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Exhibit 10.2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into
as of September 30, 1997 (the "Effective Date"), by and between ARADIGM
CORPORATION, a California corporation ("Aradigm"), and SMITHKLINE BEECHAM PLC, a
corporation existing under the laws of the United Kingdom ("SB").
RECITALS
A. Aradigm and SB are entering into that certain Product Development and
Commercialization Agreement dated as of the Effective Date of this Agreement
(the "Development Agreement").
B. In connection with entry into the Development Agreement, Aradigm desires to
sell and issue to SB, and SB desires to buy, shares of Aradigm's common stock,
as provided herein.
NOW, THEREFORE, the Parties hereto agree as follows:
1. PURCHASE AND SALE.
Subject to the terms and conditions hereof, and in reliance upon the
representations, warranties and agreements contained herein, Aradigm hereby
agrees to issue and sell to SB, and SB hereby agrees to purchase from Aradigm,
the aggregate number of shares of Aradigm's Common Stock (the "Shares")
determined in accordance with Sections 1.1 and 1.4 hereof.
1.1 INITIAL SHARES. On the First Closing Date (as defined in Section
1.2), Aradigm shall issue and sell to SB, and SB shall purchase from Aradigm for
$5,000,000 (the "Initial Purchase Price"), the number of shares of Aradigm's
Common Stock (the "Initial Shares") equal to the quotient of $5,000,000 divided
by the First Market Price (as hereinafter defined). In the event the number of
Initial Shares includes a fraction of a share, the number of Initial Shares
shall be increased to the nearest whole number of shares and the Initial
Purchase Price shall be increased to equal the First Market Price times such
whole number of Initial Shares. The First Market Price shall be one hundred
twenty-five percent (125%) of the [*]
1.2 FIRST CLOSING DATE. The closing of the sale and purchase of the
Initial Shares (the "First Closing") shall take place on the date (the "First
Closing Date") that is five (5) business days after the expiration or earlier
termination of the applicable waiting period for the notification provided by SB
and Aradigm (as discussed further in Section 15.1 of the Development Agreement)
to the Federal Trade Commission under the Hart-Scott-Rodino Antitrust
Improvements Act (the "Act"). In the event the termination of such waiting
period has not occurred within ninety (90) days after the initial notification
under the Act, then either Party
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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may elect to terminate this Agreement on written notice to the other provided
within twenty (20) days after the end of such ninety (90) day period.
1.3 DELIVERY. At the First Closing, Aradigm will deliver to SB a
certificate registered in the name of SB, representing the Initial Shares to be
purchased by SB from Aradigm, dated the First Closing Date, against payment of
the Initial Purchase Price by wire transfer, a check made payable to the order
of Aradigm, or any combination thereof.
1.4 ADDITIONAL SHARES.
(a) Commencing on the Effective Date and continuing thereafter
until the date that is [*] (as such terms are defined in the Development
Agreement) (such period referred to herein as the "Sale Period"), Aradigm shall
have the right, but not the obligation, to sell to SB the Additional Shares, as
provided in subsection 1.4(b) below. Such right shall be effected by Aradigm's
delivery to SB of a written notice specifying its election to sell to SB such
Additional Shares (the "Shares Sale Notice"), which notice must be provided, if
at all, during the Sale Period.
(b) Provided that Aradigm has delivered to SB the Shares Sale
Notice in compliance with Subsection 1.4(a), on the Second Closing Date (as
defined in Section 1.5), Aradigm shall issue and sell to SB, and SB shall
purchase from Aradigm for an additional $5,000,000 (the "Additional Purchase
Price"), the number of shares of Aradigm's Common Stock (the "Additional
Shares") equal to the quotient of $5,000,000 divided by the Second Market Price
(as hereinafter defined). The Second Market Price shall be [*]. In the event the
number of Additional Shares issuable pursuant to this Section 1.4 includes a
fractional share, the number of Additional Shares shall be increased to the
nearest whole number of shares, and the Additional Purchase Price shall be
increased to equal the Second Market Price times such whole number of Additional
Shares.
(c) Aradigm shall not deliver the Shares Sale Notice at any time
when [*] are for dates prior to the ex-dividend date for any distribution with
respect to the Shares unless SB receives such distribution with respect to the
Additional Shares. SB shall not be entitled to any rights as holder of the
Additional Shares until completion of the Second Closing.
(d) Aradigm shall not deliver the Shares Sale Notice at any time
when [*] as of (i) the date of delivery of the Shares Sale Notice or (ii) any of
the ten (10) trading days preceding such delivery date.
1.5 SECOND CLOSING DATE. The closing of the sale and purchase of the
Additional Shares (the "Second Closing") shall take place on the business day
(the "Second Closing Date") that is twelve (12) trading days after the date of
delivery of the Shares Sale Notice.
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
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1.6 DELIVERY. At the Second Closing, Aradigm will deliver to SB a
certificate registered in the name of SB, representing the Additional Shares to
be purchased by SB from Aradigm, dated the Second Closing Date, against payment
of the Additional Aggregate Purchase Price by wire transfer, a check made
payable to the order of Aradigm, or any combination of the above.
1.7 RULE 144 REPORTING. With a view to making available to SB the
benefits of certain rules and regulations of the Securities and Exchange
Commission (the "SEC") which may permit the sale of the shares Securities to the
public without registration, Aradigm agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 ("Rule 144") under the Securities Act of
1933, as amended (the 1933 Act") or any similar or analogous rule promulgated
under the 1933 Act, as long as the
Shares are outstanding;
(b) File with the SEC, in a timely manner, all reports and other
documents required of Aradigm under the 1933 Act and the Securities Act of 1934,
as amended (the "1934 Act");
(c) Take all such action (including without limitation the
furnishing of the information described in Rule 144(d)(4)) as may be necessary
to facilitate a sale of the shares by SB to a "qualified institutional buyer,"
as such term is defined in Rule 144A of the 1933 Act.
1.8 "MARKET STAND-OFF" AGREEMENTS. SB hereby agrees that prior to the
second anniversary of the Effective Date it shall not sell or otherwise transfer
or dispose of any of the Shares held by it. In addition, SB hereby agrees that
during the one hundred eighty (180) day period following the effective date of a
registration statement of Aradigm filed under the 1933 Act, it shall not, to the
extent requested by Aradigm or any underwriter, sell or otherwise transfer or
dispose of any Common Stock of Aradigm held by it at any time during such period
(except Common Stock included in such registration); provided, however, that:
(a) Such agreement shall be applicable only to registration
statements of Aradigm which cover Common Stock (or other securities) to be sold
on its behalf to the public;
(b) Such Agreement shall be applicable only if SB holds at least
one percent (1%) of the Common Stock of Aradigm then outstanding; and
(c) All officers and directors of Aradigm and any other
stockholders owning at least five percent (5%) of the Common Stock of Aradigm
then outstanding (excluding stockholders that acquired their positions in the
public market) enter into similar agreements.
Aradigm may impose stop-transfer instructions with respect to securities
subject to the foregoing restrictions until the end of the applicable periods.
The agreement of SB set forth in this Section 1.8 shall lapse on the second
anniversary of the Second Closing.
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2. REPRESENTATIONS AND WARRANTIES OF ARADIGM.
Except as otherwise set forth on the Schedule of Exceptions attached
hereto as Exhibit A, which shall contain Section numbers specifically
corresponding to the Section numbers in this Agreement, or, with respect to the
Second Closing, the Second Schedule of Exceptions, which shall be provided to SB
at the Second Closing and shall be attached to Exhibit A hereto, Aradigm hereby
represents and warrants to SB as follows:
2.1 ORGANIZATION AND STANDING; ARTICLES AND BYLAWS. Aradigm is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California, and has full power and authority to own and operate
its properties and assets and to carry on its business as presently conducted
and as proposed to be conducted. Aradigm is qualified as a foreign corporation
to do business in each jurisdiction in the United States in which the ownership
of its property or the conduct of its business requires such qualification,
except where any statutory fines or penalties or any corporate disability
imposed for the failure to qualify would not materially adversely affect
Aradigm, its assets, financial condition or operations. True and correct copies
of Aradigm's Amended and Restated Articles of Incorporation and Bylaws currently
in effect have been delivered to SB.
2.2 AUTHORIZATION. All corporate action on the part of Aradigm, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, the performance of all Aradigm's obligations
hereunder, and for the authorization, issuance, sale and delivery of the Initial
Shares and the Additional Shares has been taken or will be taken prior to each
of the First Closing and the Second Closing, respectively. This Agreement, when
executed and delivered, shall constitute a valid and legally binding obligation
of Aradigm in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and subject to
general equity principles.
2.3 VALIDITY OF SHARES. The sale of the Shares is not subject to any
preemptive rights or rights of first refusal that have not been waived and, when
issued, sold and delivered in compliance with the provisions of this Agreement,
the Shares will be validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances created by Aradigm; provided, however, that
the Shares may be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed.
2.4 OFFERING. Assuming the accuracy of the representations and
warranties of SB contained in Section 3 hereof, the offer, issue, and sale of
Shares are exempt from the registration and prospectus delivery requirements of
the 1933 Act, and the Initial Shares have been and the Additional Shares will be
registered or qualified (or are exempt from registration and qualification)
under the registration, permit, or qualification requirements of all applicable
state securities laws.
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2.5 FULL DISCLOSURE.
(a) As of the First Closing, Aradigm has furnished to SB the
following documents, and the information contained in such documents, as of
their respective dates (or if amended, as of the date of such amendment), did
not contain any untrue statement of a material fact, and did not omit to state
any material fact necessary to make any statement, in light of the circumstances
under which such statement was made, not misleading:
Aradigm's annual report on Form 10-K as amended by Form 10-K/A
for the fiscal year ended December 31, 1996; and Aradigm's Quarterly Reports on
Form 10-Q for the quarters ended March 31 and June 30, 1997, and any additional
Quarterly Reports on Form 10-Q or Current Reports on Form 8-K filed after the
Effective Date but prior to the First Closing.
(b) As of the Second Closing, Aradigm shall have furnished to SB
the following documents, and the information contained in such documents, as of
their respective dates (or if amended, as of the date of such amendment), will
not contain any untrue statement of a material fact, or omit to state any
material fact necessary to make any statement, in light of the circumstances
under which such statement is made, not misleading:
Aradigm's annual report on Form 10-K as amended by Form 10-K/A
for the most recent fiscal year prior to the Second Closing Date for which such
document is publicly available; and Aradigm's Quarterly Reports on Form 10-Q for
the quarters after such fiscal year, to the extent publicly available.
2.6 NO CONFLICT; NO VIOLATION. The execution, delivery and performance
of this Agreement and consummation of the transactions contemplated hereby will
not (a) conflict with any provisions of the Amended and Restated Certificate of
Incorporation or Bylaws of Aradigm; (b) result in any material violation or
default of, or permit the acceleration of any obligation under (in each case,
upon the giving of notice, the passage of time, or both), any material mortgage,
indenture, lease, agreement or other instrument, permit, franchise, license,
judgment, order, decree, law, ordinance, rule or regulation applicable to
Aradigm or its properties.
2.7 CONSENTS AND APPROVALS. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with, any governmental authority, required on the part of Aradigm in
connection with the valid execution and delivery of this Agreement, the offer,
sale or issuance of the Shares, or the consummation of any other transaction
contemplated hereby have been obtained, or will be effective at the First
Closing or the Second Closing, as applicable, except for notices required or
permitted to be filed with certain state and federal securities commissions
after the First Closing or the Second Closing, as the case may be, which notices
will be filed on a timely basis.
2.8 ABSENCE OF CERTAIN DEVELOPMENTS. With respect to the First Closing,
since June 30, 1997, and with respect to the Second Closing, since the end of
the last fiscal quarter prior to such Second Closing for which Aradigm's filing
on Form 10-Q is publicly available, Aradigm has not (a) incurred or become
subject to any material liabilities (absolute or contingent) except current
liabilities incurred, and liabilities under contracts entered into, in the
ordinary course of
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business, consistent with past practices; (b) mortgaged, pledged or subjected to
lien, charge or any other encumbrance any of its assets, tangible or intangible;
(c) sold, assigned or transferred any of its assets or canceled any debts or
obligations except in the ordinary course of business, consistent with past
practices; (d) suffered any extraordinary losses, or waived any rights of
substantial value; (e) entered into any material transaction other than in the
ordinary course of business, consistent with past practices; or (f) otherwise
had any material change in its condition, financial or otherwise, except for
changes in the ordinary course of business, consistent with past practices, none
of which individually or in the aggregate has been materially adverse to
Aradigm.
3. REPRESENTATIONS AND WARRANTIES OF SB.
SB hereby represents and warrants to Aradigm as follows:
3.1 LEGAL POWER. It has the requisite legal power to enter into this
Agreement, to purchase the Shares hereunder, and to carry out and perform its
obligations under the terms of this Agreement.
3.2 DUE EXECUTION. This Agreement has been duly authorized, executed and
delivered by it, and, upon due execution and delivery by Aradigm, this Agreement
will be a valid and binding agreement of it.
3.3 INVESTMENT REPRESENTATIONS.
(a) It is acquiring the Shares for its own account, not as
nominee or agent, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the 1933 Act.
(b) It understands that (i) the Shares have not been registered
under the 1933 Act by reason of a specific exemption therefrom, that they must
be held by it indefinitely, and that it must, therefore, bear the economic risk
of such investment indefinitely, unless a subsequent disposition thereof is
registered under the 1933 Act or is exempt from such registration; (ii) each
certificate representing the Initial Shares and the Additional Shares will be
endorsed with the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (A) PURSUANT TO SEC
RULE 144 OR (B) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
1933 ACT COVERING SUCH SECURITIES OR (C) ARADIGMRECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
ARADIGM, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
THE 1933 ACT."
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and (iii) Aradigm will instruct any transfer agent not to register the transfer
of any of the Shares unless the conditions specified in the foregoing legend are
satisfied.
SB shall have the right to demand removal of the foregoing legend with
respect to any or all of the Shares if, in the opinion of counsel to Aradigm,
removal of such legend is permitted by the rules and regulations of the SEC.
(c) It has been furnished with such materials and has been given
access to such information relating to Aradigm as it or its qualified
representative has requested and it has been afforded the opportunity to ask
questions regarding Aradigm and the Shares, all as it has found necessary to
make an informed investment decision.
(d) It is an "accredited investor" within the meaning of
Regulation D under the 1933 Act.
(e) It was not formed for the specific purpose of acquiring the
Shares offered hereunder.
4. CONDITIONS TO FIRST CLOSING.
4.1 CONDITIONS TO OBLIGATIONS OF SB. SB's obligation to purchase the
Initial Shares at the First Closing is subject to the fulfillment, at or prior
to the First Closing, of all of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by Aradigm in Section 2
hereof shall be true and correct in all material respects on the date of the
First Closing with the same force and effect as if they had been made on and as
of said date; and Aradigm shall have performed all obligations and conditions
herein required to be performed by it on or prior to the First Closing.
(b) OPINION OF ARADIGM'S COUNSEL. SB shall have received from
Cooley Godward LLP, counsel to Aradigm, an opinion letter substantially in the
form attached hereto as Exhibit B, addressed to it, dated the First Closing
Date.
(c) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the First
Closing hereby and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to SB and its special
counsel, and SB and its special counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.
(d) QUALIFICATIONS, LEGAL INVESTMENT. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Initial Shares pursuant to this Agreement shall
have been duly obtained and shall be effective on and as of the First Closing.
No stop order or other order enjoining the sale of the Initial Shares shall have
been
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issued and no proceedings for such purpose shall be pending or, to the knowledge
of Aradigm, threatened by the SEC or any commissioner of corporations or similar
officer of any other state having jurisdiction over this transaction. At the
time of the First Closing, the sale and issuance of the Initial Shares shall be
legally permitted by all laws and regulations to which SB and Aradigm are
subject.
(e) COMPLIANCE CERTIFICATE. Aradigm shall have delivered to SB a
Certificate, executed by the President of Aradigm, dated the date of the First
Closing, certifying to the fulfillment of the conditions specified in
subparagraphs (a) and (d) of this Subsection 4.1.
4.2 CONDITIONS TO OBLIGATIONS OF ARADIGM. Aradigm's obligation to issue
and sell the Initial Shares at the First Closing is subject to the fulfillment
to Aradigm's satisfaction, on or prior to the First Closing, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by SB in Section 3 hereof shall be true and correct at the date
of the First Closing, with the same force and effect as if they had been made on
and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. SB shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by it on or before the First Closing.
(c) QUALIFICATIONS, LEGAL INVESTMENT. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Initial Shares pursuant to this Agreement shall
have been duly obtained and shall be effective on and as of the First Closing.
No stop order or other order enjoining the sale of the Initial Shares shall have
been issued and no proceedings for such purpose shall be pending or, to the
knowledge of Aradigm, threatened by the SEC or any commissioner of corporations
or similar officer of any state having jurisdiction over this transaction. At
the time of the First Closing, the sale and issuance of the Initial Shares shall
be legally permitted by all laws and regulations to which SB and Aradigm are
subject.
5. CONDITIONS TO SECOND CLOSING.
5.1 CONDITIONS TO OBLIGATIONS OF SB. SB's obligation to purchase the
Additional Shares at the Second Closing is subject to the fulfillment, at or
prior to the Second Closing, of all of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by Aradigm in Section 2
hereof shall be true and correct in all material respects on the date of the
Second Closing with the same force and effect as if they had been made on and as
of said date; and Aradigm shall have performed all obligations and conditions
herein required to be performed by it on or prior to the Second Closing.
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(b) OPINION OF ARADIGM'S COUNSEL. SB shall have received from
Cooley Godward LLP, counsel to Aradigm, an opinion letter substantially in the
form attached hereto as Exhibit B, addressed to it, dated the Second Closing
Date.
(c) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Second
Closing hereby and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to SB and its special
counsel, and SB and its special counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.
(d) QUALIFICATIONS, LEGAL INVESTMENT. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Additional Shares pursuant to this Agreement
shall have been duly obtained and shall be effective on and as of the Second
Closing. No stop order or other order enjoining the sale of the Additional
Shares shall have been issued and no proceedings for such purpose shall be
pending or, to the knowledge of Aradigm, threatened by the SEC or any
commissioner of corporations or similar officer of any other state having
jurisdiction over this transaction. At the time of the Second Closing, the sale
and issuance of the Additional Shares shall be legally permitted by all laws and
regulations to which SB and Aradigm are subject.
(e) COMPLIANCE CERTIFICATE. Aradigm shall have delivered to SB a
Certificate, executed by the President of Aradigm, dated the date of the Second
Closing, certifying to the fulfillment of the conditions specified in
subparagraphs (a) and (d) of this Subsection 5.1.
(f) NO TERMINATION OF DEVELOPMENT AGREEMENT; NO BREACH. A
termination of the Development Agreement pursuant to Section 14.2 (by either
party) or Section 14.3 thereof (by SB) shall not have become effective. In
addition, Aradigm shall not have committed a material breach of the Development
Agreement as to which SB has provided Aradigm with written notice pursuant to
Section 14.2, unless such breach has been cured by Aradigm or waived by SB.
(g) NO CHANGE OF CONTROL OF ARADIGM. There shall have been no
Change of Control of Aradigm between the First Closing and the Second Closing.
For purposes of this Section 5(g) "Change of Control" means the occurrence of
any of the following events:
(i) all or substantially all of the assets of Aradigm
are sold, leased, exchanged or otherwise transferred to any other person or
group of persons acting in concert as a partnership or other group (a "Group")
other than an affiliate of Aradigm;
(ii) Aradigm is merged or consolidated with or into
another entity with the effect that the existing equity holders hold less than
50% of the combined voting power of the then outstanding securities ordinarily
(and apart from rights arising under special circumstances) having the right to
vote in the election of directors (or in the election of persons serving in a
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similar capacity) of the surviving entity of such merger or the entity resulting
from such consolidation.
(iii) a change in the composition of the board of
directors of Aradigm as a result of which during any period of two consecutive
years after the First Closing, individuals who at the beginning of such period
constitute Aradigm's Board of Directors (together with any new director whose
election by Aradigm's Board of Directors or whose nomination for election by
Aradigm's shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the directors in
office at the end of such period; or
(iv) a person or Group shall, as a result of a tender or
exchange offer, open market purchases, merger, privately negotiated purchases or
otherwise, have become, directly or indirectly, the beneficial owner (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
the securities of Aradigm representing 50% or more of the combined voting power
of the then outstanding securities of Aradigm ordinarily (and apart from rights
arising under special circumstances) having the right to vote in the election of
directors.
(h) Aradigm shall not have (i) filed in any court or agency
pursuant to any statute or regulation of any state or country, a petition in
bankruptcy or insolvency or for reorganization or for an arrangement or for the
appointment of a receiver or trustee of the party or of its assets, or (ii) been
served with an involuntary petition against it, filed in any insolvency
proceeding, which petition has not been dismissed as of the Second Closing Date.
5.2 CONDITIONS TO OBLIGATIONS OF ARADIGM. Aradigm's obligation to issue
and sell the Additional Shares at the Second Closing is subject to the
fulfillment to Aradigm's satisfaction, on or prior to the Second Closing, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by SB in Section 3 hereof shall be true and correct at the date
of the Second Closing, with the same force and effect as if they had been made
on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. SB shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by it on or before the Second Closing.
(c) QUALIFICATIONS, LEGAL INVESTMENT. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Additional Shares pursuant to this Agreement
shall have been duly obtained and shall be effective on and as of the Second
Closing. No stop order or other order enjoining the sale of the Additional
Shares shall have been issued and no proceedings for such purpose shall be
pending or, to the knowledge of Aradigm, threatened by the SEC or any
commissioner of corporations or similar officer of any state having jurisdiction
over this transaction. At the time of the Second Closing, the sale and
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issuance of the Additional Shares shall be legally permitted by all laws and
regulations to which SB and Aradigm are subject.
6. MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents, made and to be performed entirely within the State of
California.
6.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto.
6.3 ENTIRE AGREEMENT. This Agreement, the Development Agreement, and the
Exhibits hereto and thereto, and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement among the parties
with regard to the subjects hereof, and no party shall be liable or bound to any
other party in any manner by any representations, warranties, covenants, or
agreements except as specifically set forth herein or therein. Nothing in this
Agreement, express or implied, is intended to confer upon any party, other than
the parties hereto and their respective successors and assigns, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided herein.
6.4 SEPARABILITY. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall, to the extent practicable, be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
6.5 AMENDMENT AND WAIVER. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance, either retroactively or prospectively, and either for
a specified period of time or indefinitely), with the written consent of Aradigm
and SB. Any amendment or waiver effected in accordance with this Section shall
be binding upon SB, each future holder of the Shares, and Aradigm.
6.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power, or remedy accruing to SB or any subsequent holder of any Shares upon any
breach, default or noncompliance of Aradigm under this Agreement, shall impair
any such right, power, or remedy, nor shall it be construed to be a waiver of
any such breach, default or noncompliance, or any acquiescence therein, or of
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
SB's part of any breach, default or noncompliance under this Agreement or any
waiver on SB's part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing, and that all remedies, either under this Agreement, by law, or
otherwise afforded to SB, shall be cumulative and not alternative.
11.
12
6.7 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
(a) upon personal delivery, (b) on report of successful transmission by
facsimile machine that automatically generates a printed report indicating
whether transmission was completed successfully, at the conclusion of each
transmission, (c) on the first business day after receipted delivery to a
courier service which guarantees next business-day delivery, under circumstances
in which such guaranty is applicable, or (d) on the earlier of delivery or five
(5) business days after mailing by United States certified by mail, postage and
fees prepaid, to the appropriate party at the address set forth below or to such
other address as the part so notifies the other in writing:
(a) if to Aradigm, to:
ARADIGM CORPORATION
26219 Eden Landing Road
Hayward, CA 94545
Telecopier: (510) 783-0410
Attention: President and Chief Executive Officer
with a copy to:
COOLEY GODWARD LLP
5 Palo Alto Square, 4th Floor
3000 El Camino Real
Palo Alto, CA 94306-2155
Attention: James C. Kitch, Esq.
(b) if to SB, to:
SMITHKLINE BEECHAM PLC
c/o SmithKline Beecham Corporation
One Franklin Plaza (FP 1935)
Philadelphia, PA 19102
Telecopier: (215) 751-4253
Attention: Elizabeth Posner
with a copy to:
SMITHKLINE BEECHAM CORPORATION
One Franklin Plaza (FP 2225)
Philadelphia, PA 19102
Telecopier: (215) 751-5349
Attention: Donald F. Parman
Notwithstanding the foregoing, all notices and other communications to
an address outside of the United States shall be sent by telecopy and confirmed
in writing to be sent by first class mail.
12.
13
6.8 FINDER'S FEES.
(a) Aradigm (i) represents and warrants that it has retained no
finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold SB harmless of and
from any liability for any commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which Aradigm or
any of its employees or representatives is responsible.
(b) SB (i) represents and warrants that it has retained no finder
or broker in connection with the transactions contemplated by this Agreement,
and (ii) hereby agrees to indemnify and to hold Aradigm harmless of and from any
liability for any commission or compensation in the nature of a finder's fee to
any broker or other person or firm (and the costs and expenses of defending
against such liability or asserted liability) for which SB or any of its
employees or representatives are responsible.
6.9 INFORMATION CONFIDENTIAL. SB acknowledges that any non public
information received by it pursuant hereto is confidential and for SB's use
only, and it will refrain from using such information or reproducing,
disclosing, or disseminating such information to any other person (other than
its employees, affiliates, agents, or partners having a need to know the
contents of such information and its attorneys, in each case who agree to be
bound by this Section 6.9), except in connection with the exercise of rights
under this Agreement, unless such information becomes available to the public
generally or it is required by a governmental body to disclose such information.
6.10 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
The foregoing Agreement is hereby executed as of the date first above
written.
ARADIGM CORPORATION SMITHKLINE BEECHAM PLC
By: [SIG] By: [SIG]
----------------------- ---------------------------
13.
14
LIST OF EXHIBITS
EXHIBITS
Exhibit A - SCHEDULE OF EXCEPTIONS
Exhibit B - OPINION OF COMPANY'S COUNSEL
15
EXHIBIT A
SCHEDULE OF EXCEPTIONS
16
ARADIGM CORPORATION
SCHEDULE OF EXCEPTIONS
This is the Schedule of Exceptions to that certain Stock Purchase
Agreement, dated as of September 30, 1997 (the "Agreement"), by and between
Aradigm Corporation (the "Company") and SmithKline Beecham plc. Unless noted
otherwise, any capitalized terms used herein but not defined shall have the
meaning set forth in the Agreement. The paragraph numbers of this Schedule of
Exceptions correspond to the sections of the Agreement to which the disclosures
relate. However, all information disclosed herein shall be deemed disclosed
under and incorporated into any other section of the Agreement where such
disclosure would be appropriate. References to any document do not purport to be
complete and are qualified in their entirety by the document itself.
SECTION 2.1
The Company has sales representatives in [*]. The Company does not have any
offices in these states, and such sales representatives have not made any sales
of the Company's products.
SECTION 2.8
The Company has entered into a [*], dated August 25, 1997
(the "Loan Agreement").
Pursuant to the Loan Agreement, [*] the assets of the Company.
* Certain information on this page has been omitted and filed
separately with the Commission. Confidential treatment has
been requested with respect to the omitted portions.
1.
17
EXHIBIT B
OPINION OF COMPANY'S COUNSEL
2.
18
COOLEY GODWARD LLP ATTORNEYS AT LAW San Francisco, CA
415 693-2000
Five Palo Alto Square Menlo Park, CA
3000 El Camino Real 650 843-5000
Palo Alto, CA
94306-2155 San Diego, CA
Main 650 843-5000 619 550-6000
Fax 650 857-0663
Boulder, CO
303 546-4000
Denver, CO
303 606-4800
www.cooley.com
JAMES C. KITCH
650 843-5027
kitchjc@cooley.com
October ___, 1997
SmithKline Beecham plc
c/o SmithKline Beecham Corporation
One Franklin Plaza (FP 1935)
Philadelphia, PA 19102
RE: ARADIGM CORPORATION
Ladies and Gentlemen:
We have acted as counsel to Aradigm Corporation, a California corporation (the
"Company"), in connection with the issuance and sale to you of the Initial
Shares (as defined in the Stock Purchase Agreement between you and the Company,
dated as of September ___, 1997 (the "Purchase Agreement")), such issuance and
sale to take place pursuant to the terms and conditions of the Purchase
Agreement. We are rendering this opinion pursuant to Section 5.1(b) of the
Purchase Agreement. Except as otherwise defined herein, capitalized terms used
but not defined herein have the respective meanings given to them in the
Purchase Agreement.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Agreement by the various parties and originals or copies
certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where we render
an opinion "to the best of our knowledge" or concerning an item "known to us" or
our opinion otherwise refers to our knowledge, it is based solely upon (i) an
inquiry of attorneys within this firm who perform legal services for the
Company, (ii) receipt of a certificate executed by an officer of the Company
covering such matters, and (iii) such other investigation, if any, that we
specifically set forth herein.
In rendering this opinion, we have assumed the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to us as originals; the conformity to originals of all documents
submitted to us as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Purchase Agreement) where authorization, execution and
delivery are prerequisites to the effectiveness of such documents. We have also
assumed that all individuals executing and delivering documents in their
individual capacities had the legal capacity to so execute and deliver; that you
have received all documents you were to receive under the Purchase Agreement;
that the Purchase Agreement is an obligation binding upon you; that you have
filed any required California franchise or income tax
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Page Two
returns and have paid any required California franchise or income taxes; and
that there are no extrinsic agreements or understandings among the parties to
the Purchase Agreement that would modify or interpret the terms of the Purchase
Agreement or the respective rights or obligations of the parties thereunder.
Our opinion is expressed only with respect to the federal laws of the United
States of America and the laws of the State of California. We express no opinion
as to whether the laws of any particular jurisdiction apply, and no opinion to
the extent that the laws of any jurisdiction other than those identified above
are applicable to the subject matter hereof. We are not rendering any opinion as
to compliance with any antifraud law, rule or regulation relating to securities,
or to the sale or issuance thereof.
With respect to the opinion in paragraph 3 hereof regarding issued and
outstanding capital stock of the Company, we have examined and have relied
solely on a certificate furnished by the Company's transfer agent, Bank of
Boston, a copy of which has been made available to you. We have undertaken no
independent verification with respect thereto.
With regard to our opinion in paragraph 4 below with respect to material
defaults under any of the Material Agreements (as defined below), we have relied
solely upon (i) inquiries of officers of the Company, (ii) a list supplied to us
by the Company of material agreements to which the Company is a party, or by
which it is bound (the "Material Agreements"), and (iii) an examination of the
items on the aforementioned list; we have made no further investigation.
On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, we are of the opinion that:
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of California. The
Company has the requisite corporate power to own its property and assets and to
conduct its business as it is currently being conducted and, to the best of our
knowledge, is qualified as a foreign corporation to do business and is in good
standing in each jurisdiction in the United States in which the ownership of its
property or the conduct of its business requires such qualification and where
any statutory fines or penalties or any corporate disability imposed for the
failure to disqualify would materially and adversely affect the Company, its
assets, financial condition or operations.
2. The Purchase Agreement has been duly and validly authorized, executed
and delivered by the Company and constitutes a legal, valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement with creditors,
20
Page Three
moratorium or other similar laws affecting creditors' rights, and subject to
general equity principles and to limitations on availability of equitable
relief, including specific performance.
3. The Company's authorized capital stock consists of forty-five million
(45,000,000) shares of Common Stock, of which (excluding the Initial Shares to
be issued at Closing) ___________________________________________ (___________)
are issued and outstanding. The Initial Shares have been duly and validly
authorized, and upon issuance and delivery against payment therefor in
accordance with the Purchase Agreement will be validly issued, outstanding,
fully paid and nonassessable. To the best of our knowledge, there are no
options, warrants, conversion privileges, preemptive rights or other rights
outstanding to purchase any shares of the authorized but unissued capital stock
of the Company, other than rights granted under the Company's Equity Incentive
Plan, Non-Employee Directors Stock Option Plan and Employee Stock Purchase Plan,
for which the Company has reserved 2,355,000 shares of its Common Stock, a
warrant held by a lease financing entity to purchase 37,500 shares of Common
Stock, and the rights created in connection with the transactions contemplated
by the Purchase Agreement.
4. The execution, delivery and performance of the Purchase Agreement by
the Company and the offer, issuance and sale of the Initial Shares pursuant
thereto (a) do not constitute a material default under the provisions of any of
the Material Agreements, (b) do not violate any provision of the Company's
Certificate of Incorporation or Bylaws, and (c) do not violate or contravene (i)
any governmental statute, rule or regulation applicable to the Company or (ii)
any order, writ, judgment, injunction, decree, determination or award which has
been entered against the Company and of which we are aware, the violation or
contravention of which would materially and adversely affect the Company, its
assets, financial condition or operations.
5. To the best of our knowledge, there is no action, suit, proceeding or
investigation pending or overtly threatened against the Company before any
domestic or foreign court or administrative agency that questions the validity
of the Purchase Agreement or might result, either individually or in the
aggregate, in any material adverse change in the assets, financial condition or
operations of the Company.
6. All consents, approvals, authorizations or orders of, and filings,
registrations and qualifications with any regulatory authority or governmental
body in the United States required for the consummation by the Company of the
offer, issuance and sale of the Initial Shares contemplated by the Purchase
Agreement have been made or obtained.
7. The offer and sale of the Initial Shares is exempt from the
registration requirements of the Securities Act of 1933, as amended.
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Page Four
This opinion is intended solely for your benefit and is not to be made available
to or be relied upon by any other person, firm, or entity without our prior
written consent.
Very truly yours,
COOLEY GODWARD LLP
By:
------------------------------------
James C. Kitch