ALTEON INC. CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT
Exhibit
10.1
ALTEON
INC.
January
11, 2007
Alteon
Inc.
0
Xxxxxx
Xxxxx
Xxxxxxxxxx,
XX 00000
Ladies
and Gentlemen:
1. Purchase
and Sale.
On the
Closing Date (as defined herein), each of the undersigned (each a “Lender”
and,
collectively, the “Lenders”),
hereby agrees to purchase from Alteon Inc., a Delaware corporation (the
“Company”),
a
Senior Convertible Secured Promissory Note, in the form attached hereto as
Exhibit
A
(each, a
“Convertible
Note”
and,
collectively, the “Convertible
Notes”),
in
the principal amount set forth opposite such Lender’s
name
on Schedule
A,
and a
warrant in the form attached hereto as Exhibit
B
(each a
“Warrant”
and
collectively the “Warrants”,
and
together with the Convertible Notes, the “Securities”),
to
purchase the number of shares of common stock, $0.01 par value per share, of
the
Company (“Common
Stock”),
set
forth opposite such Lender’s name on Schedule
A.
2. Closing
Date and Payment.
The
closing (the “Closing”)
of the
purchase and sale of the Securities shall take place at the offices of the
Company at 10:00 a.m. on the date hereof (the “Closing
Date”).
At
the
Closing, subject to the terms and conditions contained in this Agreement, each
Lender shall deliver to the Company by check or by wire transfer the aggregate
purchase price for its Securities in exchange for the Securities to be issued
to
such Lender.
3. Representations
and Warranties of each Lender.
Each
Lender hereby acknowledges, represents, warrants and/or agrees as
follows:
(a) Neither
the sale of the Securities nor the issuance of the shares of capital stock
upon
conversion or exercise thereof or upon conversion, if applicable, of such
capital stock (collectively, such shares are referred to herein as the
“Conversion
Securities”)
has
been registered under the Securities Act of 1933, as amended, or any successor
statute (the “Securities
Act”),
or
any state securities laws. The Lender understands that the offering and sale
of
the Securities 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;
1
(b) The
Lender is acquiring the Securities solely for its own account for investment
and
not with a view to resale or distribution and has no present intention of
transferring the Securities to any other person or entity;
(c) The
Lender is an “accredited investor” as that term is defined in Rule 501 of
Regulation D under the Securities Act;
(d) The
Lender is a sophisticated investor and has such knowledge and experience in
financial, tax, and business matters, including, without limitation, experience
in investments by actual participation, so as to enable it to utilize the
information made available to it in connection with the offering of the
Securities, to evaluate the merits and risks of an investment in the Securities
and to make an informed investment decision with respect thereto;
(e) The
Lender is either a natural person or an entity which was not formed for the
specific purpose of acquiring the Securities. With respect to any entity-Lender,
the execution, delivery and performance of this Agreement by the Lender have
been duly authorized and the Agreement is a valid and legally binding agreement
of the Lender;
(f) The
Lender has received all documents requested by the Lender regarding the Company
and has reviewed them and believes it is well-informed about the
Company;
(g) The
Lender acknowledges that neither the U.S. Securities and Exchange Commission
(“SEC”)
nor
any U.S. state or foreign securities commission has approved the Securities
or
any of the Conversion Securities or passed upon or endorsed the merits of the
offering;
(h) The
Lender is aware that an investment in the Securities involves a number of very
significant risks;
(i) The
Lender must bear the economic risk of the investment indefinitely because none
of the Securities or Conversion Securities may be sold, hypothecated or
otherwise disposed of unless subsequently registered under the Securities Act
and applicable state securities laws or an exemption from registration is
available. Legends shall be placed on the Securities and Conversion Securities
to the effect that they have not been registered under the Securities Act or
applicable state securities laws and of the resulting limitations on transfer
and that appropriate notations thereof will be made in the Company’s books and
stock transfer records;
(j) The
aggregate purchase price of the Securities does not exceed twenty percent (20%)
of the investor’s net worth;
(k) The
Lender has taken no action which would give rise to any claim by any person
for
brokerage commission, finders’ fees or the like relating to this Agreement or
the transactions contemplated hereby; and
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(l) The
information contained herein is accurate and may be relied upon by the Company
in determining the availability of an exemption from registration under Federal
and state securities laws in connection with the offering of the Securities
and
Conversion Securities.
4. Representations
and Warranties of the Company.
The
Company hereby acknowledges, represents, warrants and/or agrees as
follows:
(a) Organization,
Standing and Qualification of the Company.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has all requisite corporate
power and authority to own and operate its properties and to carry on its
business as now being conducted and as proposed to be conducted. The Company
is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which failure to so qualify would materially and
adversely affect the business, properties, operations or condition, financial
or
otherwise, of the Company. The resolutions adopted by the directors of the
Company on January 5, 2007 authorizing the transactions contemplated by this
Agreement have not been amended or modified in any way, have not been rescinded
and are in full force and effect on the date hereof.
(b) Corporate
Authority; Enforceability.
The
Company has full right, power and authority to issue and sell the Securities
as
herein contemplated and the Company has full power and authority to enter into
and perform its obligations under this Agreement, the Securities, the Security
Agreement (defined in Section 7(a)), the Intellectual Property Security
Agreement (defined in Section 7(a)) and the Registration Rights Agreement
(defined in Section 7(a)). The execution and delivery of this Agreement, the
Securities, the Security Agreement, the Intellectual Property Security Agreement
and the Registration Rights Agreement by the Company and the consummation of
the
transactions contemplated herein and therein have been duly authorized and
approved by all requisite corporate action, and each of this Agreement, the
Securities, the Security Agreement, the Intellectual Property Security Agreement
and the Registration Rights Agreement are a valid and legally binding obligation
of the Company; provided,
however,
that
(i) the conversion of the Convertible Notes may require approval of the
Company’s stockholders under the applicable rules of the American Stock
Exchange, which approval has not been obtained and (ii) insofar as any
foreclosure on the collateral under the Security Agreement would constitute
a
sale of all or substantially all of the Company’s assets requiring stockholder
approval, such stockholder approval has not been obtained.
(c) Conflicts.
Subject
to Section 4(b)(i) and (ii) above, neither the authorization, execution and
delivery of this Agreement, the Securities, the Security Agreement, the
Intellectual Property Security Agreement and the Registration Rights Agreement
nor the consummation of the transactions herein and therein contemplated, will
(i) conflict with or result in a breach of any of the terms of the Company’s
Certificate of Incorporation or By-Laws, (ii) violate any judgment, order,
injunction, decree or award of any court or governmental body, having
jurisdiction over the Company, against or binding on the Company or to which
its
property is subject, (iii) violate any material law or regulation of any
jurisdiction which is applicable to the Company, (iv) violate, conflict with
or
result in the breach or termination of, or constitute a default under, the
terms
of any material agreement to which the Company is a party, except for such
violations or defaults which do not materially and adversely affect the
business, assets, operations or financial condition of the Company, or (v)
violate or conflict with the rules and regulations of the American Stock
Exchange applicable to the Company.
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(d) Capitalization.
The
capitalization of the Company is as set forth on Schedule
4(d)
attached
hereto. The Company has not issued any capital stock since its most
recently filed periodic report under the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”),
other
than pursuant to the exercise of employee stock options under the Company’s
stock option plans and the issuance of shares of Common Stock to employees
pursuant to the Company’s employee stock purchase plan outstanding as of the
date of the most recently filed periodic report under the Exchange Act. All
of
the outstanding shares of capital stock of the Company are validly issued,
fully
paid and nonassessable. No further approval or authorization of any stockholder
or the Board of Directors of the Company is required for the issuance and sale
of the Securities, the Conversion Securities issuable upon exercise of the
Warrants or, except as described in Section 4(b)(i) above, the Conversion
Securities issuable upon conversion of the Convertible Notes. The issuance
of
the Securities pursuant to the provisions of this Agreement will not violate
any
preemptive rights or rights of first refusal granted by the Company that will
not be validly waived or complied with, and will be free of any liens or
encumbrances, other than any liens or encumbrances created by or imposed upon
the Lenders through no action of the Company. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s stockholders.
(e) Litigation.
There
are no actions, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority now
pending, or, to the best knowledge of the Company, threatened against the
Company which, if adversely determined, could materially and adversely affect
the business, assets, operations or condition, financial or otherwise, of the
Company. There is no action, suit or proceeding by the Company currently pending
or that the Company currently intends to initiate.
(f) Compliance
with Laws.
The
Company is not in violation of any statute, law, rule or regulation, or in
default with respect to any judgment, writ, injunction, decree, rule or
regulation of any court or governmental agency or instrumentality, except for
such violations or defaults which do not materially and adversely affect the
business, assets, operations or condition, financial or otherwise, of the
Company.
4
(g) Governmental
Consents.
Subject
to the accuracy of the representations and warranties of the Lenders set forth
herein, no registration or filing with, or consent or approval of or other
action by, any Federal, state or other government agency under laws and
regulations thereof as now in effect is or will be necessary for the valid
execution, delivery and performance by the Company of this Agreement, the
Security Agreement, the Intellectual Property Security Agreement and the
Registration Rights Agreement, and the issuance, sale and delivery of the
Securities, other than the filing of a Form D with the SEC and the filings
required by state securities law.
(h) Title.
The
Company has good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by it which is material
to the business of the Company, in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value
of
such property and do not interfere with the use made and proposed to be made
of
such property by the Company. Any real property and facilities held under lease
by the Company are held by it under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use
made
and proposed to be made of such property and buildings by the
Company.
(i) Regulatory
Matters.
The
clinical, pre-clinical and other trials, studies and tests conducted by or
on
behalf of or sponsored by the Company relating to its pharmaceutical product
candidates were and, if still pending, are being conducted in all material
respects in accordance with medical and scientific protocols and research
procedures that the Company reasonably believes are appropriate. The
descriptions of the results of such trials, studies and tests as set forth
in
the SEC Documents (as defined in Section 4(k)), provided to the Lenders are
accurate in all material respects and fairly present the data derived from
such
trials, studies and tests. The Company has operated and currently is in
compliance in all material respects with applicable statutes and implementing
regulations administered or enforced by the United States Food and Drug
Administration (“FDA”).
Except as set forth in the SEC Documents, the Company has not received any
warning letters or written correspondence from the FDA and/or any other
governmental entity requiring the termination, suspension or modification of
any
clinical, pre-clinical and other trials, studies or tests that are material
to
the Company. The Company has submitted to the FDA an Investigational New Drug
Application or amendment or supplement thereto for all clinical trials it has
conducted or sponsored or is conducting or sponsoring with respect to its
product candidates termed “Alagebrium” and “ALT-2074” (the “Specified
Candidates”),
and
all such submissions were in material compliance with applicable laws and rules
and regulations when submitted and no material deficiencies are presently being
asserted by the FDA with respect to any such submissions. None of the clinical
trials that the Company is currently conducting or sponsoring or intends to
conduct or sponsor with respect to the Specified Candidates is subject to any
temporary or permanent clinical hold by the FDA or any other government agency,
and the Company has no reason to believe that such clinical trials will be
subject to any such action.
5
(j) Material
License Agreements.
Each of
the Material License Agreements (as defined below) is in full force and effect,
and neither the Company nor, to its knowledge, the licensor, is in breach of
any
Material License Agreement and the Company is aware of no circumstances or
grounds that would reasonably be expected to give rise to a claim of material
breach or right of rescission, termination, revision, or amendment of any
Material License Agreement. Any consent of the licensor required pursuant to
any
Material License Agreement in connection with the transactions contemplated
by
this Agreement, the Security Agreement, the Intellectual Property Security
Agreement and the Registration Rights Agreement has been obtained and is in
full
force and effect. As used herein, the term “Material
License Agreement”
shall
mean: Exclusive License Agreement dated as of September 28, 2004 by and between
Oxis International, a Delaware corporation, and HaptoGuard, as amended on March
22, 2005 and further amended on July 19, 2006; and License and Research
Agreement dated as of July 12, 2004 by and between BIO-RAP Technologies, Ltd.,
an Israeli corporation, on its own behalf and on behalf of the Xxxxxxxxx Family
Institute for Research in the Medical Sciences, and HaptoGaurd.
(k) SEC
Documents; Financial Statements.
During
the two (2) years prior to the date hereof, the Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the Exchange Act
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements, notes and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the
“SEC
Documents”).
The
Company has delivered to the Lenders or their respective representatives true,
correct and complete copies of each of the SEC Documents not available on the
Electronic Data Gathering, Analysis, and Retrieval system of the SEC
(“XXXXX”)
that
have been requested by each Lender. As of their respective dates, the SEC
Documents complied as to form in all material respects with the requirements
of
the Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time
they
were filed with the SEC, contained any untrue statement of a material fact
or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. As of their respective dates, the
financial statements of the Company included in the SEC Documents complied
as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as in effect
as
of the time of filing. Such financial statements have been prepared in
accordance with generally accepted accounting principles (“GAAP”),
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly present
in all material respects the financial position of the Company as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). The Company has no liabilities or obligations required to be
disclosed in the SEC Documents that are not so disclosed in the SEC Documents,
other than those incurred in the ordinary course of the Company’s business. The
information contained in the Company’s interim balance sheet as of November 30,
2006 is true and correct in all material respects.
6
(l) Xxxxxxxx-Xxxxx;
Internal Accounting Controls.
Except
as set forth in Part I - Item 4 of the Company’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2006 SEC Documents (the “Specified
Weakness”),
the
Company is in material compliance with all provisions of the Xxxxxxxx-Xxxxx
Act
of 2002 which are applicable to it as of the Closing Date. The Company is taking
all reasonable measures to implement remedial controls to address the Specified
Weakness. The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that information required to be disclosed by the Company in the
reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the Company’s most recently filed periodic report under
the Exchange Act (such date, the “Evaluation
Date”).
The
Company presented in its most recently filed periodic report under the Exchange
Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no changes in the
Company’s internal control over financial reporting (as such term is defined in
the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
7
(m) Absence
of Changes.
Except
as disclosed in Schedule 4(m),
since
September 30, 2006, and except as otherwise disclosed in the SEC Documents,
the
Company has not (i) declared or paid any dividends, (ii) sold any
assets, individually or in the aggregate, in excess of One Hundred Thousand
Dollars ($100,000) outside of the ordinary course of business, or (iii) had
capital expenditures, individually or in the aggregate, in excess of One Hundred
Thousand Dollars ($100,000). During the two (2) years prior to the date hereof,
except as disclosed in the SEC Documents (i) the Common Stock has been
designated for quotation on the American Stock Exchange, (ii) trading in
the Common Stock has not been suspended by the SEC or the American Stock
Exchange and (iii) the Company has received no communication, written or
oral, from the SEC or the American Stock Exchange regarding the suspension
or
delisting of the Common Stock from the American Stock Exchange. The
Company has not taken any steps to seek protection pursuant to any bankruptcy
law nor does the Company have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead any creditor or creditors
having claims individually or in the aggregate in excess of One Hundred Thousand
Dollars ($100,000) to do so. Based on the financial condition of the Company
as
of the Closing, after giving effect to the receipt by the Company of the
proceeds from the transactions contemplated hereby, the Company reasonably
believes that (i) the fair saleable value of the Company’s assets exceeds the
amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including, without limitation, known
contingent liabilities and the principal and interest on the Convertible Notes)
as they mature; (ii) the Company’s assets do not constitute unreasonably small
capital to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were
it to
liquidate all of its assets, after taking into account all anticipated uses
of
the cash, would be sufficient to pay all amounts on or in respect of its
liabilities when such amounts are required to be paid, including, without
limitation, with respect to the principal and interest on the Convertible Notes.
The Company does not intend to incur debts beyond its ability to pay such debts
as they mature (taking into account the timing and amounts of cash to be payable
on or in respect of its debt). The SEC Documents set forth as of the dates
thereof all outstanding secured and unsecured Indebtedness of the Company or
any
Subsidiary, or for which the Company or any Subsidiary has commitments. For
the
purposes of this Agreement, “Indebtedness”
shall
mean (a) any liabilities for borrowed money or amounts owed (other than trade
accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected
in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value
of
any lease payments due under leases required to be capitalized in accordance
with GAAP. Neither the Company nor any Subsidiary is in default with respect
to
any Indebtedness.
8
(n) Patents
and Trademarks.
The
Company has rights to use all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets, inventions,
copyrights, licenses and other intellectual property rights and similar rights
necessary or material for use in connection with its business as described
in
the SEC Documents and which the failure to so have would have a material adverse
effect on the results of operations, assets, business, or condition (financial
or otherwise) of the Company (collectively,
the “Intellectual
Property Rights”).
The
Company has not received any notice (written or otherwise) that the Intellectual
Property Rights used by the Company violate or infringe upon the rights of
any
other person or entity. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
person or entity of any of the Intellectual Property Rights. The Company has
taken reasonable security measures to protect the secrecy, confidentiality
and
value of all of its Intellectual Property Rights.
(o) Labor
Relations.
No
material labor dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company which could reasonably
be
expected to result in a material adverse effect on the results of operations,
assets, business, prospects or condition (financial or otherwise) of the
Company. To the knowledge of the Company, no executive officer is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does
not
subject the Company to any liability with respect to any of the foregoing
matters. The Company is in compliance with all U.S. federal, state, local and
foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure
to be in compliance could not, individually or in the aggregate, reasonably
be
expected to have a material adverse effect on the results of operations, assets,
business, prospects or condition (financial or otherwise) of the
Company.
(p) Offering.
Assuming the accuracy of the representations and warranties of the Lenders
contained in Section 3 hereof, the offer, issue, and sale of the Securities
and Conversion Securities are exempt from the registration and prospectus
delivery requirements of the Securities Act and the registration or
qualification requirements of all applicable state securities laws.
Neither
the Company nor any authorized agent acting on its behalf will knowingly take
any action hereafter that would cause the loss of such exemptions.
(q) Acknowledgment.
The
Company acknowledges and agrees that each Lender is acting solely in the
capacity of an arm’s length purchaser with respect to the Securities and the
transactions contemplated hereby and thereby and that no Lender is (i) an
officer or director of the Company, (ii) an “affiliate” of the Company (as
defined in Rule 144 of the Securities Act) or (iii) to the knowledge of the
Company, a “beneficial owner” of more than 10% of the shares of Common Stock (as
defined for purposes of Rule 13d-3 of the Exchange Act). The Company further
acknowledges that no Lender is acting as a financial advisor or fiduciary of
the
Company (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby, and any advice given by any Lender or any
of
its representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to such Lender’s purchase
of the Securities. The Company further represents to each Lender that the
Company’s decision to enter into this Agreement, the Security Agreement, the
Intellectual Property Security Agreement and the Registration Rights Agreement
and issue the Securities has been based solely on the independent evaluation
by
the Company and its representatives.
9
(r) No
General Solicitation; Placement Agent’s Fees.
Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D of the Securities Act) in connection with
the offer or sale of the Securities. The Company shall be responsible for the
payment of any placement agent’s fees, financial advisory fees, or brokers’
commissions (other than for persons engaged by any Lender or its investment
advisor) relating to or arising out of the transactions contemplated hereby.
The
Company shall pay, and hold each Lender harmless against, any liability, loss
or
expense (including, without limitation, attorney’s fees and out-of-pocket
expenses) arising in connection with any such claim. The Company acknowledges
that it has engaged Xxxxxx & Xxxxxxx, LLC as placement agent (the
“Agent”)
in
connection with the sale of the Securities. Other than the Agent, the Company
has not engaged any placement agent or other agent in connection with the sale
of the Securities.
(s) No
Integrated Offering.
Neither
the Company nor any person acting on its behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of any of the
Securities under the Securities Act or cause this offering of the Securities
to
be integrated with prior offerings by the Company for purposes of the Securities
Act or any applicable shareholder approval provisions, including, without
limitation, under the rules and regulations of the American Stock Exchange
or
any other exchange or automated quotation system on which any of the securities
of the Company are listed or designated.
(t) Application
of Takeover Protections; Rights Agreement.
The
Company and its Board of Directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under that certain
Stockholders’ Rights Agreement, dated as of July 27, 1995, between the Company
and Registrar and Transfer Company, as amended, and any other rights agreement)
or other similar anti-takeover provision under the Certificate of Incorporation
or the laws of the jurisdiction of its formation which is or could become
applicable to (i) any Lender as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company’s issuance of the
Securities and any Lender’s ownership of the Securities and (ii) the Lenders and
their affiliates for a period of not less than five (5) years after the Closing
Date.
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(u) Form
S-3 Eligibility.
The
Company meets the eligibility requirements set forth in the SEC’s Form S-3
promulgated under the Securities Act for the registration of the Conversion
Shares for resale by the Lenders.
(v) Registration
Rights.
Except
as set forth on Schedule
4(v),
and
except for such rights as have previously be satisfied, other than each of
the
Lenders, no person or entity has any right to cause the Company to effect the
registration under the Securities Act of any securities of the
Company.
(w) Manipulation
of Price.
The
Company has not, and to its knowledge no one acting on its behalf has, (i)
taken, directly or indirectly, any action designed to cause or to result in
the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) other than the
Agent, sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Securities, or (iii) other than the Agent, paid or
agreed to pay to any person any compensation for soliciting another to purchase
any other securities of the Company.
(x) Disclosure.
All
disclosure provided to the Lenders with regard to the representations and
warranties contained in this Section 4 regarding the Company, its business
and
the transactions contemplated hereby, furnished in writing by Company is true
and correct in all material respects and does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to
make
the statements made therein, in the light of the circumstances under which
they
were made, not misleading.
(y) Alagebrium.
The
Company owns the rights, including all Intellectual Property Rights, to its
product candidate alagebrium free and clear of any license held by third parties
and has the ability to assign its rights therein, including pursuant to the
Security Agreement and the Intellectual Property Security Agreement, without
the
consent of any third party.
5. Affirmative
Covenants of the Company.
From
and after the Closing Date and so long as the Convertible Notes remain
outstanding, unless it receives the prior written consent of Lenders holding
a
majority in principal amount of all then outstanding Convertible Notes to act
to
the contrary, the Company shall comply with the following
covenants:
(a) Financial
Information.
The
Company shall maintain a system of accounting established and administered
in
accordance with GAAP consistently applied, and shall set aside on its books,
all
such proper reserves as shall be required by GAAP. Any Lender may direct the
Company by written notice from time to time to provide any or all of the
following materials or information in which case the Company shall furnish
such
materials or information, at the Company’s expense, to such Lender:
11
(i)
Unless
otherwise filed and available on the XXXXX system, no later than ninety (90)
days after the end of each fiscal year, audited consolidated financial
statements of the Company, together with all notes thereto, prepared in
reasonable detail in accordance with GAAP, together with an opinion, based
on an
audit by independent certified public accountants selected by the Company,
stating that such financial statements have been so prepared. The consolidated
financial statements of the Company shall contain a balance sheet as of the
end
of such fiscal year and a statement of operations, cash flows and stockholders’
equity for such fiscal year, each setting forth in comparative form the
corresponding figures for the preceding fiscal year.
(ii) Subject
to the prior receipt by the Company of a written Regulation FD-compliant
confidentiality agreement from the requesting Lender, no later than ninety
(90)
days following the first day of each fiscal year of the Company, a budget
prepared by the Company for each of the four quarters of such fiscal year
prepared in the same level of detail as prepared for and delivered to the
Company’s Board of Directors for the Company.
(iii) Unless
otherwise filed and available on the XXXXX system, no later than forty-five
(45)
days after the end of each of the first three fiscal quarters of the Company’s
fiscal year, the Company’s unaudited consolidated balance sheet as of the end of
such fiscal quarter and an unaudited consolidated statement of operations and
cash flows for such fiscal quarter and for the period from the beginning of
the
then current fiscal year to the end of such fiscal quarter, setting forth in
each case, in comparative form, figures for the corresponding periods in the
preceding fiscal year, all in reasonable detail and prepared in accordance
with
GAAP, subject to changes resulting from normal or recurring year-end
adjustments.
(iv) Subject
to the prior receipt by the Company of a written Regulation FD-compliant
confidentiality agreement from the requesting Lender, no later than thirty
(30)
days after the end of each calendar month, the Company’s unaudited consolidated
interim balance sheet as of the end of such month and the related unaudited
consolidated interim statements of operations and cash flows for such one-month
period and the portion of the fiscal year through the end of such month, setting
forth in each case, in comparative form, figures for the corresponding fiscal
periods in the preceding fiscal year (subject to normal year-end audit
adjustments and the absence of footnote disclosure).
12
(b) Inspections.
The
Company shall, and shall cause its Subsidiaries to, furnish to each Lender
any
information which such Lender may from time to time reasonably request
concerning any covenant, provision or condition of this Agreement, the Security
Agreement, the Intellectual Property Security Agreement, the Registration Rights
Agreement or the Securities or any matter in connection with the Company’s
business and operations. During normal business hours, upon reasonable notice
from Lenders holding a majority in principal amount of all then outstanding
Convertible Notes, and without undue interruption of the Company’s business, the
Company shall permit representatives of each Lender, including each Lender’s
independent accountants, agents, attorneys, appraisers and any other
representatives, to visit and inspect any of the Company’s property, including
its books of account, other books and records, and any facilities or other
business assets. The
inspections in accordance
with the preceding sentence shall be limited to no more than four (4) times
each
calendar year, and all out-of-pocket costs and expenses of such inspections
shall be borne by the applicable Lenders; provided,
however,
that
during any period in which an Event of Default (as such term is defined in
the
Convertible Notes) has occurred and is continuing, the number of inspections
shall not be limited, and the reasonable, documented out-of-pocket
costs and expenses of the inspections during the period
in
which an Event of Default has occurred and is continuing
shall be
borne by the Company. The information and access set forth in this Section
5(b)
shall in each case be subject to the Company’s prior receipt of a written
Regulation FD-compliant confidentiality agreement from the requesting
Lender.
(c) Use
of
Proceeds.
The
Company shall use the net cash proceeds of the sale of the Securities for
general corporate and working capital purposes.
(d) Maintenance
of Corporate Existence and Business.
The
Company will take such commercially reasonable action as may from time to time
be necessary to preserve its corporate existence, rights and franchises,
maintain its properties in good repair and to comply with the laws of the United
States and all states and locations in which the Company shall do business
as
shall be necessary to permit the Company to conduct its business, and to
preserve all of its rights, franchises and privileges.
(e) Compliance
with Laws.
The
Company shall comply with applicable laws, rules and regulations of all
governmental authorities, the violation of which might have a material adverse
effect upon its business or financial condition.
(f) Payment
of Taxes.
The
Company shall (i) timely file all required tax returns; and (ii) timely pay
all
taxes, assessments, and other governmental charges or levies imposed upon it
or
upon its income, profits or property, except to the extent the same are being
contested in good faith and for which adequate reserves under GAAP have been
established.
13
(g) Insurance.
The
Company shall maintain insurance in such amounts and covering such risks as
are
usually and customarily carried with respect to the Collateral (as
such
term is defined in the Convertible Notes) and any other assets and
property
of the Company of a character usually insured by similar entities engaged in
the
same or similar businesses as the Company. The Company shall at all times
maintain insurance against its liability for injury to persons or property,
which insurance shall be by financially sound and reputable
insurers.
(h) Subordination.
All
existing and hereafter arising Indebtedness of the Company shall be subordinated
to the Indebtedness and other obligations of the Company under this Agreement
and the Convertible Notes pursuant to subordination agreements reasonably
satisfactory in form and substance to the each Lender, in their sole and
absolute discretion.
(i) Listing.
The
Company shall promptly secure the listing of all of the Registrable Securities
(as defined in the Registration Rights Agreement) upon each national securities
exchange and automated quotation system, if any, upon which the Company’s Common
Stock is then listed (subject to official notice of issuance) and shall maintain
such listing of all Registrable Securities. The Company shall use commercially
reasonable efforts to maintain the authorization for listing of the Common
Stock
on the American Stock Exchange. The Company shall pay all fees and expenses
in
connection with satisfying its obligations under this
Section 5(i).
(j) Non-Voting
Observer.
For
so
long as at least 50% of the Convertible Notes remain outstanding, the Lenders
shall be entitled to designate one non-voting observer (an “Observer”)
to the
Board of Directors of the Company (which Observer shall be entitled to have
expenses reimbursed by the Company as if such Observer were a director of the
Company). Any person designated as an Observer to the Board of Directors will,
to the extent permissible under Delaware law, have the right (i) to notice
of and to be present at all meetings of the Board of Directors and its
committees and to receive all materials, notices, minutes, consents and forms
of
consents in lieu of meetings distributed to the Board of Directors generally
or
to members of its committees at or in connection with any such meeting or action
by written consent in lieu of such meeting, (ii) to have the same
access to
which
directors are entitled under Delaware law to the books and records of, and
information concerning the business and operations of, the Company and Board
of
Directors, (iii) to be provided with copies of all notices, minutes,
consents, forms of consents in lieu of meetings and all other materials provided
to one or more of the directors of the Company (who are not officers or
employees of the Company), and (iv) to have the same access to all
information and materials, books and records and employees of the Company as
may
be given to any director of the Company (who is not an officer or employee
of
the Company);
provided,
however,
that
the rights granted to the Observer under this Agreement (including the right
to
receive all materials, notices, minutes, consents and forms of consents in
lieu
of meetings) shall be temporarily suspended if, in the reasonable
opinion of the Board of Directors, the Observer’s attendance at any such meeting
or portion thereof (i) relates to a subject matter that may result in a conflict
of interest between the Company and any holder of Securities, or (ii) otherwise
could violate the fiduciary duties of the Board of Directors, any
confidentiality obligations of the Company or any attorney-client privilege
that
may exist in connection with such meeting or any portion thereof.
The
Board
of Directors shall not hold informal meetings of the Board of Directors or
any
committee thereof (unless the Observer is invited thereto) as a means designed
to circumvent or having the effect of circumventing the intention that the
Lenders will have access to the Board of Directors and its committees as
provided under this Agreement.
14
(k) Pre-Emptive
Rights.
From
the Closing Date until the later of (a) January 11, 2010, or (b) if issued,
the
date on which fewer than 50% of the shares of Preferred Stock initially issued
in the Preferred Financing (as defined in Section 5(k)) remain outstanding,
the
Company shall not directly or indirectly, offer, sell or grant any option to
purchase (or announce any offer, sale, grant or any option to purchase or other
disposition of) any Common Stock, Options or Convertible Securities (any such
offer, sale, grant, disposition or announcement being referred to as a
“Subsequent
Placement”)
unless
the Company shall have first complied with this Section 5(k).
(i) The
Company shall deliver at least ten (10) days prior to the closing of a
Subsequent Placement to each Lender a written notice (the “Offer
Notice”)
of any
proposed or intended issuance or sale or exchange (the “Offer”)
of the
securities being offered (the “Offered
Securities”)
in a
Subsequent Placement, which Offer Notice shall (A) identify and describe
the Offered Securities, (B) describe the price and other terms upon which
they are to be issued, sold or exchanged, and the number or amount of the
Offered Securities to be issued, sold or exchanged, and (C) offer to issue
and sell to or exchange with such Lenders at least 50% of the Offered
Securities, allocated among such Lenders (a) based on such Lender’s pro
rata portion of the aggregate principal amount of Convertible Notes purchased
hereunder (the “Basic
Amount”),
and
(b) with respect to each Lender that elects to purchase its Basic Amount,
any additional portion of the Offered Securities attributable to the Basic
Amounts of other Lenders as such Lender shall indicate it will purchase or
acquire should the other Lenders subscribe for less than their Basic Amounts
(the “Undersubscription
Amount”).
(ii) To
accept
an Offer, in whole or in part, such Lender must deliver a written notice to
the
Company prior to the end of the 10th
business
day after such Lender’s receipt of the Offer Notice (the “Offer
Period”),
setting forth the portion of such Lender’s Basic Amount that such Lender elects
to purchase and, if such Lender shall elect to purchase all of its Basic Amount,
the Undersubscription Amount, if any, that such Lender elects to purchase (in
either case, the “Notice
of Acceptance”).
If
the Basic Amounts subscribed for by all Lenders are less than the total of
all
of the Basic Amounts, then each Lender who has set forth an Undersubscription
Amount in its Notice of Acceptance shall be entitled to purchase, in addition
to
the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed
for; provided,
however,
that if
the Undersubscription Amounts subscribed for exceed the difference between
the
total of all the Basic Amounts and the Basic Amounts subscribed for (the
“Available
Undersubscription Amount”),
each
Lender who has subscribed for any Undersubscription Amount shall be entitled
to
purchase only that portion of the Available Undersubscription Amount as the
Basic Amount of such Lender bears to the total Basic Amounts of all Lenders
that
have subscribed for Undersubscription Amounts, subject to rounding by the
Company to the extent its deems reasonably necessary.
15
(iii) The
Company shall have forty-five (45) days from the expiration of the Offer Period
above to offer, issue, sell or exchange all or any part of such Offered
Securities as to which a Notice of Acceptance has not been given by the Lenders
(the “Refused
Securities”),
but
only upon terms and conditions (including, without limitation, unit prices
and
interest rates) that are not more favorable to the acquiring person or persons
or less favorable to the Company than those set forth in the Offer
Notice.
(iv) Upon
the
closing of the issuance, sale or exchange of all or less than all of the Refused
Securities, the Lenders shall acquire from the Company, and the Company shall
issue to the Lenders, the number or amount of Offered Securities specified
in
the Notices of Acceptance, as reduced pursuant to Section 5(k)(iii) above
if the Lenders have so elected, upon the terms and conditions specified in
the
Offer.
(v) Any
Offered Securities not acquired by the Lenders or other persons in accordance
with Section 5(k)(iii) above may not be issued, sold or exchanged until
they are again offered to the Lenders under the procedures specified in this
Agreement.
(vi) The
restrictions contained in this Section 5(k) shall not apply to the issuance
of any Common Stock issued or issuable: (i) under any Approved Stock Plan;
or (ii) upon conversion of the Convertible Notes or the exercise of the
Warrants. “Approved
Stock Plan”
means
any employee benefit plan which has been approved by the Board of Directors
and
stockholders of the Company, pursuant to which the Company’s securities may be
issued to any employee, officer or director for services provided to the
Company.
(l) Preferred
Financing.
As
promptly as practical after the Closing Date, and in no event later than March
31, 2007, each of the Company and the Lenders shall use their respective
commercially reasonable efforts to negotiate and enter into definitive
transaction documents pertaining to the transactions (the “Preferred
Financing”)
contemplated in that certain Memorandum of Proposed Terms for Private Placement
of Preferred Stock and Warrants dated as of January 4, 2007 (the “Term
Sheet”);
subject in the case of the Lenders to the satisfactory completion of their
due
diligence review in their sole discretion. Without limiting the generality
of
the foregoing, the Company shall provide each stockholder entitled to vote
at a
special or annual meeting of stockholders of the Company (the “Stockholder
Meeting”),
which
shall be promptly called and held not later than April 30, 2007 (which date
will
be extended to May 31, 2007) if the SEC reviews and comments on the proxy
statement relating to the Stockholder Meeting (the “Stockholder
Meeting Deadline”),
a
proxy statement, in a form reviewed and approved by the Lenders soliciting
each
such stockholder’s affirmative vote at the Stockholder Meeting for approval of
the Preferred Financing and the other matters contemplated in the Term Sheet
in
accordance with applicable law and the rules and regulations of the American
Stock Exchange (such affirmative approval being referred to herein as the
“Stockholder
Approval”),
and
the Company shall use its commercially reasonable efforts to solicit its
stockholders’ approval of such resolutions and to cause the Board of Directors
of the Company to recommend to the stockholders that they approve such
resolutions. The Company shall use its commercially reasonable efforts to obtain
the Stockholder Approval by the Stockholder Meeting Deadline.
16
6. Negative
Covenants of the Company.
From
and after the Closing Date and so long as the Convertible Notes remain
outstanding, unless it receives the prior written consent of Lenders holding
a
majority in principal amount of all then outstanding Convertible Notes to act
to
the contrary, the Company shall not:
(a) authorize
or incur any Indebtedness other than the Convertible Notes contemplated
hereby;
(b)
issue
or
sell any convertible debt, preferred stock (convertible or otherwise) or any
other equity or equity-linked security at a price that values the Company’s
Common Stock at a price less than $0.075 per share (as adjusted for all
subsequent stock splits, stock dividends, consolidations, recapitalizations
and
reorganizations), other than any equity or equity-linked security that is issued
pursuant to any transaction or transactions contemplated by Section 6(j) hereof
if the proviso at the end of this Section 6 is satisfied1 ;
(c) increase
or decrease the authorized number of shares of capital stock of the
Company;
(d) create
or
issue any new class or series of shares having rights, preferences or privileges
senior to the Common Stock;
(e) pay
or
declare any dividends or make other distributions upon its shares of capital
stock;
1 Under
consideration / to be confirmed.
17
(f) purchase,
redeem or otherwise acquire any of the Company’s equity securities (including
warrants, options and other rights to acquire equity securities) other than
the
repurchase of equity securities pursuant to existing agreements disclosed in
Schedule
6(f)
attached
hereto;
(g) issue
any
equity or equity-linked securities to any employee other that pursuant to the
Company’s Approved
Stock Plans;
(h) liquidate
or dissolve;
(i) merge
or
consolidate with another corporation in which the holders of the Company’s
voting equity securities immediately prior to the transaction would own 50%
or
less of the voting securities of the surviving corporation;
(j) sell,
license or dispose of any material assets of the Company, including intellectual
property or other rights to the Company’s development stage, pre-clinical and/or
diagnostic assets, including, without limitation, pursuant to any license,
development, commercialization, distribution, marketing, co-marketing,
collaboration, partnering or other agreement, other than licenses of immaterial
technology in the ordinary course of business on commercially reasonable terms
and consistent with past practices;
(k) change
the authorized number of directors of the Company;
(l) amend
or
waive any material provision of the Company’s Certificate of Incorporation or
By-Laws;
(m) materially
change the nature of the Company’s business from that engaged in on the date
hereof;
(n) intentionally
take any action which is reasonably likely to result in (i) the Common Stock
of
the Company no longer being approved for quotation on the American Stock
Exchange or the Nasdaq Stock Market or (ii) the Common Stock of the Company
ceasing to be registered pursuant to Section 12 of the Exchange Act;
or
(o) agree,
consent or acquiesce to any amendment, supplement or other modification to,
or
termination of, any of its material agreements, including, without limitation
any Material License Agreement or any other agreement filed with the SEC
pursuant to Item 601 of Regulation S-K;
provided,
however,
that
the Company shall not be required to obtain the Lenders’ prior written consent
for any transaction or transactions contemplated by Section 6(i) or 6(j)
hereof if the proceeds of such transaction or transactions are, at the
closing thereof, used for the repayment in full of the Convertible Note in
accordance with its terms, including any amounts required to be paid under
Section 9 of such Convertible Note.
18
7.
|
Conditions
to Closing.
|
(a) Conditions
to the Lenders’ Obligations.
Each
Lender’s obligation to purchase its Securities on the Closing Date is subject to
the following conditions:
(i) The
Company’s representations and warranties contained in Section 4 shall be true
and correct on and as of the Closing Date;
(ii) The
Company shall deliver to each Lender at the Closing an executed Convertible
Note
and Warrant in the forms attached hereto as Exhibit
A
and
Exhibit
B,
respectively, in the original principal amount and to purchase the number of
shares of Common Stock, respectively, set forth on Schedule
A;
(iii) The
Company shall deliver to each Lender at the Closing an executed Security
Agreement, in the form attached hereto as Exhibit
C,
among
the Company and the collateral agent named therein, as agent for all Lenders
(the “Collateral
Agent”),
to
secure the Company’s obligations under the Securities (the “Security
Agreement”);
(iv)
The
Company shall deliver to each Lender at the Closing an executed Intellectual
Property Security Agreement, in the form attached hereto as Exhibit
D,
among
the Company and Collateral Agent, to secure the Company’s obligations under the
Securities (the “Intellectual
Property Security
Agreement”);
The
Company shall deliver to each Lender at the Closing an executed Registration
Rights Agreement, in the form attached hereto as Exhibit
E,
among
the Company and each of the Lenders, to provide for the registration of the
Conversion Securities issuable upon conversion of the Warrants (the
“Registration
Rights Agreement”);
(v)
The
Company shall deliver a certificate of the Secretary of the Company dated the
Closing Date, certifying the incumbency and authority of the officers or
authorized signatories of the Company who execute this Agreement, the Security
Agreement, the Intellectual Property Security Agreement, the Registration Rights
Agreement and the Securities and the truth, correctness and completeness of
the
following exhibits which shall be attached thereto: (i) a copy of
resolutions duly adopted by the Board of Directors of the Company, in full
force
and effect at the time this Agreement is entered into, authorizing the execution
of this Agreement, the Security Agreement, the Intellectual Property Security
Agreement, the Registration Rights Agreement and the Securities and the other
documents delivered or to be delivered in connection herewith and the
consummation of the transactions contemplated herein and therein, as applicable,
(ii) a copy of the Certificate of Incorporation of the Company, and all
amendments thereto, certified by an appropriate official of the Company’s
jurisdiction of incorporation, and (iii) a copy of the By-Laws of the
Company; and
19
(vi) The
opinion of Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
counsel
to the Company, dated the Closing Date, and in the form attached hereto as
Exhibit F,
subject
only to such qualifications, limitations or exceptions as may be acceptable
to
each Lender.
(b) Conditions
to the Company’s Obligations.
The
Company’s obligation to issue the Securities to each Lender on the Closing Date
is subject to the following conditions:
(i) The
Lender’s representations and warranties contained in Section 3 shall be true and
correct on and as of the Closing Date; and
(ii) The
Lender shall have delivered to the Company the aggregate purchase price for
the
Securities being purchased by it hereunder.
8. Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their heirs, executors, administrators, successors, legal representatives,
and permitted assigns.
9. Amendment.
The
terms of this Agreement shall not be amended or modified except by a writing
signed by the Company and holders of a majority in principal amount of the
then
outstanding Convertible Notes; provided,
however,
that if
there are no Convertible Notes then outstanding, this Agreement shall not be
amended or modified except by a writing signed by the Company and the Collateral
Agent.
10. 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) sent
by
overnight courier, with receipt acknowledgment, or (iii) sent by certified
mail, return receipt requested, postage prepaid.
If
to a
Lender: To
its
address set forth on Schedule
A:
If
to the
Company: Alteon
Inc.
0
Xxxxxx
Xxxxx
Xxxxxxxxxx,
XX 00000
Fax:
(000) 000-0000
Attn:
Xxxx Xxxxxxxxx, President
20
and
to: Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Xxx
Xxxxxxxxx Xxxxxx
Xxxxxx,
XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxxxx X. Xxxxxx, Esq.
All
notices, requests, consents and other communications hereunder shall be deemed
to have been given (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 telecopy or facsimile transmission, at the time that receipt thereof
has
been acknowledged by electronic confirmation or otherwise, (iii) if sent by
overnight courier, on the next business day (or if sent overseas, on the second
business day) following the day such notice is delivered to the courier service,
or (iv) if sent by certified mail, on the 5th business day (or if sent
overseas, on the 10th business day) following the day such mailing is
made.
11. Assignability.
This
Agreement and the rights, interests and obligations hereunder are not
transferable or assignable by the Lenders, except in connection with a transfer
or assignment of the Securities in accordance with their terms.
12. Applicable
Law.
This
Agreement shall be governed by and construed in accordance with the internal
law
of the State of New York without regard to its conflicts of laws
principles.
13. Confidentiality.
Each
Lender
acknowledges and agrees that any information or data it has or will acquire
from
or about the Company, not otherwise properly in the public domain, was received
in confidence. Each Lender
agrees
not to divulge, communicate or disclose, except as may be required by law or
for
the performance of this Agreement, or use other than in connection with its
investment in the Company, any confidential information of the Company,
including any scientific, technical, trade or business secrets of the Company
and any scientific, technical, trade or business materials that are treated
by
the Company as confidential or proprietary, including, but not limited to,
ideas, discoveries, inventions, developments and improvements belonging to
the
Company and confidential information obtained by or given to the Company about
or belonging to third parties.
14. Authorization
of Agent.
Each of
the undersigned Lenders authorizes the Collateral Agent to act as its agent
for
all purposes under the Security Agreement and the Intellectual Property Security
Agreement and to take any and all actions that such agent deems reasonably
necessary, appropriate or advisable under the Security Agreement and the
Intellectual Property Security Agreement. The Collateral Agent shall have the
right to make demands, to give notices, to exercise or refrain from exercising
any rights, and to take or refrain from taking action (including, without
limitation, the release or substitution of the Collateral), in accordance with
this Agreement, the Security Agreement and the Intellectual Property Security
Agreement. The Collateral Agent may employ agents and attorneys-in-fact in
connection herewith and shall not be liable for the gross negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
The Collateral Agent shall be entitled to rely upon any written notice,
statement, certificate, order or other document believed by it to be genuine
and
correct and to have been signed, sent or made by the proper person, and, with
respect to all matters pertaining to this Agreement, the Security Agreement
and
the Intellectual Property Security Agreement and its duties hereunder and
thereunder, upon advice of counsel selected by it. The Collateral Agent shall
be
deemed to have exercised reasonable care in the custody and preservation of
the
Collateral in its possession if such Collateral is accorded treatment
substantially equivalent to that which the Collateral Agent, in its individual
capacity, accords its own property consisting of similar instruments or
interests, it being understood that neither the Collateral Agent nor any of
the
Lenders shall have responsibility for taking any necessary steps to preserve
rights against any person or entity with respect to any Xxxxxxxxxx.
00
00. Fees
and Expenses.
The
Company shall reimburse the Collateral Agent or
its
designee(s) (in addition to any other expense amounts paid to any Lender prior
to the date of this Agreement) for all reasonable costs and expenses incurred
in
connection with the transactions contemplated by this Agreement and the
Preferred Financing (including all reasonable legal fees and disbursements
in
connection therewith, documentation and implementation of the transactions
contemplated by this Agreement and the Preferred Financing and due diligence
in
connection therewith) subject to a maximum of One Hundred Thousand Dollars
($100,000). Except as otherwise set forth above or in the Security Agreement,
the Intellectual Property Security Agreement or the Registration Rights
Agreement, each party to this Agreement shall bear its own expenses in
connection with the sale of the Securities to the Lenders. Without limiting
the
generality of the foregoing, the Company shall be responsible for the payment
of
any placement agent’s fees, financial advisory fees, or broker’s commissions
relating to or arising out of the transactions contemplated hereby, including,
without limitation, any fees payable to the Agent; and the Company shall pay,
and hold each Lender harmless against, any liability, loss or expense
(including, without limitation, reasonable attorney’s fees and out-of-pocket
expenses) arising in connection with any claim relating to any such
payment.
16.
Indemnification.
In
consideration of each Lender’s execution and delivery of this Agreement, the
Security Agreement, the Intellectual Property Security Agreement and the
Registration Rights Agreement, to which such Lender may be a party, and each
Lender’s acquisition of the Securities hereunder and in addition to all of the
Company’s other obligations under this Agreement, the Security Agreement, the
Intellectual Property Security Agreement, the Registration Rights Agreement
and
the Securities (collectively with any other documents contemplated thereby,
the
“Transaction
Documents”),
the
Company shall defend, protect, indemnify and hold harmless each Lender and
each
other holder of the Securities and all of their shareholders, partners, members,
officers, directors, employees and any of the foregoing persons’ agents or other
representatives (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”)
from
and against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees
and disbursements (the “Indemnified
Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to
(a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents
or
any other certificate, instrument or document contemplated hereby or thereby,
or
(c) any cause of action, suit or claim brought or made against such Indemnitee
by a third party (including for these purposes a derivative action brought
on
behalf of the Company) and arising out of or resulting from (i) the execution,
delivery, performance or enforcement of the Transaction Documents, or (ii)
the
status of such Lender or other holder of the Securities as a lender to or an
investor in the Company pursuant to the transactions contemplated by the
Transaction Documents. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
22
17. Independent
Nature of Lenders’ Obligations and Rights.
The
obligations of each Lender under any Transaction Document are several and not
joint with the obligations of any other Lender, and no Lender shall be
responsible in any way for the performance of the obligations of any other
Lender under any Transaction Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Lender pursuant hereto or
thereto, shall be deemed to constitute the Lenders as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Lenders are in any way acting in concert or as a group
with
respect to such obligations or the transactions contemplated by the Transaction
Documents and the Company acknowledges that the Lenders are not acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Lender confirms that it has
independently participated in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors. Each Lender shall be
entitled to independently protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement or out of any other
Transaction Documents, and it shall not be necessary for any other Lender to
be
joined as an additional party in any proceeding for such purpose.
18. Miscellaneous.
(a) This
Agreement, together with the Securities, the Security Agreement, the
Intellectual Property Security Agreement and the Registration Rights Agreement,
constitute the entire agreement between the Lenders and the Company with respect
to the subject matter hereof and supersede all prior oral or written agreements
and understandings, if any, relating to the subject matter hereof; provided,
however,
(i) any
agreement pertaining to confidentiality is not superseded and shall remain
in
full force and effect and (ii) the Term Sheet (sections entitled “Effect of Term
Sheet,” “Exclusivity and Confidentiality,” and “Expense Reimbursement”) shall
remain in full force and effect; and provided further that the Exclusivity
and
Confidentiality section of the Term Sheet shall not apply to any equity or
equity-linked security that is issued pursuant to any transaction or
transactions contemplated by Section 6(j) hereof if the proviso at the end
of
Section 6 is satisfied.
23
(b) The
representations, warranties, covenants and agreements of the parties made in
this Agreement shall survive the execution and delivery hereof and the issuance
and delivery of the Securities.
(c) The
Company shall issue new Securities in place of any previously issued Securities
alleged to have been lost, stolen or destroyed, upon such terms and conditions
as the Board of Directors may prescribe, including the presentation of
reasonable evidence of such loss, theft or destruction (provided that an
affidavit of a holder will be satisfactory for such purpose) and the giving
of
such indemnity as the Company’s Board of Directors may request for the
protection of the Company or any transfer agent or registrar. Upon surrender
of
any previously issued Securities that has been mutilated, the Company shall
issue new Securities in place thereof.
(d) Each
provision of this Agreement shall be considered separable and if for any reason
any provision or provisions hereof are determined to be invalid or contrary
to
applicable law, such invalidity shall not impair the operation of or affect
the
remaining portions of this Agreement.
(e) Section
titles are for descriptive purposes only and shall not control or alter the
meaning of this Agreement as set forth in the text.
(f) This
Agreement may be executed in one or more counterparts each of which shall be
deemed an original, but all of which shall together constitute one and the
same
instrument.
[Signature
Page is Next]
24
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this
Agreement to be executed by their duly authorized representatives as of the
day
and date first written above.
ALTEON
INC.
|
||
|
|
|
By: | /s/ Xxxx Xxxxxxxxx | |
Xxxx
Xxxxxxxxx
President
and Chief Executive Officer
|
||
Counterpart
Signature Pages
Begin
on
Next Page
Counterpart
Signature Page For Lenders
The
undersigned hereby agrees to become a party to that certain Securities Purchase
Agreement dated as of January 11, 2007 (the “Agreement”)
among
Alteon Inc., a Delaware corporation (the “Company”) and others. From and after
the undersigned’s execution and delivery and the Company’s acceptance of this
Counterpart Signature Page, the undersigned shall be a party to the Agreement
and the Securities purchased by the undersigned shall be deemed to be
“Securities” for all purposes of the Agreement.
XXXXX/TISCH
INVESTMENTS, L.P.
By: Xxxxx/Xxxxx
Capital, L.P.,
its general partner
its general partner
By: Xxxxx/Tisch
Capital (GP), LLC,
its general partner
its general partner
By: /s/
Xxxxx
Xxxxx
Name: Xxxxx Xxxxx, Ph.D
Title: Managing Member
Name: Xxxxx Xxxxx, Ph.D
Title: Managing Member
Securities
Amount: US$
39,958.51
Address: 000
Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
00xx Xxxxx
Xxx Xxxx, XX 00000
Counterpart
Signature Page For Lenders
The
undersigned hereby agrees to become a party to that certain Securities Purchase
Agreement dated as of January 11, 2007 (the “Agreement”)
among
Alteon Inc., a Delaware corporation (the “Company”) and others. From and after
the undersigned’s execution and delivery and the Company’s acceptance of this
Counterpart Signature Page, the undersigned shall be a party to the Agreement
and the Securities purchased by the undersigned shall be deemed to be
“Securities” for all purposes of the Agreement.
XXXXX
BIOTECH FUND I, L.P.
By:
Xxxxx
Biotech Capital, L.P.,
its general partner
its general partner
By:
Xxxxx
Biotech Capital (GP), LLC,
its general partner
its general partner
By: /s/
Xxxxx
Xxxxx
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
Securities
Amount: US$
762,087.46
Address:
000
Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
00xx Xxxxx
Xxx Xxxx, XX 00000
Counterpart
Signature Page For Lenders
The
undersigned hereby agrees to become a party to that certain Securities Purchase
Agreement dated as of January 11, 2007 (the “Agreement”)
among
Alteon Inc., a Delaware corporation (the “Company”) and others. From and after
the undersigned’s execution and delivery and the Company’s acceptance of this
Counterpart Signature Page, the undersigned shall be a party to the Agreement
and the Securities purchased by the undersigned shall be deemed to be
“Securities” for all purposes of the Agreement.
Xxxxx
Brothers Life Sciences, L.P.
By:
Xxxxx
Brothers Life Sciences Capital, L.P.
its general partner
its general partner
By:
Xxxxx
Brothers Life Sciences Capital (GP), LLC
is general partner
is general partner
By: /s/
Xxxxx
Xxxxx
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
Securities
Amount: US$
2,128,162.10
Address:
000
Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
00xx Xxxxx
Xxx Xxxx, XX 00000
Counterpart
Signature Page For Lenders
The
undersigned hereby agrees to become a party to that certain Securities Purchase
Agreement dated as of January 11, 2007 (the “Agreement”)
among
Alteon Inc., a Delaware corporation (the “Company”) and others. From and after
the undersigned’s execution and delivery and the Company’s acceptance of this
Counterpart Signature Page, the undersigned shall be a party to the Agreement
and the Securities purchased by the undersigned shall be deemed to be
“Securities” for all purposes of the Agreement.
14159,
L.P.
By:
14159
Capital, L.P.,
its general partner
its general partner
By:
14159
Capital (GP), LLC,
is general partner
is general partner
By: /s/
Xxxxx
Xxxxx
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
Name: Xxxxx Xxxxx, Ph.D.
Title: Managing Member
Securities
Amount: US$
69,791.94_______
Address:
000
Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
00xx Xxxxx
Xxx Xxxx, XX 00000
SCHEDULE
A
LENDERS
Lender
Name and Address
|
Amount
of Notes
|
Number
of
Warrants
|
Xxxxx
Xxxxx Investments, L.P. 000 Xxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx,
XX 00000
|
$20,781.11
|
178,263
|
Xxxxx
Tisch Investments, L.P. 000 Xxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx,
XX 00000
|
$19,177.40
|
164,507
|
Xxxxx
Biotech Fund I, L.P.
000
Xxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000
|
$402,372.05
|
3,451,608
|
Xxxxx
Biotech Fund I, L.P.
000
Xxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000
|
$359,715.41
|
3,085,693
|
Xxxxx
Brothers Life Sciences, L.P. 000 Xxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx,
XX
00000
|
$2,128,162.10
|
18,255,696
|
00000,
X.X.
000
Xxxxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000
|
$69,791.94
|
598,686
|
Total:
|
$
3,000,000.00
|
25,734,453
|
EXHIBIT
A
FORM
OF SENIOR CONVERTIBLE SECURED PROMISSORY NOTE
See
attached.
EXHIBIT
B
FORM
OF WARRANT
See
attached.
EXHIBIT
C
FORM
OF SECURITY AGREEMENT
See
attached.
EXHIBIT
D
FORM
OF INTELLECTUAL PROPERTY SECURITY AGREEMENT
See
attached.
EXHIBIT
E
FORM
OF REGISTRATION RIGHTS AGREEMENT
See
attached.
EXHIBIT
F
FORM
OF OPINION OF COUNSEL
See
attached.