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Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
STOCK PURCHASE AGREEMENT
between
CAMBRIDGE NEUROSCIENCE, INC.
and
VISION PHARMACEUTICALS L.P.
dated as of November 20, 1996
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TABLE OF CONTENTS
SECTION 1. Authorization of Sale of the Shares...................... 2
SECTION 2. Closing.................................................. 2
SECTION 3. Delivery of the Shares at the Closing.................... 2
SECTION 4. Representations, Warranties and Covenants of CNSI........ 2
4.1 Organization and Qualification........................... 2
4.2 Authorized Capital Stock................................. 3
4.3 Due Execution, Delivery and Performance of the Agreement. 3
4.4 Issuance, Sale and Delivery of the Shares................ 3
4.5 SEC Filings.............................................. 3
4.6 No Material Changes...................................... 3
4.7 Covenant to Keep Public Information Available............ 3
4.8 Securities Law Compliance................................ 4
4.9 Registration Rights...................................... 4
SECTION 5. Representations, Warranties and Covenants of Allergan.... 4
5.1 Investment Considerations................................ 4
5.2 Due Execution, Delivery and Performance of the Agreement. 6
SECTION 6. Registration Rights...................................... 6
6.1 Requested Registrations.................................. 6
6.2 Piggyback Registration................................... 7
6.3 Indemnification.......................................... 9
6.4 "Stand-Off" Agreement.................................... 10
6.5 Registration Rights Subject to Existing Rights; Termination 10
6.6 Transferability of Registration Rights................... 11
SECTION 7. Allergan Option to Acquire Additional Equity............. 11
7.1 Option................................................... 11
7.2 Notice of Issuance; Determination of Number of Option Shares;
Exercise of Option....................................... 11
7.3 Delivery of Certificates; Registration................... 12
7.4 Dividends and Reclassifications.......................... 12
7.5 Reservation of Common Stock.............................. 13
7.6 Successors to Option..................................... 13
SECTION 8. Standstill Covenants..................................... 13
8.1 Standstill Agreement..................................... 13
8.2 Mergers, Tender Offers or Similar Transactions........... 14
8.3 Equitable Remedies....................................... 15
8.4 Affiliates of Allergan................................... 15
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SECTION 9. Survival of Representations, Warranties and Agreements... 15
SECTION 10. Miscellaneous............................................ 15
10.1 Notices.................................................. 15
10.2 Entire Agreement......................................... 16
10.3 Assignment............................................... 16
10.4 Amendments and Waivers................................... 17
10.5 Headings................................................. 17
10.6 Severability............................................. 17
10.7 Governing Law............................................ 17
10.8 Counterparts............................................. 17
10.9 Expenses................................................. 17
10.10 Publicity................................................ 17
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT dated as of November 20, 1996 (the
"Agreement") is made between CAMBRIDGE NEUROSCIENCE, INC., a Delaware
corporation having its principal offices at One Kendall Square, Building 700,
Cambridge, Massachusetts 02139 U.S.A. ("CNSI"), and Vision Pharmaceuticals L.P.,
a Texas limited partnership having its principal offices at 2525 Dupont Drive,
Irvine, California 92715 U.S.A. ("Allergan").
R E C I T A L S
A. CNSI possesses know-how, expertise and rights to issued United States
patents and patent applications with corresponding foreign filed patent
applications pertaining to discoveries relating to the identification and
development of neuroprotective compounds.
B. CNSI has research facilities and experienced scientists, research
associates and other personnel at its facilities in Cambridge, Massachusetts
which enable it to conduct research activities.
C. Allergan desires to sponsor research by CNSI to identify candidate
compounds for use in the treatment of ophthalmic diseases and to collaborate
with CNSI on the worldwide development and commercialization of products for
such purposes.
D. Allergan is engaged in the research, development, marketing,
manufacturing and distribution of products, particularly in the ophthalmic
field, and Allergan has developed certain know-how that may be useful in the
development of treatments for neurodegenerative conditions of the eye.
E. Allergan has research and development facilities and experienced
scientists, research associates and other personnel at its facilities in Irvine,
California which enable it to conduct research and development activities.
F. CNSI is willing to enter into a collaboration with Allergan for the
worldwide development and commercialization of products on the terms and
conditions set forth in the Collaborative Research, Development and Marketing
Agreement of even date herewith between CNSI and Allergan (the "Collaboration
Agreement").
G. In connection with the Collaboration Agreement, CNSI shall borrow
$2,000,000 from Allergan pursuant to a Secured Convertible Promissory Note (the
"Note"), which shall be convertible into shares of CNSI Common Stock (the
"Conversion Shares").
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NOW THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
SECTION 1. Authorization of Sale of the Shares. Subject to the terms and
conditions of this Agreement, CNSI has authorized the sale to Allergan of
175,103 shares of the Common Stock, $.001 par value per share (the "Common
Stock"), of CNSI. The shares of Common Stock which are to be purchased pursuant
to Section 2 of this Agreement are referred to herein as the "Shares".
SECTION 2. Closing. Concurrently with the execution and delivery of this
Agreement (the "Closing"), CNSI shall sell to Allergan, and Allergan shall
purchase from CNSI, upon the terms and conditions hereinafter set forth, 175,103
Shares, at a price of U.S. $17.1328 per share, for an aggregate purchase price
of U.S. $3,000,000.00.
SECTION 3. Delivery of the Shares at the Closing. The Closing of the
purchase and sale of Shares shall occur at a place and time (the "Closing Date")
to be agreed upon by CNSI and Allergan. At the Closing, Allergan shall pay to
CNSI the aggregate purchase price for the Shares being purchased hereunder and
CNSI shall deliver to Allergan one or more stock certificates registered in the
name of Allergan, or in such nominee name(s) as designated in writing by
Allergan, representing the number of Shares being purchased. CNSI's obligation
to complete the purchase and sale of the Shares and deliver such stock
certificate(s) to Allergan at the Closing shall be subject to the following
conditions, any one or more of which may be waived by CNSI: (a) receipt by CNSI
of a certified or bank check or wire transfer in the full amount of the purchase
price for the Shares being purchased hereunder and (b) the accuracy in all
material respects of the representations and warranties made by Allergan herein
and the fulfillment in all material respects of those undertakings of Allergan
to be fulfilled prior to the Closing. Allergan's obligation to accept delivery
of such stock certificate(s) and to pay for the Shares evidenced thereby shall
be subject to the accuracy in all material respects of the representations and
warranties made by CNSI herein and the fulfillment in all material respects of
those undertakings of CNSI to be fulfilled prior to the Closing, any one or more
of which conditions may be waived by Allergan.
SECTION 4. Representations, Warranties and Covenants of CNSI. CNSI hereby
represents and warrants to, and covenants with, Allergan as follows:
4.1 Organization and Qualification. CNSI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to conduct its
business as currently conducted. CNSI holds all licenses and permits required
for the conduct of its business as now conducted, which, if not obtained, would
have a material adverse effect on the business, financial condition or results
of operations of CNSI. CNSI is qualified as a foreign corporation and is in good
standing in all states where the conduct of its business or its ownership or
leasing of property requires such qualification, except where the failure to so
qualify would not have a material adverse effect on the business, financial
condition or results of operations of CNSI.
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4.2 Authorized Capital Stock. As of the date hereof, the authorized
capital stock of CNSI consists of (a) 30,000,000 shares of common stock, $.001
par value per share, of which on October 31, 1996 14,817,300 shares were validly
issued and outstanding, fully paid and non-assessable and (b) 10,000,000 shares
of undesignated preferred stock, $.001 par value per share, none of which are
issued and outstanding.
4.3 Due Execution, Delivery and Performance of the Agreement. CNSI's
execution, delivery and performance of this Agreement (a) has been duly
authorized under Delaware law by all requisite corporate action by CNSI, and (b)
will not violate any law or the Certificate of Incorporation or By-laws of CNSI
or any subsidiary or any provision of any material indenture, mortgage,
agreement, contract or other material instrument to which CNSI or any subsidiary
is a party or by which CNSI or any of their respective properties or assets is
bound as of the date hereof, or result in a breach of or constitute (upon notice
or lapse of time or both) a default under any such indenture, mortgage,
agreement, contract or other material instrument or result in the creation or
imposition of any lien, security interest, mortgage, pledge, charge or other
encumbrance, of any material nature whatsoever, upon any properties or assets of
CNSI or any subsidiary. Upon its execution and delivery, and assuming the valid
execution thereof by Allergan, the Agreement will constitute a valid and binding
obligation of CNSI, enforceable against CNSI in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.4 Issuance, Sale and Delivery of the Shares. When issued and paid
for, the Shares to be sold hereunder by CNSI will be validly issued and
outstanding, fully paid and non-assessable.
4.5 SEC Filings. CNSI represents and warrants that it has filed all
reports required to be filed by CNSI with the Securities and Exchange Commission
(the "Commission") since December 31, 1994 pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Such reports, including the financial statements therein, when filed,
complied with the Commission's rules and did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading.
4.6 No Material Changes. As of the date hereof, there has been no
material adverse change in the financial condition or results of operations of
CNSI since the filing date of CNSI's last report with the Commission pursuant to
the reporting requirements of the Exchange Act.
4.7 Covenant to Keep Public Information Available. CNSI covenants
and agrees that it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
Commission thereunder as such
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may be amended from time to time (the "Rules"), and will take such further
actions as Allergan may reasonably request, all to the extent required from time
to time to enable Allergan to sell Shares and Conversion Shares at such times as
are permitted by this Agreement without registration under the Securities Act
within the limitations of Rule 144 of the Rules or any similar rule or
regulation hereafter adopted by the Commission. Upon the request of Allergan,
CNSI will supply Allergan with a certificate certifying compliance with this
provision.
4.8 Securities Law Compliance. Assuming the accuracy of the
representations and warranties of Allergan contained in Section 5, the offer,
issuance, sale and delivery of the Shares constitute an exempt transaction under
the Securities Act.
4.9 Registration Rights. Except as set forth in Section 6.5 below,
and pursuant to that certain Stock Purchase Agreement with Boehringer Ingelheim
International GmbH dated as of March 21, 1995, CNSI is not under any obligation
to register any of its presently outstanding securities or any of its securities
which may hereafter be issued.
SECTION 5. Representations, Warranties and Covenants of Allergan.
5.1 Investment Considerations. Allergan represents and warrants to,
and covenants with, CNSI that:
(a) Allergan is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to
investments in shares presenting an investment decision like that
involved in the purchase of the Shares, including investments in
securities issued by companies comparable to CNSI, and has
requested, received, reviewed and considered all information it
deems relevant in making an informed decision to purchase the Shares
and Conversion Shares;
(b) Allergan is acquiring the number of Shares set forth in
Section 2, and will acquire the Conversion Shares above in the
ordinary course of its business and for its own account for
investment only and with no present intention of distributing any of
such shares or any arrangement or understanding with any other
persons regarding the distribution of such Shares;
(c) Allergan understands that the Shares it is purchasing and
the Conversion Shares are "restricted securities" under the federal
securities laws inasmuch as they are being acquired from CNSI in a
transaction not involving a public offering and that under such laws
and applicable regulations such securities may be resold without
registration under the Securities Act of 1933, as amended (the
"Securities Act"), only in certain limited circumstances. In this
connection Allergan represents that it is familiar with SEC Rule
144, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act;
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(d) Allergan will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the
Shares or Conversion Shares except in compliance with the Securities
Act and the rules and regulations promulgated thereunder. Without in
any way limiting the representations set forth above, Allergan
further agrees not to make any disposition of all or any portion of
the Shares for a period of two (2) years following the date of
acquisition of the Shares and, after such time, only if (x) there is
then in effect a Registration Statement, under the Securities Act
covering such proposed disposition and such disposition is made in
accordance with such Registration Statement, or (y) (A) Allergan
shall have notified CNSI of the proposed disposition and shall have
furnished CNSI with a detailed statement of the circumstances
surrounding the proposed disposition, and (B) if requested by CNSI,
Allergan shall have furnished CNSI with an opinion of counsel, which
may be Allergan's in-house counsel, reasonably satisfactory to CNSI
and its counsel, that such disposition will not require registration
of such shares under the Securities Act. Notwithstanding the
foregoing, (i) Allergan may transfer some or all of the Shares and
Conversion Shares to a corporation, partnership or other legal
entity of which Allergan is in control of, under common control with
or controlled by, whether pursuant to the terms of merger,
consolidation, reclassification of shares or partnership interests
or capital reorganization of Allergan, or pursuant to a sale of all
or substantially all of the stock or assets of Allergan or
otherwise, but only if such transferee agrees in writing to hold
such capital stock subject to all of the provisions of this
Agreement and to transfer such shares to Allergan if such transferee
ceases to be in control of, under common control with or controlled
by Allergan (all such shares so transferred shall be deemed to be
shares held by Allergan for all purposes hereunder), (ii) this
Section 5.1 shall not prohibit the acquisition or disposition of
shares for investment purposes only in the open market in the
ordinary course by any pension fund or trust for the benefit of
employees of Allergan or its affiliates.
(e) Allergan qualifies as an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the Securities
Act; and
(f) It is understood that the certificates evidencing the
Shares and the Conversion Shares shall bear the following legend:
"These securities have not been registered under the
Securities Act of 1933. They may not be sold, offered for
sale, pledged or hypothecated in the absence of a registration
statement in effect with respect to the securities under such
Act or, if requested by CNSI, an opinion of counsel reasonably
satisfactory to CNSI and
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its counsel, that such registration is not required under
such Act."
5.2 Due Execution, Delivery and Performance of the Agreement.
Allergan further represents and warrants to, and covenants with, CNSI that (a)
Allergan is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Texas and has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, (b) the execution,
delivery and performance of this Agreement will not violate any law or the
organizational documents of Allergan, and (c) upon the execution and delivery of
this Agreement, this Agreement shall constitute a valid and binding obligation
of Allergan enforceable in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' and contracting parties' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). Allergan shall indemnify and hold CNSI harmless from any and
all losses, costs and expenses arising from Allergan's execution, delivery and
performance of this Agreement (i) violating any material indenture, mortgage,
agreement, contract or other material instrument to which Allergan is a party or
any of its properties or assets is bound, or (ii) resulting in a breach or
constitution (upon notice or lapse of time or both) a default under any such
indenture, mortgage, agreement, contract or other material instrument.
SECTION 6. Registration Rights. CNSI covenants and agrees as follows:
6.1 Requested Registrations. At any time after two years following
the Closing and subject to the conditions herein set forth, Allergan shall have
the right to require CNSI to effect the registration of Shares and the
Conversion Shares on a registration statement on Form S-3 (or any successor form
relating to secondary offerings), or Form S-1, Form S-2 or Form SB-2 if CNSI is
then ineligible to use Form S-3 under the Securities Act, by giving CNSI written
notice requesting such registration and specifying the number of Shares and/or
Conversion Shares proposed to be sold and the proposed plan for distribution of
such shares; provided, however, that such request shall cover shares having an
aggregate offering price in excess of $1,000,000 based on the then current
market price or fair value. Allergan may make such request with respect to
Conversion Shares prior to conversion of the Note. Allergan shall be entitled to
one requested registration under this Section 6.1. If and whenever CNSI shall be
required by the provisions of this Section 6.1 to effect the registration of any
Shares or Conversion Shares hereunder, CNSI will, as expeditiously as possible:
(a) use its best efforts to prepare and file a registration
statement on Form S-3, or other form if CNSI is ineligible to use
Form S-3, giving effect to the plan of distribution of the shares
proposed to be sold, and use its best efforts to cause such
registration statement to become effective in order that
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Allergan may sell its Shares or Conversion Shares in accordance with
the proposed plan of distribution;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions
of the Securities Act with respect to the offer of the Shares and
Conversion Shares covered by such registration statement during the
period required for distribution of the Shares and Conversion
Shares, which period shall not be in excess of nine (9) months from
the effective date of such registration statement;
(c) furnish Allergan such number of copies of such prospectus
as it may reasonably request in order to facilitate the sale of the
Shares and Conversion Shares;
(d) file documents required of CNSI for blue sky clearance in
states specified in writing by Allergan; provided, however, that
CNSI shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is now not so
qualified or has not so consented; and
(e) bear all expenses in connection with the procedures set
forth in paragraphs (a) through (d) of this Section 6.1 and the
registration of the Shares and Conversion Shares pursuant to the
registration statement, other than fees and expenses, if any, of
counsel or other advisors to Allergan.
If at the time of any request to register Shares or Conversion Shares
pursuant to this Section 6.1 CNSI is engaged or has fixed plans to engage within
60 days of the date of receipt of the request in a registered public offering,
or is engaged in any other activity which, in the good faith determination of
CNSI's Board of Directors, would be adversely affected by the demand
registration, then CNSI may at its option direct that such request be delayed
for a period not in excess of 90 days from the closing of such offering (but in
no event more than 180 days from the date of request) or the date of CNSI's
Board of Directors' determination, as the case may be. CNSI may direct such
delay not more than once in any twelve month period.
6.2 Piggyback Registration.
(a) If, at any time after two years following the Closing,
CNSI shall determine to register any of its securities under the
Securities Act for its own account or the account of a security
holder or holders, other than a registration relating solely to
employee benefit plans, or a registration relating solely to a Rule
145 transaction, or a registration on any registration form that
does not permit secondary sales, then CNSI will:
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(i) promptly give to Allergan a written notice thereof;
and
(ii) use its best efforts to include in such
registration (and any related qualification under blue sky
laws or other compliance), and in any underwriting involved
therein, all of the Shares and Conversion Shares specified in
a written request made by Allergan and received by CNSI within
twenty (20) days after the written notice from CNSI described
in clause (i) above is mailed or delivered by CNSI. Such
written request may specify all or a part of the Shares and
Conversion Shares.
(b) If the registration of which CNSI gives notice to Allergan
is for a registered public offering involving an underwriting, the
Company shall so advise Allergan. In such event, the right of
Allergan to registration pursuant to Section 6.2(a) shall be
conditioned upon Allergan's participation in such underwriting and
the inclusion of all or any part of the Shares and Conversion Shares
specified in Allergan's notice in the underwriting to the extent
provided herein. Allergan shall enter into an underwriting agreement
in customary form with the representative of the underwriter or
underwriters selected by CNSI.
Notwithstanding any other provision of Sections 6.2(a) or (b), if the
representative of the underwriters advises CNSI that marketing factors require a
limitation on the number of shares to be underwritten, the representative may
(subject to the limitations set forth below) exclude all of the Shares and
Conversion Shares from, or limit the number of Shares and Conversion Shares to
be included in, the registration and underwriting. CNSI shall so advise Allergan
and other holders of securities requesting registration, and the number of
shares that are entitled to be included in the registration and underwriting
shall be allocated first to CNSI for securities being sold for its own account,
second to other holders of shares of capital stock of CNSI as of the date hereof
having registration rights and requesting inclusion of shares, on a pro rata
basis, and, thereafter, to Allergan. If Allergan does not agree to the terms of
any such underwriting, Allergan shall be excluded therefrom by written notice
form CNSI or the underwriter. Any Shares, Conversion Shares or other securities
excluded or withdrawn from such underwriting shall also be withdrawn from such
registration.
(c) CNSI shall bear all expenses in connection with the procedures
set forth in paragraphs (a) and (b) of this Section 6.2 and the registration of
the Shares pursuant to the registration statement, other than fees and expenses,
if any, of counsel or other advisors to Allergan.
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6.3 Indemnification. For the purpose of this Section 6.3,
(a) the term "Selling Stockholder" shall mean Allergan and any
officer, director, employee, agent, affiliate or person deemed to be
in control of Allergan within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act;
(b) the term "Registration Statement" shall mean any final
prospectus, exhibit, supplement or amendment included in or relating
to the registration statement referred to in Section 6.1; and
(c) the term "untrue statement" shall mean any untrue
statement or alleged untrue statement of, or any omission or alleged
omission to state, in the Registration Statement a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading.
CNSI agrees to indemnify and hold harmless each Selling Stockholder from
and against any losses, claims, damages or liabilities to which such Selling
Stockholder may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement of a
material fact contained in the Registration Statement on the effective date
thereof, or arise out of any failure by CNSI to fulfill any undertaking included
in the Registration Statement and CNSI will reimburse such Selling Stockholder
for any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided,
however, that CNSI shall not be liable in any such case to the extent that such
loss, claim, damage or liability arises out of, or is based upon, an untrue
statement made in such Registration Statement in reliance upon and in conformity
with written information furnished to CNSI by or on behalf of such Selling
Stockholder specifically for use in preparation of the Registration Statement,
or any statement or omission in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to Allergan prior to the pertinent sale
or sales by Allergan.
Allergan agrees to indemnify and hold harmless CNSI (and each person, if
any, who controls CNSI within the meaning of Section 15 of the Securities Act,
each officer of CNSI who signs the Registration Statement and each director of
CNSI) from and against any losses, claims, damages or liabilities to which CNSI
(or any such officer, director or controlling person) may become subject (under
the Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement of a material fact contained in the
Registration Statement on the effective date thereof if such untrue statement
was made in reliance upon and in conformity with written information furnished
by or on behalf of Allergan specifically for use in preparation of the
Registration Statement, and Allergan will reimburse CNSI (or such officer,
director or controlling person, as the case may be), for any legal or other
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expenses reasonably incurred in investigating, defending, or preparing to defend
any such action, proceeding or claim.
Promptly after receipt by any indemnified person of a notice of a claim or
the commencement of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 6.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, and, subject to the provisions hereinafter stated,
in case any such action shall be brought against an indemnified person and such
indemnifying person shall have been notified thereof, such indemnifying person
shall be entitled to participate therein, and, to the extent it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified person. After notice from the indemnifying person to such
indemnified persons of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof; provided, however, that if there exists or shall exist a
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any officer, director,
employee, agent, affiliate or person deemed to be in control of such
indemnifying person within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, the indemnified person shall be entitled
to retain its own counsel at the expense of such indemnifying person. It is
understood, however, that CNSI shall, in connection with any one such action,
suit or proceeding or separate but substantially similar or related actions,
suits, or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
only one separate firm of attorneys (in addition to any local counsel) at any
time for all such indemnified parties not having actual or potential differing
interests with CNSI or among themselves.
6.4 "Stand-Off" Agreement. Until the earlier of five years from the
Closing or the date on which Allergan and its Affiliates, as defined in Section
8.4, own less than 1% of the outstanding Common Stock of CNSI, if Allergan holds
any Shares or Conversion Shares at such time as CNSI proposes to offer shares of
its Common Stock or other securities for sale in an underwritten registered
public offering, then if requested by the underwriter, Allergan agrees not to
sell or otherwise transfer or dispose of any such Shares, Conversion Shares or
other securities of CNSI held by it during the period commencing 10 days prior
to, and expiring 90 days after, such underwritten registered public offering has
become effective, provided, that all executive officers, directors and principal
stockholders of CNSI enter into similar agreements and, provided further, that
in no event shall such standoff period exceed 150 days. CNSI may impose stop
transfer instructions with respect to the Shares or other securities subject to
the foregoing restriction until the end of any stand-off period.
6.5 Registration Rights Subject to Existing Rights; Termination.
Allergan's registration rights under this Section 6 shall be subject to and
limited by existing registration rights granted to certain investors in CNSI
pursuant to the terms of the Stockholders'
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Agreement between CNSI and the investors dated as of December 29, 1988, and as
amended as of February 5, 1991. Allergan's registration rights hereunder shall
terminate as to any Conversion Shares or Shares when such shares have been sold
pursuant to a registration statement or Rules 144 or 144A under the Securities
Act and its demand registration rights under Section 6.1 hereof shall terminate
at such time as the Shares and Conversion Shares are eligible for resale under
Rule 144(K) under the Securities Act.
6.6 Transferability of Registration Rights. The rights conferred
upon Allergan under this Article 6 may be assigned by Allergan to any permitted
transferee of the Shares, Conversion Shares or the Note.
SECTION 7. Allergan Option to Acquire Additional Equity.
7.1 Option. Subject to the restrictions included in Section 8 below,
if, on or before the third anniversary of the Collaboration Agreement, CNSI
shall issue additional shares of its Common Stock in any private placement or
public offering (excluding issuances or sales directly to, or upon the exercise
of stock options granted to, employees, directors or consultants of CNSI) (an
"Issuance"), CNSI hereby grants to Allergan the right (the "Option"), in
connection with any such Issuance, to purchase additional shares of Common Stock
in the amounts and on the terms described herein. The per share consideration
for shares issued pursuant to an Issuance (the "Consideration") shall be deemed
to be the per share amount of cash and any other form of consideration received
by CNSI, which, in the case of a public offering, shall be the per share amount
paid by investors for such shares. The amount of any non-cash Consideration
shall be deemed to be the fair value of such non-cash Consideration determined
in good faith by CNSI's Board of Directors. The exercise price for an Option
share relating to an Issuance shall be the Consideration for an Issuance share.
7.2 Notice of Issuance; Determination of Number of Option Shares;
Exercise of Option.
(a) Public Offering. In the event that an Issuance constitutes
a public offering pursuant to an effective registration statement
filed with the Commission, CNSI shall give written notice to
Allergan of the terms thereof not later than 14 days prior to the
filing of the preliminary prospectus for such offering with the
Commission. Such notice shall include the number of shares which are
anticipated to be the subject of the Issuance, excluding shares
covered by any over-allotment option (the "Issuance Number") and the
proposed Consideration for such shares. Allergan shall be entitled
to exercise the Option to purchase that percentage of the Issuance
Number (the "Option Number") equal to Allergan's percentage
ownership interest in outstanding CNSI Common Stock at the time of
Allergan's receipt of the notice from CNSI hereunder. When the
Option Number includes a fractional share, it shall be rounded to
the nearest whole share. Allergan may exercise the Option pursuant
to this Section 7.2(a) by giving written notice to CNSI within 14
days
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following its receipt of notice of an Issuance hereunder stating
that it is Allergan's intent to exercise the Option. Allergan's
notice shall specify the number of shares for which the Option is
being exercised (up to the Option Number). Allergan shall be
required to deliver payment in full of the exercise price for such
shares concurrently with the closing of the public offering. CNSI
will deliver notice of the closing of the public offering to
Allergan not less than 3 days prior thereto or, if earlier, on the
date on which the closing date of the public offering may be
established pursuant to any underwriting, purchase or other
agreement relating thereto.
(b) Private Offering. In the event that an Issuance is not a
public offering pursuant to a registration statement under the
Securities Act, CNSI shall give written notice to Allergan of the
terms thereof promptly following the closing of such Issuance. Such
notice shall include the Issuance Number for such Issuance and the
Consideration for the shares. In this case, Allergan shall have the
right to purchase an Option Number which, when added to the Issuance
Number, equals a percentage of the sum of the Issuance Number and
the Option Number equal to Allergan's percentage ownership interest
in outstanding CNSI Common Stock at the time of the closing of the
Issuance. For example, if the Issuance Number were 10,000, and
assuming for purposes hereof that Allergan then owned 1% of CNSI's
outstanding Common Stock, the applicable Option Number would be 101
(10,000 + 101 = 10,101; 1% of 10,101 = 101.01). When the Option
Number includes a fractional share, it shall be rounded to the
nearest whole share. Allergan may exercise the Option pursuant to
this Section 7.2(b) by giving written notice to CNSI within 14 days
following its receipt of notice of an Issuance hereunder stating
that it is Allergan's intent to exercise the Option. Allergan's
notice shall specify the number of shares for which the Option is
being exercised (up to the Option Number). Allergan shall be
required to deliver payment in full of the exercise price for such
shares within 10 days of its delivery of the foregoing notice to
CNSI. In the event Allergan exercise its rights hereunder, it shall
receive securities identical to those issued to other purchasers and
shall be entitled to all other rights granted to such other
purchasers.
7.3 Delivery of Certificates; Registration. Upon the closing of any
Option exercise hereunder, CNSI shall cause to be delivered to Allergan a
certificate or certificates evidencing the shares purchased pursuant to the
exercise of the Option. Nothing in this Section 7.3 shall be deemed to require
that CNSI file or amend a registration statement covering the issuance of shares
pursuant to Section 7.2 (b) upon exercise of the Option hereunder.
7.4 Dividends and Reclassifications. If, following an Issuance (or,
in the case of a public offering pursuant to Section 7.2(a) above, delivery by
CNSI of a notice of a proposed Issuance) but prior to the exercise of, or
expiration of the right to exercise, the Option relating to such Issuance, there
shall be declared payable to holders of record of the
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Common Stock of CNSI on a date prior to such exercise or expiration, or paid, a
stock dividend upon the Common Stock of CNSI or if such Common Stock shall be
split-up, combined, converted, exchanged (including by way of merger),
reclassified, or in any way substituted for (collectively, a "Dividend or
Reclassification"), the Option shall entitle Allergan upon the future exercise
of the Option relating to such Issuance to such number and kind of securities or
other property, subject to the terms of the Option, to which Allergan would have
been entitled had Allergan actually owned the Common Stock as to which the
Option is then exercised at the time of such Dividend or Reclassification; and
the aggregate purchase price upon the exercise of the Option relating to such
Issuance shall be the same as if shares of Common Stock of CNSI originally
subject to the Option were being purchased as provided herein; provided,
however, that no fractions of shares shall be issued, the aggregate purchase
price shall be appropriately reduced on account of any fractions not so issued
and the purchase price per share shall in no event be less than the par value of
the Common Stock.
7.5 Reservation of Common Stock. CNSI hereby covenants with Allergan
that it shall in connection with any Issuance reserve such number of shares of
its Common Stock as will be sufficient to satisfy the requirements of the Option
and that such shares, when issued pursuant to the terms of this Agreement, will
be validly issued, fully paid and non-assessable.
7.6 Successors to Option. The Option and all rights thereunder shall
be non-assignable and nontransferable, are intended solely for the benefit of
Allergan, and shall in no way inure to the benefit of its assignees or
transferees. Notwithstanding the foregoing, Allergan may assign or transfer the
Option to any corporation or entity with which Allergan is merged or combined
and to any corporation or entity which is a successor to Allergan, or to any
entity which is an affiliate of Allergan. CNSI shall have the right to require,
as a condition precedent to such assignment or transfer, that the assignee or
transferee furnish such information as may in the opinion of counsel for CNSI be
appropriate to permit such assignment or transfer in light of the then
applicable federal or state securities laws.
SECTION 8. Standstill Covenants.
8.1 Standstill Agreement. Allergan agrees that, for a period of four
(4) years after the Closing (the "Standstill Period"), unless it has obtained
the prior written consent of CNSI, Allergan will not
(a) own or acquire, directly or indirectly, by purchase or
otherwise, of record or beneficially, any voting securities of CNSI,
or rights or options to acquire voting securities of CNSI, if after
such acquisition (and giving effect to the exercise of any such
rights or options) Allergan would own of record or beneficially in
the aggregate ten percent (10%) or more of the voting securities of
CNSI (assuming the exercise of all outstanding rights to acquire
voting securities held by Allergan) (the "10 Percent Limit");
provided that notwithstanding the provisions of this clause (a), if
the number of shares of
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outstanding voting securities is reduced or if the aggregate
ownership of Allergan is increased as a result of a recapitalization
of CNSI or as a result of any other action taken by CNSI, Allergan
will not be required to dispose of any of its holdings of voting
securities even though such action resulted in Allergan's ownership
exceeding the percentage of voting securities which Allergan would
then be permitted to own. In the event that Allergan owns in the
aggregate more than the 10 Percent Limit due to a repurchase by CNSI
of any of its Common Stock, CNSI shall, at Allergan's option,
repurchase that number of shares of its Common Stock from Allergan
necessary to reduce Allergan's ownership of CNSI's Common Stock
below the 10 Percent Limit, at the current market price. Except as
otherwise provided above, if Allergan shall at any time during the
Standstill Period own in the aggregate in excess of the maximum
percentage of the voting securities at the time permitted by this
clause (a), Allergan shall sell as promptly as practicable under the
circumstances sufficient voting securities so that after such sale
Allergan shall not own in the aggregate more than the applicable
maximum permitted percentage of voting securities (provided,
however, that the foregoing paragraph shall not be deemed to limit
CNSI's remedies in the event that the excess voting securities were
acquired in violation of this Section);
(b) "solicit" proxies with respect to voting securities under
any circumstances or become a "participant" in any "election
contest" relating to the election of directors of CNSI, as such
terms are defined in Regulation 14A under the Exchange Act, deposit
any voting securities in a voting trust or subject them to a voting
agreement or other agreement of similar effect; or
(c) initiate, propose or otherwise solicit stockholders for
the approval of one or more stockholder proposals at any time, or
induce or attempt to induce any other person to initiate any
stockholder proposal; or
(d) take any action individually or jointly with any
partnership, limited partnership, syndicate or other group or assist
any other person, corporation, entity or group in taking any action
it could not take individually under the terms of this Section 8.
8.2 Mergers, Tender Offers or Similar Transactions. Allergan agrees
that, for a period of four years following the Closing, it will not
(a) directly or indirectly, without the prior approval of
CNSI's Board of Directors, solicit or encourage any person to
propose a business combination or similar transaction with, or a
change of control of, CNSI or to make a tender offer for shares of
CNSI's Common Stock or other voting securities; and
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(b) directly or indirectly, without the prior approval of
CNSI's Board of Directors, publicly (or in a manner requiring CNSI
to disclose publicly) (i) propose any business combination or
similar transaction with, or a change of control of, CNSI; (ii) make
or propose a tender offer for shares of Common Stock or other voting
securities of CNSI; (iii) otherwise act to seek control of CNSI's
Board of Directors or control the management, policies or affairs of
CNSI; or (iv) propose any amendment to or waiver under this Section
which would permit Allergan to acquire additional Common Stock or
other voting securities other than those presently permitted under
this Article 8.
8.3 Equitable Remedies. Allergan agrees that irreparable damage
would occur if any provision of this Section 8 were not performed in accordance
with its specific terms or were otherwise breached. It is accordingly agreed
that CNSI shall be entitled to an injunction or injunctions to prevent breaches
of this Section 8 and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction, in
addition to any other remedy to which it may be entitled at law or equity.
8.4 Affiliates of Allergan. Allergan represents to CNSI that there
is no Affiliate of Allergan which, as of the date of this Agreement, owns of
record or beneficially any (a) Common Stock or other voting securities of CNSI
or (b) any other securities convertible or exchangeable (with or without the
payment of additional consideration) into voting securities of CNSI. Allergan
covenants to CNSI that, if at any time while this Section 8 is in effect, any
Affiliate of Allergan becomes or intends to become the beneficial owner, as
defined in regulations promulgated by the Commission, of any Common Stock or
voting securities of CNSI, or any securities convertible or exchangeable into
voting securities, Allergan will, whether prior to such ownership if possible,
or, if not possible, as soon as practicable after such ownership, cause such
Affiliate to agree to be bound by Section 8 of this Agreement. For purposes of
this Section 8, "Affiliate" shall mean Allergan, Inc. and any corporation,
partnership or other legal entity which Allergan, Inc. controls.
SECTION 9. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by CNSI and Allergan
herein shall survive the execution of this Agreement, the delivery to Allergan
of the Shares being purchased and the payment therefor, except to the extent
otherwise provided herein.
SECTION 10. Miscellaneous.
10.1 Notices. Any consent, notice or report required or permitted to
be given or made under this Agreement by one of the parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by telephone, personal delivery or courier) or courier, postage
prepaid (where applicable), addressed to such other
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party at its address indicated below, or to such other address as the addressee
shall have last furnished in writing to the addressor and shall be effective
upon receipt by the addressee.
If to CNSI: Cambridge NeuroScience, Inc.
One Kendall Square, Building 700
Cambridge, Massachusetts 02139
Attention: President
Telephone: (617) 225-0600
Telecopy: (617) 225-0613
with a copy to: Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
Attention: William T. Whelan, Esq.
Telephone: (617) 573-0100
Telecopy: (617) 227-4420
If to Allergan: Vision Pharmaceuticals, L.P.
c/o Allergan, Inc.
2525 Dupont Drive
Irvine, California 92715
Attention: Chief Financial Officer
Telephone: (714) 752-4500
Telecopy: (714)
with a copy to: Allergan, Inc.
2525 Dupont Drive
Irvine, California 92623
Attention: General Counsel
Telephone: (714) 752-4500
Telecopy: (714) 246-4774
10.2 Entire Agreement. This Agreement, together with the
Collaboration Agreement and any agreements that the parties may execute pursuant
to the Collaboration Agreement, contains the entire understanding of the parties
with respect to the subject matter hereof. All express or implied agreements and
understandings, either oral or written, heretofore made are expressly merged in
and made a part of this Agreement.
10.3 Assignment. This Agreement may not be assigned or otherwise
transferred by either party without the prior written consent of the other
party, which consent shall not be unreasonably withheld or delayed; provided,
however, that each of the parties may, without such consent, assign this
Agreement and its rights and obligations hereunder to its Affiliates or in
connection with the transfer or sale of all or substantially all of its
business, or in the event of its merger or consolidation or change in control or
similar transaction (which shall be deemed an assignment) or in the case of CNSI
the creation of a
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Confidential material omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote such omissions.
special purpose corporation or research and development limited partnership.
Notwithstanding the foregoing, CNSI may not assign this Agreement and its rights
and obligations hereunder to************************************************
or their successors-in-interest. Any purported assignment in violation of the
preceding sentences shall be void and shall be deemed a material breach of this
Agreement. Any permitted assignee shall assume all obligations of its assignor
under this Agreement in writing.
10.4 Amendments and Waivers. This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by CNSI and Allergan.
The waiver by either party hereto of any right hereunder or the failure to
perform or of a breach by the other party shall not be deemed a waiver of any
other right hereunder or of any other breach or failure by said other party
whether of a similar nature or otherwise.
10.5 Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
10.6 Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California (without giving
effect to the choice of law provisions thereof) and the federal law of the
United States of America.
10.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
10.9 Expenses. Except as otherwise specifically provided herein,
each party shall bear its own expenses in connection with this Agreement.
10.10 Publicity. Neither party hereto shall issue any press releases
or otherwise make any public statement with respect to the transactions
contemplated by this Agreement without the prior written consent of the other
party, except as may be required by applicable law or regulation.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
CAMBRIDGE NEUROSCIENCE, INC.
By: /s/ Elkan R. Gamzu
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Elkan R. Gamzu
President and Chief Executive Officer
VISION PHARMACEUTICALS L.P., a Texas limited
partnership dba Allergan
By: Allergan General, Inc.
Its: General Partner
By: /s/ Francis R. Tunney, Jr.
--------------------------------------
Title: Secretary
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