4) (21)
PAYMENTS ON CAPITAL LEASES -- --
REDEMPTION OF PREFERRED STOCK -- (70)
INCREASE IN MINORITY INTERESTS (3) 38
OTHER (4) 13
------ ------
NET CASH FROM FINANCING ACTIVITIES 244 215
------ ------
NET INCREASE (DECREASE) IN CASH 52 532
CASH BEGINNING OF PERIOD 4,987 4,507
------ ------
CASH END OF PERIOD $5,039 $5,039
====== ======
40
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41
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42
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43
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44
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46
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47
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48
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49
SCHEDULE 2.7(c).1
Page 1 of 2
IOMED TECHNOLOGY
1. PRIOR TECHNOLOGY
Patents
- U.S. Patent 4,141,359 **** from ****
- U.S. Patent 4,383,529 ****
- U.S. Patent 4,416,274 ****
- U.S. Patent 4,752,285 ****
- U.S. Patents 4,474,819, 4,744,787, 5,135,477 ****
- U.S. Patent 4,915,685 ****
- U.S. Patents 5,087,242, 5,236,412, 5,328,455, 5,374,241, WO 9,210,235 and
EP 000000 ****
- X.X. Patent 5,037,380 ****
- U.S. Patent 4,968,297 ****
- U.S. Patent 5,248,295 ****
Also included are all foreign equivalents, PCT equivalents, and all
related CIP to the above patents.
Other Technology and know-how
****
50
SCHEDULE 2.7(C).1
Page 2 of 2
IOMED TECHNOLOGY (continued)
****
51
SCHEDULE 2.7(C).2
page 1 of 1
IOMED INVENTIONS
****
52
SCHEDULE 2.9
MATERIAL CONTRACTS
1. Agreement by and between IOMED, Inc. and Laboratories Xxxxxxxx, S.C.A.,
dated as of February 20, 1996
2. Agreement by and between Alza Corporation and IOMED, Inc., dated as of July
28, 1993
3. Research and Development Agreement among IOMED, Inc., Dermion, Inc. and
Ciba-Geigy Corporation, dated as of March 29, 1996
4. License Agreement between IOMED, Inc. and University of Utah Research
Foundation, dated as of October 1, 1992
5. Preferred Stock Purchase Agreement by and between JMW Acquisition Co. and
Motion Control, Inc., dated as of August 4, 1987
6. Stock Purchase Agreement by and between IOMED, Inc. and The CIT
Group/Venture Capital, Inc., dated as of March 8, 1993
7. Stock Purchase Agreement by and between IOMED, Inc., Newtek Ventures, MBW
Venture Partners, Michigan Investment Fund, L.P., Interhealth Limited
Partnership and Vadex-Panama, S.A., dated as of February 19, 1993
8. Assignment and Assumption Agreement among Vadex-Panama, S.A., Interhealth
Limited Partnership and IOMED, Inc., dated as of March 12, 1993
9. Warrant to Purchase Shares of Common Stock between Alliance of Children's
Hospital, Inc. and IOMED, Inc., dated as of December 1, 1996
10. Stock Purchase Agreement by and between IOMED, Inc. and Child Health
Investment Corporation, dated as of November 29, 1996
11. Warrant to Purchase Shares of Common Stock between Silicon Valley Bank and
IOMED, Inc., dated as of June 25, 1992
12. Supply Agreement by and between IOMED, Inc. and Xxxxxx Laboratories, dated
as of April 27, 1993
13. Manufacturing Agreement between IOMED Clinical Systems and KWM Electronics
Corporation, dated as of November 1, 1995
53
14. Lease Agreement dated March 1, 1994 between IOMED, Inc. and Xxxxxx
Properties, Inc.
15. Lease Agreement dated October 1, 1986 by and between Xxxxxx Alliance and
Motion Control, Inc. (the "Lease Agreement")
(a) First Amendment to the "Lease Agreement dated March 9, 1988 by and
between Textron Collective Investment Trust and IOMED, Inc.
(b) Second Amendment to the "Lease Agreement" dated May 5, 1989 by and
between Textron Collective Investment Trust and IOMED, Inc.
(c) Third Amendment to the "Lease Agreement dated July 10, 1989 by and
between Textron Collective Investment Trust and IOMED, Inc.
(d) Fourth Amendment to the "Lease Agreement" dated July 18, 1989 by and
between Textron Collective Investment Trust and IOMED, Inc.
(e) Fifth Amendment to the "Lease Agreement dated February 7, 1992 by and
between Textron Collective Investment Trust and IOMED, Inc.
(f) Sixth Amendment to the "Lease Agreement dated July 20, 1994 by and
between Textron Collective Investment Trust and IOMED, Inc.
16. Asset Acquisition Agreement dated December 27, 1996 by and between IOMED,
Inc. and Fillauer, Inc.
17. License Agreement dated December 27, 1996 by and between IOMED, Inc. and
Fillauer, Inc.
