Exhibit 10.104
[Execution Copy]
STOCK PURCHASE AND WARRANT AGREEMENT
between
CETUS CORPORATION
and
HOFFMANN-LA ROCHE INC.
dated
May 9, 1989
STOCK PURCHASE AND WARRANT AGREEMENT
THIS IS A STOCK PURCHASE AND WARRANT AGREEMENT ("Agreement") dated May
9, 1989 between CETUS CORPORATION, a Delaware corporation ("Seller"), and
HOFFMANN-LA ROCHE INC., a New Jersey corporation ("Purchaser").
B A C K G R 0 U N D
Seller and Purchaser are parties to a letter agreement captioned
"Agreement on Interleukin-2 Patent Licensing" (the "Letter Agreement"), dated
December 21, 1988, pursuant to which, among other things, (i) Seller agreed
to sell to Purchaser, and Purchaser agreed to purchase from Seller, 950,000
shares of Seller's common stock, (ii) Seller agreed to issue to Purchaser
warrants to purchase an additional 1,000,000 shares of Seller's common stock,
and (iii) Seller and Purchaser agreed to cooperate in preparing and executing
an agreement or agreements (the "Follow-Up Agreements") more fully
elaborating the parties' understandings set forth in the Letter Agreement.
This Agreement is the Follow-Up Agreement relating to the stock purchase,
warrant issuance and related securities matters. Two other Follow-Up
Agreements, which
are being prepared for execution by the parties, are an IL-2 License
Agreement between Seller and Purchaser, and an IL-2 License Agreement between
Seller, EuroCetus International, N.V. and F. Hoffmann-LaRoche & Co. Limited
Company (collectively, the "License Agreements").
ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms have the meanings given
them in this Article 1:
"Closing" means the delivery by the parties of the documents necessary
to consummate the sale and purchase of the Shares and the issuance of the
Warrants, at the time and place specified in Section 2.3 of this Agreement.
"Common Stock" means the Common Stock, par value $.01, of Seller, and
does not mean and shall not be deemed to include Series B Common Stock.
"Control", "controls", "controlling" and "controlled" mean the
ownership, directly or indirectly, of stock or similar equity interests
possessing 50% or more of the voting power of a
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corporation or other entity or the possession, by contract or otherwise, of
the power to direct or cause the direction of the management and policies of
a corporation or other entity.
"Exercise Price" has the meaning given it in Section 3.2 of this
Agreement.
"First Warrant" and "Second Warrant" mean the Warrants issued by
Purchaser to Seller pursuant to Section 3.1 of this Agreement and represented
by the certificates attached to this Agreement as EXHIBITS A and B,
respectively.
"Investor Entity" means Purchaser and every Person which, at the
relevant time, controls, is controlled by or is under common control with,
Purchaser.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
"Market Price" of the Common Stock for the relevant day shall be an
amount per share of Common Stock determined as follows:
(a) if the Common Stock is listed on any national securities
exchanges the Market Price shall be the average of the closing prices of the
Common Stock on the principal exchange on
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which the Common Stock is listed for 30 consecutive trading days commencing
45 days before the applicable day; or
(b) if the Common Stock is reported on the National Market System
of the National Association of Securities Dealers Automated Quotation System
("NASDAQ"), the Market Price shall be the average of the last sale prices of
the Common Stock as reported on the NASDAQ National Market System, or, if the
Common Stock is not included in the NASDAQ National Market System, the
average of the bid prices for the Common Stock as reported on the NASDAQ
quotation system, in either case for 30 consecutive trading days commencing
45 days before the applicable day; or
(c) if the Common Stock is not so quoted on NASDAQ or listed on a
national securities exchange or admitted to unlisted trading privileges, the
Market Price shall be an amount representing the fair market value of the
shares of Common Stock as determined in good faith by the Board of Directors
of the Company.
"Net Cetus IL-2 Product Sales" means the aggregate worldwide "Net
Sales" by Seller and its affiliates for "Licensed Cetus IL-2 Product" under
the License Agreements as ultimately agreed upon, executed and delivered, or,
if such agreements are not executed and delivered by December 31, 1989, as
determined pursuant to paragraph 12 of the Letter Agreement.
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"Permitted Transferee" has the meaning given it in Section 8.5 of
this Agreement.
"Person" means any individual, partnership, corporation, trust,
unincorporated association, joint venture, group (as such term is defined in
Section 13(d)(3) of the 1934 Act), government, government agency, or any other
entity or enterprise.
"Prime Rate" means the rate of interest reported as the "Prime
Rate" in the "Money Rates" or successor feature of THE WALL STREET JOURNAL.
"Registration" has the meaning given it in Section 6.1 of
this Agreement.
"Rights" means any securities or other rights, whether issued by
Seller, granted by contract with Seller or any Person, or obtained in any other
manner, which may be converted into or exchanged for, or which otherwise
entitles their holder to acquire, any Voting Stock, and regardless, in each such
case, of when their holder may convert, exchange or exercise such securities or
rights. The Warrants issued to Purchaser under Article 3 of this Agreement are
"Rights".
"SEC" means the Securities and Exchange Commission.
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"Securities" means the Shares, the Warrants and the Warrant Shares.
"Seller Subsidiary" means the entities identified on Exhibit 22 to
Seller's Annual Report on Form 10-K for the fiscal year ended June 30, 1988.
"Shares" means the 950,000 previously unissued shares of Seller's Common
Stock to be sold by Seller to Purchaser pursuant to Section 2.1 of this
Agreement.
"Stockholder Rights Agreement" means the Rights Agreement, dated as of
August 12, 1988, between Seller and The First National Bank of Boston, as
Rights Agent. "Stockholder Rights" means the "Rights" as defined in the
Stockholder Rights Agreement.
"Tender Date" has the meaning given it in Section 9.2 of this Agreement.
"Tender Offer" has the meaning given it under Section 14(d)(1) of the
1934 Act.
"Total Voting Power" means the aggregate Voting Power of all Voting
Stock plus the Voting Stock which all Investor Entities (or, in the case of
the second and fourth sentences of Section 8.2,
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the Person or Persons referred to in those sentences) beneficially own
in the aggregate or are entitled at any time to acquire pursuant to any
Rights.
"Transfer", "Transfers" and "Transferred" mean any sale, assignment,
pledge, hypothecation, gift, transfer or other disposition of Shares,
Warrants or Warrant Shares.
"Voting Power" of any Voting Stock means the number of votes which the
holder of such Voting Stock is, at the time of determination, entitled to
cast for the directors of Seller at a meeting of Seller's stockholders, and
"Voting Power" of any Rights means the number of such votes which the holder
of those Rights would be entitled so to cast if those Rights were converted
into or exchanged or exercised for Voting Stock.
"Voting Stock" means the outstanding shares of capital stock and any
other securities issued by Seller having the present, ordinary power to vote
in the election of directors of Seller, but not securities having such power
only upon the happening of a contingency. The Shares, and the Warrant Shares
when and if issued to Purchaser upon exercise of the Warrants, are "Voting
Stock".
"Warrant" and "Warrants" mean the warrants to purchase an aggregate of
1,000,000 shares of Seller's Common Stock to be issued by Seller to Purchaser
pursuant to Section 3.1 of this Agreement.
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"Warrantholder" and "Warrantholders" mean holders of the Warrants,
including Purchaser and any transferee or transferees of Purchaser pursuant
to a Transfer of a Warrant or Warrants under Section 3.6 of this Agreement.
"Warrant Shares" means the shares of Common Stock issuable by
Seller upon exercise of a Warrant.
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
ARTICLE 2
SALE AND PURCHASE OF STOCK
2.1 SALE AND PURCHASE. Subject to the provisions of this Agreement,
Seller hereby issues and sells to Purchaser, and Purchaser hereby purchases
from Seller, the Shares.
2.2 PURCHASE PRICE. Concurrently with the execution and delivery of
this Agreement, Purchaser is delivering to Seller, by wire transfer in
immediately available funds, the sum of $14,250,000, representing the total
purchase price for the Shares based on a purchase price of $15.00 for each
Share, plus the sum of $262,437.50, representing interest (computed on the
basis of a 360-day year of 12 30-day months) on such amount computed at an
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annual rate of 9.75% from March 1, 1989 to the date of this Agreement.
Concurrently with the execution and delivery of this Agreement, Seller is
delivering to Purchaser a certificate representing the Shares registered in
the name of Purchaser.
2.3 CLOSING. The Closing shall take place upon the execution and
delivery of this Agreement at the offices of Seller at 1400 Fifty-Third Street,
Emeryville, California, on the date of this Agreement.
ARTICLE 3
ISSUANCE AND EXERCISE OF WARRANTS
3.1 ISSUANCE OF WARRANTS. Subject to the provisions of this Agreement,
Seller hereby issues to Purchaser the First Warrant and the Second Warrant.
(The First Warrant and the Second Warrant are sometimes referred to
individually as a Warrant and collectively as the Warrants.) Certificates
representing the Warrants (the forms of which certificates are attached to
this Agreement as EXHIBITS A and B, respectively) are being delivered by
Seller to Purchaser concurrently with the execution and delivery of this
Agreement. Each Warrant entitles Purchaser to purchase, at the Exercise Price
and on the terms and conditions contained in this Agreement, 500,000 Warrant
Shares, subject to adjustment from time to time pursuant to Section 3.5 of
this Agreement.
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3.2 EXERCISE PRICE The exercise price of each Warrant is $15.75 per
Warrant Share payable in cash, as may be adjusted in accordance with Section
3.5 of this Agreement.
3.3 EXERCISE OF WARRANTS
(a) FIRST WARRANT. The First Warrant may be exercised no earlier
than August 10, 1989 and no later than the earlier of (i) August 10, 1999, or
(ii) the date which is 16 months after the last day of the first fiscal year,
if any, of Seller in which Net Cetus IL-2 Product Sales exceeded $50,000,000.
The First Warrant may be exercised for the entire balance of the Warrant
Shares at the time of the exercise or in increments of not less than 50,000
Warrant Shares.
(b) SECOND WARRANT. The Second Warrant shall be exercisable as
described in this Section 3.3(b). Within 60 days after the end of each fiscal
year, Seller shall deliver a notice to Purchaser advising Purchaser as to
whether or not Net Cetus IL-2 Product Sales in that year exceeded
$50,000,000. The Second Warrant shall be exercisable for a period of five
years commencing on the date of delivery of the first notice that Net Cetus
IL-2 Product Sales exceeded $50,000,000 for the preceding fiscal year, and
shall expire if not exercised within that five-year period; provided,
however, that if Seller determines that Net Cetus IL-2 Product Sales for a
year exceed $50,000,000 before the end of that
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year, Seller shall provide prompt notice thereof to Purchaser, and the
five-year exercise period shall commence on the date of delivery of that notice;
and provided further, however, that if Net Cetus IL-2 Product Sales do not
exceed $50,000,000 in any fiscal year ending before July 1, 1998 and the Second
Warrant has not therefore become exercisable as provided in this Section 3.3(b),
the Second Warrant will be exercisable for a ten-day period beginning December
21, 1998 and ending December 31, 1998 at the Exercise Price and, if not so
exercised in that ten-day period, will expire. Seller's obligation to provide
the notice contemplated by this Section 3.3(b) shall terminate as to all
subsequent years with the notice given after the first fiscal year in which Net
Cetus IL-2 Product Sales exceeded $50,000,000. The Second Warrant may be
exercised for the entire balance of the Warrant Shares at the time of the
exercise or in increments of not less than 50,000 shares.
(c) SALES INFORMATION.
(i) The amount of Net Cetus IL-2 Product Sales for any fiscal
year as finally determined in accordance with the License Agreements or
paragraph 12 of the Letter Agreement, as the case may be, shall be conclusive
for purposes of determining the exercisability of the Warrants under this
Agreement. If, by reason of changes in Seller's fiscal year or otherwise, the
reports of Net Cetus IL-2 Product Sales provided under the License Agreements
or
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paragraph 12 of the Letter Agreement, as the case may be, do not, when
appropriately combined, cover the fiscal year of Seller, Seller will deliver to
Purchaser such additional reports as are appropriate so that fiscal year
information is available to Purchaser.
(ii) Within 60 days after the end of a fiscal year, Seller
will notify the Warrantholders at the addresses supplied by them as to
whether Net Cetus IL-2 Product Sales for that year exceeded $50,000,000;
provided, however, that if Seller determines that Net Cetus IL-2 Product
Sales for a year exceed $50,000,000 before the end of that year, Seller shall
promptly provide notice thereof to the Warrantholders, and the five year
exercise period shall commence on the date of delivery of that notice. If the
Warrants have been transferred in accordance with Section 3.6 to any Person
other than an Investor Entity, and Seller has not so notified such transferee
Warrantholder or Warrantholders that Net Cetus IL-2 Product Sales exceeded
$50,000,000, Seller shall, upon written request of a transferee
Warrantholder, make available to a single independent accounting firm
selected by such transferee Warrantholder (or jointly selected if there are
multiple transferee Warrantholders), on an annual, one-inspection-per-year
basis, at Seller's offices, such records relating to the preceding fiscal
year as may be relevant and necessary for such accounting firm to confirm
whether Net Cetus IL-2 Product Sales for that year exceeded $50,000,000. Such
independent accounting firm shall be
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entitled to notify the transferee Warrantholders whether, in its opinion
based upon such review, Net Cetus IL-2 Product Sales for that year did or did
not exceed $50,000,000, but shall not be entitled to disclose or retain any
other information (including, without limitation, the actual amount of Net
Cetus IL-2 Product Sales for that or any year) it may have obtained in the
course of such review. Seller's obligation to provide the notice and
inspection rights contemplated by this Section 3.3(c)(ii) shall terminate
either with the notice given after the end of the first fiscal year of Seller
in which Net Cetus IL-2 Product Sales exceeds $50,000,000 or with the notice
given or, in the case of inspection rights, one year after the expiration of
any 60-day notice period, as the case may be, after the last fiscal year of
Seller ending before July 1, 1998, whichever occurs first.
(d) EXERCISE PROCEDURES
(i) An exercisable Warrant may be exercised by delivery to
Seller of a duly executed irrevocable election to purchase (in the form
attached to the warrant certificate) and, at the time specified in Section
3.3(d)(ii) of this Agreement, by payment of the Exercise Price. The purchase
and sale of Warrant Shares pursuant to the exercise of a Warrant shall take
place on the third business day following the receipt or expiration, as the
case may be, of all required governmental and third-party approvals and
waiting periods, including, without limitation, applicable
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stock exchange listing requirements and expiration or early termination of
all waiting periods imposed on such purchase and sale by the HSR Act, or, if
no such approvals are required or waiting periods are applicable, on the
tenth business day, in each case after delivery to Seller of the election to
purchase, or at such other time and place as Seller and Purchaser may agree.
Upon receipt of an election to purchase, Seller and Purchaser will use their
best efforts to comply with all federal and state laws and regulations and
stock exchange listing requirements applicable to any purchase and sale of
Warrant Shares, and Seller shall be obligated to issue and deliver the
appropriate number of Warrant Shares against payment, regardless of whether
the exercise period for the underlying Warrant expires prior to actual
issuance of the Warrant Shares; provided, however, that the issuance of such
Warrant Shares shall be subject to compliance with applicable laws and
regulations and requirements of any applicable stock exchange and the absence
of any order enjoining or restraining such exercising or issuance. Seller
shall use its best efforts to maintain the listing of all the Warrant Shares
on any stock exchange or trading facility on which Common Stock is at the
time listed or traded and shall take actions reasonably necessary or
appropriate to maintain compliance with applicable federal and state laws and
regulations so to permit the immediate issuance of the Warrant Shares upon
the exercise of the Warrants, except those laws and regulations which can
only be complied with upon notice of or after the time of an exercise.
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(ii) At the time of a purchase and sale of Warrant Shares, a
Warrantholder shall present and surrender to Seller the appropriate warrant
certificate and shall make payment, in cash or by wire transfer or by check
payable in immediately available funds to the order of Seller, of the
Exercise Price for the number of Warrant Shares specified in the election to
purchase, and Seller shall deliver to the Warrantholder a certificate
representing the Warrant Shares, registered in the name of that
Warrantholder. If a Warrant is exercised for less than the total number of
shares evidenced by the Warrant, Seller shall execute and deliver a new
warrant certificate, dated the date hereof, evidencing the rights of that
Warrantholder to purchase the balance of the Warrant Shares purchasable under
that Warrant.
3.4 NO RIGHTS AS STOCKHOLDER. The Warrants shall not entitle a
Warrantholder to any rights as a stockholder of Seller, either at law or in
equity. The rights of Warrantholders with respect to the Warrants are limited
to those expressed in this Agreement and in the certificates representing the
Warrants.
3.5 ADJUSTMENTS IN NUMBER AND EXERCISE PRICES OF WARRANT SHARES
(a) ADJUSTMENTS. The number of Warrant Shares and the Exercise
Price therefor shall be subject to adjustment as follows:
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(i) If Seller (A) pays a dividend or makes a distribution on
its Common Stock in shares of its Common Stock; (B) subdivides its
outstanding shares of Common Stock into a greater number of shares; (C)
combines its outstanding shares of Common Stock into a smaller number of
shares; (D) makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock; or (E) issues by reclassification of its
Common Stock any shares of its capital stock, the number of Warrant Shares
for which the Warrants may be exercised and the Exercise Price shall be
adjusted so that a Warrantholder may receive the number and kind of shares of
capital stock of Seller upon exercise after the record date for such event
(assuming, solely for that purpose, that the Warrants were then exercisable)
which such Warrantholder would have received had it exercised a Warrant or
Warrants immediately before that record date (making the same assumption).
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
(ii) If Seller distributes any rights or warrants to all
holders of the Common Stock entitling them for a period expiring within 60
days after the record date referred to below to purchase shares of Common
Stock at a price per share less than the Market Price per share determined as
of that record date,
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the Exercise Price shall be adjusted in accordance with the formula:
N x P
-----
O + M
E' = E x ---------
O + N
WHERE:
E' = the adjusted Exercise Price
E = the current Exercise Price
O = the number of shares of Common Stock outstanding on the record date
N = the number of additional shares of Common Stock offered
M = the Market Price determined as of the record date
P = the offering price per share of the additional shares
The adjustment shall become effective immediately after the record date for
the determination of stockholders entitled to receive the rights or warrants.
This Section 3.5(a)(ii) does not apply to any Stockholder Rights issued or
issuable under the Stockholder Rights Agreement or any successor or
additional stockholder rights plan.
(iii) If Seller distributes to all holders of its Common
Stock any of its assets or debt securities or any rights or warrants to
purchase securities of Seller (other than the rights and warrants referred to
in Section 3.5(a)(ii) or any Stockholder Rights issued or issuable under the
Stockholder Rights Agreement or
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any successor or additional stockholder rights plan), the Exercise Price shall
be adjusted in accordance with the formula:
M-F
E' = E x ----
M
WHERE:
E' = the adjusted Exercise Price
E = the current Exercise Price
M = the Market Price determined as of the record date
F = the fair market value, as determined in good faith by Seller, on
the record date of the assets, debt securities, rights or warrants
distributed with respect to one share of Common Stock
The adjustment shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution. This
Section 3.5(a)(iii) does not apply to cash dividends or cash distributions
cumulatively not in excess of cumulative consolidated earnings (net of Seller's
consolidated losses) from and after July 1, 1988 as shown on the books of
Seller.
(iv) No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least .5% in the Exercise
Price. Any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
3.5 shall be made to the nearest cent or to that nearest 1/100th of a share, as
the
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case may be. No adjustment need be made for rights to purchase Common Stock
pursuant to a plan of Seller for reinvestment of dividends or interest. No
adjustment need be made for a change in the par value or no par value of the
Common Stock. To the extent the Warrants become convertible into cash
pursuant to Section 3.5(b), no adjustment need be made thereafter as to the
cash, and interest will not accrue on cash.
(b) MERGER, SALE OF ASSETS, ETC. If a consolidation or merger
of Seller with another corporation or any sale of all or substantially all of
Seller's assets to another Person is consummated in which holders of Common
Stock receive, in exchange for their shares of Common Stock, other securities
or assets, then, as a condition to the closing of such consolidation, merger,
or sale, provision shall be made whereby the Warrantholders shall have the
right to purchase and receive upon the basis and upon the terms and
conditions specified in the Warrants, including those relating to whether and
when the Warrants are exercisable, and in lieu of the Warrant Shares issuable
upon exercise of the Warrants, such securities or assets as may be issued or
payable with respect to or in exchange for the number of Warrant Shares
otherwise issuable upon the exercise of the Warrants prior to the closing of
such consolidation, merger or sale. Appropriate provision shall also be made
with respect to the rights and interests of the Warrantholders to the effect
that the provisions of this Agreement (including, without limitation,
provisions for
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adjustments of the Exercise Price and of the number of Warrant Shares
purchasable upon the exercise of the Warrants) shall thereafter be
applicable, as nearly as may be practicable, in relation to any securities or
assets thereafter deliverable upon the exercise of a Warrant. If any such
consolidation, merger or sale of assets would result in whole or in part in a
cash distribution to a Warrantholder equal to or in excess of the Exercise
Price, that Warrantholder may, at the Warrantholder's option, exercise the
Warrants (assuming that the Warrants are otherwise exercisable under Section
3.3) without making payment of the Exercise Price, and in such case Seller
shall, upon distribution to that Warrantholder, consider the Exercise Price
to have been paid in full, and in making settlement to the Warrantholder,
shall deduct an amount equal to the Exercise Price from the amount otherwise
payable to that Warrantholder. The Person purchasing such assets shall assume
by written instrument the obligation to deliver to the Warrantholders such
securities or assets as, in accordance with the foregoing provisions, such
Warrantholders may be entitled to purchase.
(c) DISSOLUTION, LIQUIDATION, ETC. In connection with any
liquidation, dissolution or winding up of its affairs, Seller shall give written
notice thereof to the Warrantholders at least 10 days before the record date for
the transaction in order to permit the Warrantholders to exercise, on or before
the record date, a Warrant or Warrants (if it or they are otherwise
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exercisable under Section 3.3 of this Agreement) but to receive only the
property described in this Section 3.5(c) rather than Warrant Shares.
Notwithstanding the provisions of Section 3.3 or of the certificates
representing the Warrants, the Warrants shall expire if not exercised within
that 10-day period. Upon such exercise, Warrantholder shall have the right to
receive, in lieu of the Warrant Shares that Warrantholder otherwise would
have been entitled to receive, the same kind and amount of assets as would
have been issued, distributed or paid to that Warrantholder upon any such
dissolution, liquidation or winding up with respect to such shares of Common
Stock had that Warrantholder been the holder of record of such shares of
Common Stock receivable upon exercise of the Warrants on the date for
determining the stockholders entitled to receive any such distribution. If
any such dissolution, liquidation or winding up results in any cash
distribution in excess of the Exercise Price provided by the Warrants, a
Warrantholder may, at that Warrantholder's option, exercise the Warrants
without making payment of the Exercise Price and, in such case, Seller shall,
upon distribution to that Warrantholder, consider the Exercise Price to have
been paid in full and, in making settlement to that Warrantholder, shall
deduct an amount equal to the Exercise Price from the amount payable to that
Warrantholder. This Section 3.5(c) shall not be applicable to any transaction
referred to in Section 3.5(b) of this Agreement.
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(d) ADJUSTMENT PROCEDURES. Seller may retain a firm of
independent public accountants of nationally recognized standing (who may be
any such firm regularly employed by Seller) to make any computation required
under this Section 3.5. A certification of such computation signed by such
firm shall, absent actual fraud, conclusively establish the correctness of
that computation.
(e) CERTIFICATION OF ADJUSTMENT. Whenever the number of
Warrant Shares or the Exercise Price may be adjusted as required by this
Section 3.5, Seller will promptly deliver to the Warrantholder or
Warrantholders, and make available for inspection at its principal office, an
officer's certificate showing the adjusted number of Warrant Shares and
Exercise Price and setting forth in reasonable detail the circumstances
requiring the adjustment.
(f) FRACTIONAL SHARES. Seller will not issue any fractional
shares of Common Stock upon exercise of a Warrant, but will instead deliver
its check for (or, at its option, apply against the Exercise Price payable)
the current market value of the fractional shares. The current market value
of a fraction of a share shall be determined by multiplying the Market Price
of a full share by the fraction, rounding the result to the nearest cent. For
purposes of this Section 3.5(f), "Market Price" shall not be determined on
the basis of an average of closing, sale or bid
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prices, as the case may be, over a specified period as provided in the
definition of Market Price contained in Article 1 of this Agreement, but
shall be the closing, sale or bid price, as the case may be, as of the close
of business of the trading day immediately preceding the date of exercise of
the Warrants.
(g) TAXES ON EXERCISE. Upon exercise of a Warrant, Seller shall
pay any documentary stamps or similar issue or transfer taxes due on the
issuance of Warrant Shares. However, a Warrantholder shall pay any such tax
which is due because the Warrant Shares are issued in a name other than the
Warrantholder's name.
3.6 TRANSFER, EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT.
(a) TRANSFER RESTRICTIONS. The Warrants and Warrant Shares may not
be Transferred except in accordance with this Agreement.
(b) TRANSFER PROCEDURE. Any Transfer of a Warrant permitted under
this Agreement shall be made in increments that are multiples of 50,000
Warrant Shares and shall be made by surrender to Seller of the certificate
representing the Warrant being Transferred with appropriate Transfer
documents reasonably satisfactory to Seller, properly completed and duly
executed and accompanied by funds sufficient to pay any applicable Transfer
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taxes. Upon satisfaction of all Transfer requirements, including, without
limitation, the requirements contained in Section 8.5 of this Agreement,
Seller shall, without charge, execute and deliver a new warrant certificate
in the name of the transferee.
(c) LOSS, THEFT, ETC. Upon receipt by Seller of evidence
satisfactory to it of loss, theft, destruction or mutilation of a warrant
certificate and, in the case of loss, theft or destruction, of an indemnity
bond satisfactory to Seller (purchased by a Warrantholder at the
Warrantholder's expense) or, in the case of mutilation, upon surrender of the
warrant certificate, Seller will execute and deliver a new warrant
certificate of like tenor and date and any such lost, stolen or destroyed
warrant certificate thereupon shall become void.
3.7 STOCKHOLDER RIGHTS AGREEMENT.
(a) DEFINITIONS. Capitalized terms used in this Section 3.7 and not
otherwise defined in this Agreement have the meanings given them in the
Stockholder Rights Agreement.
(b) SHARE CERTIFICATES. The certificate representing the Shares
delivered to Purchaser under Section 2.2 of this Agreement shall also
represent the Stockholder Rights in respect of such Shares, as provided in
the Stockholder Rights Agreement and, except as otherwise provided in this
Agreement,
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subject to the terms and conditions contained therein. However, if there has
occurred a Distribution Date prior to the Closing and the Stockholder Rights
have not been authorized for redemption and have not otherwise lapsed or been
terminated, appropriate Right Certificates shall be delivered to Purchaser
in respect of the Shares as provided in the Stockholder Rights Agreement, all
as if the Closing had occurred prior to such Distribution Date.
(c) WARRANT SHARES. If a Warrantholder exercises a Warrant prior
to a Distribution Date and the Stockholder Rights have not been authorized
for redemption and have not otherwise lapsed or been terminated, the
certificate representing the Warrant Shares shall also represent the
Stockholder Rights in respect of such Warrant Shares, as provided in the
Stockholder Rights Agreement and, except as otherwise provided in this
Agreement, subject to the terms and conditions contained therein. If a
Warrantholder exercises a Warrant following a Distribution Date but prior to
an Expiration Date, the Warrantholder shall receive from Seller a certificate
or other instrument representing rights ("Equivalents") which are equivalent
to the Stockholder Rights in respect of the Warrant Shares the Warrantholder
would have received had the Warrantholder exercised the Warrant prior to such
Distribution Date. Such Equivalents shall provide the Warrantholder with
rights as equivalent as is reasonably practicable to those held by holders of
Stockholder Rights immediately after such Distribution Date.
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(d) EXERCISE OF WARRANTS. At any time at which either Primary
Rights or Secondary Rights are exercisable as provided in Sections 7 and 8,
respectively, of the Stockholder Rights Agreement, all Warrants, whether or
not exercisable under Section 3.3 of this Agreement, shall be exercisable
during such periods and may be exercised in accordance with Section 3.3(d)
of this Agreement. Except during such periods, the Warrants shall not be
exercisable other than in accordance with the terms of this Agreement.
(e) RELATIONSHIP TO STOCKHOLDER RIGHTS AGREEMENT. Nothing in this
Agreement shall provide any Person with any rights or benefits under, or
relieve any Person of any disabilities or limitations imposed under, the
Stockholder Rights Agreement, as it may be amended or supplemented from time
to time, except as such Person may be entitled or subject to under the
Stockholder Rights Agreement, as it may be amended or supplemented from time
to time, including, without limitation, the type of property such Person
would be entitled to receive upon exercise of Primary Rights or Secondary
Rights or Equivalents or the non-effectiveness of Primary Rights or Secondary
Rights or Equivalents held by a Person who is a 15% Person or a 25% Person,
respectively. Nothing in this Agreement shall be deemed to constitute an
amendment or modification of, or in any way limit or affect, the Stockholder
Rights Agreement. If Seller amends the Stockholder Rights Agreement or
establishes a successor or additional stockholder
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rights plan, the provisions of this Section 3.7 shall remain effective under
and be applicable to such amended, successor or additional plan, as near as
may be to further the intent of this Section 3.7(e), giving regard to the
differences between the Stockholder Rights Agreement and any successor or
additional stockholder rights plan.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that, as of the date
of this Agreement:
4.1 ORGANIZATION. Each of Seller and each Seller Subsidiary is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has full corporate power and
authority to own or lease its properties and to carry on its business as it
is now being conducted.
4.2 STATUS OF THE SHARES AND WARRANTS. The Shares and the Warrants have
been duly authorized for issuance and sale to Purchaser pursuant to this
Agreement and, when issued and delivered to Purchaser at the Closing, will be
validly issued, fully-paid and non-assessable. Seller has reserved, and at
all times from the date of this Agreement until the expiration of the
Warrants shall
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continue to reserve, for issuance and delivery upon exercise of the Warrants,
the appropriate number of Warrant Shares as may be required for issuance and
delivery upon exercise of the Warrants. When issued and delivered upon
exercise of the Warrants as provided in this Agreement, the Warrant Shares
will be validly-issued, fully-paid and non-assessable. Upon delivery of the
Shares, the Warrants and the Warrant Shares and payment of the purchase price
therefor as provided in this Agreement, but subject to the provisions of this
Agreement, Purchaser and, in the case of the Warrant Shares, the
Warrantholders, will receive good and marketable title to the Shares, the
Warrants and the Warrant Shares, as the case may be, free and clear of any
adverse claim. The issuance and sale of the Shares, the Warrants and the
Warrant Shares will not give rise to any pre-emptive rights on behalf of any
person under any provision of applicable law, Seller's Certificate of
Incorporation or Bylaws, or any agreement or instrument to which Seller is a
party.
4.3 CAPITALIZATION. The authorized capital stock of Seller consists of
75,000,000 common shares, $.01 par value, and 10,000,000 shares of preferred
stock. Of the common shares, 750,000 shares have been designated as Series B
Common Stock, of which, as of April 21, 1989, 363,265 are issued and
outstanding, and 26,329,384 shares of Common Stock are issued and
outstanding. No shares of preferred stock are issued and outstanding. All of
the issued and outstanding shares of capital stock have been duly
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authorized, validly issued and fully paid and are non-assessable and free of
preemptive rights. Except as set forth on SCHEDULE 4.3: (i) there are no
outstanding subscriptions, options, calls, rights, warrants, convertible
securities, unsatisfied preemptive rights or other agreements or commitments
of any character obligating Seller to issue (or reserve for issuance) or to
transfer or sell any shares of its capital stock of any class, and (ii) there
are no agreements or commitments obligating Seller to repurchase or redeem
any of its capital stock.
4.4 CERTIFICATE OF INCORPORATION AND BY-LAWS. Seller has delivered to
Purchaser a copy of Seller's Certificate of Incorporation, certified by the
Delaware Secretary of State, and a copy of its By-laws, certified by an
Assistant Secretary of Seller. The Certificate of Incorporation and Bylaws
have not been amended other than as reflected in those certified copies.
4.5 CONSENTS AND CONFLICTS. Neither the execution and delivery of this
Agreement by Seller nor the performance by Seller of its obligations under
this Agreement will conflict with, result in the breach of any of the terms
or conditions of, constitute a default under, permit any party to accelerate
any right under, require consent, approval or waiver by any private party
under, or result in the creation of any lien, charge or encumbrance upon any
of the properties, assets or capital stock of Seller or any Seller Subsidiary
pursuant to, any charter document of Seller or any
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Seller Subsidiary or any material agreement or obligation to which Seller or
any Seller Subsidiary is a party or by which Seller or any Seller Subsidiary
or any of its material assets is bound or affected.
4.6 AUTHORITY RELATING TO THIS AGREEMENT. The execution, delivery and
performance of this Agreement by Seller, including, without limitation, the
issuance of the Securities, has been duly authorized by all necessary action
of the Board of Directors of Seller and all corporate action of Seller
necessary for such execution, delivery and performance has been duly taken.
Seller has duly and validly executed and delivered this Agreement, and this
Agreement constitutes a valid, binding and enforceable obligation of Seller
in accordance with its terms, subject, as to enforcement, to (i) bankruptcy,
insolvency, reorganization, arrangement, moratorium and other laws of general
applicability relating to or affecting creditors' rights and (ii) general
principles of equity, whether such enforcement is considered in a proceeding
in equity or at law.
4.7 1934 ACT FILINGS AND FINANCIAL STATEMENTS. Seller has filed all
reports and proxy or information statements with the SEC required to be filed
by it pursuant to Section 13 or 14 of the 1934 Act since July 1, 1987 (the "SEC
Filings"). To Seller's knowledge, no such filing (as of its filing date)
contained any untrue statement of a material fact act or omitted to state a
material
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fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. As of the dates thereof and for the periods covered
thereby, the financial statements contained in Seller's Annual Report on Form
10-K for the fiscal year ended June 30, 1988, and Seller's Quarterly Report
on Form 10-Q for the three months ended December 31, 1988 (the "10-Q") (i)
are in accordance with the books and records of Seller and its subsidiaries;
(ii) fairly present the consolidated financial position of Seller and its
consolidated results of operations, stockholders' equity and cash flows (but
subject, in the case of the financial statements included in the 10-Q, to
normal year-end audit adjustments that will not be material in amount or
effect) and (iii) have been prepared in accordance with generally accepted
accounting principles and practices (subject, in the case of the financial
statements included in the 10-Q, to the absence of certain footnote
disclosures and certain financial statement information) applied on a
consistent basis.
4.8 ABSENCE OF CERTAIN EVENTS. Since December 31, 1988, (i) to Seller's
knowledge there has not been any Materially Adverse Event (as defined below),
or (ii) any declaration, payment or setting aside of any dividend or other
distribution to or for the holders of capital stock of Seller or any Seller
Subsidiary (except dividends or other distributions paid to Seller or to a
Seller Subsidiary, and except for distributions made in connection with
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the repurchase of shares upon termination of employment pursuant to stock
repurchase agreements with employees) including, without limitation, any
redemption or purchase of any such capital stock. Seller has not incurred any
"accumulated funding deficiency" (within the meaning of Section 412 of the
Internal Revenue Code) in respect of any employee benefit plan. No employees
of Seller are participants in any "multiemployer plan" within the meaning of
the Employee Retirement Income Security Act of 1974, as amended. For purposes
of this Section 4.8, "Materially Adverse Event" means any event, condition or
circumstance (other than general economic developments or conditions or other
matters generally known or knowable to the public) which has had or is likely
to have a material adverse effect on the financial position, results of
operations or business of Seller and the Seller Subsidiaries, taken as a
whole, as compared to the state of affairs which would have existed or would
exist if such event, condition or circumstance had not occurred or was not
likely to occur.
4.9 LITIGATION AND OTHER PROCEEDINGS. SCHEDULE 4.9 sets forth all
actions, suits or proceedings pending or, to the knowledge of Seller,
threatened, against Seller or any Seller Subsidiary, and all decrees,
injunctions, and orders of any court, governmental agency, or arbitrator
outstanding and effective against Seller or any Seller Subsidiary, it being
understood that the representations and warranties in this Section 4.9 do not
relate to or include any matters relating to patent rights or any
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approval proceedings or evaluations of Seller's products, processes or
services before the United States Food and Drug Administration, the United
States Department of Agriculture, the United States Patent and Trademark Office
or any other federal, state or foreign agency.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that, as of the date
of this Agreement:
5.1 ORGANIZATION. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey and
has full corporate power and authority to own or lease its properties and to
carry on its business as it is now being conducted.
5.2 AUTHORITY RELATING TO THIS AGREEMENT. The execution, delivery and
performance of this Agreement by Purchaser has been duly authorized by all
necessary action of the Board of Directors of Purchaser, and all corporate
action of Purchaser necessary for such execution, delivery and performance
has been duly taken. Purchaser has duly and validly executed and delivered
this Agreement, and this Agreement constitutes a valid, binding and
enforceable obligation of Purchaser in accordance with its terms,
-33-
subject, as to enforcement, to (i) bankruptcy, insolvency, reorganization,
arrangement, moratorium and other laws of general applicability relating to
or affecting creditors' rights and (ii) general principles of equity, whether
such enforcement is considered in a proceeding in equity or at law.
5.3 UNDERTAKING OF PARENT. Purchaser, concurrently with the execution
and delivery of this Agreement, is delivering to Seller an undertaking of F.
Hoffmann-La Roche & Co. Limited Company, which indirectly owns 100% of the
issued and outstanding shares of Purchaser, ("Parent"), in the form attached
as EXHIBIT C to this Agreement (the "Parent Undertaking"). Parent, by signing
the Parent Undertaking, confirms that the execution, delivery and performance
of the Parent Undertaking by Parent has been duly authorized by all necessary
action of the Boards of Directors, or comparable bodies, of Parent and of the
other entities which the Parent Undertaking purports to bind, and all
corporate action of Parent and of the other entities which the Parent
Undertaking purports to bind, necessary for such execution, delivery and
performance, has been duly taken. Parent has duly and validly executed and
delivered the Parent Undertaking, and the Parent Undertakinq constitutes a
valid, binding and enforceable obligation of Parent and of the other entities
which the Parent Undertaking purports to bind, in accordance with its terms,
subject, as to enforcement, to (i) bankruptcy, insolvency, reorganization,
arrangement, moratorium and other laws of general applicability
-34-
relating to or affecting creditors' rights and (ii) general principles of
equity, whether such enforcement is considered in a proceeding in equity or
at law.
5.4 INVESTMENT INTENT. Purchaser is purchasing the Shares and Warrants
for its own account for investment and not with a view to, or for a sale in
connection with, any distribution within the meaning of the 1933 Act.
Purchaser has had a reasonable and adequate opportunity to discuss Seller's
business, management and financial affairs with Seller's management and
believes it has received satisfactory responses to its inquiries from
Seller's management. Seller acknowledges, however, that the representations
and warranties contained in this Section 5.4 do not limit or modify the
representations and warranties of Seller contained in Article 4 of this
Agreement.
ARTICLE 6
REGISTRATION RIGHTS AND RELATED MATTERS
6.1 REGISTRATION ON FORM S-3. Seller shall use its best efforts to
register the Shares and the Warrant Shares under the 1933 Act by filing prior
to June 20, 1989 a registration statement or registration statements on Form
S-3 covering the Shares and the Warrant Shares, and shall use its best
efforts to have such registration statement or registration statements
declared effective as promptly as possible and to maintain the effectiveness
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of such registrations ("Registrations") for the periods specified below.
Seller will keep Purchaser advised in writing as to the initiation of any
Registration and as to the status and completion of any Registration, and
Seller shall:
(a) Use its best efforts to keep such Registrations effective, in
the case of the Shares, for three years and thereafter until
the Warrant Shares may be publicly sold without volume
limitations pursuant to Rule 144 under the 1933 Act and, in
the case of the Warrant Shares, for the entire periods within
which the Warrants may be exercised and until the Warrant
Shares may be publicly sold without volume limitations
pursuant to Rule 144;
(b) Prepare and file with the SEC whatever amendments or
supplements to the registration statements and the
prospectuses contained in the registration statements which
are necessary to comply with the provisions of the 1933 Act;
(c) Furnish such number of prospectuses and other documents
incident thereto as from time to time Purchaser may reasonably
request; and
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(d) Use its reasonable best efforts to register or qualify the
Shares and the Warrant Shares covered by such registration
statements under such other securities or blue sky laws of
such jurisdictions where an exemption is not available and as
Purchaser shall reasonably request, to keep such registration
or qualification in effect for so long as such registration
statement remains in effect, and to take any other action that
may be reasonably necessary or advisable to enable Purchaser
to consummate the disposition of the Shares and the Warrant
Shares in such jurisdictions, except that Seller shall not,
for any such purpose, be required to qualify generally to do
business as a foreign corporation in any jurisdiction in which
it would not, but for the requirements of this subdivision
(d), be obligated to be so qualified or to consent to general
service of process in any such jurisdiction.
Seller shall have no obligation to register the Warrants under the 1933 Act
or to enter into any underwriting, placement or similar agreement in connection
with any Registration.
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6.2 INDEMNIFICATION
(a) Seller shall indemnify Purchaser, each of its directors,
officers, employees and controlling persons, its legal counsel and independent
accountants, and any underwriters and controlling persons of such underwriters,
against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlment of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, or any amendment or supplement thereto,
incident to a Registration, or based on any omission (or alleged omission) to
state therein a 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, or any violation by Seller of any rule or regulation promulgated
under the 1933 Act applicable to Seller in connection with a Registration, and
Seller shall reimburse Purchaser, such directors, officers, employees,
controlling persons, legal counsel, independent accountants, underwriters and
controlling persons of such underwriters for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action; provided that Seller will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue
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statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with information furnished to Seller by or on
behalf of Purchaser.
(b) Subject to the limitation set forth in the second sentence of
this Section 6.2(b), Purchaser shall indemnify Seller, each of its directors,
officers, employees and controlling persons, its legal counsel and
independent accountants, and any underwriters and controlling persons of such
underwriters, against all expenses, claims, losses, damages or liabilities
(or actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or
based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, or any
amendment or supplement thereto, incident to a Registration, or based on any
omission (or alleged omission) to state therein a 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, and Purchaser
shall reimburse Seller, such directors, officers, employees, controlling
persons, legal counsel, independent accountants, underwriters and controlling
persons of such underwriters, for any legal or any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action. Such indemnification and
reimbursement obligation shall be effective to
-39-
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus or other document in reliance upon and in
conformity with information furnished to Seller by or on behalf of Purchaser.
(c) Each party entitled to indemnification under this Section 6.2
(an "Indemnified Party") shall give notice to the party required to provide
indemnification (an "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party at its expense to assume the defense
of any such claim or any litigation resulting therefrom; provided that
counsel for the Indemnifying Party, who shall conduct the defense of such
claim or litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at the Indemnified Party's expense. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability to such claimant or
plaintiff in respect of such claim or litigation.
-40-
(d)(i) If for any reason the indemnification provided for in
Section 6.2(a) and 6.2(b) is unavailable to or insufficient to hold harmless
an Indemnified Party in respect of any expenses, claims, losses, damages or
liabilities specifically covered by the indemnification provisions set forth
in Sections 6.2(a) or 6.2(b), then the Indemnifying Party shall contribute to
the amount paid or payable by the Indemnified Party as a result of such
expenses, claims, losses, damages or liabilities in such proportion as is
appropriate to reflect the relative benefits received by the Indemnifying
Party on the one hand and Indemnified Party on the other from the
Registration and offering of the Shares and Warrant Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then the Indemnifying Party shall contribute so the amount
paid or payable by the Indemnified Party is in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Indemnifying Party and the Indemnified Party, as well as any
other relevant equitable considerations. The relative fault of the
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
so to state a material fact, has been made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party, and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such action. The amount paid or payable by a party as a
-41-
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party.
(ii) Seller and Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 6.2(d) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The indemnification provided for in Section 6.2 (a) and 6.2(b)
shall be made by periodic payments of the amounts thereof when it is
reasonably apparent that indemnification will be available under those
Sections, and as and when bills are received or expense, loss, damage or
liability is incurred, subject to refund in the event that any such payments
are determined not to have been due and owing hereunder. The provisions for
contribution set forth in Section 6.2(d) shall, to the extent practicable, be
similarly administered.
6.3 INFORMATION FROM PURCHASER. Purchaser shall furnish to Seller such
information regarding Purchaser as Seller may
-42-
reasonably request and as shall be required in connection with any Registration
and any qualification contemplated by this Article 6. Purchaser shall be
entitled to a reasonable opportunity to review, prior to filing or release by
Seller, such information regarding Purchaser as Seller proposes to include in
registration statements, prospectuses and other filings or public disclosures
prepared by Seller under Section 6.1 of this Agreement.
6.4 REGISTRATION EXPENSES. All expenses incident to Seller's
performance of or compliance with Section 6.1, including, without limitation,
all registration, filing and NASD fees and all fees and expenses of complying
with securities or blue sky laws, shall be paid by Seller; provided, however,
that such expenses shall not include underwriting, placement or other selling
discounts, commissions, fees and expenses, transfer taxes, if any, and fees and
disbursements of counsel to Purchaser (other than fees and disbursements
relating to compliance with blue sky laws), all of which shall be paid by
Purchaser. At Seller's option and expense, Seller may assume responsibility for
and retain counsel for compliance with blue sky laws, in which case Seller shall
have no obligation to pay any fees and disbursements of counsel to Purchaser or
to any underwriter for compliance with blue sky laws.
6.5 RESTRICTIONS ON TRANSFER. Purchaser acknowledges that, as of the
date of this Agreement and the Closing, the Securities have not been registered
under the 1933 Act and that, in
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addition to the limitations imposed by Section 3.1 and Articles 6, 8 and 9 of
this Agreement, Purchaser may not Transfer any Securities unless and until
such Securities are registered for resale under the 1933 Act (and qualified
under applicable state securities laws) or until an exemption from such
registration and qualification is available. Purchaser shall not Transfer any
Securities otherwise than pursuant to an effective Registration, unless and
until Purchaser first provides to Seller an opinion of counsel reasonably
satisfactory to Seller to the effect that no such Registration is required
because of the availability of an exemption from registration under the 1933
Act and under applicable state securities laws.
6.6 LEGEND. Until such time, if at all, as the Shares and the Warrant
Shares are the subject of an effective Registration, and, in the case of the
Warrants, at all times, the certificates representing such Securities shall
be stamped or otherwise imprinted on their face with a legend in the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). ANY SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION, GIFT OR OTHER DISPOSITION OF SUCH SECURITIES IS
INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
SUCH TRANSACTION OR UNLESS CETUS CORPORATION HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO IT TO THE EFFECT THAT SUCH REGISTRATION IS
UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT."
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ARTICLE 7
ADDITIONAL COVENANT OF SELLER
For so long as the Voting Power of all Voting Stock and Rights
beneficially owned by all Investor Entities taken together represents 2% or
more of the Total Voting Power, Seller shall give Purchaser prompt notice of
(i) any notice under the HSR Act received by Seller from a third party and
relating to Voting Stock or Rights and (ii) any Statement on Schedule 13D or
14D-1 under the 1934 Act received by Seller from a third party and relating
to Voting Stock or Rights, other than a statement filed by Purchaser or
another Investor Entity.
ARTICLE 8
ADDITIONAL COVENANTS OF PURCHASER
8.1 GENERALLY. Purchaser agrees (i) to the provisions of Article 8 and
Article 9 of this Agreement and (ii) that any and all open-market or other
acquisitions or dispositions of Voting Stock or Rights by any Investor Entity
shall be made in compliance with all applicable laws and regulations and the
provisions of this Agreement.
8.2 LIMITATION ON ACQUISITIONS. No Investor Entity shall, directly or
indirectly, acquire beneficial ownership of any
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Voting Stock or Rights (except, in either case, by way of stock
dividends or other distributions of Voting Stock or Rights by Seller to
holders of all Voting Stock or Rights, as the case may be), if the effect of
that acquisition would be to increase the aggregate Voting Power of all
Voting Stock and Rights beneficially owned by all Investor Entities taken
together to more than 15% of the Total Voting Power, provided that such
Investor Entities may acquire more than 15% of the Total Voting Power as a
result of exercising any Warrants if (and only to the extent that) one or
more adjustments provided for in Section 3.5 of this Agreement have resulted
in an increase in the percentage of Total Voting Power which may be acquired
upon exercise of the Warrants as compared with the percentage of Total Voting
Power which could have been acquired upon exercise of the Warrants prior to
any such adjustment. However, Investor Entities may acquire Voting Stock or
Rights without regard to the foregoing limitation if and after either (i) a
Person unaffiliated with any Investor Entity beneficially owns Voting Stock
or Rights having Voting Power which in the aggregate exceeds 25% of the Total
Voting Power or (ii) any Person unaffiliated with any Investor Entity
commences a bona fide tender offer or other offer known to Seller for Voting
Stock or Rights which, if completed, would result in that Person
beneficially owning Voting Stock and Rights having Voting Power which in the
aggregate would exceed 35% of the Total Voting Power (considering, for this
purpose, an offer to have been commenced when, but not before, offering
documents are first published or given to holders of Voting Stock or Rights,
or the fact of the
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offer is otherwise made known to Seller, as the case may be). If, thereafter,
such unaffiliated Person ceases to own beneficially Voting Stock and Rights
having Voting Power which in the aggregate exceeds 25% of the Total Voting
Power or such tender offer or other offer is terminated, withdrawn or
enjoined, fails to close within 20 calendar days after its stated
expiration date, or is modified so that, if it is completed, such Person
would beneficially own Voting Stock and Rights having Voting Power which in
the aggregate would not exceed 35% of the Total Voting Power, then the 15%
limitation shall be reimposed upon the Investor Entities. However, under any
of those circumstances, no Investor Entity shall be obligated to dispose of
any Voting Stock or Rights which were acquired by it in accordance with this
Agreement before such cessation, termination, withdrawal, failure, injunction
or modification, or be obligated to not acquire any Voting Stock or Rights
which it continues to be obligated to acquire by virtue of a legal commitment
it entered into in accordance with this Agreement before such cessation,
termination, withdrawal, failure, injunction or modification. Moreover, in no
event shall any Investor Entity be obligated to dispose of any Voting Stock
or Rights or be prevented from exercising any Warrants to the extent that the
aggregate Voting Power of the Voting Stock or Rights already owned by it has
increased beyond the 15% limitation as a result of (but only to the extent
that) Total Voting Power of the Company is reduced through any action by the
Seller, including, without limitation, any stock repurchase, recapitalization
program or self-tender offer effected by Seller.
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8.3 VOTING. The Investor Entities shall cause all Voting Stock owned by
them to be voted for Seller's nominees to its Board of Directors and, unless
Seller otherwise consents in writing, on all other matters to be voted on by
holders of Common Stock in the same proportion as the votes cast by the other
holders of Voting Stock with respect to such matters; provided, however, that
Voting Stock owned by Purchaser may be voted as Purchaser determines in its
sole discretion on any Significant Event presented to the holders of Voting
Stock for a vote. As used in this Section 8.3, "Significant Event" means; (i)
any amendment of Seller's Certificate of Incorporation or by-laws, (ii) any
disposition, business combination or other reorganization transaction
involving Seller (by way of merger, consolidation, acquisition, sale of
assets or otherwise), (iii) any "election contest" (as that term is used in
Rule 14a-11 of Regulation 14A under the 1934 Act and subject to Section 8.4
of this Agreement), (iv) any recapitalization of Seller; (v) any liquidation
or dissolution of Seller; (vi) any matter relating to issuance of securities
by Seller, including, without limitation, the adoption of stock option or
similar plans; (vii) any matter arising under Section 203 of the Delaware
General Corporation Law or any successor provision; or (viii) any other
action (other than actions contemplated by this Agreement) which is out of
the ordinary course of Seller's business. The Investor Entities, as holders
of Voting Stock, shall be present in person or by proxy at every meeting of
the stockholders of the Company, whatever the purpose or purposes
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of the meeting, so that all Voting Stock beneficially owned by them may be
counted in determining the presence of a quorum at the meeting.
8.4 CERTAIN OTHER ACTIVITIES. No Investor Entity shall deposit any
Voting Stock or Rights in a voting trust or subject any Voting Stock or
Rights to any arrangement, agreement or understanding (except among
themselves) with respect to the voting of any Voting Stock. No Investor
Entity shall become a "participant" or a "participant in a solicitation" (as
such terms are used in Rule 14a-11 of Regulation 14A under the 1934 Act) with
respect to the election as directors of Seller of any persons in opposition
to or different from Seller's nominees for director. Except as expressly
permitted by this Agreement, no Investor Entity shall join any Person or
otherwise act in concert with any Person (other than another Investor Entity)
for the purpose of acquiring, holding, voting (whether for directors or
otherwise) or disposing of any Voting Stock or Rights, obtaining control of
Seller, or causing or influencing any such Person to take any such action.
8.5 RESTRICTIONS ON TRANSFER. No Investor Entity shall Transfer any
Securities to any Person except (i) Seller, (ii) any Person expressly
approved for that purpose in advance of the Transfer by Seller's Board of
Directors, (iii) Purchaser, or (iv) an Investor Entity (each of the Persons
described in clauses
-49-
(i) - (iv) being a "Permitted Transferee"), until such Investor Entity has
first fully complied with Article 9 of this Agreement.
8.6 ADDITIONAL LEGEND. All certificates evidencing Securities
beneficially owned by any Investor Entity shall, in addition to the legend
required by Section 6.6 of this Agreement, be stamped or otherwise imprinted on
their face with the following legend until such time as Purchaser or any
transferee thereof delivers to Seller an opinion of counsel reasonably
acceptable to Seller to the effect that the restrictions to which it refers are
no longer applicable to the Securities represented by the certificates:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A STOCK PURCHASE AND WARRANT AGREEMENT DATED MAY 9, 1989
BETWEEN CETUS CORPORATION AND HOFFMAN-LA ROCHE INC. THE SECURITIES
MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, GIFTED, TRANSFERRED
OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH SUCH AGREEMENT. A
COPY OF SUCH AGREEMENT MAY BE OBTAINED FROM THE GENERAL COUNSEL OF
CETUS CORPORATION."
Seller may enter a stop transfer order with any transfer agent of the Securities
against a Transfer of such Securities except in compliance with this Agreement.
8.7 RETRANSFER. If and before any Investor Entity (other than
Purchaser) ceases to be an Investor Entity, it shall Transfer all Voting Stock
and Rights then beneficially owned by it
-50-
to Purchaser or to another Investor Entity which continues to be an
Investor Entity.
ARTICLE 9
SELLER'S RIGHT OF PURCHASE
9.1 GENERALLY. Before making any Transfer of Securities to any Person
other than a Permitted Transferee, an Investor Entity shall first give Seller
an opportunity to acquire the Securities in accordance with this Article 9.
If Purchaser desires to Transfer any Securities other than to a Permitted
Transferee in any transaction that does not satisfy the manner of sale
requirements of Rule 144(f) under the 1933 Act (as currently in effect), it
shall first give Seller a notice specifying the amount of Securities proposed
to be Transferred, the proposed terms and conditions of the Transfer, the
identity of the proposed transferee and, if different, the proposed
beneficial owners of the Securities and the proposed manner of transfer, all
in reasonable detail, and all if and to the extent known to the Investor
Entity or, if there is at the time of such notice no understanding with any
such proposed transferee, a statement to such effect and a statement that the
Investor Entity intends to offer the Securities in a transaction that does
not satisfy the Rule 144(f) manner of sale requirements, at a price and on
terms as specified in such notice, or at a price or on terms more favorable
to the Investor Entity. In the alternative, if Purchaser desires to Transfer
Securities in
-51-
a transaction that satisfies the manner of sale requirements of Rule 144(f),
it shall first give notice thereof to Seller. In either case, Seller shall
have the right, exercisable by written notice given to Purchaser within 10
trading days after its receipt of Purchaser's notice, to acquire all, but not
less than all, of the Securities specified in the Transfer notice, in the
case of a transaction that does not satisfy such Rule 144(f) manner of sale
requirements, on the same terms and conditions as those specified in
Purchaser's notice, or, in the case of a transaction that satisfies such Rule
144(f) manner of sale requirements, at the Market Price, together with
payment by Seller of simple interest on the aggregate purchase price from the
date which is 10 days after the date of Seller's notice to the closing date
at a rate equal to the Prime Rate. If Seller exercises this right of
purchase, the closing of its acquisition of the Securities shall take place
within 30 calendar days after Seller gives its notice, but earlier if the
Seller so elects. However, that period shall be extended, if necessary, in
order to permit compliance with any applicable laws or regulations. Upon
exercise of Seller's right of purchase, Seller and the Investor Entity shall
be legally obligated to complete the transaction and shall use their best
efforts to secure any required approvals. If Seller does not exercise its
right of purchase within the time specified for its exercise, the Investor
Entity shall be free, during the 45 days following the expiration of such
time for exercise, to complete the Transfer of the Securities specified in
its Transfer notice at, in the case of a
-52-
transaction that does not satisfy such Rule 144(f) manner of sale requirements,
the same price and terms as, or at a price and terms more advantageous to the
Investor Entity than specified in such notice if such identification was made,
and, if no such identification was made, to any party, or, in the case of a
transaction that satisfies such Rule 144(f) manner of sale requirements, at a
price fairly available in the market for Rule 144(f) transactions at the time
such transactions are effected. Any proposed Transfer on materially different
terms (including to a different transferee if a transferee was identified in the
notice or to a transferee with different beneficial owners), or after the
expiration of that 10-day period, shall again give rise to Seller's right to
acquire the Securities under this Article 9. For purposes of this Section 9.1,
"Market Price" shall not be determined on the basis of an average of closing,
sale or bid prices, as the case may be, over a specified period as provided in
the definition of Market Price contained in Article 1 of this Agreement, but
shall be the closing, sale or bid price, as the case may be, as of the close of
business of the day of Purchaser's notice.
9.2 TENDER OFFERS. Notwithstanding Section 9.1, this Section 9.2
shall apply if the Investor Entity desires to sell Securities to a tender
offeror in a tender offer. Before making any Transfer of Securities to the
tender offeror, an Investor Entity shall give Seller the opportunity to acquire
such Securities in accordance with this Section 9.2. The Investor Entity shall
-53-
give written notice to Seller of its intention to accept the tender offer no
later than 12 business days before the last date by which the Investor Entity
must tender the Securities in order that they be accepted in the offer (the
"Tender Date"). The notice shall specify the amount of Securities proposed to
be tendered. For purposes of this Section 9.2, a tender offer to purchase
Securities shall be deemed to be an offer at the price specified therein,
without regard to any provisions thereof with respect to proration or conditions
to the offeror's obligation to purchase. Seller shall have the right,
exercisable by written notice given to Purchaser at least two business days
before the Tender Date, to purchase all, but not less than all, of the
Securities specified in the notice from the Investor Entity. The consideration
to be paid by Seller to the Investor Entity for such Securities shall be the
best price offered (that is, if the tender offer is completed, the price the
Investor Entity would have received in the offer had the Securities purchased by
Seller been tendered and purchased by the offeror, including any increases in
the price actually paid by the offeror or, if the offer is not completed, the
highest bona fide price offered pursuant to the tender offer) plus simple
interest on the aggregate purchase price from the date of Seller's notice to the
closing date at a rate equal to the Prime Rate. If Seller exercises this right
of purchase, the closing of its purchase of the Securities shall take place
within 30 calendar days after Seller gives its exercise notice, but earlier if
Seller so elects. However, that period shall be extended, if necessary, in
order to
-54-
permit compliance with any applicable laws or regulations. Upon exercise of
Seller's right of purchase, Seller and the Investor Entity shall be legally
obligated to complete the purchase and shall use their best efforts to secure
any required approvals. If Seller does not timely exercise its right of
purchase, the Investor Entity shall be free to accept the tender offer with
respect to the Securities specified in its notice. If the terms and
conditions of the tender offer are changed, other than an increase in the
price, Seller shall within two days thereafter notify Purchaser whether it
considers the change to have been material, in which case Seller's right of
purchase shall be reinstated. Purchaser shall, within two days after receipt
of Seller's notice, notify Seller of any change in Purchaser's decision to
accept or not accept the tender offer.
9.3 NON-CASH OFFERS. If the consideration specified in an offer referred
to in Sections 9.1 or 9.2 includes any securities or property other than cash
and Seller and Purchaser do not promptly agree on the value of the securities
or property, such value shall be determined by a nationally recognized
investment banking firm jointly and promptly selected by Seller and
Purchaser. The parties shall use their best efforts to cause any
determination of the value of such securities or property to be made by such
investment banking firm within seven days after the date of delivery of
Seller's exercise notice. If for any reason the value cannot be determined
within that period, the transaction may, at Seller's option, be closed on the
following basis. Seller shall
-55-
pay Purchaser an amount equal to Seller's good faith estimate of the value of
the consideration offered by the third party, in consideration of the
delivery by Purchaser to Seller of the Securities being Transferred, and the
Transfer of ownership of the Securities shall be considered completed. At
Purchaser's election, the investment banking firm shall determine the values
of the consideration paid by Seller and the consideration offered by the
third party, and any difference in such values shall be reconciled by
appropriate cash payment from Seller to Purchaser or from Purchaser to
Seller, as the case may be, together with interest on such amount from the
date of the closing to the payment date at a rate equal to the Prime Rate.
Seller shall be entitled, at its option, in either case, to pay in cash or in
securities or property of a substantially like tenor and quality as those
offered by the third party.
9.4 RIGHT TO DESIGNATE ANOTHER PURCHASER. If Seller elects to exercise
its right of purchase under this Article 9, it may specify another Person as
its designee to purchase some or all of the Securities to which its notice
relates at any time before the closing of such purchase. Such designation
shall in no way relieve, limit or otherwise affect the obligation of Seller
to purchase such Securities if its designee fails to do so.
-56-
ARTICLE 10
MISCELLANEOUS
10.1 EXPENSES. Subject to the provisions of Section 6.4 of this
Agreement, Seller and Purchaser shall each pay their own costs and expenses,
including all legal and accounting fees, relating to this Agreement, the
negotiations leading up to this Agreement and the transactions contemplated
by this Agreement.
10.2 AMENDMENT. This Agreement shall not be amended in any manner
whatsoever except by a writing duly executed by each party.
10.3 ENTIRE AGREEMENT. This Agreement, the Exhibits, the Schedules and
the License Agreements contain all of the terms and conditions agreed upon by
the parties relating to the subject matter of this Agreement and supersede
all prior and contemporaneous agreements, negotiations, correspondence,
undertakings and communications between the parties, whether oral or written,
respecting that subject matter, including, without limitation, the Letter
Agreement.
10.4 HEADINGS. The headings contained in this Agreement are intended
primarily for convenience and shall not, by themselves, determine the rights
of the parties to this Agreement.
-57-
10.5 MUTUAL CONTRIBUTION. No provision of this Agreement shall be
construed against any party on the ground that that party drafted the
provision or caused it to be drafted.
10.6 NOTICES. All notices, requests, demands and other communications
made in connection with this Agreement shall be in writing and shall be
deemed to have been duly given on the date of delivery or transmission, if
hand delivered or transmitted by telex or telecopy, as the case may be, or
three days after mailing if mailed by certified or registered mail, postage
prepaid, return receipt requested, addressed as follows:
IF TO SELLER:
Cetus Corporation
1400 Fifty-Third Street
Emeryville, California 94608
Attn: Executive Vice President
WITH COPY TO:
Cetus Corporation
1400 Fifty-Third Street
Emeryville, California 94608
Attn: General Counsel
IF TO PURCHASER:
Hoffmann-La Roche Inc.
340 Kingsland Street
Nutley, New Jersey 07100
Attn: Jon Saxe, Esq., Vice President
-58-
WITH COPY TO:
Hoffmann-La Roche Inc.
340 Kingsland Street
Nutley, New Jersey 07100
Attn: Harold F. Boardman, Esq.,
General Counsel
Such addresses may be changed, from time to time, by means of a notice given
in the manner provided in this Section 10.6. Notices from Seller to
Warrantholders other than Purchaser shall be given in the manner provided in
this Section 10.6 at the addresses provided by such Warrantholders to Seller.
10.7 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to
the extent possible. In any event, all other provisions of this Agreement
shall be deemed valid and enforceable to the fullest extent possible.
10.8 ASSIGNMENT; SUCCESSORS. Purchaser may freely assign this Agreement
to any Investor Entity, but may not assign it to any other Person without the
prior written consent of Seller. Any attempted assignment in violation of
this Section 10.8 shall be voidable at Seller's option, provided, however,
that Purchaser may
-59-
assign its rights and delegate its obligations under Article 6 of this
Agreement to a non-Investor Entity transferee of both the Shares and the
Warrants in connection with Transfers of Securities pursuant to Section 8.5
of this Agreement, it being understood that the term "Purchaser" as used in
Article 6 of this Agreement means both Purchaser and, after such a transfer
of Purchaser's entire interest in the Shares and the Warrants, such
transferee. Subject to the other provisions of this Section 10.8, this
Agreement shall be binding upon and inure to the benefit of the successors
and assigns of the parties to this Agreement. "Assign this Agreement" and
"assignment", as used in this Section 10.8, shall mean any sale, assignment,
pledge, hypothecation, gift or other Transfer of all or any portion of the
rights, obligations or liabilities contained in or arising from this
Agreement to any Person, whether by operation of law or otherwise, and
regardless of the legal form of the transaction in which the attempted
Transfer takes place.
10.9 WAIVER. Waiver of any term or condition of this Agreement by any
party shall not be construed as a waiver of a subsequent breach or failure of
the same term or condition, or a waiver of any other term or condition of
this Agreement.
10.10 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California.
-60-
10.11 INJUNCTIVE RELIEF. Purchaser, on the one hand, and Seller, on the
other, acknowledge and agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is therefore agreed
that the parties shall be entitled to an injunction or injunctions to prevent
or cure breaches of the provisions of this Agreement and to enforce specific
performance of the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, this being in addition to
any other remedy to which they may be entitled at law or in equity.
10.12 TERMINATION OR SUSPENSION OF CERTAIN OBLIGATIONS. The provisions
of Articles 8 and 9 shall not be binding upon Purchaser or any Investor
Entity as of any time Purchaser and the Investor Entities, taken together,
beneficially own Voting Stock representing less than 2% or more than 50% of
the Total Voting Power, but shall again be binding and of full force and
effect at any time Purchaser and the Investor Entities, taken together, again
beneficially own Voting Stock representing 2% or more, but less than or equal
to 50%, of the Total Voting Power.
10.13 CONFIDENTIALITY. Each party agrees to maintain in confidence any
information which is clearly identified as confidential by the party
providing such information which it receives from the other party pursuant to
this Agreement. Such
-61-
confidential information may include, but shall not be limited to,
information regarding proposed transferees which may be identified in a
notice under Article 9. Each party receiving such information agrees that it
will not directly or indirectly disclose or use for its own benefit (except
as provided in this Agreement) any such confidential information, except to
the extent (i) such information is publicly known or becomes publicly known
after disclosure hereunder through no fault of the recipient; (ii) such
information can be shown by the recipient to have been rightfully in its
possession prior to receipt thereof under this Agreement; (iii) such
information is received by the recipient from a third party having the
right to disclose such information without any obligation of confidentiality
to the disclosing party; or (iv) the disclosure of such information is
required by applicable law or regulation or is necessary to comply with or
fulfill governmental requirements, submissions to governmental bodies, or the
securing or regulatory approvals, or under the rules and regulations of,
applicable securities exchanges or the National Association of Securities
Dealers, Inc.
10.14 COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart
were upon a single instrument. All counterparts shall be deemed an original
of this Agreement.
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IN WITNESS WHEREOF, Seller and Purchaser have executed this
Agreement as of the date set forth in the first paragraph of this Agreement.
SELLER: CETUS CORPORATION
By /s/ R.A. Fildes
-----------------------------
Title President
--------------------------
PURCHASER: HOFFMANN-LA ROCHE INC.
By /s/ [ILLEGIBLE]
-----------------------------
Title [ILLEGIBLE]
--------------------------
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Exhibit A
to Stock Purchase and Warrant Agreement
[FORM OF FIRST WARRANT CERTIFICATE]
THIS WARRANT AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"). ANY SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION, GIFT, TRANSFER OR OTHER DISPOSITION OF SUCH SECURITIES IS
INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH
TRANSACTION OR UNLESS CETUS CORPORATION HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO IT TO THE EFFECT THAT SUCH REGISTRATION IS UNNECESSARY IN
ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS
OF A STOCK PURCHASE AND WARRANT AGREEMENT, DATED MAY 9, 1989 BETWEEN CETUS
CORPORATION AND HOFFMANN-LA ROCHE INC. THE SECURITIES MAY NOT BE SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED, GIFTED, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT IN ACCORDANCE WITH SUCH AGREEMENT. A COPY OF SUCH AGREEMENT MAY BE
OBTAINED FROM THE GENERAL COUNSEL OF CETUS CORPORATION. THIS IS THE "FIRST
WARRANT" REFERRED TO IN THE STOCK PURCHASE AND WARRANT AGREEMENT.
VOID AFTER 5:00 p.m. First Warrant to
San Francisco time, Purchase 500,000 Shares
on the expiration date specified of Common Stock
in Section 3.3(a) of the
Stock Purchase and
Warrant Agreement
FIRST WARRANT TO PURCHASE COMMON STOCK
OF CETUS CORPORATION
This Warrant Certificate certifies that HOFFMANN-LA ROCHE INC., a New
Jersey corporation ("Purchaser"), is the registered holder of the First
Warrant (the "First Warrant") issued pursuant to a Stock Purchase and Warrant
Agreement, dated May 9, 1989 (the "Agreement") between Purchaser and Cetus
Corporation, a Delaware corporation ("Seller"). This Warrant Certificate
evidences the right of Purchaser to purchase from Seller 500,000 shares (the
"Warrant Shares") of Seller's Common Stock at the exercise price (the
"Exercise Price") of $15.75 per share. Subject to the terms of the Agreement,
this First Warrant may be exercised upon surrender of this Warrant
Certificate, with the Election to Purchase attached hereto completed and duly
executed and accompanied by payment in cash or check, to Seller at its
principal office.
The Exercise Price and the number of Warrant Shares purchasable upon
exercise of this First Warrant are subject to
adjustment upon the occurrence of certain events as set forth in the
Agreement. If this First Warrant is exercised for less than the total number
of Warrant Shares evidenced by this First Warrant, Seller shall execute and
deliver a new Warrant Certificate, dated the date of the Agreement,
evidencing the rights of the Warrantholder to purchase the balance of the
Warrant Shares purchasable under this First Warrant.
The Agreement is hereby incorporated by reference and made a part of
this Warrant Certificate as fully as though completely set forth herein. If
there is any inconsistency between the provisions of the Agreement and the
Warrant Certificate, the Agreement shall control. The Agreement should be
referred to for a complete description of the rights and obligations of
Seller and Purchaser and any direct or indirect transferee of Purchaser,
including, without limitation, matters relating to the determination of, and
provision of information about, Net Cetus IL-2 Product Sales. Capitalized
terms used in this Warrant Certificate and not otherwise defined herein shall
have the meanings given them in the Agreement.
Seller has caused this Warrant Certificate to be executed by its duly
authorized officer as of the date set forth in the first paragraph of the
Agreement.
CETUS CORPORATION
By
------------------------
Title
---------------------
-2-
FIRST WARRANT
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the
First Warrant (as defined in the Stock Purchase and Warrant Agreement, dated
May 9, 1989, (the "Agreement") between Cetus Corporation and Hoffmann-La
Roche Inc.) to purchase ________ shares of Cetus Corporation Common Stock
issuable upon the exercise of the First Warrant. By making such election, the
undersigned represents and warrants to Cetus Corporation that it (i) has
received a copy of and is familiar with the Agreement, under which the First
Warrant has been issued; (ii) acknowledges that the shares acquired upon
exercise of the First Warrant may not be transferred except as provided in
the Agreement; and (iii) acknowledges that such shares will bear the legends
set forth in the Agreement.
DATED: , 19
------------------ -- --------------------------------
(signature)
--------------------------------
(name and title)
--------------------------------
(print name of holder)
Exhibit B
to Stock Purchase and Warrant Agreement
[FORM OF SECOND WARRANT CERTIFICATE]
THIS WARRANT AND THE WARRANT SHARES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"). ANY SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION, GIFT, TRANSFER OR OTHER DISPOSITION OF SUCH SECURITIES IS
INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH
TRANSACTION OR UNLESS CETUS CORPORATION HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO IT TO THE EFFECT THAT SUCH REGISTRATION IS UNNECESSARY IN
ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS
OF A STOCK PURCHASE AND WARRANT AGREEMENT, DATED MAY 9, 1989 BETWEEN CETUS
CORPORATION AND HOFFMANN-LA ROCHE INC. THE SECURITIES MAY NOT BE SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED, GIFTED, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT IN ACCORDANCE WITH SUCH AGREEMENT. A COPY OF SUCH AGREEMENT MAY BE
OBTAINED FROM THE GENERAL COUNSEL OF CETUS CORPORATION. THIS IS THE "SECOND
WARRANT" REFERRED TO IN THE STOCK PURCHASE AND WARRANT AGREEMENT.
VOID AFTER 5:00 p.m. Second Warrant to
San Francisco time, Purchase 500,000 Shares
on the expiration date specified of Common Stock
in Section 3.3(b) of the
Stock Purchase and
Warrant Agreement
SECOND WARRANT TO PURCHASE COMMON STOCK
OF CETUS CORPORATION
This Warrant Certificate certifies that HOFFMANN-LA ROCHE INC., a
New Jersey corporation ("Purchaser"), is the registered holder of the Second
Warrant (the "Second Warrant") issued pursuant to a Stock Purchase and
Warrant Agreement, dated May 9, 1989 (the "Agreement") between Purchaser and
Cetus Corporation, a Delaware corporation ("Seller"). This Warrant
Certificate evidences the right of Purchaser to purchase from Seller 500,000
shares (the "Warrant Shares") of Seller's Common Stock at the exercise price
(the "Exercise Price") of $15.75 per share. Subject to the terms of the
Agreement, this Second Warrant may be exercised upon surrender of this
Warrant Certificate, with the Election to Purchase attached hereto completed
and duly executed and accompanied by payment in cash or check, to Seller at
its principal office.
The Exercise Price and the number of Warrant Shares purchasable
upon exercise of this Second Warrant are subject to
adjustment upon the occurrence of certain events as set forth in the
Agreement. If this Second Warrant is exercised for less than the total
number of Warrant Shares evidenced by this Second Warrant, Seller shall
execute and deliver a new Warrant Certificate, dated the date of the
Agreement, evidencing the rights of the Warrantholder to purchase the balance
of the Warrant Shares purchasable under this Second Warrant.
The Agreement is hereby incorporated by reference and made a part
of this Warrant Certificate as fully as though completely set forth herein.
If there is any inconsistency between the provisions of the Agreement and the
Warrant Certificate, the Agreement shall control. The Agreement should be
referred to for a complete description of the rights and obligations of
Seller and Purchaser and any direct or indirect transferee of Purchaser,
including, without limitation, matters relating to the determination of, and
provision of information about, Net Cetus IL-2 Product Sales. Capitalized
terms used in this Warrant Certificate and not otherwise defined herein shall
have the meanings given them in the Agreement.
Seller has caused this Warrant Certificate to be executed by its
duly authorized officer as of the date set forth in the first paragraph of
the Agreement.
CETUS CORPORATION
By
-------------------------------------
Title
----------------------------------
-2-
SECOND WARRANT
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the Second
Warrant (as defined in the Stock Purchase and Warrant Agreement, dated
May 9, 1989, (the "Agreement") between Cetus Corporation and Hoffmann-La Roche
Inc.) to purchase ___________ shares of Cetus Corporation Common Stock issuable
upon the exercise of the Second Warrant. By making such election, the
undersigned represents and warrants to Cetus Corporation that it (i) has
received a copy of and is familiar with the Agreement, under which the Second
Warrant has been issued; (ii) acknowledges that the shares acquired upon
exercise of the Second Warrant may not be transferred except as provided in the
Agreement; and (iii) acknowledges that such shares will bear the legends set
forth in the Agreement.
DATED: , 19
------------------ -- --------------------------------
(signature)
--------------------------------
(name and title)
--------------------------------
(print name of holder)
CONFIDENTIAL
Schedule 4.3
4.3(i) Subscriptions, options, calls, rights, warrants, convertible
securities, unsatisfied preemptive rights or other commitments:
1. The information contained in the Financial Statements in
Seller's Annual Report to Stockholders for the fiscal year ended June 30, 1988
is incorporated herein by reference, including without limitation the
following notes to such financial statements: Note 5 (Debt obligations), 8
(Stock option plans), 9 (Employee stock purchase plan), and 10 (Common stock
warrants)
2. The following information sets forth the status of the Company's
stock option plans, employee stock purchase plan, warrants and convertible
debt as of April 21, 1989:
STOCK OPTION
Options outstanding: 3,838,080*
Remaining shares authorized for issuance under plans:
1,143,536*
EMPLOYEE STOCK PURCHASE PLAN
Remaining shares authorized for issuance under plan:
650,568*
WARRANTS
No changes from Note 10 in Annual Report.
Note: This does not take into account the issuance of
warrants to Roche pursuant to this Agreement.
CONVERTIBLE DEBENTURES
No changes from Note 5 in Annual Report
* Numbers approximate
CONFIDENTIAL
Schedule 4.9
LITIGATION AND OTHER PROCEEDINGS
1. CHAPMAN v. CETUS CORPORATION, Superior Court, Alameda County No.
599442-7, claiming an alleged mutual mistake and fraud in connection with
Cetus' lease of property at 1400 and 1450 53rd Street, Emeryville,
California. The amended complaint requests relief in the form of a
reformation of the lease to include an annual cost of living adjustment in
the rent and punitive damages in the sum of $5,000,000. Both parties have
conducted extensive discovery.
2. THOMAS A. ROBERTS, JR., INDIVIDUALLY AND dba THOMAS A. ROBERTS, JR.
CONSULTING ENGINEER, dba THE TARCI COMPANY AND dba SANTA CLARA WIRE; V.E.
CORPORATION v. CETUS CORPORATION AND DOE ONE THROUGH ONE HUNDRED, No. 588906,
Superior Court of the State of California, County of Santa Clara. In this
action, filed on August 31, 1987, plaintiffs seek relief for alleged breach
of written and oral agreements, misrepresentation, unjust enrichment, QUANTUM
MERUIT and negligence, in connection with a contract whereby Roberts was to
provide development services for the Cetus ProPette instrument. The relief
sought includes damages of $1,900,000, unspecified damages for mental and
emotional distress, exemplary damages of $7,500,000, damages of $117,000 for
labor and material and costs of suit. The Company's demurrer to the last
amended complaint was sustained without leave to further amend the complaint.
The plaintiffs filed a demand for arbitration with American Arbitration
Association on September 6, 1988, with a claim of $4,864,536.51 for breach of
contract, misrepresentation, unjust enrichment, QUANTUM MERUIT and rescission.
Selection of arbitrators is ongoing.
3. POTENTIAL ORGANON-TEKNIKA CLAIM. During a meeting on January 16,
1989 a representative of Organon Teknika asserted
that the Company had agreed to license Organon to practice PCR technology in
the fields of diagnostics, food and veterinary applications and that if Cetus
does not grant the license, Organon would "put in a claim" for its time and
effort spent in negotiating with the Company, for punitive damages, for loss
of business anticipated through access to PCR technology and for the license.
The Company has advised Organon orally and in writing (on January 25, 1989) that
there is no contract between it and Organon providing for a PCR license to
Organon and no merit to its claim. Organon has not responded.
4. PERSONNEL-RELATED CLAIMS. There are two actions pending against the
Company by former employees based on alleged wrongful termination of
employment and related matters.
5. OLYMPUS CORPORATION v. CETUS CORPORATION. No. CV-89-0770, United
States District Court, Eastern District of New York. Complaint filed
March 9, 1989. Dispute relates to a Private Label Distribution Agreement
between Olympus and Cetus for distribution of Cetus' Pro Group product. The
parties have agreed in principle to settle this dispute without liability to the
Company. The Company expects to enter into a definitive settlement agreement
shortly.