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EXHIBIT 10.23
DISTRIBUTION AGREEMENT BETWEEN PERIMMUNE, INC.,
AND MENTOR CORP.
This Exclusive Distribution Agreement (hereinafter the "Agreement") is
made in Rockville, Maryland, by and between PerImmune, Inc. (hereinafter
"PERIMMUNE"), a corporation existing under the laws of Delaware, and MENTOR
Corp. (hereinafter "MENTOR"), a corporation existing under the laws of
Minnesota.
WHEREAS, PERIMMUNE desires to sell and/or market its AuraTek-FDP Bladder
Cancer Diagnostic product and MENTOR desires to purchase PERIMMUNE's product
for resale to customers bearing a trademark or trade name and logo owned by
MENTOR; and
WHEREAS, the parties desire to enter into an agreement setting forth the
terms of their relationship;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties do hereby agree as follows:
1. Product. The product of PERIMMUNE covered by this Agreement is set forth
on Exhibit A attached hereto (hereinafter the "Product") and any future
modifications or improvements thereto. PERIMMUNE reserves the right to
modify the Product from time to time, and shall give MENTOR at least six
(6) months prior written notice before making changes to its
manufacturing process that would have an impact on any of PERIMMUNE's
product verifications or validations, or changes in raw materials that
would alter the operating principle of the Product or other changes that
could impact product labeling or promotional literature; provided,
however, that PERIMMUNE shall be required to provide MENTOR with only
reasonable advance notice where such modification is required to comply
with any applicable legal or regulatory requirement or the unanticipated
modification or unavailability of raw material.
2. Appointment and Acceptance. PERIMMUNE hereby grants MENTOR the exclusive
right to distribute the Products in the United States, and outside the
United States (the "Territory").
3. Term and Renewal. The term of this Agreement shall be for a period of
five (5) years, commencing on the Effective Date (the "Initial Term").
"Effective Date" means the date on which this Agreement is executed. This
Agreement shall automatically renew for additional and successive terms
of one (1) year unless either party provides written notice on
non-renewal at least six (6) months prior to the close of the Initial
Term or any anniversary date thereafter.
4. Terms of Sale.
(a) MENTOR shall fix the price of the individual Product sold hereunder.
On a monthly basis, MENTOR shall pay to PerImmune, in United States
Dollars, fifty
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percent (50%) of the Net Sales, as defined below, received by MENTOR
from the sale of the Product, less the Advances, as hereinafter
defined, paid by MENTOR to PerImmune during such month. For purposes
herein, "Advances" shall mean an amount equal to 25% of the list
price, per kit, paid by MENTOR to PerImmune within 30 days of
MENTOR's receipt of kits ordered by it. Unless MENTOR and PerImmune
otherwise agree in a writing signed by both of them, the payment and
other provisions set forth in this Agreement shall supersede those
of any subsequent purchase order, sales confirmation form or other
document hereafter sent by either party hereto to the other. For
purposes hereof, Net Sales shall mean the gross invoiced price for
the sales of the Products to Purchasers by MENTOR, its agents or
affiliates ("Gross Sales") less (a) any credits and allowances
granted by MENTOR to purchasers with respect to the Product,
including, without limitation, credits and allowances on account of
price adjustments, returns, discounts, and chargebacks, (b) any
sales, excise, value added, turnover or similar taxes, and (c)
transportation, insurance and handling expenses if separately
invoiced and directly chargeable to such sales.
(b) Within thirty (30) days after the end of each month MENTOR shall
submit a report to PERIMMUNE setting forth the (i) cumulative
number of kits purchased from PERIMMUNE through the end of the
preceding month (ii) 50% of net sales price for each such kit sold
through the end of the preceding month, (iii) the advances
previously paid for such kits. Each such report shall be
accompanied by payment of the difference between (ii) and (iii).
(c) Title and risk of loss shall pass to MENTOR upon release of Product
for shipment by PERIMMUNE to the designated carrier. All freight and
applicable insurance charges shall be the responsibility of MENTOR.
PERIMMUNE will be responsible for contracting freight services, in
accordance with Section 8(a) of this Agreement, for which MENTOR
will be billed on a shipment by shipment basis. Product is subject
to inspection and acceptance by MENTOR upon receipt. MENTOR shall be
deemed to have accepted all shipments of Product unless rejected for
non-conformity with the Quality Specifications, as hereinafter
defined, in accordance with Article 9 of this Agreement, within
twenty (20) working days after receipt of shipments from PERIMMUNE.
(d) Unless approved by MENTOR in writing, PERIMMUNE will not sell any
Product to MENTOR as of the effective date hereof that has less
than eighteen (18) months shelf-life from date of shipment by
PERIMMUNE.
5. Termination. Should any of the following events occur, the affected party
may terminate this Agreement by giving notice, in writing to be effective
on the date specified in the notice, namely,
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(a) failure to either party to observe any of the terms hereof to a material
extent and to remedy the same (where it is capable to being remedied)
after having received reasonable notice from the aggrieved party and a
reasonable opportunity to cure;
(b) either party becoming insolvent or having a receiver appointed of its
assets, or execution or distress levied upon its assets;
(c) an order being made or a resolution being passed for the winding up or
liquidation of either party;
(d) if PERIMMUNE discontinues manufacturing the product for valid business
reasons that cannot be remedied during the term of this Agreement then (i)
at the request of MENTOR, PERIMMUNE shall assist MENTOR in establishing an
alternative source of supply and shall transfer any necessary technology or
knowledge to MENTOR or its alternative supplier provided that MENTOR
reimburses PERIMMUNE the out-of-pocket costs of doing so (including salary
and benefits for time expended by PERIMMUNE employees, (ii) or if the
discontinuation occurs during the first three years MENTOR can receive the
return of its investment at its election. Nothing herein is intended to
permit PERIMMUNE to breach its obligation under the agreement.
6. Procedures on Termination. Upon termination or non-renewal of this
Agreement:
(a) MENTOR shall return to PERIMMUNE all literature which PERIMMUNE shall have
supplied to MENTOR and which is in its possession.
(b) the rights and duties of each party under this Agreement in respect of
performance prior to termination or non-renewal shall survive and be
enforceable in accordance with the terms of this Agreement.
(c) within thirty (30) days of receipt of PERIMMUNE's invoice therefor, MENTOR
will pay PERIMMUNE for all remaining inventory of Product for which MENTOR
has issued purchase orders to PERIMMUNE. Upon payment, PERIMMUNE will ship
such inventory to MENTOR at MENTOR's expense.
7. MENTOR's Duties. MENTOR shall:
(a) use best commercial efforts to advertise and promote the sale of the
Product in a manner calculated by MENTOR to yield benefit to the parties
hereto in light of the prevailing circumstances and to the extent to which
any products are at the relevant time competitive with other products.
MENTOR agrees that during the term of this Agreement, it will not market
any product using the same technology which detects the same analyte and
thereby directly competes with a Product.
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(b) submit its purchase orders to PERIMMUNE in writing or via facsimile, signed
by an authorized representative of MENTOR.
(c) pay all PERIMMUNE invoices in United States currency by company check.
(d) submit to PERIMMUNE a twelve (12) month forecast of purchases delivery
dates from PERIMMUNE for the Product in a format to be mutually determined
by the parties. Said forecast shall be submitted by MENTOR to PERIMMUNE
within thirty (30) days of commencement of the term of this Agreement, and
quarterly thereafter.
(e) obtain advance written authorization and a Returned Material Authorization
("RMA") prior to returning any of the Product.
(f) maintain a properly trained sales force of adequate size to represent and
promote the sale of the Product and provide instructions to customers in
the use of the Product. MENTOR shall be responsible for developing its own
marketing plan and system for dispensing the Product.
(g) carry in stock an inventory of Product sufficient to promptly fill the
orders of MENTOR's customers in the Territory.
(h) apply for and obtain all necessary licenses, permits and other
authorizations required by local law or regulation in relation to the
promotion, marketing, distribution and supply of the Product in any
jurisdiction or country in which MENTOR sells the Product.
(i) pay any import duty or like charge on the entry of the Product into the
Territory and any local or other applicable taxes.
(j) maintain separate and detailed accurate and complete records of all
transactions in respect of the Product, including, but not limited to, such
records as identify all customer purchases by Product and serial and/or lot
number, and possess the capability to notify all purchasers in the event of
a Product recall or corrective action.
(k) defray all expenses of and incidental to the distribution and sale of
Product hereunder incurred by MENTOR.
(l) make no contracts or commitments on behalf of PERIMMUNE or make any
promises or representations or give any warranties or guarantees with
respect to the Product except as herein expressly permitted or otherwise
incur any liability on behalf of PERIMMUNE without PERIMMUNE's prior
written consent, nor
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represent itself as agent or partner of PERIMMUNE.
(m) comply with all laws and regulations and requirements applicable to
a seller of in-vitro diagnostics products, and with all laws and
regulations and requirements of governmental agencies having
jurisdiction with the Territory.
(n) except as authorized in writing by PERIMMUNE, refrain absolutely
from using the trademark or trade name and logo of PERIMMUNE in
connection with the marketing, distribution and sale of any Product.
8. PERIMMUNE's Duties. PERIMMUNE shall:
(a) make reasonable best efforts, in good faith, to ship MENTOR's
orders for Product within thirty(30) days from date of order
receipt. MENTOR shall specify the method of shipment and insurance
and PERIMMUNE shall make reasonable best efforts, in good faith, to
comply with such specifications. If no such specification is made,
or if the specification cannot be reasonably complied with after
notice to MENTOR and an opportunity to resolve the issues
surrounding PERIMMUNE's alleged inability to comply, PERIMMUNE may
select a reasonable manner of shipment and insurance.
(b) at the time of shipment, the product will have a remaining shelf
life of not less than 16 months.
(c) will provide up to 12,000 units per year of product at PERIMMUNE's
cost plus shipping charges to be used by MENTOR for promotional
purposes at no reimbursement to MENTOR.
(d) comply with all laws and regulations and requirements applicable
to PERIMMUNE as a manufacturer of in-vitro diagnostic products.
(e) except as authorized in writing by MENTOR, refrain absolutely from
using the trademark or trade name and logo of MENTOR in connection
with the marketing, distribution and sale of any Product.
(f) provide reasonable technical assistance to MENTOR's personnel
necessary for the marketing of the Product.
(g) at PERIMMUNE's expense, provide MENTOR with written product inserts
relating to the Product's use, and with such amendments thereto as
subsequently become available.
(h) provide necessary documentation to assist MENTOR in meeting
requirements to
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register Products in the Territory, and where possible, allow MENTOR
to utilize prior registrations by PERIMMUNE.
(i) provide MENTOR with copies of the 510(k) premarket notifications
submitted for the Product, copies of current package insert for the
Product, copies of documents describing specifications for the
Product, and copies of all current and future correspondence with
the FDA pertaining to the Product. PERIMMUNE will comply with the
FDA's current GMP regulations in the manufacture of the Product, if
those regulations are modified to include components of finished
devices. If needed to comply with any change in the law or FDA's GMP
regulations or policies, MENTOR shall be given the right to inspect
PERIMMUNE's manufacturing facilities and GMP records pertaining to
the manufacture of the Product. If any action should be taken by the
FDA to restrict or prevent the distribution of any of the Product
for more than thirty (30) days, and such restriction is not due to
the negligence of MENTOR, then upon notice to PERIMMUNE, MENTOR
shall have the right to terminate this Agreement as to such Product.
PERIMMUNE shall replace any affected inventory of Product under
this section or refund to Mentor the purchase price it paid to
PERIMMUNE for such inventory if PERIMMUNE is unable to replace the
Product with comparable inventory. PERIMMUNE shall replace or
repurchase any affected inventory of Product which MENTOR replaces
or repurchases from MENTOR's customers, at the price MENTOR paid
PERIMMUNE for such inventory. IN NO CASE SHALL PERIMMUNE BE LIABLE
FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES.
(j) comply with the Federal Food, Drug, and cosmetic Act. The Product
comprising each shipment or other delivery hereafter made by
PERIMMUNE to, or on the order of, MENTOR, as of the date of such
shipment or delivery, shall be, on such date, not adulterated or
misbranded within the meaning of the Federal Food, Drug, and
Cosmetic Act.
9. Performance Standards.
(a) Quality Specifications and Characteristics. PERIMMUNE shall deliver
to MENTOR Product having the quality specifications agreed upon by
the parties as set forth in Exhibit B (the "Quality
Specifications").
(b) Certificate of Analysis. Concurrent with shipment, PERIMMUNE shall
fax to MENTOR a Certificate of Analysis, in the form set forth in
Exhibit B, for each lot of Product sold to MENTOR, confirming that
the Product meets the Quality Specifications.
(c) Product Acceptance. Within twenty (20) working days of receipt of
Product,
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MENTOR shall take and conduct analysis of samples of Product
delivered by PERIMMUNE. Should the result of an analysis of such
sample deviate from the Quality Specifications, MENTOR shall notify
PERIMMUNE in accordance with Article 4(c) hereof and immediately
thereafter provide PERIMMUNE with samples of the Product tested. If,
following a review of the test results and after conducting its own
tests of the sample, PERIMMUNE agrees that such sample does not
conform to the Quality Specifications, PERIMMUNE shall provide
MENTOR, free of any additional charge, with new deliveries of the
same quantity of the Product as the one from which the sample was
taken, or, in PERIMMUNE's discretion and at its cost, PERIMMUNE may
promptly reprocess the nonconforming Product to meet the Quality
Specifications. In either event, MENTOR shall return, at PERIMMUNE's
expense, the particular lot or shipment of the Product which does
not comply with the Quality Specifications if requested to do so by
PERIMMUNE.
10. PRODUCT RECALL.
(a) PERIMMUNE shall maintain an appropriate record of all claims made or
to be made regarding the Product's performance.
(b) Each party shall keep the other informed of any formal action
relating to any specific lot of Product sold to MENTOR hereunder by
an regulatory agency of any state, national government, or
government agency having jurisdiction.
(c) Should any governmental or corporate action require the recall or
field corrections or withholding from market of Product sold by
PERIMMUNE to MENTOR, MENTOR shall bear the reasonable, direct costs
and expenses of recall or field correction if such recall or field
correction is the result of any fault or omission attributable to
MENTOR and PERIMMUNE shall bear the cost of products and the actual
costs of replacing the Product if such recall or field correction is
the result of any fault or omission attributable to PERIMMUNE.
Should such recall or field correction result from the fault of both
parties, the parties shall share the costs of Products and the
actual cost of replacing the Products in proportion to their
respective degree of fault.
11. PRODUCT COMPLAINTS.
(a) Should either party experience any quality problem involving field
correction or recall of any specific lot(s) of Product supplied to
MENTOR by PERIMMUNE, such party will notify the other in writing by
facsimile within twenty-four (24) hours of the initiation of the
field correction or recall. Both parties will test retained samples
of lots in question and report its findings to the other within ten
(10) working days. Each party retains the right to correct field
problems arising
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out of its fault or omission as it deems appropriate, with or without
the concurrence of the other. All information about Product complaints
shall be considered "Confidential Information" under the terms of the
Agreement.
(b) Either party shall immediately notify the other party in writing should
it become aware of any defect or condition that renders any lot(s) of
Product supplied by PERIMMUNE to MENTOR in violation of the United
States Food, Drug and Cosmetic Act, or of a similar law of any
jurisdiction or country where the Product is sold. The parties shall
share with each other all data on confirmed lot specific Product
complaints including, but not limited to, complaints or information
regarding performance and/or allegations or reports of any negative
effect from the use or misuse of such affected lot of Product as soon as
such data is available. Each party will provide reasonable assistance to
the other in resolving customer complaints to the extent the complaint
arises out of any fault or omission of the party whose assistance is
requested. However, MENTOR shall have sole responsibility and authority
to interact directly with MENTOR's customers in the resolution of such
complaints and PERIMMUNE agrees that it will only interact with MENTOR
in such matters.
(c) PERIMMUNE shall evaluate and investigate all customer complaints in
connection with the Product which may be brought to its attention, in
writing, by MENTOR; provided such complaints have been confirmed by
MENTOR QA/QC or technical service personnel using the same standards for
confirmation which MENTOR's uses for products other than the PERIMMUNE
Product and which are believe in good faith by MENTOR to arise out of a
fault or omission attributable to PERIMMUNE. Within twenty (20) calendar
days following receipt from MENTOR of the original notification of each
such complaint, PERIMMUNE agrees to provide MENTOR with a written
interim or final complaint investigation report, using the same
standards for evaluation and investigation that PERIMMUNE uses for
products other than the Product. All such Product complaints reported to
PERIMMUNE by MENTOR shall be reviewed monthly by PERIMMUNE until
closure, and a summary report thereof will be provided by PERIMMUNE to
MENTOR.
(d) PERIMMUNE will report to MENTOR all data and/or information pertaining
to adverse reports on any lot of Product supplied by PERIMMUNE for
distribution by MENTOR which would have a materially adverse impact on
performance of the Product.
(e) Recalls or field notifications with respect to the Product, or any of
them, shall be the responsibility of the party whose fault or omission
necessitated such action, as described in Article 10(c).
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(f) Should there be a difference of opinion between PERIMMUNE and
MENTOR regarding a field notification or recall, MENTOR will
exercise the right to notify its customers without delay.
12. Warranties.
(a) PERIMMUNE warrants that the Product which is or will be the subject
of FDA cleared 510(k) premarket notifications have not been changed
or modified in design, components, method of manufacture or
intended use from the Product as described in those 510(k)
premarket notifications, and will notify MENTOR in advance of any
changes in accordance with Article 1.
(b) PERIMMUNE warrants that the Product manufactured and supplied under
this Agreement shall at the time of shipment meet the Quality
Control Specifications of PERIMMUNE which are attached to this
Agreement as Exhibit B. No claim under this warranty may be made
with respect to a unit of the Product if shipped or used after the
expiration of the shelf-life of the Product as determined by
PERIMMUNE. PERIMMUNE further warrants that prior to shipment to
MENTOR, all of its standard tests and quality control procedures
have been carried out in relation to each lot of the Product with
satisfactory results. The limited warranty to MENTOR set forth in
this Agreement shall control over any warranty provisions which may
be set forth in MENTOR's Product literature and MENTOR shall hold
PERIMMUNE harmless from any and all damages and expenses which
PERIMMUNE may incur as a result of unauthorized MENTOR warranties
or representations. PERIMMUNE MAKES NO WARRANTY EXPRESSED OR
IMPLIED WITH RESPECT TO THE PRODUCTS BEYOND THAT WHICH IS SET FORTH
IN THIS AGREEMENT INCLUDING THE WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR ANY PARTICULAR PURPOSE. Any warranty made by MENTOR to
its customers with respect to the Product shall not obligate
PERIMMUNE in any way.
(c) Upon its verification of any claim of defect or nonconformity of
any unit of the Product arising out of a fault or omission
attributable to PERIMMUNE, during the term of this Agreement,
PERIMMUNE will provide MENTOR with a replacement unit to the extent
necessary to honor PERIMMUNE's warranties contained in Section
12(a) hereof, or make good any shortages or non-completed
deliveries and shall pay all associated freight and insurance
associated therewith.
(d) PERIMMUNE's liability under any legal or equitable theory to any
person with respect to the Product and/or the relationship
described in this Agreement shall be limited to the replacement of
the unit, or if impractical, return of the purchase price paid by
MENTOR for such unit. PERIMMUNE shall in no event be liable to
MENTOR or any other person for any incidental or consequential
damages, lost
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profits, cost procurement of substitute goods or any indirect,
special, or consequential damages even if PERIMMUNE has been
informed of the possibility thereof.
(e) As of the date hereof, PERIMMUNE warrants that it has no knowledge
that the manufacture, use or sale of all or any of the Product under
this Agreement, nor any method of using such Product infringes on
any patent or other industrial property right of a third party, and
PERIMMUNE has not received any notification from any third party
alleging that the manufacture, use or sale of any such Product does
or would infringe any patent or other industrial property. PERIMMUNE
shall further disclose all information relating to the art of the
Product of which it is, or becomes, aware relating to intellectual
property, when PERIMMUNE recognizes necessary to do so.
13. Packaging and Intellectual Property. MENTOR shall be responsible for
packaging and labeling the Product. MENTOR will distribute the Product
only with all appropriate labeling, packaging, and Product literature
and only under MENTOR's applicable trademarks and trade names. MENTOR
recognizes PERIMMUNE's right, title and interest in its patents,
trademarks, trade names and copyrights, trade secrets and proprietary
information in connection with the Product, and MENTOR shall not claim
any ownership right thereto inconsistent with this Agreement, or dispute
the validity thereof. In the event any third party shall contest
PERIMMUNE's rights to its patents, trademarks, trade names or
copyrights, trade secrets or propriety rights, MENTOR shall, at
PERIMMUNE's sole expense, render reasonable assistance to PERIMMUNE in
defending such claims.
14. Compliance with other Agreements. Each party represents and warrants
that the execution and delivery by it of this Agreement and the
performance by it of its obligations hereunder will not, with or without
the giving of notice or the passage of time, violate any judgement,
writ, injunction or order of any court, arbitration or governmental
agency or conflict with, result in the breach of any provisions of, or
the termination of, or constitute a default under, any agreement to
which PERIMMUNE or MENTOR is a party or by which it is or may be bound.
15. Indemnity.
(a) Except as limited by the remainder of this paragraph, PERIMMUNE
hereby agrees to indemnify MENTOR against claims of third parties
for injuries to their persons arising from the use of Product
supplied by PERIMMUNE to MENTOR hereunder. This indemnity shall not
apply to, and PERIMMUNE shall not be liable for, claims for injuries
caused by or arising from:
1) any act or failure to act on the part of MENTOR, its employees,
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representatives, agents, or subsidiaries in packaging,
handling, storing or otherwise distributing such Product; or
2) any representation or warranty concerning the Product made by
or on behalf of MENTOR and not specifically authorized by
PERIMMUNE; or
3) claims where the use of the Product by any customer was not in
accordance with the use prescribed by PERIMMUNE; or
4) MENTOR'S failure to disseminate to purchasers or end-users
any Product Information which PERIMMUNE has made available to
MENTOR; or
5) claims where PERIMMUNE has not been notified in writing within
forty five (45) days of MENTOR's first notice of the claim; or
6) claims where MENTOR fails to furnish evidence in its
possession or fails to fully cooperate with PERIMMUNE in
preparing the defense; or
7) claims where PERIMMUNE is not given the option to assume the
sole defense of the claim at PERIMMUNE's expense; or
(b) PERIMMUNE shall indemnify MENTOR from any claims of patent
infringement relating to a Product subject to this Agreement
provided MENTOR gives PERIMMUNE notice within forty-five (45) days
of MENTOR's first notice of the claim, and permits PERIMMUNE to
assume the sole defense of the claim at PERIMMUNE's expense;
provided, however, that the claim is not based upon (i) the sale or
use of any Product in combination with any other product which is
not specifically authorized by PERIMMUNE in writing; (ii) the
application of any Product in any manner not specifically
authorized by PERIMMUNE in writing.
(c) MENTOR shall indemnify and hold PERIMMUNE harmless from and against
any third party action brought against PERIMMUNE and any loss
therefrom arising or related to this Agreement, except as may be
caused by the negligent or willful act of PERIMMUNE.
(d) Notwithstanding anything above to the contrary, in the event of a
third party claim arising out of this Agreement, in which neither
PERIMMUNE or MENTOR is in breach of this Agreement or is
negligent, each party shall pay its respective legal expenses and
damages caused by such claim.
16. Fees. MENTOR acknowledges that it will pay $500,000 (USD) to PERIMMUNE in
connection with this Agreement, unless MENTOR elects to take an equity
position in PERIMMUNE.
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17. Force Majeure. Neither party shall be responsible for any failure to
perform due to causes beyond its control. These causes shall include, but
not be limited to, fire, storm, flood, earthquake, explosion, wars,
riots, civil disorder, sabotage, quarantine restrictions, labor disputes,
labor shortages, transportation embargoes, or failure or delays or
disruption in manufacturing process, curtailment of or failure in
obtaining fuel or electrical power, or the acts of any governmental
authority, or instrumentalities, orders of any court or tribunal whether
foreign or domestic, exchange restrictions, acts of God, acts of the
Federal Government or any agency thereof, acts of any state or local
government or agency thereof, or shortage of materials or any similar or
dissimilar occurrence beyond the reasonable control of the party which is
prevented, interrupted or delayed in the performance of its obligations
hereunder. In no event shall PERIMMUNE be under any obligations to
purchase Products or similar products from any third party in order to
supply same to MENTOR hereunder. Any force majeure event shall not excuse
performance by the party but shall delay performance, unless such force
majeure continues for a period in excess of ninety (90) days. In such
event, the party seeking performance, as its sole and exclusive remedy,
may cancel its obligations under this Agreement.
18. Insurance. Each party shall keep in force during the term of this
Agreement product liability insurance in such amounts as may be customary
for like sized businesses undertaking like responsibilities to those
contemplated by this Agreement. Each party shall submit a certificate of
insurance to the other evidencing such coverage upon written request
therefor.
19. Confidentiality.
(a) Confidentiality Defined. For the purposes of this Agreement, the
term "Confidential Information" shall be any information embodying
concepts, ideas, techniques, proprietary information, know-how,
formulations, market data, customer lists, product specifications
and accounting date which:
(1) is disclosed by one party hereto to the other;
(2) is claimed by the disclosing party to be secret, confidential
and proprietary to the disclosing party; and
(3) if disclosed in writing, is marked by the disclosing party to
indicate its confidential nature or if disclosed orally as
confidential, is confirmed in writing by the disclosing party
to be confidential within ten (10) days following disclosure.
(b) Non-Disclosure. During the period that this Agreement remains in
effect and for a period of three (3) years following termination
thereof, each party (except as is explicitly otherwise required
hereby) shall keep confidential, shall not use for itself
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or for the benefit of others and shall not copy or allow to be
copied in whole or in part any Confidential Information disclosed to
such party by the other. The obligation of confidentiality imposed
upon the parties by the foregoing paragraph shall not apply with
respect to any alleged Confidential Information which:
(1) is known to the recipient thereof, as evidenced by said
recipient's written records, prior to receipt thereof from the
other party hereto;
(2) is disclosed to said recipient after the date hereof by the
third party who has the right to make such disclosures and who
does not violate any confidentiality agreement with the
affected party hereto;
(3) is or becomes a part of the public domain through no fault of
the said recipient; or
(4) is required by law or judicial or administrative process to be
disclosed.
(c) PERIMMUNE and MENTOR shall agree to keep confidential and not
disclose to third parties, the supply and working relationship under
this Agreement.
(d) Each party agrees to limit access to Confidential Information to
employees and agents having a need to know and to protect
Confidential Information to the same extent as it protects its own
trade secrets.
20. Appointment of Sub-Distributors. MENTOR may assign, sublicense, delegate,
or otherwise transfer the performance of the rights and obligations
hereunder to qualified and reputable sub-distributors, provided, however,
that: (I) MENTOR shall be liable to PERIMMUNE for the errors, negligent
acts and omissions of its sub-distributor's as if such errors, negligent
acts and omissions were its own, including any breach of any provision of
this Agreement by the sub-distributors; (ii) MENTOR shall have and retain
full control of any sub-distributors utilized, and shall be responsible
for the performance by any sub-distributor, and (iii) MENTOR shall not be
relieved of the responsibility for the proper performance and completion
of the sub-distributed portions of its obligations hereunder.
21. Successors. This agreement shall be binding upon the successors of
PERIMMUNE and MENTOR, including successors who acquire the business assets
of PERIMMUNE and MENTOR. In the event the Principal(s) of PERIMMUNE shall
sell all or a majority of the outstanding stock of PERIMMUNE, or in the
event PERIMMUNE sells the business relating to the manufacture and sale
for the Product, then the term of this Agreement may be extended
unilaterally by MENTOR for three (3) successive terms of one (1) year each
from the date of the transfer of the control of PERIMMUNE, or sale of the
Product business, or the date for termination under the Agreement,
whichever is the later, upon the
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14
terms of this Agreement. MENTOR shall give PERIMMUNE written notice of its
intent to extend the term of this Agreement within thirty (30) days after
PERIMMUNE advises MENTOR of the sale of PERIMMUNE's Product business and at
least ninety (90) days before the end of each one (1) year term.
22. Resolution of Disputes. In the event of any controversy or claim arising
under or in relation to this Agreement, including any issue about payment
of amounts due, the parties shall, in good faith, attempt to resolve the
controversy or claim by negotiation. If the controversy or claim cannot be
resolved within sixty (60) days, then either party shall be entitled to
initiate litigation to resolve the dispute unless the parties have
mutually agreed to arbitrate the dispute.
23. Notices. Any notice or other communication required or that shall be
given pursuant to this Agreement shall be deemed sufficient if delivered
personally, sent by facsimile, telegraph, or sent by certified, registered
or express mail, postage prepaid to the address or facsimile number set
forth below:
To PERIMMUNE:
PERIMMUNE, INC.
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Facsimile No: 301/840-2161
ATTN: President and CEO
MENTOR CORPORATION
0000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Facsimile No: 805/967-3362
ATTN: Chairman of the Board, CEO
Either party may change the address to which notice to it is to be given,
as provided herein.
24. Entire Agreement. This Agreement and the exhibits referred to herein
constitute the entire Agreement between the parties and supersede all
prior proposals, communications, representations and agreements, whether
written or oral, with respect to the subject matter hereof. No change to
the written terms of this Agreement shall be made except by written
instrumentation executed by the parties hereto.
25. No Waiver. The failure of either party to enforce at any time any of the
provisions of this Agreement shall not be construed to be a waiver of
those provisions or of the right of that party thereafter to enforce those
provisions.
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15
26. Severability. If any provision of this Agreement is or becomes or is
deemed invalid, illegal or unenforceable in any jurisdiction in which the
Agreement is sought to be enforced, (a) such provision shall be deemed and
amended to conform to applicable laws of such jurisdiction so as to be
valid and enforceable or, if it cannot be so amended without materially
altering the intention of the parties, it shall be stricken; (b) the
validity, legality and enforceability of such provision will not in any
way be affected or impaired thereby in any other jurisdiction; and (c) the
remainder of this Agreement shall remain in full force and effect.
27. Headings. The headings of this Agreement are included only for ease of
reference and shall not affect the interpretation of this Agreement in any
manner.
28. THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION ENFORCEABLE BY
EITHER PARTY.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers or authorized representatives.
PERIMMUNE, INC.
By: /s/ [SIG]
------------------------
Title: President & CEO
------------------------
Date: 6/16/97
------------------------
MENTOR CORPORATION
By: /s/ [SIG]
------------------------
Title: Chief Executive Officer
------------------------
Date: June 13, 1997
------------------------
15
16
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL
RIGHTS AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
PERIMMUNE HOLDINGS, INC.
17
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
PERIMMUNE HOLDINGS, INC.
----------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
----------
PERIMMUNE HOLDINGS, INC., a Delaware corporation (the "Corporation"),
certifies that pursuant to the authority contained in Article Fourth of its
Certificate of Incorporation (the "Certificate of Incorporation") and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the Board of Directors of the Corporation by unanimous
written consent dated June __, 1997 adopted the following resolution which
resolution remains in full force and effect on the date hereof.
RESOLVED, that there is hereby established a series of authorized
preferred stock having a par value of $0.01 per share, which series shall be
designated as "Series B Convertible Preferred Stock" (the "Series B Preferred
Stock"), shall consist of 20 shares and shall have the following voting powers,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof as follows:
1. Certain Definitions.
Unless the context otherwise requires, the terms defined in this
paragraph 1 shall have, for all purposes of this resolution, the meanings
herein specified (with terms defined in the singular having comparable meanings
when used in the plural).
Business Day. The term "Business Day" shall mean a day other than a
Saturday or Sunday or any federal holiday.
18
Common Equity. The term "Common Equity" shall mean all shares now or
hereafter authorized of any class of common stock of the Corporation, including
the Common Stock, and any other stock of the Corporation, howsoever designated,
authorized after the Initial Issue Date, which has the right (subject always to
prior rights of any class or series of preferred stock) to participate in the
distribution of the assets and earnings of the Corporation without limit as to
per share amount.
Common Stock. The term "Common Stock" shall mean the common stock, par
value $0.01 per share, of the Corporation.
Conversion Date. The term "Conversion Date" shall have the meaning set
forth in subparagraph 4(b) below.
Conversion Price. The term "Conversion Price" shall initially mean $50,000
and thereafter shall be subject to adjustment from time to time pursuant to the
terms of paragraph 4 below.
Dividend Payment Date. The term "Dividend Payment Date" shall have the
meaning set forth in subparagraph 2(b) below.
Dividend Period. The term "Dividend Period" shall mean the period from,
and including, the Initial Issue Date to, but not including, the first Dividend
Payment Date and thereafter, each annual period from, and including, the
Dividend Payment Date to, but not including, the next Dividend Payment Date.
Initial Issue Date. The term "Initial Issue Date" shall mean the date that
shares of Series B Preferred Stock are first issued by the Corporation.
Junior Stock. The term "Junior Stock" shall mean, for purposes of
paragraph 2 below, Common Equity and any class or series of stock of the
Corporation authorized after the Initial Issue Date which, by its terms, is not
entitled to receive any dividends in any Dividend Period unless all dividends
required to have been paid or declared and set apart for payment on the Series
B Preferred Stock shall have been so paid or declared and set apart for
payment, and for purposes of paragraph 3 below, shall mean Common Equity and
any class or series of stock of the Corporation authorized after the Initial
Issue Date which, by its terms, is not entitled to receive any assets upon
liquidation, dissolution or winding up of the affairs of the Corporation until
the Series B Preferred Stock shall have received the entire amount to which
such stock is entitled upon such liquidation, dissolution or winding up.
Liquidation Preference. The term "Liquidation Preference" shall mean
$50,000 per share.
Parity Stock. The term "Parity Stock" shall mean Series A Convertible
Preferred Stock, and, for purposes of paragraph 2 below, any class or series of
stock of the Corporation
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19
authorized after the Initial Issue Date which, by its terms, is entitled to
receive payment of dividends on a parity with the Series B Preferred Stock, and
for purposes of paragraph 3 below, shall mean any class or series of stock of
the Corporation authorized after the Initial Issue Date which, by its terms, is
entitled to receive assets upon liquidation, dissolution or winding up of the
affairs of the Corporation on a parity with the Series B Preferred Stock.
Qualifying Convertible Securities Offering. The term "Qualifying
Convertible Securities Offering" shall mean a private offering of securities
that are convertible into shares of Common Stock effected by the Corporation
within twelve-months of the Initial Issue Date which yields gross offering
proceeds to the Corporation in excess of $5 million; provided, however, that,
if more than one such offering is effected within the twelve-month period
following the Initial Issue Date, only the first such offering shall constitute
a "Qualifying Convertible Securities Offering."
Qualifying IPO. The term "Qualifying IPO" means the first registered,
underwritten public offering of shares of Common Stock by the Corporation.
Record Date. The term "Record Date" shall mean the date designated by
the Board of Directors of the Corporation at the time a dividend is declared,
provided, however, that such Record Date shall not be more than thirty (30)
days nor less than ten (10) days prior to the respective Dividend Payment Date
or such other date designated by the Board of Directors for the payment of
dividends.
Redemption Date. The term "Redemption Date" shall have the meaning set
forth in subparagraph 5(a) below.
Redemption Price. The term "Redemption Price" shall mean a price per
share equal to the Liquidation Preference together with accrued and unpaid
dividends thereon to the Redemption Date.
Senior Stock. The term "Senior Stock" shall mean, for purposes of
paragraph 2 below, any class or series of stock of the Corporation authorized
after the Initial Issue Date which, by its terms, ranks senior to the Series B
Preferred Stock in respect of the right to receive dividends, and for purposes
of paragraph 3 below, shall mean any class or series of stock of the
Corporation authorized after the Initial Issue Date which, by its terms, ranks
senior to the Series B Preferred Stock in respect of the right to participate
in any distribution upon liquidation, dissolution or winding up of the affairs
of the Corporation.
2. Dividends.
(a) Subject to the prior preferences and other rights of any Senior
Stock as to dividends, the record holders of Series B Preferred Stock shall be
entitled to receive dividends if, when and as declared by the Board of
Directors of the Corporation, out of funds legally available for payment of
dividends. Such dividends shall by the Corporation be payable in cash at the
rate of seven percent (7%) per annum of the Liquidation Preference.
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20
(b) Dividends on shares of Series B Preferred Stock shall be payable
annually in arrears when and as declared by the Board of Directors of the
Corporation on each anniversary of the Initial Issue Date (a "Dividend Payment
Date"), commencing on June __, 1998. If any Dividend Payment Date occurs on a
day that is not a Business Day, any accrued dividends otherwise payable on such
Dividend Payment Date shall be paid on the next succeeding Business Day.
Dividends shall be paid to the holders of record of the Series B Preferred
Stock as their names shall appear on the share register of the Corporation on
the Record Date for such dividend. Dividends payable in any Dividend Period
which is less than a full Dividend Period in length will be computed on the
basis of a 365 day Dividend Period and actual days elapsed in such Dividend
Period. Dividends on account of arrears for any past Dividend Periods may be
declared and paid at any time to holders of record on the Record Date therefor.
(c) So long as any shares of Series B Preferred Stock shall be
outstanding, the Corporation shall not declare, pay or set apart for payment on
any Junior Stock any dividends whatsoever, whether in cash, property or
otherwise (other than dividends payable in shares of the class or series upon
which such dividends are declared or paid, or payable in shares of Common Stock
with respect to Junior Stock other than Common Stock, together with cash in
lieu of fractional shares), nor shall the Corporation make any distribution on
any Junior Stock, nor shall any Junior Stock be purchased, redeemed or
otherwise acquired by the Corporation or any of its subsidiaries of which it
owns not less than a majority of the outstanding voting power, nor shall any
monies be paid or made available for a sinking fund for the purchase or
redemption of any Junior Stock, unless all dividends to which the holders of
Series B Preferred Stock shall have been entitled for all previous Dividend
Periods shall have been paid or declared and a sum of money sufficient for the
payment thereof has been set apart.
(d) In the event that full dividends are not paid or made available to
the holders of all outstanding shares of Series B Preferred Stock and of any
Parity Stock and funds available for payment of dividends shall be insufficient
to permit payment in full to holders of all such stock of the full preferential
amounts to which they are then entitled, then the entire amount available for
payment of dividends shall be distributed ratably among all such holders of
Series B Preferred Stock and of any Parity Stock in proportion to the full
amount to which they would otherwise be respectively entitled.
(e) Notwithstanding anything contained herein to the contrary, no
dividends on shares of Series B Preferred Stock shall be declared by the Board
of Directors of the Corporation or paid or set apart for payment by the
Corporation at such time as the terms and provisions of any agreement of the
Corporation, including any agreement relating to its indebtedness, prohibits
such declaration, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
3. Distributions Upon Liquidation, Dissolution or Winding Up.
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(a) In the event of any voluntary or involuntary liquidation,
dissolution or other winding up of the affairs of the Corporation, subject to
the prior preferences and other rights of any Senior Stock as to liquidation
preferences, but before any payment or distribution shall be made to the
holders of Junior Stock, the holders of Series B Preferred Stock shall be
entitled to be paid out of the assets of the Corporation in cash or property at
its fair market value as determined by the Board of Directors of the
Corporation the Liquidation Preference per share plus an amount equal to all
dividends accrued and unpaid thereon to the date of such liquidation or
dissolution or such other winding up. Except as provided in this paragraph
holders of Series B Preferred Stock shall not be entitled to any distribution
in the event of liquidation, dissolution or winding up of the affairs of the
Corporation.
(b) If, upon any such liquidation, dissolution or other winding up of
the affairs of the Corporation the assets of the Corporation shall be
insufficient to permit the payment in full of the Liquidation Preference per
share plus an amount equal to all dividends accrued and unpaid on the Series B
Preferred Stock and the full liquidating payments on all Parity Stock, then the
assets of the Corporation remaining after the distributions to holders of any
Senior Stock of the full amounts to which they may be entitled shall be ratably
distributed among the holders of Series B Preferred Stock and of any Parity
Stock in proportion to the full amounts to which they would otherwise be
respectively entitled if all amounts thereon were paid in full. Neither the
consolidation or merger of the Corporation into or with another corporation or
corporations, nor the sale, lease, transfer or conveyance of all or
substantially all of the assets of the Corporation to another corporation or
any other entity shall be deemed a liquidation, dissolution or winding up of
the affairs of the Corporation within the meaning of this paragraph 3.
4. Conversion Rights.
(a) Each share of Series B Preferred Stock (i) may be converted into
Common Stock at any time before the close of business on the Redemption Date
(unless the Corporation shall default in payment of the Redemption Price) at
the option of the holder thereof and (ii) if not previously converted or
redeemed in accordance with the terms hereof, shall be automatically converted
into Common Stock upon consummation of a Qualifying IPO (i.e., upon the closing
of the offering comprising the Qualifying IPO), effective immediately prior to
the consummation of such Qualifying IPO. For the purposes of conversion, each
share of Series B Preferred Stock shall be deemed to have a value equal to the
sum of (i) the Liquidation Preference and (ii) all accrued and unpaid dividends
on such share of Series B Preferred Stock (such sum being referred to as the
"Per Share Value"), and the number of shares of Common Stock issuable upon
conversion of one share of Series B Preferred Stock (which number may be a
fraction of one share) shall equal (x) the Per Share Value, divided by (y) the
Conversion Price in effect on the Conversion Date (rounded to the nearest 100th
of a share). Immediately following such conversion, the rights of the holders
of converted Series B Preferred Stock shall cease and the persons entitled to
receive the Common Stock upon the conversion of Series B Preferred Stock shall
be treated for all purposes as having become the owners of such Common Stock.
(b) To convert Series B Preferred Stock, a holder must (i) surrender the
5
22
certificate or certificates evidencing the shares of Series B Preferred
Stock to be converted, duly endorsed in a form satisfactory to the
Corporation, at the office of the Corporation or transfer agent for the
Series B Preferred Stock, (ii) notify the Corporation at such office that
he elects to convert the Series B Preferred Stock, and the number of
shares he wishes to convert, (iii) state in writing the name or names in
which he wishes the certificate or certificates for shares of Common Stock
to be issued, and (iv) pay any transfer or similar tax if required. In the
event that a holder fails to notify the Corporation of the number of
shares of Series B Preferred Stock which he wishes to convert, he shall be
deemed to have elected to convert all shares represented by the
certificate or certificates surrendered for conversion. The date on which
the holder satisfies all those requirements is the "Conversion Date." As
soon as practical, the Corporation shall deliver a certificate for the
number of full shares of Common Stock issuable upon the conversion and a
new certificate representing the unconverted portion, if any, of the
shares of Series B Preferred Stock represented by the certificate or
certificates surrendered for conversion. The person in whose name the
Common Stock certificate is registered shall be treated as the stockholder
of record on and after the Conversion Date. If a holder of Series B
Preferred Stock converts more than one share at a time, the number of full
shares of Common Stock issuable upon conversion shall be based on the
total value of all shares of Series B Preferred Stock converted. If the
last day on which Series B Preferred Stock may be converted is not a
Business Day, the shares of Series B Preferred Stock may be surrendered
for conversion on the next succeeding Business Day.
(c) If a holder converts shares of Series B Preferred Stock, the
Corporation shall pay any documentary, stamp or similar issue or transfer
tax due on the issue of shares of Common Stock upon the conversion.
However, the holder shall pay any such tax which is due because the shares
are issued in a name other than the holder's name.
(d) The Corporation has reserved and shall continue to reserve out
of its authorized but unissued Common Stock or its Common Stock held in
treasury enough shares of Common Stock to permit the conversion of the
Series B Preferred Stock in full. All shares of Common Stock which may be
issued upon conversion of Series B Preferred Stock shall be fully paid and
nonassessable. The Corporation will comply in all material respects with
all securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Series B Preferred Stock.
(e) If the Corporation:
(i) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into
a greater number of shares;
(iii) combines its outstanding shares of Common Stock into
a smaller number of shares; or
6
23
(iv) issues by reclassification of its Common Stock any shares of its
capital stock;
then the Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of Series B Preferred Stock thereafter converted may
receive the number of shares of capital stock of the Corporation which he would
have owned immediately following such action if he had converted Series B
Preferred Stock immediately prior to such action. The adjustment shall become
effective immediately after the record date in the case of dividend or
distribution and immediately after the effective date of a subdivision,
combination or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur. If, after an adjustment referred to
in clauses (i) through (iv) above, a holder of Series B Preferred Stock upon
conversion of it may receive shares of two or more classes of capital stock of
the Corporation, the Corporation shall determine the allocation of the adjusted
Conversion Price between the classes of capital stock. After such allocation,
the Conversion Price of each class of capital stock shall thereafter be subject
to adjustment on terms comparable to those applicable to Common Stock in this
subparagraph (e).
(f) No adjustment in the Conversion Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Price. Any adjustments that are not made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under
this paragraph 4 shall be made to the nearest cent or to the nearest 1/100th of
a share, as the case may be.
(g) Whenever the Conversion Price is adjusted, the Corporation shall
promptly mail to holders of Series B Preferred Stock, first class, postage
prepaid, a notice of the adjustment. The Corporation shall file with the
transfer agent, if any, for Series B Preferred Stock a certificate from the
Corporation's independent public accountants briefly stating the facts requiring
the adjustment and the manner of computing it. The certificate shall be
conclusive evidence that the adjustment is correct.
(h) The Corporation from time to time may reduce the Conversion Price
by any amount for any period of time if the period is at least twenty (20)
Business Days and if the reduction is irrevocable during the period, but in no
event may the Conversion Price be less than the par value of a share of Common
Stock. In the event the Corporation shall reduce the Conversion Price of any
Parity Stock, then the Corporation shall reduce the Conversion Price by the
same proportionate amount and for the same period of time as for the conversion
price of such Parity Stock, provided that, in no event, should the Conversion
Price be less than the par value of a share of Common Stock. Whenever the
Conversion Price is reduced, the Corporation shall mail to holders of Series B
Preferred Stock a notice of the reduction. The Corporation shall mail, first
class, postage prepaid, the notice at least 15 days before the date the reduced
conversion price takes effect. The notice shall state the reduced conversion
price and the period it will be in effect.
(i) If the Corporation is party to a merger which reclassifies or
changes its Common Stock, upon consummation of such transaction Series B
Preferred Stock shall automatically become convertible into the kind and amount
of securities, cash or other assets which
7
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the holder of Series B Preferred Stock would have owned immediately after the
consolidation, merger, transfer or lease if such holder had converted Series B
Preferred Stock immediately before the effective date of the transaction,
appropriate adjustment (as determined by the Board of Directors of the
Corporation) shall be made in the application of the provisions herein set forth
with respect to the rights and interests thereafter of the holders of Series B
Preferred Stock, to the end that the provisions set forth herein (including
provisions with respect to changes in and other adjustment of the Conversion
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other securities or property thereafter
deliverable upon the conversion of Series B Preferred Stock. If this
subparagraph 4(k) applies, subparagraph 4(e) does not apply.
(j) In any case in which this paragraph 4 shall require that an
adjustment as a result of any event become effective from and after a record
date, the Corporation may elect to defer until after the occurrence of such
event the issuance to the holder of any shares of Series B Preferred Stock
converted after such record date and before the occurrence of such event of the
additional shares of Common Stock issuable upon such conversion over and above
the shares issuable on the basis of the Conversion Price in effect immediately
prior to adjustment.
(k) All shares of Series B Preferred Stock converted pursuant to
this paragraph 4 shall be retired and shall be restored to the status of
authorized and unissued shares of preferred stock, without designation as to
series and may thereafter be reissued as shares of any series of preferred stock
other than Series B Preferred Stock.
5. Redemption by the Corporation
(a) The Corporation shall redeem on the fifth anniversary of the
Initial Issue Date (the "Redemption Date") at the Redemption Price all of the
then issued and outstanding shares of Series B Preferred Stock. If the
Redemption Date is on or after a dividend record date and on or before the
related Dividend Payment Date, the dividend payable shall be paid to the holder
in whose name the Series B Preferred Stock is registered at the close of
business on such record date.
(b) No Series B Preferred Stock may be redeemed except with funds
legally available for the payment of the Redemption Price.
(c) In case that, on the Redemption Date, the Corporation does not
have sufficient funds available to redeem all of the then issued and outstanding
shares of Series B Preferred Stock and, accordingly, less than all shares of
Series B Preferred Stock at the time outstanding, the shares to be redeemed
shall be selected pro rata or by lot as determined by the Corporation in its
sole discretion. Any shares not so redeemed shall remain outstanding.
(d) Notwithstanding the foregoing provisions of this paragraph 5,
unless the full cumulative dividends on all outstanding shares of Series B
Preferred Stock shall have been paid or contemporaneously are declared and paid
for all past dividend periods, none of the shares of Series B Preferred Stock
shall be redeemed unless all outstanding shares of Series B Preferred Stock are
8
25
simultaneously redeemed.
(e) All shares of Series B Preferred Stock redeemed pursuant to this
paragraph 5 shall be retired and shall be restored to the status of authorized
and unissued shares of preferred stock, without designation as to series and
may thereafter be reissued as shares of any series of preferred stock other
than shares of Series B Preferred Stock.
6. Voting Rights
Except as otherwise set forth in this Section 6 or as otherwise
provided by law, the holders of shares of Series B Preferred Stock shall have
no voting rights:
During such time as any shares of Series B Preferred Stock are
outstanding, the Corporation will not, without the vote of the holders of a
majority of the Series B Preferred Stock voting separately as a class (i) file
or cause to be filed with the Secretary of State of the State of Delaware a
certificate of dissolution with respect to the Corporation as provided for in
Section 275 and Section 103 of the Delaware general Corporation Law; (ii) amend,
alter or repeal any of the provisions of the Certificate of Incorporation so as
to affect adversely the powers, preferences or rights of the holders of Series B
Preferred Stock then outstanding or reduce the minimum time for any required
notice to which the holders of the Series B Preferred Stock then outstanding may
be entitled (an amendment of the Certificate of Incorporation to authorize or
create, or to increase the authorized amount of any common stock or any other
series of preferred stock being deemed not to affect adversely the powers,
preferences, or rights of the holders of the Series B Preferred Stock); or (iii)
merge or consolidate with or into any other corporation, unless each holder of
Series B Preferred Stock immediately preceding such merger or consolidation
shall receive or continue to hold in the resulting corporation the same number
of shares, with substantially the same rights and preferences, including,
without limitation, as set forth in Section 4(k) hereof, as correspond to the
shares of Series B Preferred Stock so held.
7. Exclusion of Other Rights
Except as may otherwise be required by law, the shares of Series B
Preferred Stock shall not have any voting powers, preferences and relative,
participating, optional or other special rights, other than those specifically
set forth in this resolution (as such resolution may be amended from time to
time) and in the Certificate of Incorporation. The shares of Series B Preferred
Stock shall have no preemptive or subscription rights.
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26
IN WITNESS WHEREOF, the Corporation has caused this certificate to
be duly executed by the undersigned officer and attested by its Secretary, this
___ day of June, 1997.
PERIMMUNE HOLDINGS, INC.,
--------------------------------
Xxxxxxx X. Xxxxx, President
ATTEST:
By:
-------------------------
Secretary
10
27
EXHIBIT B
FORM OF
REGISTRATION RIGHTS AGREEMENT
28
===============================================================================
PERIMMUNE HOLDINGS, INC.
---------------
REGISTRATION RIGHTS AGREEMENT
DATED AS OF JUNE __, 1997
===============================================================================
29
TABLE OF CONTENTS
Page
----
1. DEFINITIONS................................................. 2
2. PIGGYBACK REGISTRATIONS..................................... 5
(a) Participation.......................................... 5
(b) Underwriter's Cutback.................................. 5
(c) Company Control........................................ 5
3. HOLD-BACK AGREEMENTS........................................ 6
4. REGISTRATION PROCEDURES..................................... 6
5. REGISTRATION EXPENSES....................................... 10
(a) Piggyback Registrations................................ 10
(b) Company Expenses....................................... 10
6. INDEMNIFICATION............................................. 11
(a) Indemnification by Company............................. 11
(b) Indemnification Procedures............................. 11
(c) Indemnification by Holder of Registrable Securities.... 12
(d) Contribution........................................... 13
7. EXCHANGE ACT REPORTING REQUIREMENTS......................... 13
8. REQUIREMENTS FOR PARTICIPATION IN UNDERWRITTEN OFFERINGS.... 14
9. SUSPENSION OF SALES......................................... 14
10. MISCELLANEOUS................................................ 14
(a) Remedies............................................... 14
i
30
TABLE OF CONTENTS (cont'd)
Page
----
(b) No Inconsistent Agreements............................. 15
(c) Amendments and Waivers................................. 15
(d) Notices................................................ 15
(e) Successors and Assigns................................. 16
(f) Counterparts........................................... 16
(g) Table of Contents and Headings......................... 16
(h) Governing Law.......................................... 16
(i) Severability........................................... 16
(j) Forms.................................................. 16
(k) Entire Agreement....................................... 16
ii
31
PERIMMUNE HOLDINGS, INC.
0000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000
This Registration Rights Agreement ("Agreement") is made and entered into
as of June __, 1997, by and among PerImmune Holdings, Inc., a Delaware
corporation (the "Company"), and the stockholder of the Company who is a
signatory hereto (the "Investor"). The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Board of Directors: The Board of Directors of the Company.
Claim: Any loss, claim, damages, liability or expense (including the
reasonable costs of investigation and legal fees and expenses).
Common Stock: The common stock, par value $0.01 per share, of the Company.
Equity Security: Any capital stock of the Company or any security
convertible, with or without consideration, into any such stock, or any
security carrying any warrant or right to subscribe to or purchase any such
stock, or any such warrant or right.
Exchange Act: The Securities Exchange Act of 1934, as from time to time
amended.
Firm Commitment Underwritten Offering: An offering in which the
underwriters agree to purchase securities for distribution pursuant to a
registration statement under the Securities Act and in which the obligation
of the underwriters is to purchase all the securities being offered if any are
purchased.
Holder: The beneficial owner of a security. For all purposes of this
Agreement, the Company shall be entitled to treat the record owner of a
security at the beneficial owner of such security unless the Company has been
given written notice of the existence and identity of a different beneficial
owner.
Indemnified Holder: Any Holder of Registrable Securities, any officer,
director, employee or agent of any such Holder and any Person who controls any
such Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act.
Misstatement: An untrue statement of material fact or an omission to
state a material fact required to be stated in a Registration Statement or
Prospectus or necessary to make the statements in a Registration Statement,
Prospectus or preliminary prospectus not misleading.
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Person: A natural person, partnership, corporation, business trust
association, joint venture or other entity or a government or agency or
political subdivision thereof.
Piggyback Registration: A registration pursuant to Section 2 hereof.
Preferred Stock: The Series B Convertible Preferred Stock, par value
$0.01 per share, being issued and sold pursuant to the Purchase Agreement.
Prospectus: The prospectus included in any Registration Statement, as
supplemented by any and all prospectus supplements and as amended by any and
all post-effective amendments and including all material incorporated by
reference in such prospectus.
Qualifying IPO: The first registered, underwritten public offering of
shares of Common Stock by the Company.
Registrable Securities: (a) The shares of Common Stock held by the
Investor, and (b) any securities issued or issuable with respect to such Common
Stock by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
reorganization; provided that any such share or other security shall be deemed
to be Registrable Securities only if and so long as it is a Transfer Restricted
Security.
Registration: A Piggyback Registration.
Registration Expenses: The out-of-pocket expenses of a Registration,
including:
(1) all registration and filing fees (including fees with
respect to filings required to be made with the National Association
of Securities Dealers);
(2) fees and expenses of compliance with securities or blue sky
laws (including fees and disbursements of counsel for the underwriters
or selling holders in connection with blue sky qualifications of the
Registrable Securities and determinations of their eligibility for
investment under the laws of such jurisdictions as the managing
underwriters or holders of a majority of the Registrable Securities
being sold may designate);
(3) printing, messenger, telephone and delivery expenses;
(4) fees and disbursements of counsel for the Company, counsel
for the underwriters and of not more than one firm of attorneys for
the sellers of the Registrable Securities (the attorneys for such
sellers to be determined by a vote of the majority of the
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aggregate shares of Registrable Securities requested to be included in
the Registration Statement for such Registration);
(5) fees and disbursements of all independent certified public
accountants of the Company incurred in connection with such
Registration (including the expenses of any special audit and "cold
comfort" letters incident to such registration);
(6) fees and disbursements of underwriters (excluding discounts,
commissions or fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals relating to the
distribution of the Registrable Securities);
(7) premiums and other costs of securities acts liability
insurance if the Company so desires or if the underwriters or selling
holders of Registrable Securities so require; and
(8) fees and expenses of any other Persons retained by the
Company.
Registration Statement: Any registration statement under the
Securities Act on an appropriate form (which form shall be available for
the sale of the Registrable Securities in accordance with the intended
method or methods of distribution thereof and shall include all financial
statements required by the SEC to be filed therewith) which covers
Registrable Securities pursuant to the provisions of this Agreement,
including the Prospectus included in such registration statement,
amendments (including post-effective amendments) and supplements to such
registration statement, and all exhibits to and all material incorporated
by reference in such registration statement.
Securities Act: The Securities Act of 1933, as from time to time
amended.
SEC: The Securities and Exchange Commission.
Transfer Restricted Security: A security that has not been sold to or
through a broker, dealer or underwriter in a public distribution or other
public securities transaction or sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act
under Rule 144 promulgated thereunder (or any successor rule). The
foregoing notwithstanding, a security shall remain a Transfer Restricted
Security until (i) all stop transfer instructions or notations and
restrictive legends with respect to such security have been lifted or
removed and (ii) the Holder of such security has received at Company
expense an opinion of counsel to the Company (which counsel and opinion are
reasonably satisfactory to such Holder), to the effect that such shares in
such Holder's hands are freely transferable in any public or private
transaction without registration under the Securities Act (or such Holder
has waived receipt of such opinion).
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Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for
distribution to the public.
2. PIGGYBACK REGISTRATIONS
(a) PARTICIPATION
Each time the Company decides to file a Registration Statement
under the Securities Act (other than on Forms S-4 or S-8 or any successor form
thereto and other than in connection with a Qualifying IPO) covering the offer
and sale by it or any of its security holders of any of its securities for
money, the Company shall give written notice thereof to all Holders of
outstanding Registrable Securities, which written notice shall state that the
Company has decided to so file a registration statement and shall include the
approximate date that such registration statement is expected to be filed with
the SEC and the name of any underwriter (if any) with respect to such offering.
The Company shall include in such registration statement such shares within 30
days after such written notice has been given. If the registration statement is
to cover an Underwritten Offering, such Registrable Securities shall be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters.
(b) UNDERWRITER'S CUTBACK
Subject to the requirements of Section 10 hereof, if in the good
faith judgment of the managing underwriter of such offering the inclusion of
all of the shares of Registrable Securities and any other Common Stock
requested to be registered would interfere with the successful marketing of a
smaller number of such shares, then the number of shares of Registrable
Securities and other Common Stock to be included in the offering shall be
reduced to such smaller number with the participation in such offering to be in
the following order of priority: (1) first, the shares of Common Stock which
the Company proposes to sell for its own account, (2) second, the shares of
Registrable Securities and any other shares of Common Stock requested to be
included. Any necessary allocation among the Holders of shares within each of
the foregoing groups shall be pro rata among such Holders requesting such
registration based upon the number of shares of Common Stock and Registrable
Securities owned by such Holders.
(c) COMPANY CONTROL
The Company may decline to file a Registration Statement after
giving notice to any Holder pursuant to Section 3(a) above, or withdraw a
Registration Statement after filing and after such notice, but prior to the
effectiveness thereof, provided that the Company shall promptly notify each
Holder in writing of any such action and provided further that the Company
shall bear all expenses incurred by such Holder or otherwise in connection with
such withdrawn Registration Statement.
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3. HOLD-BACK AGREEMENTS
Upon the written request of the managing underwriter of any
Underwritten Offering of the Company's securities, a Holder of Registrable
Securities shall not sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any Registrable Securities (other than
those included in such registration) without the prior written consent of such
managing underwriter for a period (not to exceed 30 days before the effective
date and 180 days thereafter) that such managing underwriter reasonably
determines is necessary in order to effect the underwritten public offering;
provided that each of the officers and directors of the Company shall have
entered into substantially similar holdback agreements with such managing
underwriter covering at least the same period.
4. REGISTRATION PROCEDURES
If and whenever the Company is required to register Registrable
Securities in a Piggyback Registration, the Company will use its best efforts
to effect such registration to permit the sale of such Registrable Securities
in accordance with the intended plan of distribution thereof, and pursuant
thereto the Company will as expeditiously as possible:
(a) prepare and file with the SEC as soon as practicable a
Registration Statement with respect to such Registrable Securities and use its
best efforts to cause such Registration Statement to become effective and
remain continuously effective until the date earlier to occur of (i) the date
six months from the date such Registration Statement was declared effective,
and (ii) the date the last of the Registrable Securities covered by such
Registration Statement have been sold provided that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto,
the Company shall furnish to the Holders of the Registrable Securities covered
by such Registration Statement and the underwriters, if any, draft copies of
all such documents proposed to be filed, which documents will be subject to the
review of such Holders and underwriters, and the Company shall not file any
Registration Statement or amendment thereto or any Prospectus or any supplement
thereto to which the Holders of a majority of the Registrable Securities
covered by such Registration Statement or the underwriters, if any, shall
reasonably object;
(b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement, and such supplements
to the Prospectus, as may be requested by any Holder of Registrable Securities
or any underwriter of Registrable Securities or as may be required by the
rules, regulations or instructions applicable to the registration form used by
the Company or by the Securities Act or rules and regulations thereunder to
keep the Registration Statement effective until all Registrable Securities
covered by such Registration Statement are sold in accordance with the intended
plan of distribution set forth in such Registration Statement or supplement to
the Prospectus;
(c) promptly notify the selling Holders of Registrable
Securities and the managing underwriter, if any, and (if requested by any such
Person) confirm such advice in writing,
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(1) when the Prospectus or any supplement or post-effective
amendment has been filed, and, with respect to the Registration Statement
or any post-effective amendment, when the same has become effective,
(2) of any request by the SEC for amendments or supplements to the
Registration Statement or the Prospectus or for additional information,
(3) of the issuance by the SEC of any stop under suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose,
(4) if at any time the representations and warranties of the Company
contemplated by clause (1) of paragraph (o) below cease to be accurate in
all material respects,
(5) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, and
(6) of the existence of any fact which results in the Registration
Statement, the Prospectus or any document incorporated therein by
reference containing a Misstatement;
(d) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible time;
(e) if requested by the managing underwriter or a Holder of Registrable
Securities being sold in connection with an Underwritten Offering, immediately
incorporate in a supplement or post-effective amendment such information as the
managing underwriter and the Holders of a majority of the Registrable
Securities being sold agree should be included therein relating to the sale of
the Registrable Securities, including, without limitation, information with
respect to the number of shares of Registrable Securities being sold to
underwriters, the purchase price being paid therefor by such underwriters and
with respect to any other terms of the Underwritten Offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
supplement or post-effective amendment as soon as notified of the matters to be
incorporated in such supplement or post-effective amendment;
(f) promptly prior to the filing of any document which is to be
incorporated by reference into the Registration Statement or the Prospectus
(after initial filing of the Registration Statement) provide copies of such
document to counsel to the selling Holders of Registrable Securities and to the
managing underwriter, if any, and make the Company's representatives available
for discussion of such document and make such changes in such document prior to
the filing thereof as counsel for such selling Holders or underwriters may
reasonably request;
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(g) furnish to each selling Holder of Registrable Securities and the
managing underwriter, without charge, at least one signed copy of the
Registration Statement and any post-effective amendments thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(h) deliver to each selling Holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of each Prospectus (and
each preliminary prospectus) as such Persons may reasonably request (the
Company hereby consenting to the use of each such Prospectus (or preliminary
prospectus) by each of the selling Holders of Registrable Securities and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus (or preliminary prospectus);
(i) prior to any public offering of Registrable Securities, register
or qualify or cooperate with the selling Holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as such selling
Holders or underwriters may designate in writing and do anything else necessary
or advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or to take any action which would subject it
to general service of process in any such jurisdiction where it is not then so
subject;
(j) cooperate with the selling Holders of Registrable Securities and
the managing underwriter, if any, to facilitate the timely preparation and
delivery of certificates not bearing any restrictive legends representing the
Registrable Securities to be sold and cause such Registrable Securities to be
in such denominations and registered in such names as the managing underwriter
may request at least three business days prior to any sale of Registrable
Securities to the underwriters;
(k) use its best efforts to cause the Registrable Securities covered
by the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller
or sellers thereof or the underwriters, if any, to consummate the disposition
of such Registrable Securities;
(l) if the Registration Statement or the Prospectus contains a
Misstatement, prepare a supplement or post-effective amendment to the
Registration Statement or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, the Prospectus will
not contain a Misstatement;
(m) cause all Registrable Securities covered by the Registration
Statement to be listed on any national securities exchange or authorized for
quotation on NASDAQ or in the National Market System on which Common Stock is
then listed or is authorized for quotation, if requested by the Holders of a
majority of such Registrable Securities or the managing underwriter, if any;
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(n) provide a CUSIP number for all Registrable Securities not later
than the effective date of the Registration Statement;
(o) enter into such agreements (including an underwriting agreement)
and do anything else necessary or advisable in order to expedite or facilitate
the disposition of such Registrable Securities, and in such connection, whether
or not the registration is an Underwritten Registration:
(1) make such representations and warranties to the Holders of
such Registrable Securities and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters
in primary Underwritten Offerings;
(2) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriter, if any,
and the Holders of a majority of the Registrable Securities being
sold) addressed to each selling Holder and the underwriter, if any,
covering the matters customarily covered in opinions delivered to
underwriters in primary Underwritten Offerings and such other matters
as may be reasonably requested by such Holders or underwriters;
(3) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the
selling Holders of Registrable Securities and the underwriters, if
any, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by underwriters in
connection with primary Underwritten Offerings;
(4) if an underwriting agreement is entered into, cause the same
to include the indemnification and contribution provisions and
procedures of Section 6 hereof with respect to all parties to be
indemnified pursuant to said Section (or, with respect to the
indemnification of such underwriters, such similar indemnification and
contribution provisions as such underwriters shall customarily
require); and
(5) deliver such documents and certificates as may be requested
by the Holders of a majority of the Registrable Securities being sold
and the managing underwriter, if any, to evidence compliance with
clause (1) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
The above shall be done at each closing under such underwriting or similar
agreement or as and to the extent otherwise reasonably requested by the Holders
of a majority of the Registrable Securities being sold;
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(p) make available for inspection by representatives of the
Holders of a majority of the Registrable Securities being sold, any
underwriter participating in any disposition pursuant to such Registration
Statement, and any attorney or accountant retained by the sellers or any
such underwriter, all financial and other records and pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by
any such representative, underwriter, attorney or accountant in
connection with the Registration; provided that any records, information or
documents that are designated by the Company in writing as confidential
shall be kept confidential by such Persons unless disclosure of such
records, information or documents is required by court or administrative
order; and
(q) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its
security holders earnings statements satisfying the provisions of Section
11(a) of the Securities Act, no later than 45 days after the end of any
12-month period (or 90 days, if such period is a fiscal year) (x)
commencing at the end of any fiscal quarter in which Registrable Securities
are sold to underwriters in an Underwritten Offering, or, if not sold to
underwriters in such an offering, (y) beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the
Registration Statement, which statements shall cover said 12-month periods.
Notwithstanding the foregoing, the Company shall, upon written
notice delivered to the Holders of Registrable Securities, be entitled to
postpone the filing or declaration of effectiveness of a Registration
Statement required or proposed to be filed hereunder (i) upon the happening
of any event of the kind described in Section 4(c)(6), or (ii) if, in the
reasonable determination of the Company, there exists circumstances not yet
disclosed to the public, which would be required to be disclosed in such
Registration Statement and the disclosure of which would be materially
harmful to the Company. The Company shall use its best efforts to minimize
the length of any postponement or discontinuance provided that the Company
may postpone for a period of sixty (60) days the disclosure of any
circumstances if, in the reasonable determination of the Company, such
disclosure would be materially harmful to the Company.
5. REGISTRATION EXPENSES
(a) PIGGYBACK REGISTRATIONS
The Company shall bear all Registration Expenses incurred in
connection with all Piggyback Registrations.
(b) COMPANY EXPENSES
The Company also will, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers
and employees performing legal or accounting duties), the expense of any
annual audit, the fees and expenses incurred in connection with any listing
of the securities to be registered on a securities exchange, and the fees
and expenses of any Person, including special experts, retained by the
Company.
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6. INDEMNIFICATION
(a) INDEMNIFICATION BY THE COMPANY
The Company agrees to indemnify and hold harmless each
Indemnified Holder from and against all Claims arising out of or based upon any
Misstatement or alleged Misstatement, except insofar as such Misstatement or
alleged Misstatement was based upon information furnished in writing to the
Company by any Indemnified Holder expressly for use in the document containing
such Misstatement or alleged Misstatement. This indemnity shall not be
exclusive and shall be in addition to any liability which the Company may
otherwise have.
The foregoing notwithstanding, the Company shall not be liable
to the extent that any such Claim arises out of or is based upon a Misstatement
or alleged Misstatement made in any preliminary prospectus if (i) such
Indemnified Holder failed to send or deliver a copy of the Prospectus with
or prior to the delivery of written confirmation of the sale of Registrable
Securities giving rise to such Claim and (ii) the Prospectus would have
corrected such untrue statement or omission.
In addition, the Company shall not be liable to the extent that
any such Claim arises out of or is based upon a Misstatement or alleged
Misstatement in a Prospectus, (x) if such Misstatement or alleged Misstatement
is corrected in an amendment or supplement to such Prospectus and (y) having
previously been furnished by or on behalf of the Company with copies of the
Prospectus as so amended or supplemented, such Indemnified Holder thereafter
fails to deliver such Prospectus as so amended or supplemented prior to or
concurrently with the sale to the person who purchased a Registrable Security
from such Indemnified Holder and who is asserting such Claim.
The Company shall also indemnify underwriters, selling brokers,
dealer managers and similar securities industry professionals participating in
a distribution covered by a Registration Statement, their officers and
directors and each Person who controls such Persons (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of the Indemnified
Holders of Registrable Securities.
(b) INDEMNIFICATION PROCEDURES
If any action or proceeding (including any governmental
investigation or inquiry) shall be brought or asserted against an Indemnified
Holder in respect of which indemnity may be sought from the Company, such
Indemnified Holder shall promptly notify the Company in writing, and the
Company shall assume the defense thereof, including the employment of counsel
satisfactory to such Indemnified Holder and the payment of all expenses.
Such Indemnified Holder shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such separate counsel shall be the expense of such
Indemnified Holder unless (i) the Company has agreed to pay such fees and
expenses, (ii) the Company shall have failed to assume the defense of such
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action or proceeding or has failed to employ counsel satisfactory to such
Indemnified Holder in any such action or proceeding or (iii) the named parties
to any such action or proceeding (including any impleaded parties) include both
such Indemnified Holder and the Company, and such Indemnified Holder shall have
been advised by counsel that there may be one or more legal defenses available
to such Indemnified Holder that are different from or additional to those
available to the Company.
If such Indemnified Holder notifies the Company in writing that it
elects to employ separate counsel at the expense of the Company as permitted by
the provisions of the preceding paragraph, the Company shall not have the right
to assume the defense of such action or proceeding on behalf of such Indemnified
Holder. The foregoing notwithstanding, the Company shall not be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for such Indemnified Holder and any other Indemnified Holders (which firm
shall be designated in writing by such Indemnified Holders) in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances.
The Company shall not be liable for any settlement of any such
action or proceeding effected without its written consent, but if settled with
its written consent, or if there be a final judgment for the plaintiff in any
such action or proceeding, the Company agrees to indemnify and hold harmless
such Indemnified Holders from and against any loss or liability by reason of
such settlement or judgment.
(c) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES
Each Holder of Registrable Securities agrees to indemnify and hold
harmless the Company, its directors and officers and each Person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Holder, but only with respect to information
relating to such Holder furnished in writing by such Holder expressly for use
in any Registration Statement, Prospectus or preliminary prospectus. In no
event, however, shall the liability hereunder of any selling Holder of
Registrable Securities be greater than the dollar amount of the proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.
In any case any action or proceeding shall be brought against the
Company or its directors or officers or any such controlling person, in respect
of which indemnity may be sought against a Holder of Registrable Securities,
such Holder shall have the rights and duties given the Company and the Company
or its directors or officers or such controlling person shall have the rights
and duties given to each Holder by Sections 6(a) and 6(b) above.
The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above with respect to information so furnished in writing by such Persons
specifically for inclusion in any Prospectus or Registration Statement.
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(d) Contribution
If the indemnification provided for in this Section 6 is unavailable
to an indemnified party under Section 6(a) or Section 6(c) above (other than by
reason of exceptions provided in those Sections) in respect of any Claims
referred to in such Sections, then each applicable indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Claims in such proportion
as is appropriate to reflect the relative fault of the Company on the one hand
and of the Indemnified Holder on the other in connection with the statements or
omissions which resulted in such Claims as well as any other relevant equitable
considerations. The amount paid or payable by a party as a result of the Claims
referred to above shall be deemed to include, subject to the limitations set
forth in Section 6(b), any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any action or claim.
The relative fault of the Company on the one hand and of the
Indemnified Holder on the other shall be determined by reference to, among
other things, whether the Misstatement or alleged Misstatement relates to
information supplied by the Company or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such Misstatement or alleged Misstatement.
The Company and each Holder of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section 6(d)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 6(d), an Indemnified
Holder shall not be required to contribute any amount in excess of the amount
by which (i) the total price at which the securities that were sold by such
Indemnified Holder and distributed to the public were offered to the public
exceeds (ii) the amount of any damages which such Indemnified Holder has
otherwise been required to pay by reason of such Misstatement.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
7. EXCHANGE ACT REPORTING REQUIREMENTS.
From and after the effective date of the first registration
statement filed by the Company under the Securities Act, the Company shall
(whether or not it shall then be required to do so) timely file such
information, documents and reports as the Commission may require or prescribe
under Section 13 or 15(d) (whichever is applicable) of the Exchange Act. In
addition, the Company shall take such other measures and file such other
information, documents and reports, as shall hereafter be required by the
Commission as a condition to the availability of Rule 144 under the Securities
Act (or any successor provision) and the use of Form S-3.
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From and after such date, the Company shall forthwith upon request
furnish any Holder or Registrable Securities (i) a written statement by the
Company that it has compiled with such reporting requirements, (ii) a copy of
the most recent annual or quarterly report of the Company, and (iii) such other
reports and documents filed by the Company with the Commission as such Holder
may reasonably request in availing itself of an exemption for the sale of
Registrable Securities without registration under the Securities Act.
The purpose of the foregoing requirements are (x) to enable any
such Holder to comply with the current public information requirements
contained in paragraph (c) of Rule 144 under the Securities Act (or any
successor provision) and (y) to qualify the Company for the use of registration
statements on Form S-3.
8. REQUIREMENTS FOR PARTICIPATION IN UNDERWRITTEN OFFERINGS
No Person may participate in any Underwritten Offering pursuant to
a Registration hereunder unless such Person (a) agrees to sell such Persons's
securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
9. SUSPENSION OF SALES
Upon receipt of written notice from the Company that (i) a
Registration Statement or Prospectus contains a Misstatement, or (ii) in the
reasonable determination of the Company, there exists circumstances not yet
disclosed to the public which would be required to be disclosed in such
Registration Statement and the disclosure of which would be materially harmful
to the Company, each Holder of Registrable Securities shall forthwith
discontinue disposition of Registrable Securities until such Holder has
received copies of the supplemented or amended Prospectus required by Section
4(1) hereof, or until such Holder is advised in writing by the Company that the
use of the Prospectus may be resumed, and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice. The Company shall use its reasonable best efforts to minimize
the length of such suspension of sales, provided, that the Company may require
the suspension of sales for a period of sixty (60) days in the event that the
disclosure of any circumstances, in the reasonable determination of the Company
would be materially harmful to the Company.
10. MISCELLANEOUS
(a) REMEDIES
Each Holder of Registrable Securities, in addition to being
entitled to exercise all rights provided herein, in the Purchase Agreement and
granted by law, including recovery of damages, shall be entitled to specific
performance of its rights under this Agreement. The
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Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS
The Company shall not on or after the date of this Agreement enter
into any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof.
Except as otherwise disclosed to the Investor, the Company has not
previously entered into any agreement with respect to its securities granting
any registration rights to any Person.
(c) AMENDMENTS AND WAIVERS
The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given unless the Company
has obtained the written consent of the Holders of at least a majority of the
outstanding shares of Registrable Securities. The foregoing notwithstanding, a
waiver or consent to departure from the provisions hereof that relates
exclusively to the rights of Holders of shares of Registrable Securities whose
shares are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders of shares of
Registrable Securities may be given by the Holders of a majority of the shares
of Registrable Securities being sold.
(d) NOTICES
All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder of Registrable Securities, at the most
current address given by such Holder to the Company in accordance
with the provisions hereof, which address initially is, with
respect to each Investor, the address set forth on such Investor's
signature page of the Purchase Agreement, with a copy to Reicker,
Clough, Xxxx & Xxxx LLP, 0000 Xxxxx Xxxxxx, Xxxxx X, Xxxxx Xxxxxxx,
Xxxxxxxxxx 00000-0000, Attention: Xxx Xxxxxxx, Esq.; and
(ii) if to the Company, initially at its address set forth
in the Purchase Agreement and thereafter at such other address,
notice of which is given in accordance with the provisions hereof,
with a copy to Xxxxxx & Xxxxxxx, Xxxxxx & Xxxxxxx, 0000
Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 0000, Xxxxxxxxxx, X.X. 00000,
Attention: Xxxxx X. Xxxxxxxxx, Esq.
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All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery. The Company shall promptly provide a list of the most current
addresses of the Holders of Registrable Securities given to it in accordance
with the provisions hereof to any such Holder for the purpose of enabling such
Holder to communicate with other Holders in connection with this Agreement.
(e) SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties.
(f) COUNTERPARTS
This Agreement may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(g) TABLE OF CONTENTS AND HEADINGS
The table of contents and headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Maryland.
(i) SEVERABILITY
In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
(j) FORMS
All references in this Agreement to particular forms of registration
statements are intended to include all successor forms which are intended to
replace, or to apply to similar transactions as, the forms herein referenced.
(k) ENTIRE AGREEMENT
This Agreement and the stock purchase agreement by and between the
Company and the Investor (the "Stock Purchase Agreement") are intended by the
respective parties to those
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agreements as the final expression of their respective agreement and are
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein or therein with respect to the
registration rights granted by the Company with respect to the securities sold
pursuant to the Stock Purchase Agreement. This Agreement and the Stock Purchase
Agreement supersede all prior agreements and understandings between the parties
with respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
PERIMMUNE HOLDINGS, INC.
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
INVESTOR:
MENTOR CORPORATION
By: _____________________________________
Name: _____________________________________
Title: _____________________________________
48
EXHIBIT C
FORM OF
LEGAL OPINIONS OF
COUNSEL TO
HOLDINGS
49
OPINION OF COUNSEL TO HOLDINGS
Xxxxxx & Xxxxxxx, counsel for Holdings, shall have furnished to the
Purchaser its written opinion, as counsel to Holdings, addressed to Purchaser
and dated the Closing Date, in form and substance reasonably satisfactory to
Purchaser, to the effect that:
1. Holdings has been duly incorporated and is validly existing and in
good standing under the laws of the State of Delaware with corporate power and
authority to enter into this Agreement and the Registration Rights Agreement
and perform its obligations thereunder.
2. PerImmune, Inc. has been duly incorporated and is validly existing and
in good standing under the laws of the State of Delaware.
3. The issuance and sale of the Preferred Shares to the Purchaser have
been duly authorized by all necessary corporate action and, when issued and
delivered to the Purchaser pursuant to this Agreement will be validly issued,
fully paid and non-assessable.
4. The shares of Common Stock initially issuable upon conversion of the
Preferred Shares have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion in accordance with the
Certificate of Designations, will be validly issued, fully paid and
non-assessable.
5. The execution, delivery and performance of this Agreement and the
Registration Rights Agreement, have each been duly authorized by all necessary
corporate action of Holdings, and this Agreement has been duly executed and
delivered by Holdings.
6. Assuming the Preferred Shares are issued, sold and delivered under
the circumstances contemplated by this Agreement, that the representations and
warranties and covenants of the Purchaser and Holdings contained in this
Agreement are true, correct and complete, and that the Purchaser complies with
its covenants in this Agreement: (i) registration under the Securities Act of
the Preferred Shares is not required in connection with the offer and sale of
the Preferred Shares to the Purchaser in the manner contemplated by this
Agreement; and (ii) the offer and sale of the Preferred Shares to the Purchaser
by Holdings pursuant to this Agreement does not require registration,
qualification or other action under any state securities or blue sky laws, other
than action which has been taken.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the federal laws of the United States of
America and the General Corporation Law of the State of Delaware.
